After Three Trials, Court Restores Original $222,000 Verdict in Key File-Sharing Case

Jammie Thomas-Rasset testifies in her first civil trial in 2007, while U.S. District Judge Michael Davis watches from the bench. Illustration: Cate Whittemore/Wired

A federal appeals court on Tuesday ordered infamous file-sharer Jammie Thomas-Rasset to pay the recording industry $222,000 for downloading and sharing two dozen copyrighted songs on the now-defunct file-sharing service Kazaa.

More importantly, the appeals court agreed with the Recording Industry Association of America that judges are virtually powerless to reduce a jury’s verdict in a copyright case. The appeals court, however, sidestepped ruling on the issue of whether the RIAA must prove “actual distribution” of songs in addition to merely making them available on a peer-to-peer network.

Unless there’s an appeal, the decision (.pdf) by the 8th U.S. Circuit Court of Appeals marks the finish to three RIAA trials against the Minnesota woman, who was the nation’s first individual to challenge an RIAA lawsuit in court instead of settling for a few thousand dollars.

The case dates to 2006, and has a tortuous history of three different verdicts for the same offense. Under the case’s latest iteration, a jury last year awarded the RIAA $1.5 million, which the court reduced to $54,000, ruling that the jury’s award for “stealing 24 songs for personal use is appalling.”

The appeals court’s convoluted decision Tuesday, however, found that the $222,000 verdict from the first case should stand and that U.S. District Judge Michael Davis should not have declared a mistrial in that 2007 case over a flawed jury instruction.

In her appeal, Thomas-Rasset argued that the Copyright Act, which allows damages of up to $150,000 per infringement, was unconstitutionally excessive. (.pdf) The Obama administration weighed in too, saying the large damages allowed “is reasonably related to furthering the public interest (.pdf) in protecting original works of artistic literary, and musical expression.”

The only other file-sharer to challenge an RIAA lawsuit was Joel Tenenbaum, a Massachusetts college student. The Supreme Court in May upheld a Boston federal jury’s award of $675,000 for sharing 30 songs.

Most of the thousands of RIAA file sharing cases against individuals settled out of court for a few thousand dollars. The RIAA has ceased its 5-year campaign of suing individual file sharers and, with the Motion Picture Association of America, has convinced internet service providers to take punitive action against copyright scofflaws, including terminating service.

Feds Urging Appeals Court to Reinstate $1.5 Million File-Sharing Verdict

Jammie Thomas-Rasset testifies in her first civil trial in 2007, while U.S. District Judge Michael Davis watches from the bench. Illustration: Cate Whittemore/Wired

The Obama administration is set to urge a federal appeals court to reinstate a $1.5 million music filing-sharing verdict a jury levied against a Minnesota woman for sharing two dozen songs on Kazaa.

At issue is a Minnesota federal judge’s decision last year lowering the verdict to $54,000, ruling that the jury’s award “for stealing 24 songs for personal use is appalling.”

The case tests the constitutionality of the Copyright Act, which allows penalties of as much as $150,000 per infringement. It also asks whether federal judges have the power to reduce copyright damage awards rendered by juries.

The decision by US District Judge Michael Davis follows the third trial in the Recording Industry Association of America’s lawsuit against Jammie Thomas-Rasset, the first file sharer to take an RIAA lawsuit to a jury trial. Under the case’s latest iteration, a Minnesota jury penalized her last year $62,500 for each of 24 tracks she pilfered on Kazaa.

Despite the judge’s reduction, Thomas-Rasset appealed the lowered damages verdict, (.pdf) claiming the Copyright Act was unconstitutional because of its large or “excessive” awards. The RIAA, for its part, claims that judges do not have the power to alter jury awards when it comes to copyright infringement.

The Obama administration, which is intervening because the constitutionality of the Copyright Act is at issue, agreed with the RIAA and added that the act was constitutional.

“The Copyright Act’s statutory damage provision is reasonably related to furthering the public interest in protecting original works of artistic, literary, and musical expression and its constitutionality must therefore be sustained under the applicable, highly deferential standards of judicial review,” the government wrote (.pdf) the Missouri-based 8th U.S. Circuit Court of Appeals.

The three-judge appellate court panel will hear oral arguments in the case Tuesday.

Judge Davis has overturned the judgments of three separate juries in the Thomas-Rasset case dating to 2007.

The first trial of Thomas-Rasset, of Minnesota, ended with a $222,000 judgment, but Davis declared a mistrial, on the grounds that he’d improperly instructed the jury on a point of law. After the second trial, Davis tentatively reduced the award from $1.92 million to $54,000, and ordered a new trial on damages if the parties didn’t agree to that amount or settle. That third trial ended in the $1.5 million judgement that Davis reduced again.

Judge Davis, the nation’s first judge to reduce the amount of damages in a Copyright Act case, said fairness demanded his decision to reduce the latest award to $2,250 per track.

The jury’s award was “so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable,” he wrote.

The RIAA said in a legal filing with the appeals court that Judge Davis’ decision “is fundamentally incompatible both with Plaintiff’s constitutional right to have a jury determine what amount of statutory damages is just, and with the deference due to congressionally authorized awards.”

