Sony BMG Music Entertainment v. Tenenbaum
719 F.3d 67, 107 U.S.P.Q. 2d (BNA) 1264, 2013 WL 3185436 (2013)
Rule of Law:
An award of statutory damages under the Copyright Act violates due process only if the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable, a standard distinct from the guideposts for punitive damages.
Facts:
- From 1999 to at least 2007, Joel Tenenbaum downloaded and distributed copyrighted music without authorization using various peer-to-peer networks.
- Tenenbaum made thousands of songs available illegally.
- He continued his activities despite warnings from his father, his college, and recording companies, indicating he knew his conduct was illegal.
- During discovery, Tenenbaum lied about his activities, blaming unidentified burglars and others, only admitting at trial that he had distributed as many as five thousand songs.
- The plaintiffs, Sony BMG Music Entertainment, Warner Bros. Records Inc., Arista Records LLC, and UMG Recordings, Inc., owned the copyrights to the music Tenenbaum distributed.
Procedural Posture:
- Sony BMG Music Entertainment, et al. (Sony) sued Joel Tenenbaum in the U.S. District Court for the District of Massachusetts under the Copyright Act for statutory damages and injunctive relief, asserting claims for thirty copyrighted works.
- The District Court ruled as a matter of law that Tenenbaum violated the Copyright Act, and a jury found his violations were willful.
- The jury awarded Sony $22,500 for each of the thirty violations, totaling $675,000.
- Tenenbaum moved for a reduction, arguing the award was excessive and violated due process, or that remittitur (a reduction by the court) was appropriate.
- The District Court initially, bypassing remittitur, held that the award violated due process under BMW v. Gore and reduced it to $67,500.
- Sony appealed this reduction to the U.S. Court of Appeals for the First Circuit.
- The First Circuit (Tenenbaum II) vacated the District Court's judgment, instructing it to address remittitur first and suggesting St. Louis, I.M. & S. Ry. Co. v. Williams as the proper standard for constitutional review of statutory damages.
- On remand, the District Court determined remittitur was inappropriate and affirmed that the original $675,000 award comported with due process, relying on Williams.
- Joel Tenenbaum then appealed the District Court's decision on the constitutionality of the damage award to the U.S. Court of Appeals for the First Circuit.
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Issue:
Does an award of statutory damages under the Copyright Act, specifically $22,500 for each of thirty willful copyright violations totaling $675,000, violate the defendant's constitutional right to due process of law?
Opinions:
Majority - Howard, Circuit Judge
No, an award of statutory damages totaling $675,000 for thirty willful copyright violations does not violate Joel Tenenbaum's right to due process of law. The court held that the proper standard for evaluating the constitutionality of statutory damages is the test established in St. Louis, I.M. & S. Ry. Co. v. Williams, which asks whether the penalty is "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable." This standard is distinct from the punitive damages guideposts outlined in BMW of North America, Inc. v. Gore, which are inapplicable because statutory damages, by their nature, provide inherent notice of potential penalties, and Gore's second and third guideposts (ratio to actual harm and comparison to other penalties) do not logically apply to statutory damage awards where actual damages need not be proven and the award itself is an authorized civil penalty. Applying the Williams standard, the court found Tenenbaum's conduct to be egregious, noting he engaged in infringement for years, ignored numerous warnings, made thousands of songs illegally available, and lied during discovery. The $22,500 per song award, representing 15% of the statutory maximum for willful violations and less than the maximum for non-willful violations, served the Copyright Act's dual purpose of reparation for injury and deterrence of wrongful conduct. The court concluded that the award was not wholly disproportioned to the offense and was therefore consistent with due process.
Analysis:
This case significantly clarifies the constitutional standard for reviewing statutory damage awards, distinctly separating them from punitive damages. By reaffirming the Williams standard over Gore's guideposts for statutory damages, the First Circuit provides greater deference to legislative intent in setting statutory remedies, particularly where proving actual damages is challenging. This decision empowers Congress to craft robust statutory damage schemes that prioritize deterrence and address public wrong, especially pertinent in the context of widespread digital copyright infringement, without being constrained by a strict proportionality to a plaintiff's demonstrable economic loss.
