Sony BMG v. Tenenbaum

Citation: Sony BMG Music Entertainment v. Tenenbaum, 2010 WL 2705499 (D. Mass. July 09, 2010)(full-text).

Factual Background
In 1999, defendant Joel Tenenbaum began using the peer-to-peer network Napster to download copyrighted sound recordings from others users. He also made copyrighted sound recordings saved on his computer available to other users through his shared folder. After Napster was forced to shut down for contributory copyright infringement on a massive scale, Tenenbaum transitioned to other peer-to-peer networks, including Morpheus, Kazaa, and LimeWire. From 1999 to approximately 2007, he used these peer-to-peer networks to download and distribute thousands of songs for free and without authorization from the owners of the songs’ copyrights.

Tenenbaum was aware that his conduct was illegal. Before he began using Kazaa, he understood that Napster had closed because it was facilitating copyright infringement. In addition, a student handbook published by Tenenbaum’s undergraduate institution clearly warned that the sharing of copyrighted works over peer-to-peer networks could subject a student to civil liability, criminal penalties, and academic disciplinary action. He continued to file-share after the Plaintiff, Sony BMG Music Entertainment, send him a letter demanding that he cease his infringing activities.

Trial Court Proceedings
On August 7, 2007, the plaintiffs sued Tenenbaum for infringing their registered copyrights through his online downloading and distribution.

Tenenbaum was accused of using file-sharing software] to [[download and distribute thirty copyrighted songs belonging to the plaintiffs. The plaintiffs are a group of the country's biggest record companies. Their lawsuit against Tenenbaum is one of thousands that they have brought against file sharers throughout the country. Tenenbaum, like many of the defendants in these suits, was an undergraduate when his file-sharing was detected.

Although the plaintiffs presented evidence that Tenenbaum illegally downloaded and shared thousands of recordings, the trial focused on his infringement of the plaintiffs' copyrights in thirty songs. As to these songs, Tenenbaum's liability for infringement was not seriously in question. Since he admitted engaging in conduct that clearly constituted copyright infringement at trial, the trial court directed judgment in the plaintiffs' favor on this issue. The only questions for the jury were whether Tenenbaum's infringements were willful and what amount of damages was appropriate.

In Tenenbaum's case, the plaintiffs chose statutory damages over actual damages as the remedy. “Statutory damages” are damages specially authorized by Congress that may be obtained even in the absence of evidence of the harm suffered by the plaintiff or the profit reaped by the defendant. Under the relevant statute, the jury's award could be no less than $750 for each work that Tenenbaum infringed and no more than $30,000 or $150,000, depending on whether the jury concluded that Tenenbaum's conduct was willful. The jury did find that Tenenbaum willfully infringed the plaintiffs' copyrights and imposed damages of $22,500 per song, yielding a total award of $675,000.

While that award fell within the broad range of damages set by Congress, Tenenbaum challenged it as far exceeding any plausible estimate of the harm suffered by the plaintiffs and the benefits he reaped. He filed a motion for new trial or remittitur, raising both common law and constitutional grounds.

Significantly, the common-law doctrine of remittitur would have enabled the trial court to entirely avoid the constitutional challenge, always the better choice. Remittitur permits a court to review a jury's award to determine if it is “grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.” If the court so finds, it may reduce the damages, but only if the plaintiffs accept the reduced amount; if they do not, the court is obliged to grant a new trial.

The plaintiffs in this case, however, made it abundantly clear that they likely would not accept a remitted award. And at a retrial on the issue of damages, the trial court would again be presented with the very constitutional issues that the remittitur procedure was designed to avoid. The trial court is obliged to deal with Tenenbaum's constitutional challenge. While the parties disagree as to the content of the review of an award of statutory damages, they agree that some form of constitutional review is appropriate.

In reviewing the jury's award, the trial court held that there are plainly legitimate reasons for providing statutory damages in copyright infringement actions. They ensure that plaintiffs are adequately compensated in cases where the plaintiffs' actual damages are difficult to prove. They also deter copyright infringement and thereby encourage parties to procure licenses to use copyrighted works through ordinary market interactions.

But since constitutional rights are at issue, deference must not be slavish and unthinking. This is especially so in this case since there is substantial evidence indicating that Congress did not contemplate that the Copyright Act's broad statutory damages provision would be applied to college students like Tenenbaum who file-shared without any financial gain.

Furthermore, a comparison between the jury's award in this case and the statutory damages awards in other copyright cases demonstrates that the jury's award here was much higher. The statutory provision under which the jurors imposed their award also did not offer any meaningful guidance on the question of what amount of damages was appropriate. It merely instructs the fact finder to select an amount within an extraordinarily broad range-which here went from $22,500 to $4,500,000 given Tenenbaum's willful infringement of thirty works.

Weighing all of these considerations, the trial court concluded that the jury's award of $675,000 in statutory damages for Tenenbaum's infringement of thirty copyrighted works was unconstitutionally excessive. This award was far greater than necessary to serve the government's legitimate interests in compensating copyright owners and deterring infringement.

Thus, the trial court reduced the jury's award to $2,250 per infringed work, three times the statutory minimum, for a total award of $67,500. The trial court even felt that this reduced award was still severe and even harsh. The court held that it not only adequately compensates the plaintiffs for the relatively minor harm that Tenenbaum caused them, but it also sends a strong message that those who exploit peer-to-peer networks to unlawfully download and distribute copyrighted works run the risk of incurring substantial damages awards.