This week, the First Circuit affirmed a $675,0000 statutory damages award against college student Joel Tenenbaum for copyright infringement. The Court held that the damages award, based on Tenenbaum’s illegal downloading and distribution of 30 copyrighted songs, was not excessive or a violation of due process.
The Original Jury Award
As we have previously discussed, Tenenbaum had been downloading and distributing (via peer-to-peer networks) thousands of copyrighted songs, despite warnings from his parents, his college and copyright owners. In 2007, a group of recording companies brought a copyright infringement suit and sought statutory damages with respect to a representative sample of about thirty songs. Tenenbaum initially lied and blamed his sisters, but eventually admitted to illegal file sharing. A jury found that Tenenbaum’s infringement was willful, and awarded the plaintiffs $675,0000 in statutory damages, or $22,500 per song — about 15% of the maximum statutory damages that could have been awarded under 17 U.S.C. § 504(c).
Judge Gertner Finds the Award Unconstitutional
When Tenenbaum moved for a reduction of the award based on the principles of remittitur and due process, Judge Nancy Gertner reduced the award ten-fold, to $67,500. Judge Gertner found that the severity of the award was a violation of due process under the Supreme Court’s ruling in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). The Gore case, which addressed punitive damages, held in part that such damages must be somewhat proportionate to the harm suffered by the plaintiff.
The First Circuit’s First Reversal
In 2011, the record companies appealed the reduction of the award and the First Circuit reversed and remanded. According to the First Circuit, Judge Gertner should have avoided the constitutional due process issue because she could have ruled based on non-constitutional remittitur principles. Additionally, the First Circuit doubted whether the Gore test applied to statutory damages under the Copyright Act (as opposed to punitive damages), and suggested that the district court reevaluate the award based on a different test set forth in St. Louis, I.M. & S Ry. Co. v. Williams, 251 U.S. 63 (1919). The Williams test, which is more plaintiff-friendly than Gore, provides that an award of statutory damages violates due process only “where the penalty prescribed is so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable.” On remand, Judge Rya Zobel (Judge Gertner having retired) applied Williams and reinstated the original award of $675,000.
The Second Appeal
Now it was Tenenbaum’s turn to appeal. In 2012, he argued that the district court should have stuck to the Gore test, and that under either test the award was excessive, in large part because it was disproportionate to the actual injury he caused, which Tenenbaum estimated at a mere $450 (the retail cost of the thirty albums in question).
On June 25, 2013, the First Circuit rejected Tenenbaum’s arguments and affirmed the award. In an opinion by Judge Jeffrey Howard, the Court affirmatively rejected the Gore test as inappropriate for the review of statutory damages under the Copyright Act. According to the Court, Gore counseled proportionality between the wrongful act and the actual harm caused, but such an approach was logically inapplicable to a case involving statutory damages, where actual damages are irrelevant. The Court went on to hold that the award against Tenenbaum was not excessive because, even if the actual damages were low in proportion to award, the deterrent purpose of statutory damages (as well as Tenenbaum’s willfulness) made up the difference.
As we have previously discussed, the applicability of the Gore test to statutory damages under the Copyright Act is a controversial issue on which appellate courts may disagree. No word yet on whether Tenenabaum will attempt to appeal the decision to the Supreme Court.