It is not often that a defendant in a lawsuit deems it a victory that the damages it will be ordered to pay will be measured in the hundreds of millions of dollars and not in the trillions. (Arista Records LLC et al. v. Lime Group LLC et al.)
The Lime Group defendants own and operate the “Lime Wire” online file-sharing program. The plaintiffs are a collection of record companies (“labels”) which sued the Lime Group defendants, alleging “secondary copyright infringement.” In humanspeak, “secondary copyright infringement” means that the fiendish defendants induced numerous individual Lime Wire users to infringe the plaintiffs’ copyrights by downloading copyrighted material “without authorization” (read “without paying any royalties”). Last May, the court granted summary judgment to the plaintiffs, finding the Lime Wire defendants guilty of this nefarious crime. A trial as to the appropriate amount of damages for the heinous act will commence in May of this year.
The plaintiffs have identified approximately 11,000 “sound recordings” (note that no one calls it “music”) that they allege have been infringed through the Lime Wire system, each of which was downloaded by “hundreds, if not thousands, of individuals” in the online peer-to-peer file sharing program run by Lime Wire. The plaintiffs have elected to pursue “statutory damages” of “not less than $750 or more than $30,000” per “infringement.” These damages may be increased to “not more than $150,000” per infringement upon a finding that the infringement was “willful.”
The question is, what constitutes an “infringement” under the copyright statute? Is the number of “infringements” equal to the number of sound recording copyrights – 11,000 – which were infringed, or is it the number of individual recordings multiplied by the number of times each was downloaded? Obviously, the plaintiffs urge the latter definition, while the Lime Group defendants seek the former. The question is one of “first impression” – there was, until now, no judicial decision on this point.
Well, now there is. Much to the relief of the Lime Group defendants, the Court has decided that, in these circumstances, “infringement” means the violation of a single copyright. In reaching this decision, the Court held that, “Plaintiffs’ position on statutory damages … offends the ‘canon that we should avoid endorsing statutory interpretations that would lead to absurd results.’ If Plaintiffs were able to pursue a statutory damage theory predicated on the number of direct infringers per work, Defendants’ damages could reach into the trillions. (emphasis in the original) As Defendants note, Plaintiffs are suggesting an award that is ‘more money than the entire music recording industry has made since Edison’s invention of the phonograph in 1877’.” So, the Lime Wire defendants are facing potential damages of only something over a BILLION dollars! A resounding victory!
The Court, however, went on to note that “in analyzing where to set Plaintiffs’ statutory damage awards within the wide range of permissible dollar amounts, the fact-finder may take into account the number of direct infringers who infringed each of Plaintiffs’ copyrighted works through the Lime Wire system.” This will determine where, in the permissible range of $750 to $30,000 per “infringement” – or up to $150,000 if the infringement is found to be “willful” – the Court will fix the damages.
The whole thing is, of course, silly in the extreme, as it is apparent that the Lime Wire defendants will be hard pressed to pay damages in the millions of dollars. We’re surprised that the Court didn’t sanction the lot of them for wasting the Court’s time. Still, a new precedent has been established.
THE LESSON TO BE LEARNED: The chance to be the world’s first trillion dollar judgment winner is still open.