Supreme Court : Copyright Infringement Cases, Different Outcomes

The record companies are happy today. Text book publishers and authors are not.

The Supreme Court has denied cert in the case of Jammie Thomas-Rasset, a native American who uploaded, downloaded or otherwise shared 24 songs on Kazaa, a now-defunct music file-sharing service, for personal use. The record companies sued, and the ultimate judgment against her, after several retrials and appeals with jury verdicts as high as $1.9 million, was $222,000, or $9,250 per song. The issue, according to the Petition for Cert (which includes the 8th Circuit and trial court's opinions in the Appendix portion):

Is there any constitutional limit to the statutory damages that can be imposed for downloading music online?

Under the copyright infringement statute, it's not necessary for the record company to show actual damages or that the infringer profited from the work. It can seek statutory damages, which allow up to $150,000 for each infringement.

The remedies section of the Copyright Act, 17 U.S.C. 504, provides:

§ 504. Remedies for infringement: Damages and profits

(a) In General. — Except as otherwise provided by this title, an infringer of copyright is liable for: either —

(1) the copyright owner’s actual damages and any additional profits of the infringer, as provided by subsection (b); or (2) statutory damages, as provided by subsection [c].

Under subsection [c]:

(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.

The innocence exception is very narrow (also section (2):

In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.

Thomas-Rasset claimed the statute was unconstitutional and violated her right to due process. In her petition for cert, her lawyers wrote:

Thomas–Rasset contends that the award of statutory damages against her violates the Due Process Clause because it is tied not to the actual injury that she caused or other features of her conduct, but to the injury caused by file sharing in general.

....Unable to show actual damages or profits on the part of the infringers, the recording companies have chosen to pursue statutory damages in this and every other file-sharing case against an individual defendant.

Statutory damages are an amount between $750 and $30,000 per work, “as the court considers just.” 17 U.S.C. 504[c](1). When the infringement is willful, the maximum is increased to $150,000 per work; when the infringement is innocent, the minimum is decreased to $200 per work. 17 U.S.C. 504[c](2). Thus, for willful infringement of the copyright in 24 songs, the statutory range is from $18,000 to $3,600,000.

When it comes to damages, the copyright act doesn't distinguish between different types of work:

It applies as much, for example, to stealing and publishing the advance copy of a presidential memoir, pirating and reselling copies of Microsoft Windows or Microsoft Office, exceeding the scope of a modern software license agreement, or staging a play as it does to downloading music using Napster or Kazaa.

Her lawyers argued:

It is the availability of music for free through file-sharing services like Kazaa that, the recording industry contends, was responsible for its collapse. But the uncontested evidence at trial was that (a) it is impossible, given the nature of filesharing networks, to determine whether any third party received a particular song from Thomas–Rasset as opposed to from another user of Kazaa and, more importantly, (b) even if Thomas–Rasset had never used Kazaa, the 24 popular songs at issue would nonetheless have been available, for free, from other Kazaa users.

Thomas–Rasset may have thrown one stick on the recording industry’s pyre, one stick out of tens of millions, but Napster, Kazaa, and the like were the ones who set it on fire.

As to why the case is important, they argued:

It is unfair, it is not due process, for an industry to sue 12,500 people and threaten to sue 5,000 more, wielding a statute for which they lobbied, under which they can threaten hundreds of thousands or millions of dollars in statutory damages, where the only way to resist is through modern, complex, expensive federal process, so that the only reasonable choice is to pay the settlement and be done. That’s extortion, not law. We cannot govern that way.

They also argued the case was of national importance because:

...copyright also governs software programs, and not just copying and distribution of those programs, but also their use — for the lower courts have held that exceeding the terms of a software license agreement can constitute copyright infringement.

By denying the Petition for Cert, the Supreme Court has let the judgment stand. Thomas-Rasset says if the music companies try to collect, she will file for bankruptcy.

But, in another copyright infringement case today, Kirtsaeng v. John Wiley & Sons, (opinion here) the Court threw out $600,000. verdict against a Thai student for reselling text books purchased abroad on E-Bay. The sales generated a $100,000. profit to the student.

the issue was whether U.S. copyright protection applies to items that are made abroad, purchased abroad and then resold in the U.S. without the permission of the manufacturer.

...Kirtsaeng sold $900,000 worth of books published abroad by Wiley and others and made about $100,000 in profit. The international editions of the textbooks were essentially the same as the more costly American editions. A jury in New York awarded Wiley $600,000 after deciding Kirtsaeng sold copies of eight Wiley textbooks without permission.

The explanation:

Justice Stephen Breyer said in his opinion for the court that once goods are sold lawfully, whether in the U.S. or elsewhere, publishers and manufacturers lose the protection of U.S. copyright law.

“We hold that the ‘first sale’ doctrine applies to copies of a copyrighted work lawfully made abroad,” Breyer said.

Reuters explains it this way:

By a 6-3 vote, the country's highest court said the "first sale doctrine" applies to copies of a copyrighted work lawfully made abroad.

