Year in Review: Damages

In May 2008 it was reported that Universal Music appealed a decision against Bridgeport Music in which Universal had been found liable for copyright infringement.[1] Universal argued on appeal that the punitive damages awarded were unconstitutional as they were around ten times the actual damages.[2] In its filing Universal stated:

"While the Supreme Court has declined to adopt concrete or bright-line constitutional limits for the ratio between actual or potential harm and a punitive-damage award, the Court nonetheless observed that, ‘in practice, few awards exceeding a singled-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process’... The court cited a 4-to-1 ratio as being close to the line of unconstitutional impropriety."[3]

This is despite the fact that in many of the file sharing cases in which Universal is the plaintiff punitive damages more than on thousand times the actual damages are sought.[4] Elektra vs Barker is one case in which the damages sought for file sharing are being challenged.[5]

In more recent times the question of the constitutional validity of the damages sought by the recording industry through their file sharing litigation campaign has again been called into question. In October a counterclaim prepared with the assistance of Professor Nesson from Harvard University on behalf of Joel Tenenbaum (Sony BMG Music v. Tenenbaum) argued that the record labels were abusing the process and challenged the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999.[6] The brief stated:

10. On information, belief, and evidence submitted concurrently in “Defendant’s Response to Plaintiffs’ Motion to Dismiss,” Plaintiffs did not file this suit primarily to seek redress against Defendant for harm that he allegedly caused.

11. Plaintiffs filed this suit primarily to advance ulterior purposes. On information and belief, these ulterior purposes include, but may not be limited to:

• Unlawfully sacrificing Defendant to intimidate other Internet users into altering the norms of Internet usage.
• Unlawfully sacrificing Defendant to intimidate other accused infringers into settling without exercising their constitutional right to have their defenses heard in court.[7]

The Act itself is being challenged on the basis that the focus on punitive damages rather than compensatory damages in effect creates criminal penalties for civil disputes.[8]

[1] TechDirt, Funny How Universal Music Thinks Infringement Fines Are Unconstitutional When It's On The Receiving End (14 May 2008) <http://www.techdirt.com/articles/20080513/1807491105.shtml> at 21 May 2008
[2] TechDirt, Funny How Universal Music Thinks Infringement Fines Are Unconstitutional When It's On The Receiving End (14 May 2008) <http://www.techdirt.com/articles/20080513/1807491105.shtml> at 21 May 2008
[3] TechDirt, Funny How Universal Music Thinks Infringement Fines Are Unconstitutional When It's On The Receiving End (14 May 2008) <http://www.techdirt.com/articles/20080513/1807491105.shtml> at 21 May 2008
[4] TechDirt, Funny How Universal Music Thinks Infringement Fines Are Unconstitutional When It's On The Receiving End (14 May 2008) <http://www.techdirt.com/articles/20080513/1807491105.shtml> at 21 May 2008
[5] ZeroPaid, Harvard Professor Takes on the RIAA (30 October 2008) <http://www.zeropaid.com/news/9827/Harvard+Professor+Takes+on+the+RIAA> at 5 November 2008
[6] ZeroPaid, Harvard Professor Takes on the RIAA (30 October 2008) <http://www.zeropaid.com/news/9827/Harvard+Professor+Takes+on+the+RIAA> at 5 November 2008
[7] ZeroPaid, Harvard Professor Takes on the RIAA (30 October 2008) <http://www.zeropaid.com/news/9827/Harvard+Professor+Takes+on+the+RIAA> at 5 November 2008
[8] TechDirt, Big Guns Come Out In Effort To Show RIAA's Lawsuits Are Unconstitutional (30 October 2008) <http://www.techdirt.com/articles/20081030/0203582685.shtml> at 5 November 2008