Sony BMG v. Tenenbaum: District Court Erred in Finding Statutory Copyright Damages Unconstitutional

On September 16, 2011, the First Circuit reversed the district court’s opinion in Sony BMG v. Tenenbaum — which found a jury verdict awarding statutory damages to plaintiffs to be unconstitutional and reduced the amount of damages on that ground — thereby reinstating the jury’s award of $675,000 to the plaintiff copyright holders.

Background of the appeal

The 65-page ruling stems from one of only two cases to have gone to trial in the group of lawsuits brought by record companies against individual file-sharers. The legal issues on appeal arose from a five-day trial in 2009, which pitted Sony BMG and other record companies against Joel Tenenbaum. Sony alleged that Tenenbaum willfully infringed the copyrights of thirty music recordings by using file sharing software, such as Napster, to download and distribute those recordings without authorization; although Sony pursued claims on only thirty copyrighted works, it presented evidence at trial that Tenenbaum willfully violated thousands of copyrights.

Section 504(c) of the Copyright Act authorizes damages in the range of $750 to $150,000 per willful act of infringement. At the close of the 2009 trial, the jury found that all thirty acts of infringement by Tenenbaum had been willful and awarded a judgment to the plaintiffs in the amount of $22,500 per infringement, an amount well within the statutory range set by Congress. Tenenbaum then filed a post-trial motion seeking a reduction of the jury’s award, arguing that (i) common law remittitur was appropriate in his case, and (ii) the award was excessive such that it violated due process.

Remittitur is a process whereby a court deems an award to be excessive; the court will order the plaintiff to remit a particular amount of the award. However, the plaintiff has the discretion of accepting the reduced award, or rejecting the remittitur in which case a new trial for damages would ensue.

The district court declined to decide Tenenbaum’s motion on the remittitur issue, reasoning that Sony would not likely agree to a reduction of the award, thereby requiring a new trial on the issue of damages. Proceeding to constitutional analysis, the district court found that the jury award was excessive to the point that it violated due process and reduced the award from $22,500 per infringement to $2,250 per infringement.

The First Circuit’s decision and order

On appeal, the First Circuit held that the district court was wrong to reduce the jury award on the grounds that it violated due process. Although the ruling appears to be an immediate victory for copyright holders, the First Circuit’s reversal was based mainly on procedural error. The canon of constitutional avoidance is a long standing principle of judicial restraint that requires courts to avoid reaching constitutional questions when a matter can be decided on other grounds. In this case, the district court erred by not first deciding the issue of reducing damages according to remittitur. Had the district court ordered remittitur, it would have avoided not only the due process consideration, but also the unnecessary resolution of issues arising under the Seventh Amendment, specifically, whether a statutory damage award under the Copyright Act may be reduced without offering the plaintiffs a new trial. Accordingly, the First Circuit remanded the case to the district court in order to decide the issue of whether remittitur is appropriate.

It should be noted that the First Circuit rejected additional arguments made by Tenenbaum on appeal, including an argument that “consumer copiers” such as himself are not subject to the Copyright Act. The court explained that even if Tenenbaum was a so called “consumer copier”, which it decided he was not, the clear language of the Copyright Act would not exempt such a category of infringer from liability.

What does this decision mean for future copyright litigation?

For now, this decision means that the constitutionality of the statutory damage range set by Congress for willful copyright infringement remains undisturbed in the First Circuit. For the District of Massachusetts, the task is to determine whether the case can be resolved according to remittitur in the district court. If not, the First Circuit may be forced to decide whether an award for willful copyright infringement within the statutory range can actually be considered unconstitutional. Perhaps the First Circuit foreshadowed in its opinion how it would handle the question: “We comment that this case raises concerns about application of the Copyright Act which Congress may wish to examine.” Such a statement may very well mean that the Court will not find any award within the statutory range set by Congress to be unconstitutional, and that the only redress in such a situation would be to lobby Congress for change in the Copyright Act.

Either way, it remains to be seen whether the court in Capitol Records v. Thomas-Rasset — the other similar post-trial copyright infringement casewhere a district court in Minnesota recently held the jury award to be unconstitutional — will heed the First Circuit’s statement as a warning that courts should not hold copyright infringement damages that are within the Copyright Act’s statutory range to be unconstitutional; the record companies in that case have recently appealed the Thomas-Rasset case to the Eighth Circuit.