Song Download Damages Improperly Reduced, Appeals Court Says

September 16, 2011

By Don Jeffrey

(Updates with music industry comment in eighth paragraph.)

Sept. 16, 2011 (Bloomberg) -- A judge improperly cut the damages assessed against a teenager who downloaded and redistributed thousands of songs from the Web without paying, a federal appeals court said

The U.S. Court of Appeals in Boston today rejected U.S. District Judge Nancy Gertner’s 90 percent reduction of the award and directed her to reconsider whether the jury’s $675,000 penalty against Joel Tenenbaum was excessive.

“We affirm the finding of liability against Tenenbaum and in favor of plaintiffs,” U.S. Circuit Chief Judge Sandra Lynch said in the appellate opinion. The panel “rejected Tenenbaum’s arguments that the Copyright Act is unconstitutional.”

The record industry has suffered billions of dollars of lost revenue since Napster, the original peer-to-peer, or P2P, file-sharing website for music, appeared in 1999. After Napster was shut down by court order, other file-sharing sites took its place. In 2005 the U.S. Supreme Court ruled that another P2P site, Grokster Ltd., was liable for copyright infringement on a “gigantic scale.”

Recording companies including Sony Music Entertainment, Warner Music Group Corp. and Vivendi SA’s Universal Music Group sued Tenenbaum in 2007 after warning him in a letter that he was infringing their music copyrights. Gertner found him liable for copyright infringement on a sample of 30 songs and scheduled a trial by jury to determine whether the infringement was “willful” and what the damages would be.

‘Unconstitutionally Excessive’

Under federal copyright law, statutory damages can range from $750 a song to as much as $150,000 if the infringement is willful.

The jury in July 2009 awarded damages of $22,500 a song, or $675,000. Gertner cut the penalty in July 2010, calling it “unconstitutionally excessive.”

“We are pleased the court agreed with us that the finding of liability was correct and that the district court erred in finding the verdict unconstitutional,” Jennifer Pariser, of the music industry’s trade group the Recording Industry Association of America, said in an e-mailed statement.

Charles Nesson, a lawyer representing Tenenbaum, didn’t immediately respond to an e-mail message seeking comment.

Smaller Penalty

Both Tenenbaum and the record industry appealed the district court’s decision. The music companies wanted the jury award to stand, and Tenenbaum sought a smaller penalty. The U.S. also appealed, claiming that the statutory damage awards are constitutional.

The music industry, in addition to suing file-sharing sites, pursued consumers, many of them college students, who were downloading and sharing digital songs. The consumers, identified by Internet service providers, were allowed to pay fines to avoid court action and most took that option.

Tenenbaum is one of two cases to be tried in federal court. In 2009, a federal jury in Minneapolis said Jammie Thomas-Rasset should pay $80,000 for each of 24 songs downloaded, for a total damages award of $1.92 million. The judge found the award excessive and the music industry appealed to Eight Circuit Court of Appeals.

Tenenbaum, from Providence, Rhode Island, was attending Goucher College in Baltimore when the infringement occurred, according to court papers. He later went to graduate school at Boston University.

The 30 infringed songs, a sample of the tracks Tenenbaum obtained and shared, included Nirvana’s “Come As You Are.”

The case is Sony BMG Music Entertainment v. Tenenbaum, 10- 1883, U.S. Court of Appeals for the First Circuit (Boston). The lower court case is Sony BMG Music v. Tenenbaum, 07-11446, U.S. District Court, District of Massachusetts (Boston).

--Editors: Stephen Farr, Mary Romano