What? A Third Trial in Capitol Records v. Thomas-Rasset on Statutory Damages in Copyright Litigation? Stay Tuned.

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As Ben Sheffner reports in his blog, Copyright and Campaigns, the parties in Capitol Records v. ThomasRasset have been unable to reach a settlement in this much litigated copyright infringement case. Therefore, a third trial (that’s not a typo) in this case will likely go forward in early November.

This case is a poster child for the uncertainty and confusion surrounding statutory damages in copyright litigation. In an earlier post I traced the case’s unique litigation history through January of this year when the court fixed the October 4 date.

Since then there have been further unique twists and turns with respect to settlement. Rule 53 (a)(1)(A) of the Federal Rules of Civil Procedure empowers a court to appoint a special master to “perform duties consented to by the parties.” Rule 53 (b) further provides that “[b]efore appointing a master, the court must give the parties notice and an opportunity to be heard.”

But on June 18, 2010, Chief District Judge Michael J. Davis, pursuant to Rule 53, ordered the appointment of a special master in this case to conduct settlement discussions  without the consent of the parties and without giving the parties the opportunity to be heard before the appointment was made.

Those discussions were fruitless leading to the parties’ joint motion (yes they were at least able to agree on this request) seeking to be relieved “from any further obligation to conduct settlement discussions.” In another unique twist, no federal rule of civil procedure authorized the making of that motion but the parties made it anyway.

With the third trial in the offing here are some issues that may arise, most of which the plaintiffs raised in their well-reasoned “Notice of Decision Re Remittitur” (the “Notice”) they filed back in January when they advised they could not accept the remitted award proposed by the court:

1.  If the jury again awards plaintiffs statutory damages within the range fixed by Congress, will the court again set it aside– for the third time?

2.  If so, will the court, if it has not done so before, have usurped the role of Congress?  Congress over the years has calibrated statutory damages setting limits depending on whether the infringing conduct is innocent, non-willful or willful. If the jury again exercises its discretion to fix statutory damages within the applicable range, does the court have the authority to ignore the jury’s decision because the court finds the amount “shocking”?

3. Isn’t it the job of Congress to fashion a limit on damages and isn’t that a job Congress has already done? See Eldred v. Ashcroft, 537 U.S. 186, 222 (2003) (“[T]he Copyright Clause empowers Congress to determine the intellectual property regimes that, overall, in that body’s judgment, will serve the ends of the Clause.”).

4. The court in its decision on January 22, 2010, reduced the verdict to three times the minimum statutory damages (or $2,250) for each of the songs infringed. This time around will the court instruct this jury that, regardless of how willful they believe the defendant to have been, they can only set damages at this same three times minimum?

In other words, does the court have the authority to tell the jury they must cap the damages at an amount the court decides is just?

5. As plaintiffs correctly noted in their Notice, “neither the Copyright Act nor any case law contains any authority for capping damages at three times minimum damages in particular cases.” Isn’t creating a new and much smaller cap akin or least close to refusing to empanel a jury? And doesn’t this cap contravene the plaintiffs’ right under the Seventh Amendment to have the appropriate level of damages decided by the jury.

6. Further, is there any reason to award a lower amount of statutory damages in this case because defendant is a “noncommercial” infringer? Didn’t Congress increase statutory damages in the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, to address “noncommercial” infringers:

By the turn of the century the Internet is projected to have more than 200 million users, and the development of new technology will create additional incentive for copyright thieves to steal protected works. . . . Many computer users are either ignorant that copyright laws apply to Internet activity, or they simply believe that they will not be caught or prosecuted for their conduct. Also, many infringers do not consider the current copyright infringement penalties a real threat and continue infringing, even after a copyright owner puts them on notice that their actions constitute infringement and that they should stop the activity or face legal action. H.R. Rep. No. 106-216 at 3.

7.  What about the due process issues lurking beneath the surface? Are statutory damages akin to punitive damages or do they also compensate as well as deter and punish? Is the statutory damage scheme any more immune to judicial attack because it has been set and revised from time to time by Congress? Are the due process issues mitigated because the statute gives notice (and therefore fair warning) of the range of damages that may be assessed?

In this case the questions keep coming. We will see whether there are answers that at least satisfy one of the parties to this seemingly never-ending fight.

Other Posts About Statutory Damages

Want to read Parts I, II and III of the posts that attempt to clear up other common misconceptions about statutory damages in copyright litigation? See link (Part I),  link (Part II ) and link (Part III). To read some later posts criticizing the decision in Sony BMG v. Tenenbaum slashing the jury’s verdict by 90% go to link and link.  Still have questions about statutory damages in copyright litigation and want to see a video answering those questions, go to link or want to read an article about statutory damages written for non-lawyers, go here. Also see this link explaining when a copyrighted work qualifies as a work for purposes of fixing statutory damages and another link explaining the one work limitation set forth in the last sentence of 17 U.S.C. § 504 (c)(1).

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