Saturday, September 17, 2011

Sony v. Tenenbaum: First Circuit Rejects District Court's substantive due process rationale for reducing statutory damages award

The First Circuit vacated the District Court's due process damages ruling and reversed the reduction of the jury's statutory damages award. The jury's award of damages was reinstated and the Court remanded for consideration of plaintiff's motion for common law remittitur based on excessiveness.

Notably, the First Circuit rejected of the following arguments by Tenenbaum: 1) that the Copyright Act is unconstitutional under Feltner, 523 U.S. 340; 2)  that the Act exempts  "consumer copying" (which was the P2P subject-matter of this case) infringement from liability and damages; and 3), that statutory damages under the Act are unavailable without a showing of actual harm. The First Circuit made the point -- correctly, in my view -- that the due process arguments raised by Tenenbaum (and channeled in the District Court opinion) were inapposite given that the Act clearly specifies the range of damages; hence, the notion that there are due process or notice issues are entirely misplaced.

The application of the Gore punitive damages standard to statutory damages awards was rejected outright. The Court pointed out there was no support for such a proposition, except in limited dicta cited in two cases. 

The First Circuit also relied on the general principles of Article III Constitutional avoidance and concepts of judicial restraint in support of its overturning the District Court opinion. 

Finally, while I believe the First Circuit reached the correct legal ruling, by virtue of kicking it back for remittitur, in effect the court is "punting" on the practical issue of  the damage award itself. Sony and the other plaintiffs have previously indicated they will reject the remittitur process. Which means that there will be yet another trial.  Capitol v. Thomas, a similar statutory damages P2P copyright infringement case, went through a similar fact pattern with three trials, where remittitur was rejected each time by the record companies.


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