Saturday, March 28, 2009

Constitutionality of Copyright Statutory Damages - Free IP CLE on IP Colloquium

Professor Doug Lichtman of UCLA has put together an amazing series of monthly podcast CLE (Continuing Legal Education) programs available for free at These programs can be downloaded and listened to on your Ipod. Following the program, you submit the verification passwords and get CLE from your local jurisdiction.

The February 2009 program on statutory damages was lively, engaging and professionally-produced. Lichtman interviewed Charles Nesson of Harvard, who has taken on the defense of a young person accused of downloading seven songs and then making the songs available for others to copy.

Lichtman then interviews a series of experts on punitive damages, discussing the factors that may go into a jury determination on punitive damages.

In concluding the program, Lichtman steps outside the traditional role of moderator and concludes that Nesson is wrong. I am not entirely persuaded that Nesson is wrong, and I think that he made some powerful and troubling arguments that were perhaps too quickly discounted. The facts in Nesson's case are quite troubling, as are the RIAA's attacks on minors and the impecunious. I think it likely that some federal judges may agree that the RIAA has gamed the federal court system by aiming its efforts at those who can't fight back.

I look forward to checking out the IP Colloquium's other programs. If the program on statutory damages is typical, these programs should be an entertaining, thought-provoking way of getting CLE credits.


charlie nesson said...

nicely said

Doug Lichtman said...

Ray -

Thanks so much for the post. I'm really glad that you like the shows, and we're working hard to make them better all the time.

On this one, one quick response to the remark about my stepping out of the moderator role and disagreeing with Charlie:

Although the show engages a wide range of issues, there end up being two primary questions raised over the course of the hour:

1. First, can a civil case ever become so focused on punishment or deterrence that it crosses some constitutional line and as a result must be re-characterized as criminal? That’s an important question not only because criminal cases have to be brought by the government, but also because criminal cases have to afford the accused certain heightened procedural protections.

2. Second, whether civil or criminal, what limitations does the due process clause impose on a statutory damages regime? For instance, are there specific types of information that a court is not allowed to use when choosing a number from of the statutory range? Or, conversely, are there specific facts that a plaintiff must prove before a statutory range is permissible?

The conversation does in the end leave me disagreeing with Charlie at most turns. Specifically, on the first question, I think it’s pretty clear that Professor Nesson is wrong to the extent he is trying to argue that these music industry cases cross the line from civil to criminal and, because of that, are unconstitutional. The statutory damages regime in general, and the statutory damages regime as applied here, both seem to fall well within the range of cases where courts defer to the civil label as chosen by Congress.

That said, the Due Process clause of the Constitution does have some work to do with respect to statutory damages. For one thing, after a damages award is chosen in any specific case, the court has an obligation to check that the resulting number is not excessive in light of the law’s legitimate interests in compensation, deterrence, and punishment. I think Charlie and I likely agree on this principle in the abstract, but we then disagree on how to run the numbers – with Charlie’s analysis implausibly running somewhere in the pennies, and my own back-of-the-envelope analysis not only suggesting that actual harm is likely much higher, but also seeing room for a much bigger award that would meaningfully deter this type of infringement.

The Due Process clause also has work to do when it comes to establishing what evidence can and maybe must be used when a court picks a number from within the statutory range. Considerations along these lines would seem to be things like the actual harm caused; the likelihood that this defendant might have avoided detection; and even the defendant’s own wealth, because that gives us a clue about what it would take to deter him. This leaves me at odds with Charlie yet again – primarily because Charlie seems to think that the lack of a commercial purpose is somehow a Holy Grail in the analysis, yet I see the lack of a commercial purpose as just one among many relevant inputs.

Our differences aside, however, I think Charlie and I (and you too, I think) sit here today uncomfortable with the reality on the ground – civil cases, brought against individuals, where the individuals are sympathetic in the sense that they are typically outgunned by the music industry’s lawyers, and, although it is no excuse, they are doing something that thousands upon thousands of their peers also do. Indeed, I’ve been uncomfortable with that aspect of these cases for years now (see, and that discomfort has long led me to prefer legal rules that would hold intermediaries like ISPs and universities accountable for the behavior of the relevant individuals. Those entities would then be in a good position, and also have the right incentives, to influence individual behavior.

My guess, then, is that you and I both think Charlie is right on some of the emotions that motivate his case, but you and I probably would both end up thinking his actual legal arguments are deeply flawed and (from my perspective at least) not the right way to champion the cause he understandably wishes to champion.

Again, anyone reading who is interested caan listen to the full podcast here: (And, for attorneys who listen, don’t forget that you can earn free CLE credit by registering on the site. All of our previous programs have been approved in New York, California, Illinois, Texas, and Washington.)

Ray Dowd said...

