Sorry: Trying to Settle or Keep Costs Down in Copyright Litigation Have Become Much Harder Thanks to Sony v. Tenenbaum

The problems that Sony v. Tenenbaum will cause copyright owners, if affirmed on appeal, are many.  I touched on a few in an related post. Professor Eric Goldman in an excellent post adds a few more.  As he indicates, Tenenbaum will now prompt a due process defense to a statutory damage claim thereby making copyright litigation, already expensive, more so.

Further, the three-times minimum statutory damage cap of $2,250 per work imposed first in Thomas-Rasset and now in Tenenbaum will make it harder to settle copyright cases. When jury awards are unpredictable, settlement is prudent and possible. But the cap ends that unpredictability and, as Eric Goldman points out, will give defendants increased confidence in a low case valuation.

I have one quibble with Eric’s post. He adds that Judge Gertner “bizarre digression” focusing on off-hand comments from Senators Hatch and Leahy expressing “lukewarm enthusiasm” about peer-to-peer file sharing was “irrelevant to her holding.” I disagree. Let me explain.

Judge Gertner recognized that the third Gore guidepost was “the most troublesome for Tenenbaum’s argument that the jury’s award violated the Due Process Clause.” That guidepost judges the propriety of the award by focusing on its relationship with the authorized civil penalty. But here the award and the authorized penalty were seemingly “identical” and therefore the verdict appeared to satisfy this Gore due process guidepost.

To avoid the identity between the authorized penalty and the award, the court needed to conclude that Congress never intended to authorize any award in this case even one within the statutory penalty range. The court reached this extraordinary result by deciding that Congress meant to immunize “college students like Tenenbaum who file-shared without any pecuniary gain” from the reach of statutory damages.

Although college students across the country are no doubt toasting this result, there is no evidence that Congress ever placed file-sharing infringers in a safe harbor. Instead, as Eric Goldman points out, there are “mountains of evidence that Congress actually HATES peer-to-peer file sharing with a passion” (emphasis in original).

So it appears that the court’s “bizarre” reliance on comments from two senators was, not a digression, but a necessary building block in the court’s decision.

In any case, thanks to Tenenbaum, we will all be hearing a lot more about due process in copyright cases to come.

Other Posts About Statutory Damages in Copyright Litigation

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). For a post discussing some of the issues raised by the upcoming third trial in Capitol v. Thomas-Rasset case go to 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).