Tag Archives: Statutory Damages

Mayday! Mayday! UMG Took Us Down!!

After UMG won its MSJ (order here), Golden Eagle has apparently settled at a full fare price. According to The Hollywood Reporter, the settlement could be worth $30-40mm to UMG.

UMG’s Motion for Summary Judgment

Umg v Inflight (Umg Msj)

Global Eagle’s Response

UMG v Inflight (Inflight Res to UMG MSJ)

Judge Wu’s Tentative Order

UMG v Inflight (Order Re UMG MSJ)

Judge Wu’s Supplemental Order

UMG v Inflight (Supp Order Re UMG MSJ)

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.

Satellite Wars

It’s been a tough few weeks for satellite radio service Sirius XM. On August 1, former Frank Zappa bandmates Mark Volman and Howard Kaylan (a/k/a Flo & Eddie), who performed together as The Turtles since 1965 and are most known for the song “Happy Together,” sued Sirius XM in California state court over the alleged unauthorized reproduction, distribution and public performance of The Turtles sound recordings. Then, on August 15, Flo & Eddie sued Sirius XM in New York federal court over the same allegations. In both cases, Flo & Eddie seek to represent a class of similarly situated plaintiffs. In the California case, Flo & Eddie allege damages exceed $100,000,000.00. Finally, on August 26, SoundExchange sued Sirius XM in the federal district court for the District of Columbia over alleged underpayments of sound recording performance royalties. SoundExchange alleges that Sirius XM owes tens of millions of dollars in underpaid royalties.

At issue in each case is an anomaly of the protection of sound recordings in the Copyright Act. While musical works have been protected by federal copyright since 1831, sound recordings did not enjoy any federal copyright protection until 1972. In 1971, as technology advances made it easier for people to make unauthorized copies of records (think peer-to-peer file sharing in the physical world), Congress extended copyright protection to sound recordings, but only with respect to the exclusive right to reproduce and distribute and only for sound recordings “fixed” on or after February 15, 1972 (sound recordings fixed prior to that date are typically referred to as “pre-72”). There are a variety of reasons why Congress decided not to grant copyright protection to all sound recordings (e.g., apply the right retroactively), but one reason was the lobbying of the record industry, which claimed that applying federal copyright protection to pre-72 recordings would cause havoc on music industry agreements written before federal protection existed.

State law protection for pre-1972 sound recordings is a complicated subject. State protection of pre-1972 sound recordings is a patchwork of criminal laws, civil statutes and common law. Early cases relied principally on unfair competition to protect sound recordings from unauthorized duplication and sale. By the 1950s, record piracy had become a serious problem, with pirates openly competing with record companies. For that reason, in the 1960s, states began to pass laws making it a criminal offense to duplicate and distribute sound recordings, without authorization, for commercial purposes. New York was the first such state in 1967; California was the second, in 1968.

In addition to the criminal penalties, some states have statutes that provide civil remedies. Section 980(a)(2) of the California statute is a good example:

The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior sound recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording.

The most notable case in recent years involving pre-1972 sound recordings was Capitol Records, Inc. v. Naxos of America, Inc. At issue were recordings of classical music performances originally made in the 1930s. Capitol, with a license from EMI, the successor of the original recording company, remastered the recordings, and was distributing them in the United States. Naxos obtained the original lacquer masters and restored the recordings in the UK, where they were in the public domain, and began marketing them in the United States in competition with Capitol. Capitol sued in federal court for unfair competition, misappropriation and common law copyright infringement. The district court granted summary judgment to Naxos because the recordings were in the public domain in the UK, where they were originally recorded.

When that decision was appealed, the U.S. Court of Appeals for the Second Circuit concluded that New York law was unclear in some important respects and certified the question of state law to the New York Court of Appeals. The New York Court of Appeals accepted the case, and held that foreign sound recordings remain protected under “common law copyright” in New York until 2067, even though they may be in the public domain in their home country. The court explained that a common law copyright claim in New York “consists of two elements: (1) the existence of a valid copyright; and (2) unauthorized reproduction of the work protected by copyright.” It went on to state that “[c]opyright infringement is distinguishable from unfair competition, which in addition to unauthorized copying and distribution requires competition in the marketplace or similar actions designed for commercial benefit.”

