Category Archives: Statutory Damages

Tidal Wave?

Jay Z’s Tidal is the latest interactive service to be sued for copyright infringement for failure to secure reproduction rights to musical compositions embodied in sound recordings made available to listeners / subscribers of the service. The suit specifically alleges that Tidal failed to submit the required notices of intent that are prerequisites to taking advantage of the statutory license under Sec. 115 of the Copyright Act.

The complaint is here:

Yesh Music v. S Carter Enterprises – class action complaint royalties TIDAL.pdf by Mark H. Jaffe

Gaye Gets in Thicke

Marvin Gaye’s estate has answered Robin Thicke’s declaratory judgment suit over Gaye’s “Got to Give It Up” and Thicke’s uber popular song “Blurred Lines” by filing counterclaims, including alleged infringement of additional Gaye songs, including the Marvin Gaye song, “After the Dance,” in the Thicke song “Love After War.”

Thicke’s own words were used against him, as Gaye’s counterclaim cited a May, 2013 interview Thicke gave GQ magazine in which he said,

Pharrell and I were in the studio and I told him that one of my favorite songs of all time was Marvin Gaye’s ‘Got to Give it Up.’ I was like, ‘Damn, we should make something like that, something with that groove.’ Then he started playing a little something and we literally wrote the song in about a half hour and recorded it.

Thicke repeated this claim in a July interview with Billboard,

Pharrell and I were in the studio making a couple records, and then on the third day I told him I wanted to do something kinda like Marvin Gaye’s ‘Got to Give it Up,’ that kind of feel ’cause it’s one of my favorite songs of all time. So he started messing with some drums and then he started going ‘Hey, hey hey .. ‘ and about an hour and a half later we had the whole record finished.

Frankly, even a cursory listening makes it hard to argue these songs are substantially similar.  The case reminds me of the Vanilla Ice initially claiming that “Ice Ice Baby” didn’t sample Queen / David Bowie’s “Under Pressure.”

The Gaye family alleges that EMI breached its fiduciary duty tp and obligations of good faith and fair dealing with the family by siding with Pharrell Williams, an EMI-affiliated writer and one of Blurred Lines co-writers.  According to the Gaye family, Gaye’s administration agreement with EMI grants EMI the exclusive right to bring infringement claims, but when the Gaye family told EMI about the alleged infringement of Got to Give It Up, EMI refused to pursue a claim against Williams.   

Among the nefarious actions alleged is the salacious claim that the chairman of EMI called a legal representative of the Gaye family suggesting that–notwithstanding the fact that Thicke had already filed his dec action against them–they not to pursue this action because Marvin Gaye’s children were “tarnishing” and “ruining an incredible song” (“Blurred Lines”) and”killing the goose that laid the golden egg,”  The EMI chairman claimed that the Gaye family’s accusations that Blurred Lines was based on Gaye’s song was responsible for “Blurred Lines” not receiving an MTV Video Music Award and might kill any chances of “Blurred Lines” winning a Grammy Award for Song of the Year.

Based on these alleged breaches, the Gaye family is seeking to rescind its publishing agreement with EMI.

The counterclaims are here.

Kew-kew-kew-kew! Roscoe’s Owner Personally Liable for $204,000 Judgment for Unlicensed Public Performance

The Ninth Circuit, in an unpublished opinion, has affirmed a Central District of California’s granting of summary judgment in favor of music publishers whose works were publicly performed without proper license.  Range Road Music, Inc. v. East Coast Foods, Inc., 10-55691 (9th Cir., January 12, 2012).  The facts of the case are straightforward and similar to hundreds of other cases publishers bring against small businesses each year for unlicensed public performance.  In May, 2008, an investigator visited Roscoe’s House of Chicken & Waffles in Long Beach, California.  The investigator heard a band perform at least 4 songs and a DJ play another 4 songs from CDs.  Roscoe’s failed to obtain the necessary public performance licenses to perform these songs and the publishers filed suit for copyright infringement.

The defendants in this case, East Coast Foods, Inc. and Herbert Hudson, argued that the allegedly infringing performances actually occurred at The Sea Bird Jazz Lounge, which is located at the same address but operated as a separate business and owned by a separate company, Shoreline Foods, Inc..  Hudson, the sole officer and director of East Coast Foods and President of Shoreline Foods, was sued in his individual capacity.

