[See update below regarding the “downloading” and “sharing” distinction.]
Green Day’s “Minority” is available for $0.99 on Amazon MP3.
Joel Tenenbaum will pay $22,500 for it (a total of $675,000 for 30 songs) because he downloaded and shared it through KaZaA, a peer-to-peer network.
Since Warner Music apparently didn’t bother proving any actual damages beyond the $0.99 for Tenenbaum’s personal use of the song, we must assume that $21,499.01 of the award is for punitive damages.*
Tenenbaum and other activists have argued such an award is unconstitutional. The issue is “unsettled,” but doesn’t look good for Tenenbaum: previously, in Eldred and Grokster, the Supreme Court bent over backwards for copyright owners by, respectively, nullifying a clause of the United States Constitution and inventing an entirely new federal common law cause of action for copyright holders.
If the Tenenbaum situation had been reversed — if Warner Music had ripped off Tenenbaum by fraudulently selling him an MP3 then revoking his access to it, which Warner (through the RIAA) claims they can do — then there would be no question on the limit of the punitive damages. As the Supreme Court held in State Farm v. Campbell:
Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. In Has lip, in upholding a punitive damages award, we concluded that an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. 499 U. S., at 23-24. We cited that 4-to-1 ratio again in Gore. 517 U. S., at 581. The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing for sanctions of double, treble, or quadruple damages to deter and punish. Id., at 581, and n. 33. While these ratios are not binding, they are instructive. They demonstrate what should be obvious: Single-digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1, id., at 582, or, in this case, of 145 to 1.
The unconstitutional 145-to-1 verdict is but a tiny fraction of the 21,716-to-1 awarded against Tenenbaum. Tenenbaum’s award is thus a no-brainer under existing due process / constitutional precedent: it’s grossly excessive and unreasonable.
The only question is if we have one set of laws for lawsuits against big corporations and another set for lawsuits by big corporations.
* * *
* Footnote: The verdict won’t separate “compensatory” from “punitive” damages, it will simply call the whole sum “statutory damages.” Unlike every other field of law, federal copyright statutes permit copyright holders to waive “actual damages” in favor of absurdly large “statutory damages” of up to $150,000 per infringement if the infringement was “willful.”
But let’s be serious: any award over proven actual damages is undoubtedly “punitive.” Congress can’t just legislate its way around a constitutional right by calling a duck a goose.
[UPDATE: A number of commentators on other sites have drawn distinctions between downloading music and sharing it, pointing out that the latter is the infringement typically at issue.
That’s correct, but it’s irrelevant here, because the record company elected statutory damages, relieving them of any burden to prove actual damages from the sharing. That’s the whole problem: under statutory damages, the record company need only prove “infringement” — and not the extent or nature of it — to avail themselves of grossly excessive punitive damages.]