The three Thomas-Rasset verdicts prove that federal juries are willing to slap file sharers with monster awards.

The only other file sharing case to have gone to trial resulted in a Boston jury awarding the RIAA $675,000 for 30 songs, which a judge reduced last year to $67,500. A federal appeals court reinstated the verdict, and the Supreme Court last week declined to intervene.

Most of the thousands of RIAA file sharing cases against individuals settled out of court for a few thousand dollars. The RIAA has ceased its 5-year campaign of suing individual file sharers and, with the Motion Picture Association of America, has convinced internet service providers to take punitive action against copyright scofflaws, including terminating service.

(Thanks to Ray Beckerman for pointing out next week’s oral arguments.)

Feds Seized Hip-Hop Site for a Year, Waiting for Proof of Infringement

For more than a year, and without explanation, the government redirected hip-hop site to this landing page.

Federal authorities who seized a popular hip-hop music site based on assertions from the Recording Industry Association of America that it was linking to four “pre-release” music tracks gave it back more than a year later without filing civil or criminal charges because of apparent recording industry delays in confirming infringement, according to court records obtained by Wired.

The Los Angeles federal court records, which were unsealed Wednesday at the joint request of Wired, the Electronic Frontier Foundation and the First Amendment Coalition, highlight a secret government process in which a judge granted the government repeated time extensions to build a civil or criminal case against, one of about 750 domains the government has seized in the last two years in a program known as Operation in Our Sites.

Apparently, however, the RIAA and music labels’ evidence against Dajaz1, a music blog, never came. Or, if it did, it was not enough to build a case and the authorities returned the site nearly 13 months later without explanation or apology.

Cindy Cohn, the EFF’s legal director, said the site’s 13-month seizure by the Immigration and Customs Enforcement bureau highlights the RIAA’s influence over the government. President Barack Obama has tapped at least five former RIAA attorneys for senior positions in the Justice Department.

“Here you have ICE making a seizure, based on the say-so of the record company guys, and getting secret extensions as they wait for their masters, the record companies, for evidence to prosecute,” Cohn said in a telephone interview. “This is the RIAA controlling a government investigation and holding it up for a year.”

ICE, a branch of the Department of Homeland Security, has the power to seize web domains engaged in infringing activity under the same forfeiture laws used to seize property like houses, cars and boats allegedly tied to illegal activity such as drug running or gambling. But seizing a domain name raises First Amendment concerns — though nothing in the court records show that the government or the court was concerned about the prolonged seizure of the site that is akin to an online printing press.

In the Dajaz1 case, the authorities seized the site in November 2010 on the word of the RIAA that four songs linked to on the site were unauthorized, the records show. Yet nearly a year later, in September 2011, the government was secretly seeking yet another extension to build its case, ostensibly because it was still waiting for the recording industry to produce evidence, the records show. All the while, the site’s owner and his attorney were left out of the loop, as the court record was sealed from them and the public. The Dajaz1 site was redirected to a government landing page saying it was seized by customs officials.

On Sept. 7, 2011, about 11 months after the government seized Andre Nasib’s site, a Department of Homeland Security agent wrote a declaration to U.S. District Judge Margaret Morrow of Los Angeles, explaining the reason for seeking a third time extension to build a case. The agent said “a sampling of content obtained from the website and its purported affiliate websites was submitted for rights holder evaluation and has yet to be returned.”

The agent, Andrew Reynolds, wrote virtually the exact same sentence in a July 13, 2011 declaration (.pdf), in which the government sought its second extension of time to build a case.

However, Reynolds’ declaration in September for the first time mentioned the RIAA by name.

“Additionally, a representative with the Recording Industry Association of America (RIAA) has stated that he will provide a very comprehensive statement to ICE’s and CBP’s [Customs and Border Protection’s] outstanding questions, in coordination with corresponding rights holders, which will be forthcoming in approximately 30 days,” Reynolds wrote. (.pdf)

Other than the unsealing orders won by Wired, EFF and the First Amendment Coalition, that Reynolds filing was the last one in the case — meaning the record does not say whether the RIAA or other industry players ever produced the promised report.

The Los Angeles federal prosecutor in the case, Steven Welk, did not respond for comment. Welk’s office agreed to unseal the documents, but said that it did so without conceding there was any First Amendment or common law necessity to do so. In December, when the site was returned, the authorities said it was “the appropriate and just result.”

The RIAA declined to comment on the unsealed documents, which Wired provided to it for review.

Instead, the industry lobbying group pointed Wired to its statement in December, when Dajaz1 was returned:

We understand that a decision was made that this particular site did not merit a criminal forfeiture proceeding. We respect that government agencies must consider a range of technical issues when exercising their independent prosecutorial discretion. Criminal proceedings are not always brought, for a variety of appropriate reasons.

With respect to Dajaz1, we would note that this particular website has specialized in the massive unauthorized distribution of pre-release music — arguably the worst and most damaging form of digital theft. […]

If the site continues to operate in an illegal manner, we will consider all our legal options to prevent further damage to the music community.