The plaintiff publishers argued that East Coast Foods and Hudson were vicariously liable for the copyright infringement that occurred at The Sea Bird.  A defendant can be vicarious liable for copyright infringement if he “exercises the requisite control over the direct infringer and … derives a direct financial benefit from the direct infringement.” (at p. 5).  The District Court found that Hudson, as the sole officer and director of East Coast, did control the premises where the infringing performances occurred and did derive a financial benefit through the sale of food and liquor and was, therefore, vicariously liable for the copyright infringement that took place at Roscoe’s / Sea Bird.

In total, the District Court awarded the plaintiff publishers $203,728.22, which included $4,500 for each of the 8 infringements ($36,000) and attorneys’ fees and costs in the amount of $167,728.22.  Because he was found vicariously liable, Mr. Hudson is personally responsible for satisfying the entire $204,000 judgment.

The Ninth Circuit opinion is here:
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The District Court’s granting of summary judgment is here:
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The District Court’s award of fees is here:
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File Sharing Smack Down: First Circuit Rules Against Tenenbaum

In a victory for the record labels, the First Circuit has issued its decision in Sony v. Tenenbaum, finding meritless all of Tenebaum’s arguments against the constitutionality of statutory damage awards in file sharing cases.  The long-awaited decision, released Friday, restores the original jury award of $675,000 and remands back to District Judge Gertner to consider remittitur.

A key argument raised by Tenenbaum (and inherently adopted by the District Court in its opinion) is that the Copyright Act’s statutory damages provisions do not apply to “consumer-copiers” or non-commercial infringement.  The First Circuit quickly and authoritatively rejects that argument.

Tenenbaum is not a “consumer-copier,” a term he never clearly defines. He is not a consumer whose infringement was merely that he failed to pay for copies of music recordings which he downloaded for his own personal use. Rather, he widely and repeatedly copied works belonging to Sony and then illegally distributed those works to others, who also did not pay Sony. Further, he received, in turn, other copyrighted works for which he did not pay. Nor can Tenenbaum assert that his was merely a “non-commercial” use and distribution of copyrighted works as those terms are used elsewhere in the Act.  His use and distribution was for private gain and involved repeated and exploitative copying.

Had Congress intended to limit copyright actions against so-called “consumer infringers” as Tenenbaum hypothesizes, it easily could have done so. … Instead, subject to exceptions not relevant here, it extended liability to “anyone” who violates a copyright owner’s exclusive rights and allowed those owners to pursue actions against “any infringement.”

Where Congress intended to create other exceptions for solely personal or non-commercial use, it did so expressly. In two amendments which do not apply here, it drew such distinctions: (1) the Sound Recording Act of 1971, Pub. L. No. 92-140, 85 Stat. 391, which fully extended federal copyright protections to sound recordings but exempted certain reproductions of sound recordings made for personal use, and (2) the Audio Home Recording Act of 1992 (AHRA), Pub. L. No. 102-563, 106 Stat. 4237, codified at 17 U.S.C. § 1001 et seq., which provided some exemptions in other situations from copyright liability for infringements “based on the noncommercial use by a consumer.”  17 U.S.C. § 1008.  These statutes refute Tenenbaum’s argument [that statutory damages do not apply to “consumer copiers”].

The First Circuit, in remanding back to the district court to consider remittitur, briefly discusses the district court’s reliance on the Gore factors instead of Williams in determining that the jury award was unconstitutional.  Without directly holding that Gore does not apply, the First Circuit makes clear its belief that it is inapplicable here.

We note that in Gore, the Supreme Court did not overrule Williams. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312 (1994) (hierarchical relationship of Supreme Court to lower courts mandates that where “the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law”). Nor has the Supreme Court to date suggested that the Gore guideposts should extend to constitutional review of statutory damage awards. The concerns regarding fair notice to the parties of the range of possible punitive damage awards present in Gore are simply not present in a statutory damages case where the statute itself provides notice of the scope of the potential award.

In the long-running District of Minnesota Elektra v. Thomas case, Judge Davis followed Judge Gertner’s district court decision in Tenenbaum, finding that the jury award of statutory damages was unconstitutional, but used the Williams factors instead of Gore in reaching his decision.  Judge Davis also tried remittitur once before reaching the constitutional question, so it will be interesting to see how the Eighth Circuit treats the inevitable appeal on the Thomas case.

