US court awards $80,000 per song in key P2P filesharing case

Since 2003, the RIAA and major music labels have launched proceedings against approximately 35,000 users of online peer-to-peer (P2P) filesharing networks, including Kazaa.  The majority of users have settled rather than going to court, agreeing to payments of between USD$3,700 and $5,200.  However, Ms Thomas-Rasset refused to agree to a settlement and was the first user to take her case to court.

In October 2007, her defence became a high-profile test case.  Ms Thomas-Rasset was found guilty of copyright infringement and ordered to pay USD$222,000 in damages, or $9,250 per song.  However, due to a faulty jury instruction, the verdict was annulled and a retrial was ordered.  At retrial last week, the jury was even less symphathetic to her case, and ordered her to pay approximately USD$80,000 per song.  The retail price of the music on iTunes was approximately $80.

Why the significant increase in damages?  Under the Copyright Act 1976 (US), a jury has a wide discretion to order damages between USD$750 and $150,000 per infringement.  The almost tenfold increase damages at last week’s retrial indicates that the jury may have taken on board some of the prosecution’s key points about the need for deterrence and the questionable nature of the defence’s evidence.   

Interestingly, some commentators have foreshadowed a potential legislative backlash against the record industry, in light of the enormous damages award.  Such a backlash seems particularly likely if RIAA and the major music labels actually attempt to enforce the damages order.  However, for her part, Ms Thomas-Rasset has indicated that such an attempt is unlikely to be successful, saying: “Good luck trying to get it from me … it’s like squeezing blood from a turnip”.

Meanwhile, a recent study by economists at Harvard University casts doubt on the methods used to assess damages in online infringement cases, suggesting that in some cases, P2P filesharing may actually carry significant societal benefits.

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