In 2007, a coalition of four music labels sued Joel Tenenbaum, a graduate student at Boston University, for downloading and sharing 30 songs using file-sharing software like Kazaa or Limewire. The case in itself may not seem particularly significant. The music industry, usually through the auspices of the Recording Industry Association of America (RIAA), launched about 18,000 of these cases throughout the previous decade. The vast majority of those cases were settled out of court, for the amount of $4,000 on average.
Only two of those cases went to a full trial, both of which involved much higher sums. The first case, Capitol v. Thomas, involved some weirdly fluctuating and absurdly staggering figures. The original ruling in 2007 ruled that the defendant owed $220,000 in damages (about $9,250 per song). A legal technicality, however, caused a new trial that was settled in 2009. This time, the defendant was penalized $1.92 million until a judge lowered it to $54,000. Of course, the record labels found the 97% reduction a little excessive (unlike their multi-thousand dollar fine) so there was a third trial, which resulted in a penalty of $1.5 million before being reduced, again, to $54,000. The record labels appealed, again, and, as of last September, the original penalty of $220,000 was imposed.
Tenenbaum's case, Sony BMG vs. Tenenbaum, went through a less tumultuous route. In 2009, the Court ruled that Tenenbaum owed $675,000 in damages for downloading and sharing 30 songs. A subsequent attempt by the record companies to prevent Tenenbuam from criticizing the verdict and the record companies failed. He launched an appeal soon after on the grounds of disproportionate damages. At the beginning of 2010, the Obama administration announced that they supported the verdict on the grounds that copyright infringement “creates a public harm that Congress determined must be deterred.” Yesterday, the Federal Appeals Court upheld the verdict and called Tenenbaum’s actions “egregious.”
Why are the penalties in these cases so steep? Tenenbaum argued that he owed around $450 in damages, the equivalent of 30 music albums. Yes, the courts have the precedent of assigning statutory damages. But at a minimum, the smallest penalty was $50,000 more than the average out-of-court counterpart. It appears that these steep penalties come from attempts at deterrence, both by the record industry to prosecute individuals and by Congress in attempting to stop copyright infringement.
Yet, it is also true that file sharing and illegal downloads no longer command the attention of the public that it once did. The RIAA has even abandoned its efforts to prosecute individuals with extreme damages. Legal actions now operate against the owners and operators of file sharing sites, such as the recent conviction of Pirate Bay's founder and the wiping of Megavideo's servers. While torrents remain popular, streaming services like Spotify have basically replaced file-sharing services.
So deterrence may not even matter anymore. Indeed, the news around yesterday’s ruling seemed like an afterthought, a forgotten legal case from another digital era. All that is left are the plaintiffs facing hundreds of thousands in damages. To be clear, the defendants are guilty of violating the law. But the Supreme Court once ruled that statutory damages violate due process when they are arbitrary, unreasonable, and disproportional to the actual damages sustained. It is a little surprising to think that these damages do not meet those legal standards.