Re: More FSF hypocrisy

[Alexander Terekhov]

Alexander Terekhov wrote:
> 
> Thufir Hawat wrote:
> >
> > On Tue, 24 Mar 2009 15:37:37 -0400, Rjack wrote:
> >
> > > Rjack doesn't accept the rationalization of piracy due the thief's state
> > > of mind or motive. The difference between commercial and non-commercial
> > > piracy is comparable to the difference between being pregnant and a
> > > "little bit" pregnant.
> >
> > Who does accept the rationalization of piracy?  Be specific with an
> > example.
> 
> http://www.tlug.jp/docs/rms.html
> 
> <quote>
> 
> HY: Hmmm. Then tell me what you think about pirated software.
> 
> RMS: I don't call this copying "piracy", because that is a propaganda
> word. I don't think it is wrong to copy and share information.
> Governments can pass laws against it, but that does not make it wrong,
> just illegal.
> 
> An unauthorized copy of a proprietary program has the same drawbacks
> as an authorized copy. If you want to make more copies and share them,
> you have to do it in secret; and you cannot get the source code.
> 
> So I think that unauthorized copies are not much better than
> authorized copies. The only good thing about the unauthorized copy is
> that you avoid giving money to the owner. This is good, because the
> owner does not deserve a reward for making software proprietary.
> 
> </quote>
> 
> See also
> 
> http://chronicle.com/wiredcampus/article/3677/justice-department-favors-recording-industrys-position-in-copyright-case
> 
> "A defendant in a lawsuit who asks the federal government to intervene
> in his case might be careful what he wishes for.
> 
> The U.S. Department of Justice rejected over the weekend the argument
> that the recording industry’s litigation against alleged copyright
> infringers is unconstitutional. Charles R. Nesson, a professor at
> Harvard Law School defending Joel Tenenbaum, a student at Boston
> University being sued by Sony BMG Music Entertainment, had asked the
> Justice Department in February to prevent copyright holders from
> collecting statutory damages except from offenders seeking commercial
> gain.
> 
> The Justice Department fiercely denied that request, in a 31-page memo
> filed on Saturday.
> 
> “The remedy of statutory damages has been a cornerstone of our federal
> copyright law since 1790,” the agency said. Even copyright violations
> not motivated by profits limit the legal distribution of protected work,
> it said. “The public in turn suffers from lost jobs and wages, lost tax
> revenue, and higher prices for honest purchasers.”
> 
> Mr. Nesson has argued that the penalties Mr. Tenenbaum faces, if he
> loses the case, are grossly disproportionate: up to $150,000 for each of
> the seven songs he is accused of illegally downloading. The Free
> Software Foundation, in a legal brief on Mr. Tenenbaum’s behalf, cited
> several recent cases to support the position that the recording
> industry’s lost profits for each infringement — which it estimates at
> $0.35 — should not prompt damages of more than 425,000 times that
> amount. "
> 
> USDOJ's brief:
> 
> http://beckermanlegal.com/pdf/?file=/Lawyer_Copyright_Internet_Law/sony_tenenbaum_090320FSFAmicusBrief.pdf

Soooooooooory, I meant:

http://beckermanlegal.com/pdf/?file=/Lawyer_Copyright_Internet_Law/sony_tenenbaum_090322DOJBrief.pdf

(quoted in full below)

-----
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
)
CAPITOL RECORDS, INC., et al. ))
Civil Action No. 03-cv-11661-NG
Plaintiffs, ) (Lead Docket Number)
)
v. ))
NOOR ALAUJUN, )
)
Defendant. )
____________________________________)
)
SONY BMG MUSIC ENTERTAINMENT, )
et al. ))
Civil Action No. 07-cv-11446-NG
Plaintiffs, ) (Original Docket Number)
)
v. ))
JOEL TENENBAUM, )
)
Defendant. )
____________________________________)
UNITED STATES OF AMERICA’S MEMORANDUM IN RESPONSE TO
DEFENDANT’S MOTION TO DISMISS AND IN DEFENSE OF THE
CONSTITUTIONALITY OF THE STATUTORY DAMAGES PROVISION OF THE
COPYRIGHT ACT, 17 U.S.C. § 504(c)
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 1 of 39
i
TABLE OF CONTENTS
Page
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
BACKGROUND.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
I. PROCEDURAL BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .4
.
II. STATUTORY BACKGROUND. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .6
ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
I. THIS COURT SHOULD FIRST DETERMINE WHETHER
THE CONSTITUTIONAL QUESTIONS RAISED BY DEFENDANT
CAN BE AVOIDED. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .8
II. THE COPYRIGHT ACT’S STATUTORY DAMAGES PROVISION
APPLIES REGARDLESS OF WHETHER AN INFRINGER SEEKS
COMMERCIAL GAIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .9
III. THE COPYRIGHT ACT DOES NOT VIOLATE THE SEPARATION
OF POWERS DOCTRINE.. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .11
A. Congress Possesses Authority To Create A Private Right
Of Action To Enforce The Copyright Act. . . . . . . . . . . . . . . . .
. . . . . . .11
B. The Statutory Damages Provision Of The Copyright Act Is A
Civil Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .14
1. Congress Intended To Create A Civil Remedy. . . . . . . . . . . . . .
.15
2. The Copyright Act’s Statutory Damages Provision Is
Not So Punitive As To Negate Congress’ Intent. . . . . . . . . . . . .16
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 2 of 39
ii
IV. THE COPYRIGHT ACT’S STATUTORY DAMAGES PROVISION
SATISFIES DUE PROCESS. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .20
A. Courts Examine Statutory Damages Awards Under The
Standard Articulated By The Supreme Court In Williams. . . . . . . . . .
. 21
B. The Copyright Act’s Statutory Damages Provision Satisfies The
Williams Standard.. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .24
VI. THE COPYRIGHT ACT’S STATUTORY DAMAGES PROVISION
DOES NOT VIOLATE THE EIGHTH AMENDMENT. . . . . . . . . . . . . . . . .
.29
CONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 3 of 39
iii
TABLE OF AUTHORITIES
CASES Page(s)
Accounting Outsourcing, LLC v. Verizon Wireless Pers. Commc'n, L.P.,
329 F. Supp. 2d 789 (M.D. La.
2004).....................................................................
22, 23
Adams Fruit Co. v. Barrett,
494 U.S. 638
(1990).....................................................................................................
12
Ashby v. Farmers Ins. Co.,
592 F. Supp. 2d 1307 (D. Or. 2008).
..............................................................................
8
BMW of North Am., Inc. v. Gore,
517 U.S. 559
(1996)...............................................................................................
passim
Brown v. Gardner,
513 U.S. 115
(1994).....................................................................................................
10
Browning-Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc.,
492 U.S. 257
(1989).....................................................................................................
30
Buchanan v. Maine,
469 F.3d 158 (1st Cir. 2006).
.........................................................................................
8
Burrow-Giles Lithographic Co. v. Sarony,
111 U.S. 53
(1884).......................................................................................................
13
Capitol Records, Inc. v. Thomas,
579 F. Supp. 2d 1210 (D. Minn. 2008).
..........................................................................
9
Carter v. Carter Coal Co.,
298 U.S. 238
(1936).....................................................................................................
13
Centerline Equip. Corp. v. Banner Personnel Serv., Inc.,
545 F. Supp. 2d 768 (N.D. Ill. 2008).
............................................................... 20, 23,
30
Corporacion Insular de Seguros v. Munoz,
896 F. Supp. 238 (D.P.R. 1995).
..................................................................................
30
Davis v. Passman,
442 U.S. 228
(1979).....................................................................................................
12
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 4 of 39
iv
DirecTV, Inc. v. Cantu,
2004 WL 2623932 (W.D. Tex. Sept. 29, 2004).
........................................................... 22
Douglas v. Cunningham,
294 U.S. 207
(1935).....................................................................................................
24
Eldred v. Ashcroft,
537 U.S. 186
(2003)...............................................................................................
12, 13
F.W. Woolworth Co. v. Contemporary Arts, Inc.,
344 U.S. 228
(1952)...............................................................................................
passim
Feltner v. Columbia Pictures Television, Inc.,
523 U.S. 340
(1998).......................................................................................
6, 7, 17, 25
Flemming v. Nestor,
363 U.S. 603
(1960).....................................................................................................
14
Helvering v. Mitchell,
303 U.S. 391
(1938).....................................................................................................16
Herald Co. v. Harper,
410 F. 2d 125 (8th Cir. 1969).
......................................................................................17
Hudson v. United States,
522 U.S. 93
(1997)................................................................................................
passim
Infodek, Inc. v. Meredith-Webb Printing Co.,
830 F. Supp. 614
(1993)...............................................................................................12
International Union, United Mine Workers of America v. Bagwell,
512 U.S. 821
(1994)...............................................................................................