The First Circuit’s Opinion is below:
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Minnesota Judge Finds $1.5mm Jury Award Unconstitutional in File-Sharing Case

For the third time, Chief Judge Davis of the District of Minnesota federal court has reduced a jury’s award of statutory damages against Jammie Thomas-Rasset.  In October, 2007 the first jury awarded plaintiff record label Capital Records $222,000 based on Thomas-Rasset’s illegal sharing of 24 songs ($9,250 / song).  Judge Davis awarded a new trial because he believed he had given improper jury instructions.

In June, 2009, a second jury awarded $1,920,000 for illegally sharing the same 24 songs ($80,000 / song).  Judge Davis remitted the jury’s award down to $2,250 / song (or $54,000), but Capital Records rejected the remittitur and a third trial was held on the issue of damages.

Finally, in November, 2010, a third jury awarded $1,500,000 ($62,500 / song).  This time, realizing remittitur was not a viable option to ending the litigation, Judge Davis has held that the jury’s award violates Thomas-Rasset’s constitutional due process rights.  Specifically, Judge Davis held that “an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable. In this particular case, involving a first-time willful, consumer infringer of limited means who committed illegal song file-sharing for her own personal use, an award of $2,250 per song, for a total award of $54,000, is the maximum award consistent with due process.”

Judge Davis wisely avoids the faulty logic of Judge Gertner’s similar due process analysis in Sony BMG Music Entertainment v. Tenenbaum, 721 F. Supp.2d 85 (D. Mass. 2010).  In reducing the jury’s award of $675,000 ($22,500 for each of the 30 songs at issue) to $2,250, Judge Gertner based her award on Judge Davis’ remitted award in Thomas-Rasset v.2.  She analyzed the constitutionality of the jury’s verdict under the Supreme Court’s BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (“Gore”) standard, which provides a three factor test to determine whether an award of punitive damages is constitutional.  The myriad flaws in her decision are for another post.

Judge Davis wisely adopts the Supreme Court’s standard in St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67 (1919) (“Williams”), in which the Court established a three factor test to determine the constitutionality of statutory damages.  What is fascinating about Judge Davis’ opinion is that it appears that the jury’s verdict satisfies each of the Williams factors, and yet he still finds the award unconstitutional.

For example, the first factor is the public interest.  Here, Judge Davis concludes “There is a significant public interest in vindicating copyright.”  The second factor is the opportunities to commit the offense.  Here again, Judge Davis concludes “It is clear that there are ‘numberless opportunities for committing the offense’ of illegally downloading and distributing sound recordings online.”  Judge Davis continues, “The third Williams factor [is] ‘the need for securing uniform adherence to established passenger rates.’ The need for deterrence also exists in this case.”  So, all three Williams factors point towards plaintiff Capital Records.

Judge Davis, however, begins the final section of his opinion by stating:

“To protect the public’s interest in enforceable copyrights, to attempt to compensate Plaintiffs, and to deter future copyright infringement, Thomas-Rasset must pay a statutory damages award. Plaintiffs have pointed out that Thomas-Rasset acted willfully, failed to take responsibility, and contributed to the great harm to the recording industry inflicted by online piracy in general. These facts can sustain the jury’s conclusion that a substantial penalty is warranted. However, they cannot justify a $1.5 million verdict in this case.”

In other words, Judge Davis’ entire constitutional due process analysis appears to boil down to, “I personally think this is too high an award.”  There is no further legal support to his position.  In fact, later in the opinion he states “The Court accords deference to the jury’s verdict. Yet an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award against an individual consumer, of limited means, acting with no attempt to profit, is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”

But the jury’s verdict is quite clearly not obviously unreasonable.  As noted above, the three juries in this case awarded damages of $9,250, $80,000, and $62,500 per song.  The jury in Tenenbaum awarded $22,500 per song.  While that range is pretty wide, the juries have awarded between 4 and 35 times as much as both Judge Davis and Judge Gertner find “obviously unreasonable.”

Congress created the statutory damages scheme of the Copyright Act to allow juries to determine awards within a range, which all three juries did in the Thomas-Rasset case.  I’m confident that the 8th Circuit will reverse the inevitable appeal.

