Looks like the RIAA has run into another possible stumbling block in discouraging online swapping of copyrighted songs. Now the courts are going to look at the excessive loss claims by the RIAA in its lawsuits against online music traders.
With that in mind, it wasn’t that surprising earlier this year to see one defendant in an RIAA suit question the constitutionality of the $750 number that was trotted out in her case. At the time, we stated that the reasoning used to back this up seemed much weaker than the reasoning in the law review article, but as lawyer Ray Beckerman (who is involved in the case) explained, the filing was limited in length and only needed to serve a specific purpose. It also looks like they were later able to submit either the law review article we mentioned, or other supporting documents. No matter what happened, the judge has now ruled that it is a perfectly legitimate question, and will be included as part of the case. The judge tossed out all of the RIAA’s objections, noting that the defendant actually backed up their claim with case law and law review articles. The RIAA, on the other hand, could offer no similar case law to explain why the constitutionality of the fines couldn’t be questioned. Of course, who knows how the case will turn out, but should the RIAA lose, it would be pretty damaging for them. They use the threat of the $750/song (or higher) fines as a way to bully people into just settling, rather than fighting — even if they know they’re innocent.
The law review article mentioned above can be found here. The article makes an interesting point. Suppose you download one copyrighted song that imposes a loss on the copyright holder of $1. Now, according the RIAA, they would hit you with $750, and of that $1 is to cover the loss and the remaining $749 is the punishment. A punishment in this case is not unreasonable as it can dissuade the person from downloading in the future and causing additional damage and also deter others. Now suppose you have downloaded 4,000 songs. Now you’d be paying $4,000 in damages and just under $3 million for punishment. Seems a tad excessive.
This raises another issue, what to do with the punitive damages awarded in a court case. It has always seemed to me that awarding the punitive damages to anyone runs the risk of creating perverse incentives. If it is given to the plaintiff then it creates an incentive on the part of individuals to sue in order to try and win big. If the government/courts keep it then it creates an incentive to bring more lawsuits which could be costly as it makes doing business more costly. Now, if the money is collected than burned, that would remove the incentive problem…of course, burning millions of dollars every year probably wouldn’t sit well with too many people.