We are aware of statements by the site operator that suggest that music companies themselves were the source of at least some of the thousands of recordings available on Dajaz1. Even assuming this to be accurate, it does not excuse the thousands of other pre-release tracks also made available which were neither authorized for commercial distribution nor for uploading to publicly accessible sites where they were readily downloadable for free.

Dajaz1′s owner, Nasib, of New York, declined comment through his attorney, Andrew Bridges.

In December, Nasib told The New York Times that the recording industry offered him the four songs that were at the center of the case against him.

“It’s not my fault if someone at a record label is sending me the song,” the paper quoted him as saying.

The site’s seizure was based on an affidavit (.pdf) from Reynolds, who said he streamed or downloaded four songs hosted in cyberlockers — and — that were linked on Nasib’s site. The songs in question were “Deuces” by Chris Brown; “Fall for Your Type” by Jamie Foxx; “Long Gone” by Nelly and “Mechanics” by Reek Da Villian. Reynolds, in his seizure affidavit, wrote that he consulted with “RIAA representatives” when drafting the affidavit to verify that the songs were unauthorized.

Bridges said in a telephone interview that Nasib’s site, which is now up and running again, should never have been seized.

“To begin with,” Bridges said, “I don’t think there was any evidence of criminal copyright infringement.”

MPAA Wants Megaupload User Data Retained for Lawsuits — Updated

Hollywood studios want a federal judge to preserve data on all the 66.6 million users of Megaupload, the file-sharing service that was shuttered in January due to federal indictments targeting its operators.

The Motion Picture Association of America is requesting Carpathia, Megaupload’s Virginia-based server host, to retain the 25 petabytes of Megaupload data on its servers, which includes account information for Megaupload’s millions of users. That’s according to a newly surfaced court filing in the Megaupload prosecution in connection to charges of racketeering and criminal copyright infringement.

The MPAA said it wanted to have that data because it might sue Megaupload and others for contributing to copyright infringement.

Howard Gantman, a MPAA vice president, said in a telephone interview that the studios are not intending on suing individual users, but are considering suing Megaupload or other “entities involved.”

“The reason we did that filing [was] that there is a possibility that litigation might be pursued against Megaupload or various intermediaries involved in Megaupload’s operation. We’re not talking about individual users,” Gantman said.

Gantman declined, however,  to name the “intermediaries” that might be sued.

Here is the data the MPAA is seeking:

“In light of the potential civil claims by the studios, we demand that Carpathia preserve all material in its possession, custody, or control, including electronic data and database, related to Megaupload or its operations. This would include, but is not limited to, all information identifying or otherwise related to the content files uploaded to, stored on and/or downloaded from Megaupload; all data associated with those content files, the uploading or downloading of those files, and the Megaupload users who uploaded or downloaded those files,” MPAA attorney attorney Steven Fabrizio wrote (.pdf) Carpathia Jan. 31, the letter of which Carpathia lodged in a legal filing Tuesday.

A hearing on the matter is set for next month. Federal authorities have said they have copied some, but not all of the data, and said Carpathia could delete the 25 million gigabytes of Megaupload data it is hosting.

Carpathia said it is spending $9,000 daily to retain the data, and is demanding a federal judge relieve it of that burden. Megaupload, meanwhile, wants the government to free up some of the millions in dollars of seized Megaupload assets to be released to pay Carpathia to retain the data for its defense and possibly to return data to its customers.

The criminal Megaupload prosecution concerns seven individuals connected to the Hong Kong-based file-sharing site, including founder Kim Dotcom. They were indicted in January on a variety of charges, including criminal copyright infringement and conspiracy to commit money laundering.

Five of the members of what the authorities called a 5-year-old “racketeering conspiracy” have been arrested in New Zealand, pending extradition to the United States.

The government said the site, which generated millions in user fees and advertising, facilitated copyright infringement of movies, often before their theatrical release, in addition to music, television programs, electronic books, and business and entertainment software. The government said Megaupload’s “estimated harm” to copyright holders was “well in excess of $500 million.”

Gantman said the MPAA is not concerned about the identities of the individual Megaupload users. He said Hollywood wants to know the uploading and downloading activity of the Megaupload users in a bid to prove a case that Megaupload or other “intermediaries” contributed or facilitated the users’ behavior.

“If there’s evidence of a frequent infringers, high volume infringers, who are able to continue that operation despite knowledge by Megaupload, that could point to evidence that was involved in this infringing campaign,” Gantman said.

Similar user data was part of the Grokster and Napster civil lawsuits.

Megaupload was on the recording and movie industries’ most-hated lists, often being accused of facilitating wanton infringement of their members’ copyrights. The indictment claims Megaupload induced users to upload copyrighted works for others to download, and that it often failed to comply with removal notices from rights holders under the Digital Millennium Copyright Act.

Megaupload, which was not based in the U.S., says it did comply with DMCA orders, despite not being legally required to due to jurisdiction issues.

Correction: This story originally misstated MPAA’s reasoning behind its request that Megaupload user data be stored. MPAA says it has no plans to use the data to sue individual file sharers.

Photo: Redmind/Flickr