Judge Davis’ opinion is below:
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Statutory Damages Go to the Dogs (and Cats) Part Deux: Albums as Compilations and Statutory Damages

In what can only be the universe trying to get me to write more about statutory damages, today I read Judge Wood’s most recent decision in the Limewire case and discovered an interesting article by Wyatt Glynn entitled “Musical Albums as “Compositions”: A Limitation on Damages or a Trojan Horse Set to Ambush Termination Rights?”  The former decision deals with the record labels’ motion seeking entitlement to statutory damages for each individual sound recording infringed by users of Limewire’s file sharing protocol, even if those sound recordings appeared as part of a compilation.  The latter article considers the recent case of Bryant v. Media Rights Prods., Inc., 603 F.3d 135, 141 (2d Cir. 2010) and the potential impact of that decision, which found that the plaintiffs were only entitled to one award of statutory damages because the sound recordings had been issued as albums and were, therefore, “compilations” under the Copyright Act, on terminations of transfer.

In finding that the record labels were entitled to individual awards of statutory damages for each sound recording infringed, Judge Wood distinguished her Limewire case from Bryant by noting that the plaintiffs in Bryant had only issued their recordings as a compilation; i.e., the individual sound recordings had never been issued by the plaintiffs as “singles” but only as a CD.  Only later, when those digital albums were made available on iTunes, were the individual sound recordings available as “singles.”

The calculation of damages in the Limewire case is going to require a MIT math wiz to calculate.  Here is how Judge Wood described the statutory damages available to the record label plaintiffs:

For albums that contain sound recordings that are available only as part of the album, and
sound recordings that are also available as individual tracks, the Court provides the following example for purposes of illustration. Let us assume that Plaintiffs issued (1) an album containing songs A, B, C, and D, and that Plaintiffs also made available (2) songs A and B as individual tracks, but (3) made available songs C and D only as part of the album as a whole. Let us also assume that songs A, B, C, and D were infringed on the LimeWire system during that time period. Plaintiffs would be able to recover three statutory damage awards: one award for song A, one award for song B, and one award for the compilation (of which C and D are a part).

The concern of the author of the article is whether the Second Circuit’s holding in Bryant that albums are “compilations” under § 101 of the the Copyright Act might impact recording artists ability to terminate their copyright transfers under § 203 of the Copyright Act.  For the uninitiated, § 203 provides that an author who has transferred the rights to her copyrighted work may, after 35 years, terminate the assignment of the copyright notwithstanding any agreement to the contrary.  This being the Copyright Act, there is, of course, an exception; there is no right to terminate a transfer for a “work made for hire.”  As the author discusses, whether the “album” as currently constituted today fits the statutory definition of a “compilation” is hotly contested; e.g., if a song is issued first as a single and then as a part of a digital album, is that a “compilation”?  If they are compilations, then record companies can rest easy in the knowledge that they will own the copyrights in those sound recordings until they expire.  If they are not compilations, then record companies face a mass exodus of famous (and very profitable) back catalog in the coming years.

An interesting application of this issue can be found in Arista Records LLC v. Launch Media, Inc. where the Second Circuit held in a case of first impression that the Launchcast personalized Internet radio service was not an “interactive” service under the Copyright Act.  Because the Second Circuit determined that Launch as non-interactive–and, therefore, not infringing–the Court never considered whether the record label plaintiffs were entitled to damages based on individual sound recordings or only on a per-compilation basis.  The Launch brief to the Second Circuit, however, contains a nice encapsulation of how this issue plays itself out in interesting ways. According to their brief (around page 51):

During the trial, plaintiffs stipulated as follows: (1) every copyright at issue
was a single registration for “an album consisting of multiple tracks”; (2) for all
but 11 of the 835 copyrights at issue, the copyright registration was denominated
as a “work made for hire”; (3) for every copyright at issue “the recording artist
whose recordings are the subject of the Certificates were not employees of the
copyright claimants.” … These facts, taken together, lead to the
inescapable conclusion that the registrations at issue were, in fact, for
compilations.

Judge Wood’s Limewire decision is here:
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Wyatt Glynn’s article is available by clicking here.

Launch Media’s Second Circuit brief is here:
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Record Labels Only Get 1 Bite at LimeWire Apple

In May of last year, Judge Kimba Wood granted the record labels’ motion for summary judgment against LimeWire for secondary copyright infringement, to wit LimeWire had induced millions of people to illegally share billions of copyrighted sound recordings.  The case then entered the damages phase and things really got interesting.

The fights have thus far centered around the interpretation of §504(c) of the Copyright Act and the parameters for calculating an award of statutory damages.