14, 15
Kennedy v. Mendoza-Martinez,
372 U.S. 144
(1963).....................................................................................................
14
Life & Cas. Ins. Co. v. McCray,
291 U.S. 566
(1934).....................................................................................................
29
Lowry's Reports, Inc. v. Legg Mason, Inc.,
302 F. Supp. 2d 455 (D. Md.
2004)............................................................. 19,
22, 23, 26
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 5 of 39
v
Lyng v. Northwest Indian Cemetery Protective Ass'n,
485 U.S. 439
(1988).......................................................................................................
8
Ramirez v. Midwest Airlines, Inc.,
537 F. Supp. 2d 1161 (D. Kan.
2008).............................................................................
8
Reiserer v. United States,
479 F.3d 1160 (9th Cir. 2007).
...............................................................................
16, 19
St. Louis, I.M. & S. Ry. Co. v. Williams,
251 U.S. 63
(1919).................................................................................................
passim
State Farm Mut. Auto. Ins. Co. v. Campbell,
538 U.S. 408
(2003).....................................................................................................
24
Students for Sensible Drug Policy Found. v. Spellings,
523 F.3d 896 (8th Cir. 2008).
.......................................................................................
17
Suss v. American Society For The Prevention of Cruelty To Animals,
823 F. Supp. 181 (S.D.N.Y. 1993).
..............................................................................
13
Texas v. American Blastfax, Inc.,
121 F. Supp. 2d 1085 (W.D. Tex.
2000).......................................................................
23
United States v. Bajakajian,
524 U.S. 321
(1998).....................................................................................................
29
United States v. Citrin,
972 F. 2d 1044 (9th Cir. 1992).
....................................................................................
23
United States v. LaMacchia,
871 F. Supp. 535 (D. Mass.
1994)................................................................................
10
United States v. Ward,
448 U.S. 242
(1980)...............................................................................................
passim
Warren Freedenfeld Assocs., Inc. v. McTigue,
531 F.3d 38 (1st Cir. 2008).
.....................................................................................
9, 18
Ex parte Young,
209 U.S. 123
(1908).....................................................................................................
29
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 6 of 39
vi
Zomba Enters., Inc. v. Panorama Records, Inc.,
491 F.3d 574 (6th Cir. 2007).
...........................................................................
23, 24, 30
STATUTES
15 U.S.C. § 15(a).
....................................................................................................................12
17 U.S.C. §
501....................................................................................................................
9, 15
17 U.S.C. § 502(a).
..................................................................................................................16
17 U.S.C. §
504.....................................................................................................................
9,15
17 U.S.C. § 504(c).
...........................................................................................................
passim
17 U.S.C. §
506..................................................................................................................
15, 18
17 U.S.C. §
506(a)(1)...............................................................................................................10
18 U.S.C. §
2319................................................................................................................
16, 18
18 U.S.C. § 3571(b).
................................................................................................................18
29 U.S.C. §
626(c)(1)...............................................................................................................12
47 U.S.C. §
227(b)(3)...............................................................................................................12
102 Stat. 2853, 2860
(1988).......................................................................................................8
Copyright Act of 1790, 1 Stat. 124, 125.
...........................................................................
passim
No Electronic Theft Act, Pub. L. No. 105-147, 111 Stat. 2678
(1997)......................................10
Pub. L. No. 60-349, § 25
(1909)...............................................................................................30
Pub. L. No. 94-553, § 22
(1976).................................................................................................7
Digital Theft Deterrence and Copyright Damages Improvement Act of 1999,
Pub. L. No. 106-160, § 2
(1999).............................................................................
7,8,11
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 7 of 39
vii
LEGISLATIVE HISTORY
H.R. Rep. 105-339
(1997)..................................................................................................
10, 27
H.R. Rep. 106-216
(1999)........................................................................................
8, 26, 27, 28
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 8 of 39
INTRODUCTION
In this civil action for copyright infringement, Defendant challenges
the constitutionality of
the statutory damages provision of the Copyright Act, 17 U.S.C. §
504(c). The United States has
now moved to intervene to defend the constitutionality of that
provision. This memorandum
deals solely with the constitutionality of 17 U.S.C. § 504(c); it does
not address any of the nonconstitutional
arguments raised by the parties. The United States nevertheless
respectfully
submits that this Court should resolve any non-constitutional issues
presented by the parties first if
it would enable the Court to avoid the constitutional questions.
Additionally, the Court should
avoid a decision on the merits of Defendant’s due process and Eighth
Amendment claims unless
and until such a decision is necessary following a finding of liability
and awarding of statutory
damages by a jury.
If the Court finds it necessary to reach the constitutional questions at
this time, then it
should reject each of Defendant’s constitutional claims. As an initial
matter, the Court should
reject Defendant’s invitation to interpret the Copyright Act’s statutory
damages provision to
apply only to infringers who seek commercial gain. Such an
interpretation is not supported by the
language of the statutory damages provision, which does not expressly
require proof of
commercial gain. Nor is it supported by the history of the Copyright
Act, which suggests
Congress intended both civil and criminal remedies to be available for
infringement even in the
absence of commercial gain.
Second, the Court should reject Defendant’s claim that the Copyright Act
violates the
separation of powers doctrine by placing the executive function of
prosecuting an essentially
criminal statute in private hands and by requiring courts to adjudicate
criminal cases by civil
process. The Copyright Act’s statutory damages provision was enacted
pursuant to the
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 9 of 39
2
Copyright Clause and the Necessary and Proper Clause of the U.S.
Constitution. These Clauses
grant Congress broad authority to create intellectual property regimes
that, in its judgment, will
best promote the advancement of science. Since 1790, Congress has
exercised this power by
creating a private right of action pursuant to which copyright owners
can recover actual damages
and profits or, alternatively, statutory damages from those who infringe
their copyrights. Creation
of this cause of action and remedy is clearly within Congress’
constitutional authority.
Furthermore, the statutory damages remedy Congress has created is civil
in nature, not criminal.
Congress intended the remedy to be civil, and, under the factors
identified in United States v.
Ward, 448 U.S. 242, 249 (1980), the statutory damages scheme is not so
punitive either in
purpose or effect as to transform it into a criminal penalty. The
Copyright Act’s statutory
damages provision does not impose any affirmative disability or
restraint on copyright infringers.
Nor does it require a finding of scienter. The statutory damages remedy
moreover is separate and
distinct from the criminal penalties for copyright infringement found in
the Copyright Act; those
criminal penalties serve a different purpose than statutory damages.
Because the Copyright Act’s
statutory damages provision is a civil remedy that is clearly within
Congress’ authority to create,
it does not impermissibly infringe on constitutional powers delegated to
the judicial or executive
branches.
Third, Defendant’s claim that the Copyright Act’s statutory damages
provision violates
the Due Process Clause should fail. That claim should be examined under
the standard articulated
by the Supreme Court in St. Louis, I.M. & S. Ry. Co. v. Williams, 251
U.S. 63, 66–67 (1919), for
assessing whether statutory damages awards satisfy due process, not the
standard courts use for
assessing punitive damages awards. The Copyright Act’s statutory damages
provision satisfies
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 10 of 39
3
the Williams standard because the range of damages established by
Congress is not “so severe and
oppressive as to be wholly disproportioned to the offense [or] obviously
unreasonable.” 251 U.S.
at 67. The remedy of statutory damages for copyright infringement has
been a cornerstone of our
federal copyright law since 1790, and Congress acted reasonably in
crafting the current
incarnation of the statutory damages provision. Congress sought to
account for both the
difficulty of quantifying damages in the context of copyright
infringement and the need to deter
millions of users of new technology from infringing copyrighted works in
an environment where
many violators believe that their activities will go unnoticed. The
harms caused by copyright
infringement are not negated merely because an infringer does not seek
commercial gain. In the
context of online media distribution systems, infringement without
commercial gain limits a
copyright owner’s ability to distribute legal copies of copyrighted
works. The public in turn
suffers from lost jobs and wages, lost tax revenue, and higher prices
for honest purchasers of
copyrighted works. In light of these harms and the important purposes
served by the awarding of
statutory damages, the statutory damages range chosen by Congress
satisfies due process.
Lastly, the Court should reject Defendant’s claim that the Copyright
Act’s statutory
damages provision violates the Excessive Fines Clause, because the
Eighth Amendment does not
apply to this case. The Eighth Amendment only applies to an award of
money damages in a civil
action if the case is brought by the United States or the United States
has a right to receive a
share of the damages awarded. Neither of these preconditions exists
here.
