Third Time Should Charm RIAA

Posted by Cyberbear on November 24, 2010 in Intellectual Property, Internet, Litigation |

Posted By: Ronald Rasmussen


Chief Judge Michael J. Davis of the U.S. District Court of Minnesota needs to let stand the recent $1.5 million verdict against Jammie Thomas-Rasset. No matter what he decides, the case is likely headed to the 8th Circuit Court of Appeals, and Judge Davis is unlikely to aid in reaching a resolution of the case at this point by again reducing the award.

Thomas-Rasset’s first trial in 2007 resulted in a $222,000 judgment against her, before Judge Davis declared a mistrial based on his jury instructions. Her second trial in 2009 resulted in a $1.92 million judgment against her. In January 2010, Judge Davis called the award “monstrous and shocking.” Applying the remittitur doctrine following a motion filed by Thomas-Rasset’s legal team, Judge Davis reduced the award to $54,000, or $2250 for each of the 24 songs. Plaintiffs at that point had a choice between accepting the reduced award, or submitting to a new trial on the issue of damages. Plaintiffs rejected the reduced award, arguing that it would set a precedent of a “damages cap” on noncommercial infringement. The RIAA was willing to settle with Thomas-Rasset for $25,000 and an admission of guilt, but no settlement was reached.

Thomas-Nasset and the RIAA were unable to reach agreement on an actual settlement amount, so Judge Davis ordered a new jury trial on the issue of damages only. On Nov. 3, 2010, after two hours of deliberation, the jury awarded the RIAA a verdict of $1.5 million, $62,500 for each of the 24 songs.

This infringement case was brought under the U.S. Copyright Act, with damages according to 17 U.S.C. §504. The statute provides that the copyright owner can recover either actual damages or statutory damages. The minimum statutory damages are $750 per infringed work, and the maximum damages for willful infringement may be up to $150,000 per infringed work, in the court’s discretion. The recent jury award represents damages of $62,500 per song, right in the middle range of the statutory damages permitted. It’s clear that the RIAA’s actual damages for downloading 24 individual songs in this situation would be more along the lines of $24, so choosing statutory damages was the only logical route for them to pursue. Judge Davis thought damages above $2250 per song would be too much in this noncommercial infringement situation, a figure representing three times the minimum statutory damages of $750.

If Judge Davis again reduces the award, he will be going against the damages imposed by three juries, and once again plaintiff RIAA is unlikely to accept a reduced amount. At this point, having “won” with three juries, RIAA has little reason to accept a reduced amount, or even a low out-of-court settlement, for that matter. They have invested the money in litigation to get it this far, and they need to continue to support the precedent that has been set. The litigation has showed that neither party will be happy even with a reduced award, so there’s slim opportunity for Judge Davis to reduce the award and “exit gracefully” with a closed and finalized decision. Appeal is likely forthcoming, so why overrule a third jury award?

If Judge Davis lets the award stand, the defendant and plaintiffs can still settle on an agreed amount. If the award stands, Thomas-Rasset can appeal the award as unreasonable, because the award is so large in relationship to the actual damages, and it will be up to the 8th Circuit Court of Appeals or perhaps the Supreme Court. Looking to the future, if Congress finds the award offensively high, they can change the statutory damages for cases of noncommercial, personal use, infringement.

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