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Judge slashes downloading penalty

Calls $675k award in BU student’s case ‘excessive’

By Jonathan Saltzman
Globe Staff / July 10, 2010

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In a major setback for the recording industry, a Boston judge yesterday slashed by 90 percent a $675,000 damages award that a Boston University graduate student had been ordered to pay to four record labels for illegally downloading 30 songs and sharing them online.

US District Court Judge Nancy Gertner ruled that the amount a federal jury ordered Joel Tenenbaum to pay last July was “unconstitutionally excessive’’ in light of what she described as the modest harm caused to the record labels. She cut the award to $67,500, one-tenth the original sum.

“There is no question that this reduced award is still severe, even harsh,’’ she wrote in a 62-page order. “It not only adequately compensates the plaintiffs for the relatively minor harm that Tenenbaum caused them; it sends a strong message that those who exploit peer-to-peer networks to unlawfully download and distribute copyrighted works run the risk of in curring substantial damages awards.’’

But the reduction, she said, also sends an equally important message that the constitutional protection against grossly excessive punitive awards in civil suits protects not only big corporations but “ordinary people like Joel Tenenbaum.’’

Congress, she said, never envisioned that the Digital Theft Deterrence Act of 1999 would subject people like Tenenbaum to huge statutory damages for violating copyright law through illegal file sharing.

Tenenbaum, who had not read the decision when a reporter called him yesterday afternoon, said he welcomed any reduction but he could not afford $67,500 either.

“It’s basically equally unpayable to me,’’ said the 26-year-old doctoral student in physics and former Providence resident who infringed on the copyrights of songs such as Nirvana’s “Come as You Are’’ and Beck’s “Loser.’’

The Recording Industry Association of America, a Washington-based trade group that represents the record labels, issued a statement saying, “With this decision, the court has substituted its judgment for that of 10 jurors as well as Congress.’’

Gertner’s ruling “appropriately recognized the egregious conduct’’ of Tenenbaum but dismissed the “profound economic and artistic harm’’ to the recording industry from illegal music sharing, the statement said. The RIAA said it would “contest this ruling’’ but declined to specify how.

Tenenbaum’s lawyer, Harvard Law professor Charles Nesson, said he is inclined to appeal the $67,500 award as still unconstitutionally excessive to the First Circuit Court of Appeals but must speak first with his client.

Nonetheless, Nesson praised Gertner for “recognizing the abusiveness of the copyright litigation campaign being conducted’’ by the recording and movie industries against people who illegally download music and films.

The lawsuit by the record labels against Tenenbaum was only the second in the nation to go to trial in a federal court.

A Minnesota woman, Jammie Thomas-Rasset, faced similar allegations and fought the recording industry in two federal trials. Earlier this year, a judge reduced a jury award of $1.9 million for the industry to $54,000 in her second trial, and the industry offered to settle the case with her for $25,000. Thomas-Rasset rejected the settlement, and the case is now poised to go to trial for a third time.

Tenenbaum is among thousands of people in recent years to receive letters from the RIAA demanding payment for illegal file sharing. The vast majority have settled out of court for $3,000 to $5,000.

In Tenenbaum’s case, the jury reached its verdict the day after he unapologetically admitted from the witness stand that he had illegally downloaded and shared hundreds of songs from 1999 to at least 2007 through peer-to-peer networks. The record labels presented evidence that he shared thousands of files.

Under the federal statute, Tenenbaum could have been ordered to pay as much as $150,000 for each song, or a total of $4.5 million, because the jury concluded that the infringements were “willful.’’ The law required that jurors award at least $750 for each infringement. The jury ended up awarding the labels $22,500 for each infringement, or $675,000 total.

Nesson had argued in February that Tenenbaum caused no more than $21 in damages to the labels for downloading and sharing 30 songs. If Tenenbaum had bought the songs legally on iTunes, Nesson explained, the student would have paid 99 cents for each, and the record labels would have received 70 cents from Apple.

In her ruling, Gertner wrote that Tenenbaum flouted the law for years by illegally sharing music online. His behavior, she wrote, was “hardly exemplary.’’

Nonetheless, she said, his actions were roughly comparable to those of Thomas-Rasset. After her second trial, a federal judge slashed the award for each infringement to $2,250, three times the statutory minimum of $750.

Gertner said that sum seemed appropriate and cut the award for each of Tenenbaum’s infringements to that amount.

“Some will undoubtedly murmur that my decision to draw the constitutional line at $2,250 per infringed work is to some extent arbitrary,’’ Gertner wrote. But the total of $67,500, she said, is “higher than I might have awarded in my own independent judgment and is the maximum that the Constitution will permit given the facts of this case.’’

Gertner rejected a key argument by the record labels that one cannot look at Tenenbaum’s actions in isolation given the economic impact of illegal downloading on the industry.

“While the plaintiffs argue that they have lost billions of dollars in revenue due to file sharing, the jury was not permitted to punish Tenenbaum for harm caused by other infringers,’’ she wrote.

Andrew Beckerman-Rodau, a professor at Suffolk Law School who specializes in intellectual property law, said yesterday that judges frequently reduce damages awards by jurors who are sometimes swayed by emotion. In this case, he said, it was hard for a jury to come up with a reasonable award because Congress set up a broad range of penalties for copyright infringements like Tenenbaum’s — from $750 to $150,000 per song.

The four labels that won the damages award are Sony BMG Music Entertainment, Warner Bros. Records Inc., Arista Records LLC, and UMG Recordings Inc.

After years of suing thousands of people for allegedly stealing music online — a tactic that created a public relations nightmare for the recording industry — the RIAA announced in December 2008 that it was going to stop filing suits. But it said it would continue to litigate cases that already were making their way through courts.

Saltzman can be reached at jsaltzman@globe.com.

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