The decision will provide support for the $63 billion gray market, in which third parties import brand-name goods protected by trademark or copyright into the United States.

Justices Ginsburg, Kagen and Alito dissented.

While the issues in the cases are different, the outcomes seem a bit contradictory to me. It is okay to bankrupt a music listener who shares 24 songs for personal enjoyment with no proven actual damages to the copyright holder, but E-Bay, Costco and other wholesalers can continue to make tens of billions off of copyrighted material in the "gray market", just so long as the work is not made or first sold in the U.S.

The Obama Administration backed the copyright holders in both cases.

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  • Display: Sort:
    That Is the Arguement... (none / 0) (#1)
    by ScottW714 on Tue Mar 19, 2013 at 03:30:17 PM EST
    ...that been used to cover music bought on foreign websites, namely Russian, that many folks like myself use.  If you were to buy it there on another media form, like CD, it would be legal to bring here if the purchase was legal.

    Not sure if that passes legal muster, but when the record industry makes that claim that it's illegal, they are being dishonest.  At best it's a grey area and this case may have settled it.

    Kazaa.  Using the same metric as this case, they could have come after me for zillions.  My only real limit was the fact that I was still using dial up at the time and would have to let my computer run all day for the downloads to complete.  Sucks for her, bad luck because a whole lot of folks traded a whole lot of music with the same program.  That program is what shifted me from CD's to MP3's.

    I would add that I download at lot of stuff I already own.  A CD's worth of MP3's ripped at a high quality bitrate go for ~$1.40 and they have all the meta data.  Takes 5 mins.  For me to do it, takes about 40 mins and I would have to import or type all the meta data, just not worth it.  Same for movies, converting a DVD with the copyright protection is a serious task, paying $4/5 to download a HD version for my tablet is well worth it.  And they have nearly any format/quality you could want. But the real plus is you pay for bandwith, not per song.

    My point, the record industry is so hell bent on copyright BS, that people who actually purchase the materials find themselves having to go to other markets in order to view/listen to it on multiple platforms.

    For example, why don't they include and MP3 version of a CD on the CD, or MP4 version on a DVD ?  Because they want you to buy the same material, again and again and again even though you purchased the rights to own it.  Greed is killing them.

    The entire entertainment industry ... (5.00 / 1) (#2)
    by Donald from Hawaii on Tue Mar 19, 2013 at 05:28:03 PM EST
    ... has long been a greedy and dirty industry. The executives running the joint first try to cheat the artists out of their rightful due at the front end, and then they try to gaff the consumer every which way you turn on the back end.

    While there's no doubt that technology has enhanced our lives, it's also rendered us that much more vulnerable to the sharks out there in the water, legal and otherwise.

    It was all just so much easier back in the day when we could record our own cassette tapes of our favorite tunes to listen to ourselves or share with others, and we never worried about copyright infringement. Like you, I was always under the impression that we already purchased the rights to the material when we bought the album / CD.

    And if we wanted to share with others what we were listening to, or make a duplicate copy for an extended road trip so we could leave the original at home, as long as we were not reproducing the material with the intent of selling copies to others, that was strictly our business. (Sigh!) That's not necessarily so anymore, apparently.

    I get the fact that there are a lot of pirates out there -- particularly overseas in China and eastern Europe -- who regularly cheat the industry out of untold fabulous sums of bucks, and I've really done my very best to ensure that our household does not possess pirated material.

    We taught our kids to not purchase CDs and movies from anyone who was not a licensed and reputable distributor, and to not download music files from Napster during the past controversy. They were only allowed to download and purchase music on iTunes.

    Unlike one right-wing friend of mine who brags about being able to download and listen to / view copyrighted material for free (well, at least she's consistent in her caveat emptor / kill-or-be-killed philosophy), I don't begrudge paying a fair market price for my family's entertainment products.

    But I do resent the entertainment industry's growing inference that when we purchase a copy of something on CD / DVD, we no longer really "own" that copy.


    Are you forgetting Bow Wow Wow? (none / 0) (#3)
    by parse on Tue Mar 19, 2013 at 07:52:26 PM EST
    Donald, have you forgotten Home Taping is Killing Music, the anti-copyright infringement campaign from the 1980s? The slogan was plastered over a skull and crossbones where the skull was a cassette tape with a warning underneath: And It's Illegal. The Bow Wow Wow single C30, C60, C90, Go! was pushback against the campaign.

    I couldn't have forgotten it, if ... (none / 0) (#4)
    by Donald from Hawaii on Tue Mar 19, 2013 at 09:52:33 PM EST
    ... I never heard of it in the first place. But then, I wasn't exactly the most well-informed young twentysomething during the Reagan / Bush, Sr. era. For me back in the day, it was all about having a good time. The enlightenment of my core being came later.

