Recent, high-profile damages awards in the two online-music-sharing copyright lawsuits that have gone to trial – involving defendants Joel Tenenbaum in Massachusetts and Jammie Thomas-Rasset in Minnesota – leave unanswered questions regarding just how high copyright damages can go in copyright actions under other circumstances.
On July 31, 2009, the Tenenbaum jury returned its verdict that the defendant (a Boston University graduate student) should pay $675,000 in statutory damages to several different record labels for sharing copyrighted songs over the Internet on peer-to-peer networks. The Thomas-Rasset jury’s verdict was even higher, ordering the defendant there – a natural resources coordinator for the Mille Lacs Band of Ojibwe Indians – to pay $1.92 million to several labels under similar factual circumstances. Each defendant has vowed to pursue a reduction in damages or to appeal the verdicts based on the Supreme Court’s suggestion in other circumstances that punitive damages awards greater than 10 times actual damages are unconstitutional. In each of these cases, the damages awarded are many times higher than the amounts the defendants claim to be able to pay without filing for bankruptcy protection. The Recording Industry Association of America (RIAA) certainly is aware of this, undoubtedly making the magnitude of the awards most valuable to it and its member music distributors as useful examples to help coerce other, potential defendants into accepting settlement on the RIAA’s terms.
Many businesses are justifiably concerned regarding the implication of these recent awards, to the extent that software companies and their representatives – such as the Business Software Alliance (BSA) or the Software & Information Industry Association (SIIA) – might attempt to use them in the context of settling claims of software copyright infringement. In fact, the attorneys at Scott & Scott already have noticed that attorneys for software publishers and trade groups have begun to reference the awards in the music download cases in order to force their clients’ points at settlement. From this perspective, the cases are a good reminder of the importance of implementing solid software asset management practices in order to prevent the significant exposure that could result from a BSA or SIIA software audit.
However, it is also important to keep in mind that the circumstances surrounding allegations of software copyright infringement often depart substantially from the circumstances in the music cases. In many cases, business owners and managers may be wholly unaware of any unlicensed software use in their organization, and in some cases, the fault for any non-compliance may rest in the hands of the individuals who are acting as the confidential sources of the BSA’s or SIIA’s information. Every case is different, and a business’ attorneys should be prepared and able to distinguish the facts at hand in a dispute from the facts of cases that a claimant may use to argue for excessive settlement amounts.
It is also important to keep in mind that these high-profile music cases may serve as catalysts for judicial or legislative action on the issue of the maximum damages available for copyright infringement. It will be very interesting to watch development in this area.
Posted by Marketing Department at 09/03/2009 11:50:24 AM