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 11 of 39
4
BACKGROUND
I. PROCEDURAL BACKGROUND
On August 7, 2007, Plaintiffs brought suit against Defendant pursuant to
the Copyright
Act. See Compl. ¶ 1. They allege Defendant infringed on their copyright
in various sound
recordings by using an online media distribution system to download,
distribute, and make
available for distribution the copyrighted works. Id. ¶ 13. Plaintiffs
seek an injunction against
further infringements, statutory damages, and costs and attorneys’ fees.
Id. at 4.
Defendant, proceeding pro se, filed an amended answer and counterclaim
on August 19,
2008. See Def.’s Am. Answer and Countercl. In his counterclaim,
Defendant alleged, among
other things, that the statutory damages provision of the Copyright Act
is unconstitutional
because it authorizes the awarding of statutory damages that are grossly
in excess of any actual
damages suffered by a copyright owner. Id. at 2–3. Plaintiffs
subsequently moved to dismiss the
counterclaim under Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim upon
which relief may be granted. See Pls.’ Mot. to Dismiss Countercl.
Defendant, having obtained
counsel, opposed the motion, again asserting that the Copyright Act
provides for
unconstitutionally excessive statutory damages. See Def.’s Opp’n to
Pls.’ Mot. to Dismiss
Countercl., at 7–13. Defendant clarified that his counterclaim is
brought pursuant to both the
Due Process Clause of the Fifth Amendment and the Excessive Fines Clause
of the Eighth
Amendment. Id. at 3, 7. Defendant also raised two additional
constitutional claims for the first
time. Defendant argued that the statutory damages provision of the
Copyright Act “is essentially
a criminal statute,” and thus, a defendant sued under the Act is
entitled to the process protections
of the criminal law. Id. at 3. Defendant further asserted that the
allegedly criminal nature of the
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 12 of 39
5
statutory damages provision “violate[s] constitutional separation of
powers by requiring the
judicial branch to try cases pursuant to [its] essentially criminal
mandate by inappropriate civil
process” and exceeds Congress’ authority “by placing the executive
function of prosecuting an
essentially criminal statute in private hands.” Id.
On November 5, 2008, Defendant moved for leave to file an amended
counterclaim to
assert an additional claim for abuse of federal process. See Mot. for
Leave to Am. Def.’s
Countercl. Defendant alleges Plaintiffs initiated this action for
ulterior purposes, namely to
intimidate Internet users into settling infringement suits and altering
their manner of Internet
usage. Id., Attach. 1 ¶¶ 13–14. Defendant’s proposed amended
counterclaim appears to rely in
part on the alleged unconstitutionality of the statutory damages
provision of the Copyright Act.
See id., Attach. 1 ¶ 18 (“In their attempts to advance their ulterior
purposes, Plaintiffs abuse
prosecutorial discretion unconstitutionally conferred upon them by
Congress and abuse a
statutory scheme providing for unconstitutional damages.”). Plaintiffs
opposed the motion for
leave to amend, contending, among other things, that amendment would be
futile because
Defendant’s constitutional claims fail as a matter of law. See Pls.’
Opp’n to Def.’s Mot. for
Leave to File Am. Countercl., at 12–29.
The Court entered an order on February 23, 2009 indicating Defendant’s
constitutional
counterclaims were actually defenses more properly asserted in a motion
to dismiss. Ord. Re:
Mot. to Stay, at 1–2. The Court granted Defendant additional time to
file such a motion. Id. at
2–3. Defendant filed a motion to dismiss on March 9, 2009. In the
motion, Defendant reasserts
and rephrases some of the constitutional arguments he raised in previous
briefing and abandons
others. Defendant argues the Copyright Act’s statutory damages provision
should be interpreted
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 13 of 39
6
to apply only to copyright infringers who seek commercial gain. Def.’s
Mem. in Supp. of Mot. to
Dismiss, at 6–7. Otherwise, according to Defendant, the amount of
statutory damages authorized
by the Act exceeds Congress’ authority by delegating “executive
prosecutorial power to private
enforcers.” Id. at 2–3. Defendant further argues the Copyright Act’s
statutory damages
provision, if applied to non-commercial infringers, is a “de facto
limitation on access to (the)
courts” because non-commercial infringers “have no realistic option to
defend themselves and so
are forced into out-of-court settlements that [cannot] be refused.” Id.
at 4–6. Finally, Defendant
argues the Copyright Act’s statutory damages provision is
unconstitutional as applied to infringers
who do not seek commercial gain because the damages it authorizes are
disproportionate to the
harm caused by non-commercial infringement. Id. at 7–10.
The United States has now moved to intervene in this action to address
the constitutional
issues raised by Defendant. Defendant appears, in his motion to dismiss,
to abandon some of the
constitutional claims he originally asserted as counterclaims. In an
abundance of caution,
however, the United States will address all of the constitutional
questions raised by Defendant’s
Amended Answer and Counterclaim, Defendant’s Opposition to Plaintiffs’
Motion to Dismiss
Counterclaim, Defendant’s Motion for Leave to File an Amended
Counterclaim, and Defendant’s
Motion to Dismiss. This brief is filed in conjunction with the United
States’ Motion to Intervene
to Defend the Constitutionality of a Federal Statute.
II. STATUTORY BACKGROUND
The remedy of statutory damages for copyright infringement dates back to
the Statute of
Anne in 1710. See Feltner v. Columbia Pictures Television, Inc., 523
U.S. 340, 349 (1998). “In
1783, the Continental Congress passed a resolution recommending that the
States secure
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 14 of 39
7
copyright protections for authors.” Id. at 350. Three of the twelve
States that responded to this
resolution “specifically authorized an award of damages from a statutory
range, just as § 504(c)
does today.” Id. at 350–51.
An award of statutory damages for copyright infringement was first
authorized under U.S.
federal law almost immediately following the adoption of the
Constitution. Under the Copyright
Act of 1790, enacted by the First Congress, each infringer of a
copyright was liable for “the sum
of fifty cents for every sheet which shall be found in his or their
possession.” 1 Stat. 124, 125
(1790). Each subsequent modification of the Copyright Act has maintained
a statutory damages
provision.
The statutory damages provision at issue in this case was enacted as
part of a 1999
amendment to the Copyright Act of 1976. See Digital Theft Deterrence and
Copyright Damages
Improvement Act of 1999, Pub. L. No. 106-160, § 2 (1999). Under the
Copyright Act of 1976,
and the law in effect today, “an infringer of copyright is liable for
either -- (1) the copyright
owner’s actual damages and any additional profits of the infringer” or
(2) “statutory damages.”
17 U.S.C. § 504(a). The copyright owner may elect to recover statutory
damages instead of
actual damages and profits at any time before final judgment is
rendered. Id. § 504(c)(1).
Under the 1976 law, the copyright owner was entitled to recover
statutory damages of
between $250 and $10,000 per infringed work. Pub. L. No. 94-553, § 22
(1976). If the violation
was willful, the maximum statutory damages award increased to $50,000
per work. Id. In the
1999 amendment, Congress increased the statutory damages range to its
current level: between
$750 and $30,000 per infringed work, with a maximum of $150,000 for a
willful violation. See
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 15 of 39
An intermediate amendment of the 1976 Act set the range 1 at $500 to
$20,000, with a
willfulness enhancement of up to $100,000. 102 Stat. 2853, 2860 (1988).
8
Pub. L. No. 106-160, § 2; see also 17 U.S.C. 504(c).1 Congress explained
that the increase was
necessary because:
Many computer users are either ignorant that copyright laws apply
to Internet activity, or they simply believe that they will not be
caught or prosecuted for their conduct. Also, many infringers do
not consider the current copyright infringement penalties a real
threat and continue infringing, even after a copyright owner puts
them on notice that their actions constitute infringement and that
they should stop the activity or face legal action.
H.R. Rep. 106-216, at 3 (1999).
ARGUMENT
I. THIS COURT SHOULD FIRST DETERMINE WHETHER THE
CONSTITUTIONAL QUESTIONS RAISED BY DEFENDANT CAN BE
AVOIDED
This Court should only reach the merits of the constitutional questions
that Defendant has
raised if resolution of those questions is necessary at this time. See
Lyng v. Northwest Indian
Cemetery Protective Ass’n, 485 U.S. 439, 445 (1988) (“A fundamental and
longstanding principle
of judicial restraint requires that courts avoid reaching constitutional
questions in advance of the
necessity of deciding them.”); Buchanan v. Maine, 469 F.3d 158, 172 (1st
Cir. 2006). A decision
on the merits of Defendant’s due process and Eighth Amendment claims may
be premature
because a jury has not found Defendant liable for copyright infringement
or awarded statutory
damages. See Ashby v. Farmers Ins. Co., 592 F. Supp. 2d 1307, 1316 (D.
Or. 2008) (concluding
due process challenge to the statutory damages provision of the Fair
Credit Reporting Act was
premature until the jury actually awarded statutory damages); Ramirez v.
