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What Are the Constitutional Limits on Awards of Statutory
Damages in Copyright Litigation?
By Andrew Berger, Esq. For the John Marshall Law School
Center For Intellectual Property
Sony BMG v. Tenenbaum
Jury verdict of $675,000 in file sharing case
Tenenbaum willful infringer
Judge Nancy Gertner reduces award by 90% to $67,500
Some History: Skyrocketing Awards and Judicial Response
Awards Threatening Research Awards Threatening Research and Development of New and Development of New Products Products
Gore Gore held a punitive damages held a punitive damages award of $2 million award of $2 million unconstitutionalunconstitutional
The The GoreGore Guidelines: Guidelines: ReprehensibilityReprehensibility Ratio between actual Ratio between actual
damages and punitive awarddamages and punitive award Difference between the Difference between the
punitive award and applicable punitive award and applicable civil penaltycivil penalty
St. Louis Railway v. Williams
Two sisters each overcharged by 66 cents
Statutory damages award of $75 apiece-114 times more than the actual damage
Award constitutional
Williams Defers to the Judgment of Congress
Does the statutory damage scheme adequately respond to the public interest, the opportunities for committing the offense and the need to secure uniform adherence to the law?
When Will An Award Violate Due Process Under Williams?
The award must be so severe as to be disproportionate to the offense and obviously unreasonable
Remedies for public wrongs do not have to be proportioned to the actual damage
Are the Gore Guidelines Applicable?
Punitive damage awards raise notice and limits concerns
But statutory damages provide notice and limits
Punitive damages are designed to punish but statutory damages serve other purposes
More on Whether Gore Guidelines Applicable
Statutory damages authorized by Congress and therefore entitled to deference
Punitive damages awarded without statutory authorization and thus present no basis to defer to a legislative judgment
The First Guideline: Reprehensibility
Reprehensibility is already calibrated in Copyright Act: damage floor for innocent infringer; cap for non-willful and willful infringement
Only question should therefore be whether the statutory damage scheme is rational
Second Guideline: Relationship Between the Award and Harm
No application because statutory damages may be awarded without any showing of harm
Statutory damages are not conditioned on availability of actual damages
Williams: statutory damages are not to be compared with harm
One of the purpose of statutory damages is to relieve the copyright holder from the burden of proving actual damages
Third Guideline: Relationship Between the Award and Penalty
Irrelevant because the award = the penalty
Tenenbaum created safe harbor for non-commercial file sharers
Court relied on post-hoc comments by two Senators made after Digital Theft statute passed
College students may be toasting result
Tenenbaum’s Damage Calculation Problematic
Court first determined actual damages at $1 per song
Court relied on doctrine of treble damage But did not treble the actual damages it
determined Instead court trebled $750, the statutory
minimum
The Verdict Satisfies Williams Need to defer to Congress Jury’s verdict of $22,500 toward the low
end of the willful range which extends to $150,000
Tenenbaum’s conduct defines willfulness
Consequences if Tenenbaum Affirmed
Meritorious copyright claims may never be brought because of the inability to show actual damages
Relegating litigants to actual damages will also end may litigations because actual damages are often inadequate and may be too expensive to demonstrate
There may be no lost profits or none that can be established
What will the Supreme Court Do?
It will likely be deferential to the judgment of Congress
But Williams Needs Some Updating
It is nearly a century old Copyright landscape has changed Copyright holders now post on social
media hoping their works will be copied As copyright infringement becomes more
commonplace judicial response to infringement may change
Questions?
Contact Andrew Berger at (212) 702-3167 or [email protected].
Also visit www.ipinbrief.com