In 2009 Congress asked the Copyright Office to investigate the appropriateness of extending federal copyright protection to pre-72 recordings. In December 2011, the Copyright Office released its report, entitled Federal Copyright Protection for Pre-1972 Sound Recordings, in which it recommended that federal copyright extended to pre-72 recordings. As the Copyright Office noted in that report,

“Until 1995 there was no public performance right in sound recordings under federal law, and it does not appear that, in practice, pre-1972 sound recordings had such protection. The current right provided by federal law applies only to digital audio transmissions (not to broadcasts) of copyrighted sound recordings. It is possible that a state court would entertain a claim for unfair competition or common law copyright infringement if, for example, it were faced with a claim that pre-1972 sound recordings were being made available through internet streaming, particularly if it were persuaded that the use was substituting for purchases of the plaintiff’s recording. But no such case has yet arisen.”

Well, now such case has arisen. There are significant issues yet to be resolved, not the least of which is how you certify a class of potential plaintiffs whose sound recordings were fixed over several decades under different recording contracts. More importantly, Sirius XM will have a host of available defenses (affirmative or otherwise) that courts—including the Supreme Court—have recently suggested need to be considered as part of the class certification process.

For example, in the on-going dispute over Google’s digitization of books, the Second Circuit recently delayed class certification to consider Google’s alleged fair use defense.

Putting aside the merits of Google’s claim that plaintiffs are not representative of the certified class—an argument which, in our view, may carry some force—we believe that the resolution of Google’s fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues, including those regarding the commonality of plaintiffs’ injuries, the typicality of their claims, and the predominance of common questions of law or fact, see Fed. R. Civ. P. 23(a)(2), (3), (b)(3). See, e.g., FPX, LLC v. Google, Inc., 276 F.R.D. 543, 551 (E.D. Tex. 2011) (denying plaintiffs’ request for class certification “because of the fact-specific inquiries the court would have to evaluate to address [defendants’] affirmative defenses [including fair use of trademarks]”); Vulcan Golf, LLC v. Google Inc., 254 F.R.D. 521, 531 (N.D. Ill. 2008) (“The existence of affirmative defenses [such as fair use of trademarks] which require individual resolution can be considered as part of the court’s analysis to determine whether individual issues predominate under Rule 23(b)(3).”); see also Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n.12 (1978) (“Evaluation of many of the questions entering into determination of class action questions is intimately involved with the merits of the claims. The typicality of the representative’s claims or defenses . . . and the presence of common questions of law or fact are obvious examples.” (quotation marks omitted)); Castano v. Am. Tobacco Co., 84 F.3d 734, 744 (5th Cir. 1996) (“[A] court must understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues.”); cf. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011) (holding that “a class cannot be certified on the premise that [a defendant] will not be entitled to litigate its statutory defenses to individual claims”). Moreover, we are persuaded that holding the issue of class certification in abeyance until Google’s fair use defense has been resolved will not prejudice the interests of either party during the projected proceedings before the District Court following remand. Accordingly, we vacate the District Court’s order of June 11, 2012 certifying plaintiffs’ proposed class, and we remand the cause to the District Court, for consideration of the fair use issues.

Even assuming a class can get certified, there are still significant issues facing the plaintiff, including, but not limited to, whether a public performance right exists in state common law, how to measure damages in the absence of the statutory remedy available under federal copyright, and the scope of individual state courts over out-of-state “infringements.”

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:
[scribd id=80819236 key=key-ccwxuuqfkh6vm4rid16 mode=list]

The District Court’s granting of summary judgment is here:
[scribd id=80819231 key=key-10dj2mhw5qztp6y9xl16 mode=list]

The District Court’s award of fees is here:
[scribd id=80819234 key=key-2le7xysisukyoclhhs27 mode=list]

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:
[scribd id=65490758 key=key-1mzyriiczt13zzgb8mg6 mode=list]

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:
[scribd id=60656112 key=key-1dd30lndhlkqyrg36ybd mode=list]

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:
[scribd id=52369214 key=key-22a33gm3e571yo3aq6kv mode=list]

Wyatt Glynn’s article is available by clicking here.

Launch Media’s Second Circuit brief is here:
[scribd id=52369224 key=key-1culbh3left0au03p194 mode=list]

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
[scribd id=51594464 key=key-eirb2r44i8f8q789nlj mode=list]

Defendant’s Response
[scribd id=51594476 key=key-1ys6k5cyw8msv4jgz3by mode=slideshow]

Plaintiff’s Motion re Multiple Awards
[scribd id=51594488 key=key-2gaw56fs3ukn3widotcz mode=list]

Judge Wood’s Opinion
[scribd id=51594494 key=key-2nv7zdi0jnhgmp38jouy mode=list]