Bloomberg News

Music Downloading Damages Left Intact by U.S. High Court

May 21, 2012

The U.S. Supreme Court left intact a $675,000 jury verdict against a college student who downloaded and redistributed thousands of songs from the Internet without paying.

The court, without comment, refused to hear Boston University student Joel Tenenbaum’s challenge to a law that let the recording industry collect thousands of dollars from individuals for such downloading. The jury was told to impose damages, set by U.S. copyright law, of between $750 and $150,000 per violation. Jurors set a rate of $22,500 for each of 30 songs he downloaded.

Tenenbaum said individual downloaders who don’t make money from sharing songs shouldn’t be treated the same as companies whose business is to steal copyrighted content. A U.S. appeals court rejected that argument, ruling that all illegal downloaders, regardless of their motives, are subject to the same range of penalties.

“This pernicious interpretation of the Copyright Act transforms every bit of cyberspace into a potentially exploding lawsuit and is sparking the development of a spam-litigation industry,” Tenenbaum’s lawyers said in his high court appeal.

The Recording Industry Association of America, acting on behalf of major record labels, sued more than 12,000 people and sent notices to thousands of others it claimed were illegally sharing music. The industry said it lost billions of dollars of revenue.

Tenenbaum and a woman from Minnesota took their cases to trial, and both lost. An appeals court plans to hear arguments in the Minnesota case in June. The industry group filed the claims before 2008, when it adopted a different strategy to combat illegal downloading.

Amount of Damages

The trial judge in Tenenbaum’s case reduced the jury award to $67,500, saying the larger amount was unconstitutionally excessive. The 1st U.S. Circuit Court of Appeals in Boston reinstated the award and said the record companies would be entitled to a new trial if the judge cut the award again.

Suing Tenenbaum were Sony Corp. (6758) and its Arista Records, Warner Music Group’s Warner Bros. and Atlantic labels and Vivendi SA’s (VIV) Universal Music Group. They said he made songs available on various sites including Napster, Morpheus, Kazaa and LimeWire, distributing songs to millions of other people. He continued after being sent a letter from the record companies, and blamed sisters, houseguests and even burglars, the companies said.

“Tenenbaum undertook these actions even though he was fully aware that they were illegal,” the record companies said. “In fact, his own father warned him that individuals were being sued for such conduct but he did not stop.”

Illegal Downloads

The Supreme Court had ruled in 2005 that Internet file- sharing networks may bear responsibility when users illegally download music and movies, giving the recording industry new power to shut down such sites.

The record companies said they were forced to go after individual users because a new downloading site popped up for each one that was shut down.

The music companies said in a court filing that Congress set the range of damages because it’s hard to put a value on harm caused by copyright infringement.

Tenenbaum’s lawyers said a 2008 study estimated that the average teenager illegally downloaded 800 songs, which would expose that person to damages of as much as $120 million. Multiplied by the number of people sued by the recording industry, the maximum damage amount would reach $1.5 trillion.

The Obama administration defended the statute, saying Tenenbaum’s argument that the recording industry should have to show how much it was harmed by his actions would defeat the law’s purpose of deterring copyright infringement.

The government urged the court not to take the case, saying some issues remained unresolved, including what the judge might do to the $675,000 damage award.

The case is Tenenbaum v. Sony BMG Music Entertainment Inc., 11-1019.

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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