Midwest Airlines, Inc.,
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 16 of 39
Defendant appears to recognize that his “2 interpretive argument” is in
fact a policy
argument. Indeed, he goes so far as to propose an “interpretation” of
the Copyright Act’s
statutory damages provision that creates three different categories of
infringers: unaware
infringers, merely aware infringers, and willful infringers. See Def.’s
Mem. in Supp. of Mot. to
Dismiss, at 7. Such a proposal is clearly not supported by the language
of the Act. As the court
acknowledged in a case cited by Defendant, if the applicability of the
Copyright Act’s statutory
damages provision is to be limited to infringers who seek commercial
gain, it is Congress’
prerogative to enact the necessary amendments. See id. at 8–9; Capitol
Records, Inc. v. Thomas,
579 F. Supp. 2d 1210, 1227 (D. Minn. 2008) (“implor[ing] Congress to
amend the Copyright Act
to address liability and damages in peer-to-peer network cases”).
9
537 F. Supp. 2d 1161, 1170 (D. Kan. 2008) (observing due process
challenge to the statutory
damages provision of the Fair and Accurate Credit Transactions Act was
premature “where there
[was] not yet any damage award for the court to review”). If the Court
can avoid a decision on
these constitutional questions until such a decision becomes necessary
following a trial of the
case, the Court should do so.
II. THE COPYRIGHT ACT’S STATUTORY DAMAGES PROVISION APPLIES
REGARDLESS OF WHETHER AN INFRINGER SEEKS COMMERCIAL GAIN
In an effort to alleviate what he perceives as constitutional
infirmities in the Copyright
Act’s statutory damages provision, Defendant argues that the Copyright
Act should be construed
to authorize statutory damages only where a copyrighted work is
infringed for purposes of
commercial gain. Regardless of whether this argument would have merit as
a matter of policy, it
is not supported by the language of the Copyright Act itself.2 The
Copyright Act does not
expressly require a plaintiff to prove its copyrighted work was
infringed for purposes of
commercial gain to recover statutory damages. See 17 U.S.C. §§ 501, 504;
see also Warren
Freedenfeld Assocs., Inc. v. McTigue, 531 F.3d 38, 47 (1st Cir. 2008)
(setting forth the elements
of civil copyright infringement). Another provision of the Copyright Act
does contain such a
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 17 of 39
10
requirement. See 17 U.S.C. § 506(a)(1) (criminalizing, among other
things, copyright
infringement “for purposes of commercial advantage or private financial
gain”). The fact that
Congress expressly included this requirement in one section of the
Copyright Act and omitted it in
another section of the same statute suggests that “Congress act[ed]
intentionally and purposely in
the disparate inclusion or exclusion.” Brown v. Gardner, 513 U.S. 115,
120 (1994); see F.W.
Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952)
(“Even for uninjurious and
unprofitable invasions of copyright the court may, if it deems it just,
impose a liability within
statutory limits to sanction and vindicate the statutory policy (of
deterrence).”).
Construing the Copyright Act to require commercial gain for recovery of
statutory
damages is also not supported by the history of the Copyright Act. In
1997, Congress amended
the criminal provisions of the Act in response to United States v.
LaMacchia, 871 F. Supp. 535
(D. Mass. 1994). LaMacchia involved a graduate student who was
criminally prosecuted for
encouraging lawful purchasers of copyrighted software to upload the
software onto the Internet
so that it could be downloaded by others for personal use without
authorization by, or
compensation to, the copyright owners. Id. at 536–37. The court in
LaMacchia observed that,
unlike civil copyright violations, criminal copyright violations must be
pursued for purposes of
commercial gain. Id. at 539. Congress amended the Copyright Act after
LaMacchia to remove
what it saw as an undesirable limitation on the effectiveness of the
criminal copyright provisions.
See H.R. Rep. 105-339, at 3, 5 (1997). In doing so, Congress sought to
“criminalize[] computer
theft of copyrighted works, whether or not the defendant derives a
direct financial benefit from
the act(s) of misappropriation.” Id.; see also No Electronic Theft Act,
Pub. L. No. 105-147, 111
Stat. 2678 (1997). Congress amended the Copyright Act’s statutory
damages provision to its
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 18 of 39
11
current form two years later without making any changes to the elements
of civil copyright
infringement. See Pub. L. No. 106-160. It is unlikely Congress intended
to require proof of
commercial gain for copyright owners to recover statutory damages when
no such proof is
categorically required for imposing criminal penalties for copyright
infringement.
The language and history of the Copyright Act demonstrate that statutory
damages may
be awarded against an infringer who does not seek to profit from
infringement. Moreover, as
explained below, the Copyright Act’s statutory damages provision is
constitutional as applied to
both infringers who seek commercial gain and those who do not.
III. THE COPYRIGHT ACT DOES NOT VIOLATE THE SEPARATION OF
POWERS DOCTRINE
A. Congress Possesses Authority To Create A Private Right Of Action To
Enforce The Copyright Act
If the Court determines that it is necessary to reach Defendant’s
constitutional claims at
this juncture, then it should reject them. The Copyright Act’s statutory
damages provision does
not exceed Congress’ authority or violate the separation-of-powers
doctrine, as Defendant claims,
by placing law enforcement authority traditionally reserved to the
Executive Branch in the hands
of private citizens. See Def.’s Mem. in Supp. of Mot. to Dismiss, at 3;
Def.’s Opp’n to Pls.’ Mot.
to Dismiss Countercl., at 4–6. As discussed below, see infra Part IV,
the Copyright Act’s
statutory damages provision is not criminal in nature and thus does not
require enforcement by the
Executive Branch. Moreover, the Constitution endows Congress with the
power to “promote the
Progress of Science and useful Arts, by securing for limited Times to
Authors and Inventors the
exclusive Right to their respective Writings and Discoveries.” U.S.
Const. art. I, § 8, cl. 8. It
further authorizes Congress to “make all Laws which shall be necessary
and proper for carrying
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 19 of 39
The term “science” in the Intellectual Property Clause relates 3 to
copyrights whereas the
term “useful arts” relates to patents. See Infodek, Inc. v.
Meredith-Webb Printing Co., 830 F.
Supp. 614, 622 n.8 (1993). The term “science” had a broader meaning in
the Eighteenth Century
than it is usually given today; it was understood to mean knowledge or
learning. Id.
12
(this power) into Execution.” Id., cl. 18. Congress has chosen to
promote the progress of
science,3 in part, by creating a private right of action pursuant to
which copyright owners can
recover actual damages and profits or, alternatively, statutory damages
from those who infringe
their copyrights. This power is clearly within Congress’ authority. As
the Supreme Court
recognized in Eldred v. Ashcroft, 537 U.S. 186, 222 (2003), “the
Copyright Clause empowers
Congress to determine the intellectual property regimes that, overall,
in that body’s judgment, will
serve the ends of the Clause. . . . The wisdom of Congress’ action . . .
is not within our province
to second-guess.”
The creation of a private right of action to enforce federal law is not
a novel concept. See
e.g., 15 U.S.C. § 15(a) (authorizing private parties to sue and recover
treble damages for
violations of the Clayton Act); 29 U.S.C. § 626(c)(1) (creating a
private right of action to enforce
the Age Discrimination in Employment Act); 47 U.S.C. § 227(b)(3)
(creating a private right of
action in state court to enforce the Telephone Consumer Protection Act
and authorizing statutory
damages). The Supreme Court has recognized that because Congress
establishes statutory rights,
“it is entirely appropriate for Congress, in creating these rights and
obligations, to determine in
addition, who may enforce them and in what manner.” Davis v. Passman,
442 U.S. 228, 241
(1979); see also Adams Fruit Co. v. Barrett, 494 U.S. 638, 650 (1990)
(noting, without
questioning the practice, that “Congress established an enforcement
scheme independent of the
Executive and provided aggrieved farmworkers with direct recourse to
federal court where their
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 20 of 39
Defendant’s reliance 4 on Carter v. Carter Coal Co., 298 U.S. 238
(1936), and Suss v.
American Society For The Prevention of Cruelty To Animals, 823 F. Supp.
181 (S.D.N.Y. 1993),
is misplaced. See Def.’s Mem. in Supp. of Mot. to Dismiss, at 3; Def.’s
Opp’n to Pls.’ Mot. to
Dismiss Countercl., at 5. Carter involved a congressional delegation of
power to private parties
to make law—in particular, Congress authorized a subset of producers and
miners in the
bituminous coal-mining industry to establish wage and hour standards for
the rest of the industry.
298 U.S. at 310–11. There is no similar delegation of legislative
authority here. Congress has
clearly set forth in the Copyright Act the types of works that are to be
protected and the scope of
that protection. As one mechanism of enforcing those protections,
Congress created a private
cause of action for copyright infringement. Congress clearly identified
the parties that could bring
such an action, what those parties were required to prove, and the
amount of damages those
parties were entitled to recover. This carefully crafted statute leaves
no room, and provides no
authority, for copyright owners to make law.
