First Circuit Finds $22,500 Is A Fair Amount Of Statutory Damages For Each Willful Copyright Infringement

The First Circuit affirmed a $675,000 statutory damages award for copyright infringement, finding no violation of the defendant’s right to due process.  Sony BMG Music Entertainment, et al. v. Tenenbaum, Case No. 12-2146 (1st Cir. June 25, 2013) (available here).  Sony sued Tenenbaum for statutory damages and injunctive relief stemming from Tenenbaum’s illegal download and sharing of copyrighted music on peer-to-peer networks.  A jury awarded Sony $675,000 in statutory damages and Tenenbaum appealed, arguing that the damages amount violates his constitutional right to due process of the law.  The First Circuit disagreed with Tenenbaum and affirmed the award.

From 1999 to 2007, Tenenbaum illegally downloaded and shared thousands of copyrighted songs.  He knew his conduct was illegal and ignored warnings from his family, his college, and recording companies.  In 2007, Sony sued Tenenbaum under the Copyright Act for thirty copyrighted works.  Tenenbaum originally lied about his activities, but admitted to distributing as many as five thousand songs at trial.  The jury found that his actions were willful and awarded Sony $675,000, which is $22,5000 for each of the thirty songs.  The Copyright Act permits statutory damages between $750 and $150,000 for each willful violation.  17 U.S.C. § 504(c).  Tenenbaum moved to reduce the award, arguing remittitur and violation of due process.  The lower court ignored the remittitur issue and reduced the amount of the award to $67,500.  The lower court relied on BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), where the Supreme Court held that an excessive award of punitive damages can violate due process.  Sony appealed the reduction, and the First Circuit held that the lower court applied the wrong standard.  Instead, the lower court should have applied the standard in St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63 (1919), where the Supreme Court considered the constitutionality of an award of statutory damages.  On remand, the lower court reinstated the original award amount of $675,000.  Tenenbaum appealed the amount of the award, arguing due process violations.

To start, the First Circuit determined the correct standard for reviewing the constitutionality of an award of statutory damages under the Copyright Act.  The Williams case held that a statutory damage award violates due process only “where the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.” Williams, 251 at 66-67.  The Gore case discussed when punitive damages violate due process.  As such, the lower court in this case correctly applied the Williams standard because the jury awarded Sony statutory damages.

Second, the Court considered the constitutionality of the award against Tenenbaum.  The purpose of statutory damages is to provide the plaintiff with reparation from the injuries caused and to discourage wrongful conduct.  Sony presented evidence of loss of value of the copyrights, loss of income and profits, and job cuts.  “The evidence of Tenenbaum’s copyright infringement easily justifies the conclusion that his conduct was egregious. Tenenbaum carried on his activities for
years in spite of numerous warnings, he made thousands of songs available illegally, and he denied responsibility during discovery.”  Tenenbaum, Slip Op. P. 8.  As such, the First Circuit found that $22,500 per infringement, which is only 15% of the maximum award for willful violations and less than the maximum award for non-willful violations, complies with constitutional due process.  The First Circuit affirmed the $675,000 amount of damages.

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