Copyright Act Statutory Damages in Age of the Internet

LOS ANGELES & SAN FRANCISCO

www.dailyjournal.com

THURSDAY, MAY 11, 2017

PERSPECTIVE Copyright Act statutory damages in age of the internet By Paul Goldstein While Columbia Pictures involved More recently, in its 2016 individual’s infringement of any and Joyce Liou only three separate infringements in decision in Friedman v. Live Nation given work.” the broadcasting context, applying Merchandise, Inc., the 9th Circuit Internet service providers and n the internet era, one of the most the joint and several liability principle adopted a different approach to the other potential upstream infringers significant legal concerns for an to infringements on the internet has joint and several liability conundrum. should understand that the current Iinternet service provider (ISP) potentially punitive consequences. The court held that, for a plaintiff statutory damages regime is is the risk of exposure to damages An “upstream” infringer, often the to recover multiple damage awards particularly unsuitable for internet for the copyright infringements of ISP, may be found secondarily liable against a secondarily liable defendant cases. While courts have offered their users. In particular, ISPs that for the infringements of numerous based on downstream infringement, expedient solutions for limiting transmit or host user-generated “downstream” infringers, the service it must join the direct infringers punitive awards, the solutions content face a potentially greater provider’s users. Even if a court as defendants. The court found are neither definitive nor entirely risk than others because not only exercises its discretion to award no nothing in the text of Section 504(c) responsive to the problem. can they be held secondarily liable more than the $750 minimum for that “admits of a ‘mass-marketing’ As the Friedman court noted, there for “downstream” infringements of exception” of the sort endorsed by is nothing in the statute to support users, but that liability can come with The real problem with the Arista court. The 9th Circuit also a “mass-marketing” exception to statutory damages attached. Statutory statutory damages under the observed that its prior Columbia multiple statutory damage awards, damages, which are authorized by Copyright Act is that Congress Pictures decision rested on the fact much less to indicate how a court Section 504(c) of the Copyright that each downstream infringer in should go about determining “mass did not contemplate secondary Act, range from $750 to $30,000 for that case was named as a defendant. infringement” type of cases. Nor is each infringed work, though a court liability for infringement on a Because the Friedman plaintiff had the Friedman rule that downstream may award up to $150,000 in cases massive scale. not joined any of the 100-plus alleged infringers must be joined as of willful infringement. Under the “downstream” infringers (retailers defendants limiting in internet cases, principle of joint and several liability, each of the separate infringements who distributed the infringing where a plaintiff can identify and an ISP with an uncounted number of subject to joint and several liability, a merchandise) as defendants, their join large numbers of defendants users may see its damages exposure statutory award for tens or hundreds unadjudicated liability could not with relatively little effort, and multiply hundreds or thousands of thousands of internet-based direct enlarge the plaintiff’s statutory even a minimum award of $750 for of times over. The result is that a infringements could bankrupt all damage award against Live Nation. each infringement might repay the defendant may be held liable for but the most deep-pocketed service Applying the statutory damages expense. multiple statutory damage awards for provider. The mere prospect of formula, yet avoiding seemingly The real problem with statutory infringing a single work. such an award could discourage disproportionate outcomes, is a tricky damages under the Copyright Act is The 9th U.S. Circuit Court of companies from entering this market. task when a single ISP may be held that Congress did not contemplate Appeal’s decision in Columbia To avoid punitive statutory damage liable for a statutory damages award secondary liability for infringement Pictures Television v. Krypton awards against jointly and severally multiplied by the hundreds of direct on a massive scale. Until the Broadcasting of Birmingham, Inc. liable copyright defendants, some infringers with whom it is jointly and contemporary reality of internet two decades ago illustrates the courts have invoked proportionality severally liable. Friedman attempts usage is addressed in the statute, intersection of the joint and several as a principle of statutory to avoid this prospect by importing ISPs face greater exposure than other liability principle with copyright interpretation. In Arista Records LLC a due process requirement that, in alleged infringers. statutory damages. The defendants v. Lime Group LLC, for example, a order for the copyright owner to in Columbia Pictures were three file-sharing service provider faced a obtain an expanded statutory award Paul Goldstein, the Lillick Professor television stations that had directly potential near-billion dollar damage against the contributory infringer, the of Law at Stanford Law School, is of infringed upon the plaintiff’s award for the conduct of a multitude direct infringers also must be parties counsel in the San Francisco office of copyrights independently of each of downstream infringers. The New to a suit. But this does not avoid Morrison & Foerster. other. Consequently, the company York district court found that “the proportionality concerns in cases that owned the three stations most plausible interpretation of where direct infringers are joined. Joyce Liou is an associate with the was secondarily liable for their Section 504(c) is one that authorizes Would the Arista court have reached firm. infringement. The court held that the only a single statutory damage award a different result under the Friedman plaintiff was entitled to separately per work against a secondarily liable approach if the plaintiff had joined calculated statutory awards against defendant, particularly in the context all downstream file-sharing users each of the three stations (as they of the mass infringement found in as defendants? Presumably yes, as were separate infringers) and that, the context of online peer-to-peer the court noted that, if the Arista with respect to these awards, each file sharing.” Accordingly, the court plaintiffs “were suing multiple of the three stations was jointly and limited the plaintiffs’ statutory individually liable infringers in the severally liable with their common damages to a single statutory damage same lawsuit, they would be entitled owner. award per work. to one award with respect to each GOLDSTEIN LIOU