‘Tenenbaum’ P2P Case Goes Back to Trial Court, $675,000 Damages Reinstated
Don’t answer a constitutional question when common-law questions are on the table, the First U.S. Circuit Court of Appeals said, reinstating a $675,000 damages award against P2P defendant Joel Tenenbaum and sending the case back to the U.S. District Court in Boston for further proceedings. U.S. District Judge Nancy Gertner had reduced the award to $67,500 -- triple the $750 minimum in the Copyright Act, multiplied by 30 infringed songs -- on due-process grounds last year, saying Congress never intended the broad statutory penalties in the law to apply to noncommercial infringers (WID July 13/10 p3). In an opinion by the three-judge panel written by Chief Judge Sandra Lynch, the appeals court rejected all of Tenenbaum’s arguments and agreed with the U.S., which had intervened to defend the constitutionality of statutory penalties, and said the common-law “remittitur” question had to be answered.
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But in another troubling development for the record labels, Lynch suggested Congress undertake its own review. “We comment that this case raises concerns about application of the Copyright Act which Congress may wish to examine,” Lynch said, echoing in spirit -- though not in passion or at length -- the argument by U.S. District Judge Michael Davis in Minneapolis in overturning a $1.92 million P2P damages award against Jammie Thomas-Rasset last year. Sony v. Tenenbaum follows the arc of Capitol v. Thomas-Rasset in another way: Davis considered remittitur arguments in a second damages trial and then the due-process question in a third trial, knocking down damages to just $54,000 (WID July 25 p5).
Tenenbaum’s argument that statutory penalties don’t apply to “consumer copiers,” which wasn’t advanced in trial, is wrong in any case, Lynch said. The former grad student “widely and repeatedly copied works belonging to Sony and then illegally distributed those works to others, who also did not pay Sony,” and Tenenbaum swapped music for “private gain,” the opinion said. The Copyright Act doesn’t refer to “consumers” at all, much less as excluded from penalties, and says the penalties apply to “anyone,” Lynch said: Where Congress wanted to tailor the law’s applicability, it did so, for example in establishing the fair-use defense and setting higher penalties for willful infringement. The Audio Home Recording Act is a specific example of Congress exempting from liability a “noncommercial use by a consumer” in some situations, Lynch said.
Congress even acknowledged that noncommercial consumer copying was a threat to the content industry in the legislative history of its 1999 update to the law, the opinion said. In a footnote responding to Tenenbaum’s claim that Napster was a month short of launching when the 1999 update bill was introduced, and thus P2P sharing hadn’t been contemplated, Lynch said Napster was “operational” when the bill was signed in December 1999. The 1997 NET Act, which allowed criminal penalties for infringement with no commercial gain, also confirms Congress wanted to punish infringement of any kind, the judge said. Finally, Lynch defended a hard separation between actual and statutory damages, saying the latter need not have any relation to the former and that the 4th and 9th circuit appeals courts had reached the same conclusion.
Gertner was wrong to assume the constitutional question was “inevitable” and remittitur consideration would needlessly prolong the case, Lynch said: “A decision on a constitutional due process question was not necessary, was not inevitable, had considerable impermissible consequences, and contravened the rule of constitutional avoidance.” Sony could have accepted a reduced damages award under remittitur or asked for a new trial, Lynch said. Gertner answered other disputed constitutional questions, evaluating the statutory damages award under the standard for punitive damages and resolving a Seventh Amendment question on whether a plaintiff must be offered a new jury trial, the opinion said.
In an extended discussion of the proceedings in Gertner’s courtroom -- in which Sony’s lawyer said it was unlikely the label would accept reduced damages on remittitur -- Lynch said Gertner had violated the “bedrock” principle of judicial restraint with constitutional questions: “No valid reason justified abandonment of this doctrine in this case.” A new trial requested by Sony “could have materially reshaped the nature of the constitutional issue by altering the amount of the award at issue or even the existence on which to evaluate whether a particular award was excessive,” the opinion said.
Gertner waded into particularly contentious territory by conflating the standards for review of statutory and punitive damages awards as determined by the Supreme Court, Lynch said. That’s especially so because some appeals courts, including the First Circuit, have held under the Seventh Amendment that judges can reduce punitive damages awards without offering a new trial, but not statutory awards, Lynch added. Yet the opinion concluded with affirmation for Gertner. “This was a difficult and contentious case and the parties received a fair trial from an admirably patient and able district judge,” Lynch said.