Suss is also inapplicable. That case involved delegation, by a state, of
power to a private
entity to conduct searches and make arrests. See 823 F. Supp. at 188. A
state’s ability to
13
rights under the statute are violated”). Most telling for purposes of
this case, a statutory damages
provision, enforceable by private parties, was enacted by the First
Congress as part of the
Copyright Act of 1790. 1 Stat. 124, 125. That the First Congress did not
see any separation-ofpowers
problem with allowing private parties to bring suit and recover
statutory damages for
copyright infringement is strong evidence that no separation-of-powers
problem exists. See
Eldred, 537 U.S. at 199 (observing, in upholding the constitutionality
of copyright term
extensions, that “[t]o comprehend the scope of Congress’ Copyright
Clause power, a page of
history is worth a volume of logic” (quotation omitted)); Burrow-Giles
Lithographic Co. v.
Sarony, 111 U.S. 53, 57 (1884) (concluding the provision of copyright
protection for
photographs is within Congress’ Copyright Clause authority and noting
“[t]he construction placed
upon the constitution by the first act of 1790 and the act of 1802, by
the men who were
contemporary with its formation, many of whom were members of the
convention which framed
it, is of itself entitled to very great weight, and when it is
remembered that the rights thus
established have not been disputed during a period of nearly a century,
it is almost conclusive”).4
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 21 of 39
delegate its power is not relevant to an analysis of the federal
separation of powers doctrine.
Defendant relies on International Union, United Min 5 e Workers of
America v. Bagwell,
512 U.S. 821 (1994), instead of Ward to support his assertion that the
Copyright Act’s statutory
damages provision is criminal in nature. See Def.’s Opp’n to Pls.’ Mot.
to Dismiss Countercl., at
14
B. The Statutory Damages Provision Of The Copyright Act Is A Civil
Remedy
The Copyright Act’s statutory damages provision is a civil remedy, not a
criminal penalty.
The Supreme Court has articulated a two-part test for determining
whether a statutorily-defined
penalty is civil or criminal. See United States v. Ward, 448 U.S. 242,
248–49 (1980). A court
must first examine “whether Congress . . . indicated either expressly or
impliedly a preference for
one label or the other.” Id. at 248. If Congress intended to create a
civil remedy, the court must
next inquire whether the statutory scheme is so punitive either in
purpose or effect as to
“transform what was clearly intended as a civil remedy into a criminal
penalty.” Id. at 248–49. In
doing so, the court should consider: (1) whether the remedy involves an
affirmative disability or
restraint; (2) whether the remedy has historically been regarded as a
punishment; (3) whether the
remedy is triggered only upon a finding of scienter; (4) whether the
remedy will promote the
traditional aims of punishment—retribution and deterrence; (5) whether
the behavior to which the
remedy applies is already a crime; (6) whether the remedy serves a
non-punitive purpose; and (7)
whether the remedy appears excessive in relation to the non-punitive
purpose. Id. at 249;
Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168–69 (1963). “[T]hese
factors must be
considered in relation to the statute on its face,” not as applied in a
particular case.
Mendoza-Martinez, 372 U.S. at 169. Moreover, evidence of punitive
purpose or effect gleaned
from these factors must be clear, Ward, 448 U.S. at 249, and
“unmistakable,” Flemming v.
Nestor, 363 U.S. 603, 619 (1960).5
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 22 of 39
4. In International Union, the Court articulated a framework to
distinguish between civil and
criminal contempt penalties imposed by a judge; it did not address civil
and criminal penalties
imposed by Congress. See Int’l Union, 512 U.S. at 831 (acknowledging the
greater potential for
harm that exists when a judge is “solely responsible for identifying,
prosecuting, adjudicating, and
sanctioning the contumacious conduct” than when “a legislature defines
both the sanctionable
conduct and the penalty to be imposed”). The case, therefore, is not
applicable here. Indeed, the
Court in International Union cited Ward in recognizing that courts
“generally . . . defer[] to a
legislature’s determination whether a sanction is civil or criminal,”
and noted, “[w]e do not
deviate from [that] tradition today.” Id. at 838.
15
1. Congress Intended To Create A Civil Remedy
It is clear from the language of the Copyright Act’s statutory damages
provision and the
structure of the Copyright Act as a whole that Congress intended
statutory damages to be a civil
remedy. Section 501(b) of the Copyright Act provides that “[t]he legal
or beneficial owner of an
exclusive right under a copyright is entitled . . . to institute an
action for any infringement of that
particular right committed while he or she is the owner of it.” 17
U.S.C. § 501(b); see also id. §
504(c) (authorizing a copyright owner to elect to receive statutory
damages any time before final
judgment is rendered in such an action). The fact that Congress
conferred authority to bring an
action for statutory damages upon copyright owners, instead of the
federal government, evidences
its intent to create a civil remedy rather than a criminal penalty. Cf.
Hudson v. United States, 522
U.S. 93, 103 (1997) (“That [the] authority (to issue debarment orders)
was conferred upon
administrative agencies is prima facie evidence that Congress intended
to provide for a civil
sanction.”).
Congress’ intent to create a civil remedy of statutory damages is
further evidenced by its
inclusion of a separate section within the Copyright Act establishing
criminal offenses and
penalties for infringement. Criminal copyright offenses are defined at
17 U.S.C. § 506, a section
entitled “Criminal offenses.” This section sets forth penalties for some
of the offenses it defines,
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 23 of 39
16
and refers to 18 U.S.C. § 2319, a section entitled “Criminal
infringement of a copyright,” to
establish other penalties. The Copyright Act’s statutory damages
provision is neither contained
in, nor referenced in, either of these sections. See Reiserer v. United
States, 479 F.3d 1160, 1163
(9th Cir. 2007) (concluding Congress intended penalties to be civil
where they were authorized in
a statutory section entitled “Additions to the Tax, Additional Amounts,
and Assessable Penalties,”
rather than the section entitled “Crimes, Other Offenses, and
Forfeitures”).
2. The Copyright Act’s Statutory Damages Provision Is Not So Punitive
As To Negate Congress’ Intent
Because Congress intended the Copyright Act’s statutory damages
provision to be a civil
remedy, this Court may not declare the provision criminal unless it
finds clear and unmistakable
proof that the statutory scheme is so punitive in purpose or effect as
to render it criminal despite
Congress’ intent. Analysis of the seven factors identified in Ward
demonstrate that there is little,
if any, evidence of a punitive purpose or effect, much less the
“clearest proof” that the law
requires, to negate Congress’ intent to create a civil remedy. 448 U.S.
at 249.
First, the Copyright Act’s statutory damages provision does not impose
any affirmative
disability or restraint on copyright infringers. See Hudson, 522 U.S. at
104 (awarding monetary
penalties does not impose an affirmative disability or restraint).
Plaintiffs in this case seek an
injunction preventing Defendant from infringing their copyrighted sound
recordings in the future,
but the injunction remedy is not a part of the statutory damages
provision. Compare 17 U.S.C. §
502(a) (authorizing court to grant injunction to prevent future
infringement), with id. § 504
(authorizing an award of statutory damages).
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 24 of 39
17
Second, statutory damages have not historically been regarded as
punishment. In
Helvering v. Mitchell, 303 U.S. 391, 400 (1938), the Supreme Court
acknowledged that “the
payment of fixed or variable sums of money [is a] sanction[] which ha[s]
been recognized as
enforceable by civil proceedings since the original revenue law of
1789.” The awarding of
statutory damages as a civil remedy for copyright infringement has a
similarly lengthy history.
The remedy was enacted by the First Congress as part of the Copyright
Act of 1790, see 1 Stat.
124, 125, and has been a feature of our federal copyright law ever
since. See 17 U.S.C. § 504(c);
Feltner, 523 U.S. at 345 n.3. Despite this long history, Defendant cites
no authority to suggest
the remedy has ever been regarded as punitive or criminal in nature. See
Herald Co. v. Harper,
410 F. 2d 125, 128–31 (8th Cir. 1969) (rejecting the claim that an
antitrust statutory provision
authorizing the recovery of treble damages in a civil action is criminal
in nature and noting “[t]he
many cases that have passed through the federal courts under [the
provision] without an attack on
its constitutionality attest to the lack of substance” of the argument
that the provision is criminal
in nature).
Third, statutory damages for copyright infringement are not triggered
only upon a finding
of scienter. Even innocent infringement subjects a person to a minimum
award of $200 in
statutory damages. See 17 U.S.C. § 504(c)(2).