The relevant portions of §504(c) Statutory Damages are highlighted below —

(1) … the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

First, the record labels argued that they were entitled to an award of statutory damages for each single infringed, whether that single also appeared as part of a “compilation” (i.e., CD).  Next, the record labels argued that they were entitled to an award of statutory damages for each work infringed by each direct infringer (in addition to LimeWire).  To put numbers to the arguments, the record labels argued that they were entitled to 10 awards of statutory damages for each CD containing 10 songs (instead of 1) and were entitled to multiply those 10 awards by 1,000,000+ for each user of LimeWire that directly infringed the record label’s copyright by making an unauthorized copy (rather than just 1 award for LimeWire and all of LimeWire’s users).  Unsurprisingly, LimeWire adopted contrary positions.

The practical effect of these differences were summed up by Judge Wood in her recent decision rejecting the record labels interpretation of §504(c) of the Copyright Act as follows: “If Plaintiffs were able to pursue a statutory damage theory predicated on the number of direct infringers per work, Defendants’ damages could reach into the trillions [of dollars]. … The absurdity of this result is one of the factors that has motivated other courts to reject Plaintiffs’ damages theory.”

Judge Wood cites a number of cases supporting her conclusion, including McClatchey
v. Associated Press, No. 3:05-cv-145, 2007 WL 1630261 (W.D. Pa. June 4, 2007) and Bouchat v. Champion Prods., Inc., 327 F. Supp. 2d 537, 552 (D. Md. 2003), aff’d on other grounds, 506 F.3d 315, 332 (4th Cir. 2007).  These cases also involve massive downstream (or secondary) copyright infringement induced by the defendant.  The courts in both cited cases use the same “absurdity of the result” rationale in rejecting the plaintiff’s request that statutory damages be calculated on a per work – per direct infringer basis.

Interestingly, this case mirrors in some respect the file sharing jury verdicts.  While both lines of cases recognize that the purpose of statutory damages in copyright cases is both to (1) to afford copyright owners an easy means of establishing an amount of damages when direct evidence may be difficult or impossible to produce and (2) to deter infringement, the “absurdity” of the result leads the judge to rule in a way most favorable to the infringer, rather than the infringed.  In other words, the specter of billions of dollars in damages wasn’t enough to stop the developers of LimeWire from developing its P2P client enabling millions of users to infringe thousands of copyrights resulting in billions in individual infringements of plaintiffs’ copyrighted works.  Maybe the specter of TRILLIONS of dollars in damages would have (though I doubt it).  This is the same (faulty) logic that Judges Davis and Gertner applied in Capital Records v. Thomas, 06-1497 (D. Minn) and Sony BMG Music Entertainment v. Tennenbaum, 07-11446 (D. Mass.), respectively; i.e., that the jury award was higher than required to deter infringement despite the overwhelming evidence that infringement hasn’t decreased subsequent to the original jury awards.

The briefs and opinion are below.

Plaintiff’s Motion re Singles v. Compilations
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Defendant’s Response
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Plaintiff’s Motion re Multiple Awards
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Judge Wood’s Opinion
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Tenenbaum – Def. Appeal Brief & EFF Amicus

While I’m a little late to the game, below is Joel Tenenbaum’s 1st Cir. appeal brief and the amicus filed by EFF.  Prof. Nesson continues to represent Joel, though this brief is far better written than anything submitted by Joel’s defense team during the district court trial.  Its greatest weakness–aside from being completely wrong on the law–is the repeated conflation of non-commercial and personal.  In other words, the brief goes to great lengths to talk about how copying for personal use was never intended to be covered by §504’s statutory damages scheme, which, Nesson argues, is reserved for commercial infringers.  The obvious problem here is that Joel didn’t just make a personal copy.  He made his personal copy available for millions of others to make their own personal copy.  One need look no further than Nesson’s own example from the hearings on the 1971 Sound Recording Act where Rep. Kazen asks, apparently rhetorically, “In other words, if your child were to record off of a program which comes through the air on the radio or television, and then used it for his or her own personal pleasure, this use would not be included under the penalties of this bill.”  Joel Tenenbaum did nothing remotely like what Rep. Kazen is describing.
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The Electronic Frontier Foundation’s amicus brief didn’t make much sense to me.  I mean, I understand the point the brief is making–statutory damages are bad–but I fail to see any attempt to tie the facts of the Tenenbaum case with the outcome EFF presumably wants.
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