In a recent case in the Southern District of New York, Yurman Studio, Inc. v. Castaneda, 07 Civ. 1241 (SAS)(S.D.N.Y. November 19, 2008), District Judge Shira A. Scheindlin reminds us of the well settled principle that "At the end of the day, 'statutory damages should bear some relation to actual damages suffered' [citing RSO Records v. Peri, 596 F.Supp. 849,862 (SDNY 1984); New Line Cinema Corp. v. Russ Berrie & Co., 161 F.Supp.2d 293,303 (SDNY 2001); 4 Nimmer Sec. 14.04[E] at 14-90(2005)] and 'cannot be divorced entirely from economic reality'"
The damages disproportion and economic reality disconnect in RIAA cases were recognized in the September 24, 2008, dictum of District Judge Michael J. Davis, set forth at pages 40-43 of the Court's decision (pdf) in Capitol v. Thomas, where Judge Davis observed that the statutory damages awarded were "wholly disproportionate", and urged Congressional action to prevent a recurrence. While we agree that Congressional action would be nice, we think it is clear that copyright jurisprudence itself prevents the outlandish damage awards sought by the RIAA.
The lessons to be learned from Yurman, and the body of law upon which it rests, are:
(a) it is necessary to obtain pretrial discovery into the plaintiffs' actual damages,
(b) the RIAA's outlandish theories for recovery of from 2,600 to 450,000 times plaintiffs' actual damages are inconsistent with the main body of copyright law, and cannot be allowed;
(c) the RIAA's allegation of a single copyright violation -- i.e. the use an "online media distribution system" -- should be treated as a single act of copyright infringement, and the award should be limited to a maximum of $750 in statutory damages, total, or $200 if the infringement was innocent; and
(d) as an alternative to (c), the maximum award of statutory damages should be nine (9) times the actual damages proved by plaintiffs to have been sustained, which would limit recovery to a range of from zero to $3.15 per song file (typically, lost profits are approximately 35 cents per song file).
The Courts should recognize that any other interpretation of the Copyright Act would lead to an inescapable conclusion that the statute is unconstitutional.
We should also be mindful of the rule that no statutory damages at all are recoverable if the complaint alleges (as the RIAA complaints do allege) an ongoing course of copyright infringement, for any recordings whose effective date of copyright registration is later than the date the defendant's ongoing course of copyright infringement began. 17 U.S.C. Sec. 412. See, e.g., Homkow v. Musika Records, Inc., 2008 U.S. Dist. LEXIS 14079 (S.D.N.Y. February 26, 2008); Irwin v. ZDF Enters. GmbH, 2006 U.S. Dist. LEXIS 6156 (S.D.N.Y. 2006); Shady Records, Inc. v. Source Enters., 2004 U.S. Dist. LEXIS 26143 (S.D.N.Y. 2004). As to those song files, only the actual damages are recoverable. (Example: Plaintiffs' allegations are that defendant used an online media distribution system to download and/or distribute plaintiffs' songs without permission on a continuing basis. Plaintiffs' proof is to the effect that defendant began using Kazaa on November 1, 2006; defendant used it to download copyrighted song files A through F without permission, during the period January 1, 2007, to December 31, 2007; the copyright registration effective date for song file A is October 1, 2006; the copyright registration effective date for song file B is December 1, 2006; the copyright registration effective dates for song files C through F are in 2007. Plaintiffs can recover statutory damages for Song File A only, and are relegated to actual damages only for song files B through F.)
Yurman v. Castaneda, November 19, 2008, Decision
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