Fourth, although statutory damages promote one of the traditional aims
of punishment
(i.e., deterrence), this alone is not sufficient to negate Congress’
intent to create a civil remedy.
See Hudson, 522 U.S. at 105 (finding monetary penalties were civil in
nature even though they
served deterrent purpose because they also served the non-punitive
purpose of promoting stability
in the banking industry); Students for Sensible Drug Policy Found. v.
Spellings, 523 F.3d 896,
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 25 of 39
18
901 (8th Cir. 2008) (“[T]hough the statute will deter other students,
this alone is insufficient to
render a sanction criminal, as deterrence may serve civil as well as
criminal goals.” (quotations
omitted)). “[A]ll civil penalties have some deterrent effect,” Hudson,
522 U.S. at 102; and if a
remedy had to be entirely nondeterrent to be civil, it would severely
limit Congress’ ability to
create civil remedies and thereby undermine its authority to regulate
harmful conduct, see id. at
105.
Fifth, although copyright infringement can be a crime, see 17 U.S.C. §
506(a), this fact is
also not determinative because “Congress may impose both a criminal and
a civil sanction in
respect to the same act or omission.” Ward, 448 U.S. at 250. Moreover,
not all conduct that
warrants imposition of statutory damages under the Copyright Act is also
a crime. To recover
statutory damages in a civil proceeding, a plaintiff must prove only two
elements: (1) ownership
of a valid copyright and (2) unauthorized copying of original elements
of the copyrighted work.
See Warren Freedenfeld Assocs., 531 F.3d at 47. Imposition of criminal
penalties requires proof
of additional elements, including wilfulness. See 17 U.S.C. § 506
(outlining the elements of
misdemeanor and felony copyright infringement); see also 18 U.S.C. §
2319. Moreover, the
penalties for criminal copyright infringement are, in fact, punitive as
they include the possibility of
imprisonment. Compare 18 U.S.C. §§ 2319, 3571(b) (providing for up to
five years’
imprisonment and up to a $250,000 fine for a first criminal offense),
with 17 U.S.C. § 504(c)
(authorizing statutory damages between $750 and $30,000 per infringed
work, with a maximum
of $150,000 for a willful violation).
Sixth, in addition to its deterrent purpose, the Copyright Act’s
statutory damages
provision also serves an important non-punitive purpose: it compensates
copyright owners for
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 26 of 39
19
damages suffered as a result of infringement. See discussion infra Part
V.B. Statutory damages
were established as an alternative to actual damages and disgorgement of
profits because the
value of a copyright and the loss caused by infringement are often
difficult to calculate and prove.
F.W. Woolworth, 344 U.S. at 233; Lowry’s Reports, Inc. v. Legg Mason,
Inc., 302 F. Supp. 2d
455, 460 (D. Md. 2004). Proving actual damages may be prohibitively
expensive because the
actual damages capable of proof are often less than the cost of
detecting and investigating
infringements. Infringers’ profits, moreover, are often not an adequate
measure of the actual
injury caused by copyright infringement, especially where the infringers
do not seek or realize
commercial gain. This non-punitive, compensatory purpose further
demonstrates that the
Copyright Act’s statutory damages provision is civil in nature. See
Reiserer, 479 F.3d at 1164
(concluding tax penalties that serve the remedial goal of reimbursing
the government for the costs
in investigating tax fraud and for possible lost revenue are civil in
nature).
Finally, in light of the important non-punitive purpose served by the
awarding of statutory
damages for copyright infringement, the range of statutory damages
specified by Congress in the
1999 amendment to the Copyright Act is not excessive. See discussion
infra Part V.B.
Defendant relies exclusively on an alleged disparity between the amount
of statutory damages
authorized by the Copyright Act and the actual harm he asserts is caused
by non-commercial
copyright infringement to support his assertion that the statutory
damages provision is criminal in
nature. Even if Defendant were correct in asserting such a disparity, a
comparison between the
remedy and its non-punitive purpose is only one factor in assessing
whether the remedy is
sufficiently punitive to negate Congress’ intent. The Supreme Court has
specifically cautioned
against elevating this one factor to controlling status, as Defendant
attempts to do here. See
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 27 of 39
20
Hudson, 522 U.S. at 101; see also Williams, 251 U.S. at 66 (recognizing
that statutory damages
addressing “public wrong[s]” need not “be confined or proportioned to
[actual] loss or
damages”); Centerline Equip. Corp. v. Banner Personnel Serv., Inc., 545
F. Supp. 2d 768, 777
(N.D. Ill. 2008) (“There is no requirement that [statutory damages] be
proportional to the
plaintiff's own injury . . . Congress may choose an amount that reflects
the injury to the public as
well as to the individual.”).
In enacting the Copyright Act’s statutory damages provision, Congress
intended to create
a civil remedy to allow copyright owners to obtain compensation for
infringement of their
copyrighted works and to deter infringement. The range of statutory
damages Congress provided
for in the 1999 amendments to the Copyright Act is not so punitive in
purpose or effect, under the
Ward factors, as to transform the remedy into a criminal penalty
notwithstanding Congress’
intent. Because the Copyright Act’s statutory damages provision is a
civil remedy, Defendant is
not entitled to the process protections of the criminal law in this case
and the adjudication of
Defendant’s liability by civil action rather than criminal prosecution
does not violate the
separation-of-powers doctrine.
IV. THE COPYRIGHT ACT’S STATUTORY DAMAGES PROVISION SATISFIES
DUE PROCESS
The Copyright Act authorizes an award of statutory damages for copyright
infringement
ranging from $750 to $30,000 per infringed work, with a maximum of
$150,000 for wilful
infringement. 17 U.S.C. § 504(c). Contrary to Defendants assertion, see
Def.’s Mem. in Supp. of
Mot. to Dismiss, at 7–10; Def.’s Opp’n to Pls.’ Mot. to Dismiss
Countercl., at 7–13, this range of
statutory damages does not violate due process, even when applied to
infringers who do not seek
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 28 of 39
Defendant initially relied on BMW of North Am., Inc. v. 6 Gore, 517 U.S.
559 (1996), to
support his due process claim. See Def.’s Opp’n to Pls.’ Mot. to Dismiss
Countercl., at 10–12.
In his later motion to dismiss, Defendant changed course, stating it is
“unclear” whether punitive
damages jurisprudence applies in the statutory damages context and
acknowledging that the
Supreme Court has previously applied the standard articulated in St.
Louis, I.M. & S. Railway Co.
v. Williams, 251 U.S. 63, 67 (1919), to assess statutory damages. Def.’s
Mem. in Supp. of Mot.
to Dismiss, 7–10.
7The Gore framework assesses an award of punitive damages based on (1)
the degree of
reprehensibility of the defendant’s misconduct; (2) the disparity
between the actual or potential
harm suffered by the plaintiff and the punitive damages award; and (3)
the difference between the
punitive damages awarded by the jury and civil penalties authorized or
imposed in comparable
21
commercial gain, because it is not “so severe and oppressive as to be
wholly disproportioned to
the offense [or] obviously unreasonable.” Williams, 251 U.S. at 67. In
establishing the current
range of statutory damages, Congress reasonably determined such damages
are necessary to
compensate copyright owners and deter infringement in the face of new
computer technologies.
A. Courts Examine Statutory Damages Awards Under The Standard
Articulated By The Supreme Court In Williams
The Supreme Court’s punitive damages jurisprudence, see BMW of North
Am., Inc. v.
Gore, 517 U.S. 559, 574–75 (1996), does not provide the appropriate
standard for determining
whether statutory damages violate the Due Process Clause. Rather, the
applicable standard is set
forth in St. Louis, I.M. & S. Railway Co. v. Williams. 251 U.S. at 64,
67 (holding that a statutory
damages award of $75, for a violation that resulted in actual damages of
only 66 cents, was within
the statutorily-authorized range of $50 to $300 and did not violate due
process).6 The Williams
standard is quite distinct from, and much more deferential than, the
framework articulated in
Gore. Under the Williams standard, a statutory damages provision is
analyzed to determine if it is
“so severe and oppressive as to be wholly disproportioned to the offense
and obviously
unreasonable.” Id. at 67.7
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 29 of 39
cases. 517 U.S. at 575.
22
The framework articulated in Gore for assessing punitive damages is not
applicable to
statutory damages because the two remedies are distinct. Punitive
damages are awarded by a jury
to punish a wrongdoer; the jury’s discretion in choosing an amount is
usually unconstrained.
Statutory damages, on the other hand, exist in large part to compensate
victims of wrongdoing in
areas where actual damages are difficult to calculate or prove. See
Lowry’s Reports, 302 F. Supp.