    Bow Wow Wow... (none / 0) (#6)
    by MileHi Hawkeye on Tue Mar 19, 2013 at 10:57:36 PM EST
    was put together by Malcolm McLaren with most of the original line-up of Adam and the Ants and featured then 13 year old Annabella Lwin on vocals. Big stink about her posing nude on the cover of their EP The Last of the Mohicans when she was 15.

    You'd probably remember I Want Candy if you'd seen the video on MTV.    


    I Absolutly Love... (none / 0) (#12)
    by ScottW714 on Wed Mar 20, 2013 at 10:09:44 AM EST
    ...the 5 second warning at the beginning of a DVD that states something like Piracy is Not a Victimless Crime.  Yeah, the victims are people like Suge Knight, Tommy Mottola, and an endless list of super rich crusty old dudes in music and pictures.

    Referring to themselves as victims makes me want to commit piracy.

    They could easily set-up a database so one could register legally acquired copyright materials, but they won't, because they live on new selling copyright material you already own.

    I have no qualms about getting my stuff somewhere else, because at every turn they screw everyone they can, and I won't support it.  I know exactly how many songs I have purchased in the US, one.  I know this because it's the only song I that can't be shared outside of iTunes and is really ticks me off.

    I guarantee, between all the mediums, I have one album, 'The Pros & Cons of Hitchhiking' that I have legally purchased at least 10 times.  IMO I should only have to purchase the rights to the music once, then when a new format comes out, or I lose it, I should be able to buy for the cost of the media.  Not the media and the copyright materials, I already own the former.

    A registry would eliminate that issue, but I would bet they make far more money from reselling the same copyright materials to the same people, than they lose from piracy.  

    Either way, it is not illegal to download copyright materials you already own, no matter the source, but unfortunately for the girl above, it is illegal to disseminate music, which was Kazaa's fatal flaw.


    There is no "contradiction" (none / 0) (#5)
    by expy on Tue Mar 19, 2013 at 10:31:38 PM EST
    because a denial of cert is not an adjudication on the merits. It is simply a statement from the Supreme Court that they don't particularly feel like taking up the issue, in the form that it is presented, at the present time.

    Based on the way the issue was framed in the Cert complaint, I can see why not. If the Supreme Court had taken up the case, then the issue would have been limited to whether the statutory damages were constitutionally excessive.

    In any case, given the framing of the issues, the two cases are unrelated. One case dealt with substantive interpretation of the statute; the other with calculation of damages.

    (The fact that the case involved "several retrials and appeals" may be a factor that makes it a rather messy case to take up)

    The decisions are wholly consistent (none / 0) (#7)
    by scribe on Wed Mar 20, 2013 at 05:03:50 AM EST
    In both of them, the poor/less powerful got it in the neck.

    In the downloading case, this is easily seen.  The individual was hammered and got no relief.  NB:  She shouldn't count on getting a discharge in bankruptcy.

    In the grey-market case, one must understand the purpose of copyright -  Wiley as a publisher was working to protect the stream of copyright royalties that, ultimately, would go to the authors who wrote those books.  Grey market books deprive the authors of royalties.  Getting deep into the weeds, the foreign-published editions of the books may well have had authors' royalties at a lower rate than the US-published.  Wiley may well have been contractually obligated to pay authors' royalties on US sales of the textbooks at the higher US rate than the lower foreign rate, thus exposing Wiley to a loss.

    Regardless, in upholding the first-sale doctrine - which is founded on long-standing precedent - the poorer, less powerful authors got screwed.

    As I understand it, most of the Wiley-published books were science/engineering texts.  That's a lot of Wiley's catalog.  Such texts usually have abundant problem sets in each section of each chapter, so going forward the authors and Wiley can thwart use of their foreign published editions in the US by making different problem sets for each edition.

    Nah (none / 0) (#9)
    by Big Tent Democrat on Wed Mar 20, 2013 at 07:21:35 AM EST
    Wiley loses money because it makes less profit on sale abroad (sort of like pharmaceuticals.)

    They do that anyway... (none / 0) (#11)
    by unitron on Wed Mar 20, 2013 at 08:14:28 AM EST

    "so going forward the authors and Wiley can thwart use of their foreign published editions in the US by making different problem sets for each edition."

    Every couple of years textbooks get a couple of chapters shuffled around and a few other changes so that next year's students have to buy new books and last years books are suddenly worthless.


    The decisions are not incompatible (none / 0) (#8)
    by Big Tent Democrat on Wed Mar 20, 2013 at 07:20:33 AM EST
    There was no first sale in the first case and there was a first sale in the second case.

    I think the second case was wrongly decided.

    Whether you agree with the law of statutory damages, it is constitutional. Due process was provided to prove innocent infringement.

    In the second case, while the argument for copyright license violation was colorable, in the end the first sale doctrine seems to me to be applicable to foreign sales.

    Full disclosure - I have an absolute conflict on both of these issues.

    The grey market case (none / 0) (#10)
    by Big Tent Democrat on Wed Mar 20, 2013 at 07:22:48 AM EST
    cuts against the interests of my clients to be clear.