Doug - Thanks, but the reasons that I think Charlie may be correct are not the ones you give - aside from the emotional arguments, imposing potential damages that to me are so breathtakingly excessive and crippling to an individual without any clear standards seems to be penal in nature. If you are accused of stealing a car, you receive certain procedural protections before losing all of your property, being bankrupted, etc. At least we know that the legislature knows what a car is. As Charlie argued, we've got some kid making a few mouse clicks. Certainly non-violent, and certainly he's not hitting the lottery - he's getting music, not cash. If you look at criminal larceny statutes, penalties are based on value. If you steal a $500 car, it's a certain penalty. If you steal a $30,000 car, it's another. That's because legislatures have to think about these issues before whacking people senselessly. Punishing kids for stealing stuff is traditionally the role of the penal system. The damages penalties imposed are criminal-level, if not more. I didn't jot down all of the factors that your expert listed, but it seems like Charlie could be persuasive.

What you are saying is that Charlie says it's pennies, you'd like to look at the guy's wallet before deciding, and the plain language of the statute teaches us that Congress hasn't given the courts any guidance.

My understanding is that RIAA asked Tenenbaum for $3,500. He mailed them $500 that they rejected. Then, years later they sued and demanded $12,500 to make it go away.

In the real world, this sounds awfully arbitrary and a lot more like extortion. Why? The price of a car or anything you contract for doesn't go 3X just because a lawyer says so. You've got an uncertain criminal-like penalty hanging over Tenenbaum's head, based on the degree of legal heat aimed at him. Sounds pretty arbitrary.

Your argument over whether Tenenbaum's act is truly pernicious -- "is it moisture in the cloud" is interesting, but is the type of information and debate that a legislature should engage in. We distinguish between jaywalking and mowing down civilians in the non-IP world.

I am not so sure that the uncritical sympathy for the record company's bottom line is really going to fly before a Boston judge - there are not so many record companies in Boston, but I think over 90 colleges.

In the Feltner copyright case, the judge awarded $8.6 million in statutory damages and the jury on remand awarded over $30 million. What happened there? Sounds awfully arbitrary.


Doug Lichtman said...

Ray -

I don't think that the Due Process clause requires that the statute itself list out the factors explicitly. You are right that there ought to be factors and they ought to distinguish between theft of a Cadillac and theft of a Matchbox car. But there are factors. For instance, many of the Circuits have standing model jury instructions that talk to the jury about how to pick an appropriate number based on likely harm, the need for deterrence, and so on. So I think it's not quite fair to say that these are standardless cases. The standard is not laid out fully in the statute; it is done primarily through jury instructions, which as you know are tailored for each case through a back-and-forth between the court and the lawyers; and that sounds a lot like most other areas of law, where the statute sets out a broad articulation of damages and the courts fill in the details through model rules and case precedent. (Patent law damages come to mind, for obvious reasons.)

Your point about settlement also strikes me as a little unfair. Of course private parties have a lot of discretion to decide what settlement offer to make, and that number of course moves as a case moves forward and both sides have spent more and learned more. That's not evidence of the law being arbitrary and, again, it's what we see all over the law.

p.s. Not sure if you saw, but today Lessig commented publicly about the case and reaffirmed his view that P2P file-sharing is both wrong and illegal. (Lessig's remarks are posted on Nesson's personal blog.)

Ray Dowd said...

Doug Thank you for the great debate, I have really shied away from polemics on this blog, but this is a good break from that.

One last thought from me - Lessig would probably agree that jaywalking is wrong and illegal. In California, you give out tickets and mow over pedestrians. In New York, pedestrians have absolute right of way and jaywalking is seen as a necessary evil if you want to get anywhere on time and is generally tolerated.

So even if we agree that something is wrong and illegal doesn't mean that we think people should be fined or killed for it. Whether a Boston judge wants to ok a tremendous transfer payment to the LA and New York copyright economies --- after Charlie Nesson starts working him over with one of those "a man's home is his castle" libertarian arguments... again, as I wrote originally, I am not entirely persuaded that he is wrong, and I think he's got a better chance than you give him.

I concede that your arguments may well work in a larger corporate or commercial context for an infringer, and in those cases we are usually talking about disputes between entities that have limited liability because of their corporate form, but at the micro/individual level when you are going after a student or families for $$ they don't have, it gets a lot tougher factually for the RIAA. The law expects that we are nicer and fairer to consumers and that there is unequal bargaining power.

One man's "settlement discussion" is another man's "unfair debt collection practices" and if Charlie's Harvard students ever latch onto such blue collar concepts, the RIAA could have a real fight on their hands. In real litigation, use the law that wins your client's case.

But even if you are counting Supreme Court votes, remember that Chief Justice Roberts got Elvin Feltner the right to a jury trial after a judge hit him with $8.6 million in damages - then the jury on remand came back with over $30 million in STATUTORY damages against him - surely Roberts knows that juries with too many factors to juggle cannot do the work of a legislature.

Ray Beckerman said...

Dear Ray,
I was disappointed in the colloquium. I felt that most of the important caselaw and scholarship was omitted from the discussion, and that the relationship between the several applicable Supreme Court cases was never explored in the context of statutory damages. The amicus briefs I submitted in SONY BMG Music Entertainment v. Tenenbaum and in SONY BMG Music Entertainment v. Cloud include what I felt this colloquium omitted.
Best regards