2d at 460. The range of statutory damages, moreover, is carefully
constrained by statute. As a
result of these differences, statutory damages do not implicate the
issue of fair notice that
concerned the Supreme Court in Gore, see Gore, 517 U.S. at 574
(“Elementary notions of
fairness enshrined in our constitutional jurisprudence dictate that a
person receive fair notice not
only of the conduct that will subject him to punishment, but also of the
severity of the
penalty[.]”); rather, a statutory damages provision by its nature puts
individuals on notice of a
specific range of damages to which they may be subject, see id. at 595
(Breyer, J., concurring)
(noting the absence of “legislative enactments [in Gore] that classify
awards and impose
quantitative limits that would significantly cabin the fairly unbounded
discretion created by the
absence of constraining legal standards”); Lowry’s Reports, 302 F. Supp.
2d at 460 (“The
unregulated and arbitrary use of judicial power that the Gore guideposts
remedy is not implicated
in Congress’ carefully crafted and reasonably constrained statute.”);
DirecTV, Inc. v. Cantu, 2004
WL 2623932, at *4–*5 (W.D. Tex. Sept. 29, 2004) (rejecting due process
claim and
distinguishing Gore from statutory damages context because “fair notice
is not a concern here”);
Accounting Outsourcing, LLC v. Verizon Wireless Pers. Commc’n, L.P., 329
F. Supp. 2d 789,
808–10 (M.D. La. 2004) (same). Nor does it make sense in the context of
statutory damages to
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 30 of 39
23
examine the disparity between the actual damages suffered by a plaintiff
and the punitive damages
award as required by Gore, see Gore, 517 U.S. at 575, because statutory
damages may only be
awarded when a plaintiff forgoes the right to recover actual damages,
Lowry’s Reports, 302 F.
Supp. 2d. at 460, and are in fact, a substitute or proxy for actual
damages.
A further indication that the Supreme Court did not intend for its
punitive damages
jurisprudence to apply to statutory damages is that the Gore guideposts
specifically compare a
punitive damages award to civil penalties available for comparable
conduct. See Gore, 517 U.S.
at 575; id. at 583 (“[A] reviewing court engaged in determining whether
an award of punitive
damages is excessive should accord substantial deference to legislative
judgments concerning
appropriate sanctions for the conduct at issue.” (quotations omitted)).
Applying this guidepost in
the context of statutory damages would be a tautology; a statutory
damages award is by definition
within the statutory range set by Congress.
Courts have consistently applied the Williams standard, rather than
punitive damages
jurisprudence, in assessing the constitutionality of statutory damages
provisions. See Zomba, 491
F.3d at 587–88 (concluding application of the Copyright Act’s statutory
damages provision did
not violate the Williams standard); Centerline Equip., 545 F. Supp. 2d
at 777–78 (applying the
Williams standard to uphold the statutory damages provision of the
Telephone Consumer
Protection Act); Accounting Outsourcing, 329 F. Supp. 2d at 808–10
(same); Texas v. American
Blastfax, Inc., 121 F. Supp. 2d 1085, 1090–91 (W.D. Tex. 2000) (same);
see also United States
v. Citrin, 972 F. 2d 1044, 1051 (9th Cir. 1992) (“A statutorily
prescribed penalty violates due
process rights only where the penalty prescribed is so severe and
oppressive as to be wholly
disproportioned to the offense and obviously unreasonable.” (quotation
omitted)). Because the
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 31 of 39
The Sixth Circuit did use an objective ratio test 8 in Zomba and found
that a ratio of 44:1
of statutory damages to actual damages did not violate due process given
that the ratio in
Williams was 113:1. See Zomba Enters., Inc. v. Panorama Records, Inc.,
491 F.3d 574, 588 (6th
Cir. 2007).
24
Supreme Court has articulated a standard for evaluating the
constitutionality of statutory damages
provisions, see Williams, 251 U.S. at 67, and the Gore guideposts are
not workable in the
statutory damages context, the Court should apply the Williams standard
in assessing the
constitutionality of the Copyright Act’s statutory damages provision.
B. The Copyright Act’s Statutory Damages Provision Satisfies The
Williams
Standard
The Copyright Act’s statutory damages provision is not “so severe and
oppressive as to be
wholly disproportioned to the offense and obviously unreasonable.”
Williams, 251 U.S. at 67.
The Williams standard is extremely deferential and does not turn on a
particular ratio between
statutory and actual damages. See Zomba, 491 F.3d at 587 (describing the
Williams standard as
“extraordinarily deferential—even more so than in cases applying
abuse-of-discretion review”)
(citing Douglas v. Cunningham, 294 U.S. 207, 210 (1935) (“[E]mployment
of the statutory
yardstick, within set limits, is committed solely to the court which
hears the case, and this fact
takes the matter out of the ordinary rule with respect to abuse of
discretion.”)).8 Even in the
punitive damages context, the Supreme Court has been “reluctant to
identify concrete
constitutional limits on the ratio between harm, or potential harm, to
the plaintiff and the punitive
damages award.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.
408, 424 (2003). In a
1952 case analyzing a previous copyright statute, the Supreme Court
found it was just for a
copyright infringer to be subject to statutory damages of $5,000 even
though the defendant
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 32 of 39
This report, written in 1961, was part of an extensive review, 9 by the
Copyright Office, of
the history, purposes, and effects of the Copyright Act. It culminated
in Congress’ enactment of
the 1976 Copyright Act.
25
admitted to only $900 in gross profits. F.W. Woolworth, 344 U.S. at
229–30, 234. The Supreme
Court observed,
the court’s conception of what is just in the particular case,
considering the nature of the copyright, the circumstances of the
infringement and the like, is made the measure of the damages to be
paid, but with the express qualification that in every case the
assessment must be within the prescribed limitations, that is to say,
neither more than the maximum nor less than the minimum. Within
these limitations the court’s discretion and sense of justice are
controlling[.]
Id. at 232. A statutory damages award within the limits established by
Congress in the 1999
amendments to the Copyright Act is similarly just and does not violate
notions of due process.
Dating back to the middle of the 17th century, “the common law
recognized an author’s
right to prevent the unauthorized publication of his manuscript” because
of “the principle that the
manuscript was the product of intellectual labor and was as much the
author’s property as the
material on which it was written.” Feltner, 523 U.S. at 349. The first
Congress recognized the
need to protect this intellectual labor by enacting a federal statutory
damages provision for
copyright infringement in 1790. See Copyright Act of 1790, 1 Stat. 124,
125. Federal copyright
law has authorized the awarding of statutory damages for copyright
infringement in some form
ever since, and the Court should defer to Congress’s historical
application of these provisions.
See Staff of House Comm. On The Judiciary, 87th Cong., Report of the
Register of Copyrights
on The General Revision of The U.S. Copyright Law (Comm. Print 1961), at
ix (tracing the
federal copyright statute from 1790 to its three general revisions in
1831, 1870, and 1909).9
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 33 of 39
The compensatory component of statutory damages is reflected 10 in
Congress’s concern
that the 1999 adjustment of the statutory damages range from the 1988
Amendments “reflect
inflation over the past eleven years.” See H.R. Rep. 106-216, at 6
(1999).
26
The Copyright Act’s statutory damages provision serves both to
compensate and deter.
Congress established a scheme to allow copyright owners to elect to
receive statutory damages
for copyright infringement instead of actual damages and profits because
of the difficulty of
calculating and proving actual damages. F.W. Woolworth, 344 U.S. at 233
(noting statutory
damages are intended to allow “the owner of a copyright some recompense
for injury done him, in
a case where the rules of law render difficult or impossible proof of
damages or discovery of
profits”); Lowry’s Reports, 302 F. Supp. 2d at 460 (“Statutory damages
exist in part because of
the difficulties in proving—and providing compensation for—actual harm
in copyright
infringement actions.”).10 As the Copyright Office explained in its 1961
report to Congress, the
need for statutory damages in the context of copyright infringement
“arises from the
acknowledged inadequacy of actual damages and profits in many cases:
• The value of a copyright is, by its nature, difficult to establish,
and the loss caused
by an infringement is equally hard to determine. As a result, actual
damages are
often conjectural, and may be impossible or prohibitively expensive to
prove.
• In many cases, especially those involving public performances, the
only direct loss
that could be proven is the amount of a license fee. An award of such an
amount
would be an invitation to infringe with no risk of loss to the
infringer.
• The actual damages capable of proof are often less than the cost to
the copyright
owner of detecting and investigating infringements.
• An award of the infringer’s profits would often be equally inadequate.
There may
have been little or no profit, or it may be impossible to compute the
amount of
profits attributable to the infringement. Frequently the infringer’s
profits will not
be an adequate measure of the injury caused to the copyright owner.”
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 34 of 39
27
Staff of House Comm. On The Judiciary, 87th Cong., Report of the
Register of Copyrights on
The General Revision of The U.S. Copyright Law (Comm. Print 1961), at
102–03.
