DIRECT REPORTING: Tenenbaum oral argument

A few hours ago, I attended oral arguments here in Boston before the First Circuit Court of Appeals in Sony BMG Music Entertainment v. Tenenbaum (Wikipedia backgrounder, appellate briefs here).  To summarize, several record labels sued Joel Tenenbaum for sharing music files on a peer-to-peer service, and Tenenbaum lost at trial.  However, trial court Judge Nancy Gertner reduced the jury verdict of $675,000 against Mr. Tenenbaum down to $67,500.

Both sides appealed.  The labels framed the sole issue on appeal as:

Whether the district court erred by holding that the jury’s award of $22,500 per work for willful infringement of 30 copyrighted works violated the Due Process Clause, even though that award is well within the range of statutorily prescribed damages awards for willful copyright infringement and even within the statutory range for non-willful infringement.

In contrast, defendant Tenenbaum framed the issues as:

1. Is the award of damages against the defendant unconstitutionally excessive?

2. Was the jury properly guided by the trial judge’s instructions?

3. Does the statute under which the defendant was prosecuted apply to individual noncommercial consumers?

4. Does 17 U.S.C. § 504(c) remain operative in the wake of Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998)?

Today’s hearing took place before a three-judge panel consisting of Chief Judge Sandra L. Lynch, Judge Juan R. Torruella, and Judge O. Rogeriee Thompson.  In addition to the plaintiffs and defendants, the United States (as intervenor) and the Electronic Frontier Foundation (as amicus curiae) presented oral arguments.

Based on the judges’ questions and demeanor at oral argument, my impression is that Joel Tenenbaum faces an uphill battle and is likely to lose his appeal.  I don’t have a transcript of the proceedings, but the following stands out from my notes and memory.

Chief Judge Lynch clearly had no tolerance for the defense’s contention that “no one thought” the statutory penalties for copyright infringement would ever apply to “consumers”.  She pointed out that the statute appeared to apply to consumers, eliciting a concession from Tenenbaum’s counsel that statutory copyright penalties were not facial unconstitutional.  This left the defense with little more than a half-hearted argument that the jury verdict was improper here because the copyright statute originally contemplated damage calculations by judges.

Judges Torruella and Thompson seemed somewhat more suspicious of the record labels’ arguments, but it was unclear whether these suspicions would help Tenenbaum win his case.  Judge Torruella asked the labels’ lawyer whether “lost sales” would provide a useful measure of damages, to which he replied that damages should be commensurate with the “lost of value of the copyright”.  He argued that file-sharing in the aggregate caused enormous economic losses to the labels because it essentially put the music “in the public domain.”  (Why Joel Tenenbaum should be personally responsible for the actions of thousands or millions of other file-sharers remained the obvious question he never managed to answer.)

For her part, Judge Thompson questioned whether appellate courts could ever find that a jury for statutory damages in a copyright infringement action to be excessive if it fell within the statutory range ($750 to $150,000 per work infringed).  The labels’ counsel did concede copyright damage awards were “not immune from Williams [Philip Morris USA v. Williams, 549 U.S. 346 (2007)] review” but maintained that such a problem would be “rare” and that this was not that case.

We likely won’t have the First Circuit’s decision for several months, so there’s still plenty of time to speculate about what the outcome will be.  I’ll continue posting as I have additional thoughts.

Update 4/5/2011:

0 thoughts on “DIRECT REPORTING: Tenenbaum oral argument

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  6. Your legal description of the district court decision has one error. The lower court reduced the award on constitutional grounds, not remittiur. See Sony BMG Music Entertainment v. Tenenbaum, 721 F.Supp.2d 85, 121 (D. Mass. 2010). Had she reduced it on remmittiur the plaintiffs could have demanded a new trial on damages. Because she found the $675K award unconstitutional on due process grounds Sony must appeal to try to reinstate the original jury award. This is important because (I believe) it is much more likely that the First Circuit will reverse a lower court finding of a constitutional violation as they will evaluate the issue de novo (that is without deference to the lower court decision).

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  7. Having worked on the Tenenbaum appeal since September, I want to respond quickly to your prediction.

    You’re right that Chief Judge Lynch exhibited hostility to our arguments that Congress never intended section 504(c) of the Copyright Act to apply to noncommercial copyright infringement, or to filesharing in particular. It is clear she intends to elevate textualism over Congressional intent and rationality. Judges Torruella and Thompson, however, engaged immediately with the propriety of saddling individual filesharers with immense liability under section 504(c). Both were clearly concerned with the historical understanding of the scope of the Copyright Act – Joel’s is the first trial of a noncommercial copyright infringer – and with the potential for juries to award millions of dollars in statutory damages for a few minutes of online activity.

    And it is true that we conceded the apparent fit between the text of 504(c) and Joel’s downloading – indeed, we did so in our briefs. But the crux of our appeal, of this whole saga, is that ending the inquiry there cannot be right. The patent absurdity bordering on blatant unconstitutionality that will result – that has already resulted – from such myopic textualism simply bolsters the historical and Congressional evidence that Joel’s conduct cannot be within the reach of section 504(c).

    It is a dangerous fiction that Congress intended or expected noncommercial infringement to subject an individual consumer to statutory damages. Centuries of copyright litigation and legislative history bear this out. As noted by Jason Harrow at oral argument, statutory damages make any suit against any copyright infringer economically viable, and yet no such case had ever been filed (or even seriously contemplated) against noncommercial infringers until the advent of filesharing. Judge Thompson is right – we must presume Congress legislated with this knowledge. Until Congress affirmatively acts to bring noncommercial copying by individual consumers within the purview of section 504(c) – an action that would raise a myriad of grave constitutional questions – the federal courts must decline to allow these suits to proceed.

    Going into oral argument Monday, our team was still unsure about our line of attack – should we focus on the narrow issue of what legal standard to apply when reviewing the constitutionality of a jury award under 504(c) of the Copyright Act, or should we instead follow our hearts and try to convince the judges that 504(c) was never meant to apply to noncommercial copyright infringers? Many law students we consulted with advised the former route, but, taking our cue from Judge Torruella and Judge Thompson, we took the latter. And, in my opinion, the oral argument went as well as – perhaps better than – we could have expected. There is real hope for Joel, for justice, and for rationality.

    A recording of the oral argument is available here: http://www.ca1.uscourts.gov/files/audio/10-1883.mp3

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