The inadequacy of actual damages and profits to compensate copyright
owners is evident
under the circumstances of this case. It is impossible for a copyright
owner to calculate actual
damages when an online media distribution system is used to illegally
distribute its copyrighted
sound recordings; the number of subsequent acts of infringement by
computer users who
download illegal copies of the sound recordings from the original
infringer is simply unknowable.
Additionally, it is costly for owners of copyrighted sound recordings to
detect and investigate
copyright infringement because of the widespread nature of such
infringement in today’s world of
advanced computer technologies. See H.R. Rep. 106-216, at 3
(“[C]opyright piracy of
intellectual property flourishes, assisted in large part by today’s
world of advanced
technologies.”). Finally, the harms to the owners of copyrighted sound
recordings and to the
public are not negated merely because an infringer using an online media
distribution system does
not seek commercial gain. Such infringement can limit a copyright
owner’s (or their authorized
licensees’) ability to distribute legal copies of copyrighted sound
recordings. See H.R. Rep. 105-
339, at 5 (acknowledging the harm of infringement without commercial
gain on businesses that
depend on licensing agreements and royalties). It can also reduce a
copyright owner’s profits by
permitting individuals who would otherwise be required to purchase
copies of copyrighted sound
recordings to obtain illegal copies for free. Infringement without
commercial gain also harms the
public because the high volume of infringement results in “lost U.S.
jobs, lost wages, lower tax
revenue, and higher prices for honest purchasers of copyrighted [sound
recordings].” H.R. Rep.
106-216, at 3; see also Williams, 251 U.S. at 66 (observing that the
“[l]egislature may adjust
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 35 of 39
The importance of allowing recovery of 11 statutory damages to protect
copyrighted works
is further evidenced by bilateral free trade agreements, entered into by
the United States, that
require signatories to have statutory damages provisions in place to
remedy copyright
infringement. See, e.g., Singapore-US Free Trade Agreement, Art. 16.9.9;
Morocco-US Free
Trade Agreement, Art. 15.11.7; Central America-US Free Trade Agreement,
Art. 15.11.8.
28
[the] amount (of statutory damages) to the public wrong rather than the
private injury”). In light
of the difficulty of calculating and proving actual damages in copyright
cases, it was not
unreasonable for Congress to authorize recovery of statutory damages.
Statutory damages also serve a deterrent purpose. In increasing the
range of statutory
damages in the 1999 amendments to the Copyright Act, Congress stated,
“[i]t is important that
the cost of infringement substantially exceed the costs of compliance,
so that persons who use or
distribute intellectual property have a strong incentive to abide by the
copyright laws.” H.R. Rep.
106-216, at 6. Congress noted that, in 1999, the rate of software piracy
equaled 25% of all sales
in the United States and resulted in a loss of $2.9 billion to copyright
owners. Id. at 3. According
to Congress, further deterrence was necessary to prevent similar losses
in the future because
“many infringers do not consider the current copyright infringement
penalties a real threat and
continue infringing, even after a copyright owner puts them on notice
that their actions constitute
infringement and that they should stop the activity or face legal
action.” Id. Congress’ expressed
desire to increase deterrence, accompanied by congressional findings,
demonstrates that the
statutory damages provision of the Copyright Act is not disproportionate
to the offense or
obviously unreasonable. The Court should defer to Congress’ reasoned
judgment.11 See Gore,
517 U.S. at 583.
Copyrights are of great value, not just to their owners, but to the
American public as well.
Congress has recognized this value from the first days of the Republic.
The federal copyright
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 36 of 39
Defendant also argues that the availability 12 of statutory damages for
non-commercial
infringement results in a “de facto limitation on access to (the)
courts” in violation of due process.
Def.’s Mem. in Supp. of Mot. to Dismiss, at 6. In support of this
assertion, Defendant cites a line
of cases holding that a state cannot enforce state-prescribed rates for
railroad transportation by
imposing severe penalties for deviation from those rates unless the
state also provides a
mechanism for railroad companies to test the validity of the rates
before the penalties are imposed
to ensure that the rates are sufficiently high to permit a return on
investment. Id. at 4–5 (citing Ex
parte Young, 209 U.S. 123 (1908); Williams, 251 U.S. at 64–65
(identifying line of cases); and
Life & Cas. Ins. Co. v. McCray, 291 U.S. 566, 574–75 (1934) (relying on
railroad cases)). These
cases are inapposite; railroad companies were de facto denied the
ability to test the validity of the
prohibition underlying a penalty, whereas here, the validity of the
prohibition—against copyright
infringement—is beyond dispute. Moreover, Defendant has presented no
evidence that he sought
declaratory relief to determine whether the Copyright Act’s statutory
damages provision is
constitutional as applied to non-commercial infringers or that his
alleged conduct was an effort to
test the validity of the Act.
29
statute, enacted by the First Congress and subject to numerous revisions
since that time, has
consistently authorized the awarding of statutory damages to ensure
significant monetary awards
in copyright infringement lawsuits that will make copyright owners whole
and deter further
infringement. This historical approach is followed in the current
version of the Copyright Act’s
statutory damages provision; it provides compensation to copyright
owners who have to invest
resources into protecting property that is often unquantifiable in value
and deters those infringing
parties who think they will go undetected in committing this serious
public wrong. For these
reasons, the range of statutory damages authorized by 17 U.S.C. § 504(c)
is not disproportionate
to the offense or obviously unreasonable and does not violate notions of
due process.12
VI. THE COPYRIGHT ACT’S STATUTORY DAMAGES PROVISION DOES NOT
VIOLATE THE EIGHTH AMENDMENT
Contrary to Defendant’s assertion, see Def.’s Opp’n to Pls.’ Mot. to
Dismiss Countercl.,
at 3, 7, the Eighth Amendment’s prohibition against “excessive fines,”
U.S. Const. amend. VIII,
does not apply to this case. The Excessive Fines Clause “limits the
government’s power to
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 37 of 39
Under the Copyright Act of 1790, the copyright owner received 13 half of
the statutory
damages awarded for copyright infringement and the United States
received the remaining half. 1
Stat. 124 (1790). The language permitting the United States to receive a
share of the statutory
damages award was omitted in the 1909 revision of the Copyright Act and
has been absent ever
since. See Pub. L. No. 60-349, § 25 (1909).
30
extract payments, whether in cash or in kind, as punishment for some
offense.” United States v.
Bajakajian, 524 U.S. 321, 328 (1998) (quotation omitted). It does not,
however, “constrain an
award of money damages in a civil suit when the government neither has
prosecuted the action
nor has any right to receive a share of the damages awarded.”
Browning-Ferris Indus. of
Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 264 (1989). Because
this action was
instituted by private parties and the United States does not have a
right to receive a share of any
statutory damages awarded,13 the Eighth Amendment is inapplicable. See
Zomba, 491 F.3d at
586 (concluding Excessive Fines Clause does not apply to the Copyright
Act’s statutory damages
provision because the government did not prosecute the action or receive
a share of the damages
awarded); Centerline Equip., 545 F. Supp. 2d at 777 (same with respect
to the statutory damages
provision of the Telephone Consumer Protection Act); Corporacion Insular
de Seguros v.
Munoz, 896 F. Supp. 238, 239–40 (D.P.R. 1995) (same with respect to a
provision of the
Racketeer Influenced and Corrupt Organizations Act that allows private
parties to recover treble
damages in civil actions). Defendant’s assertion that the Copyright
Act’s statutory damages
provision somehow violates the Excessive Fines Clause must be rejected.
CONCLUSION
For the foregoing reasons, the Court should uphold the constitutionality
of the Copyright
Act’s statutory damages provision if the Court finds it is necessary to
address the provision’s
constitutionality.
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 38 of 39
31
Respectfully submitted this 22nd day of March, 2009.
MICHAEL F. HERTZ
Acting Assistant Attorney General
MICHAEL J. SULLIVAN
United States Attorney
JAMES J. GILLIGAN
Assistant Director, Federal Programs Branch
By: /s/ Michelle R. Bennett
MICHELLE R. BENNETT, CO Bar No. 37050
Trial Attorney
U.S. Department of Justice
Civil Division, Federal Programs Branch
20 Massachusetts Ave., NW, Room 7111
Washington, D.C. 20001
Tel: (202) 305-8902
Fax: (202) 616-8470
Email: michelle.bennett@usdoj.gov
Counsel for the United States of America
CERTIFICATE OF SERVICE
I hereby certify that on March 22, 2009, I filed a true copy of the
above document with
the CM/ECF System, which will send an electronic notice to the attorney
of record for each party.
_/s/ Michelle R. Bennett____________________
MICHELLE R. BENNETT
Case 1:03-cv-11661-NG Document 793 Filed 03/22/2009 Page 39 of 39
-----

regards,
alexander.

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