"Distribution"

I’ve done at least one post on the music and movie industries’ war against file-sharing.

Personally, I think, as I said earlier, that they’re pursuing a strategy that will ultimately prove futile, but they continue to pursue it.

Late last month there was an interesting development in a civil suit against an alleged file-sharer. The case is Capitol Records, Inc. v. Thomas, 2008 WL 4405282 (U.S. District Court for the District of Minnesota, 2008). You can read about the facts in the case and how it got to court in this article from last year.

As the article explains, last year Jammie Thomas, a 30 year old Native American single mother of two, refused to pay an out of court settlement to the Recording Industry Association of America (RIAA) when they accused her of illegally using file-sharing software to share music. Instead, Thomas went to trial. On October 4 of last year, a federal jury in Duluth, Minnesota found that Ms. Thomas had engaged in illegal file-sharing and ordered her to pay $9,250 for each of the 24 songs the RIAA said she had distributed illegally via the software. The total award was $220,000. The article cited above, which was written at the time, said the award would “almost certainly go uncollected” and would drive Ms. Thomas into bankruptcy.

Ms. Thomas’ lawyers filed a motion for a new trial with the court, raising several errors in the original proceeding. In ruling on her motion, the court first noted precisely what the RIAA had accused Ms. Thomas of: “On April 19, 2006, Plaintiffs filed a Complaint against Defendant Jammie Thomas alleging that she infringed Plaintiffs' copyrighted sound recordings pursuant to the Copyright Act, 17 U.S.C. §§ 101, 106, 501-505, by illegally downloading and distributing the recordings via the online peer-to-peer file sharing application known as Kazaa.” Capitol Hill Records, Inc. v. Thomas, supra.

The court then considered whether it erred in the instruction it gave the jury on the issue of “distributing” the recordings. “The Copyright Act provides that `the owner of copyright . . . has the exclusive rights to . . . distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership. . . .’ 17 U.S.C. § 106(3). The Act does not define the term `distribute.’ Capitol Hill Records, Inc. v. Thomas, supra. It noted that other courts disagree as to “whether making copyrighted materials available for distribution constitutes distribution under § 106(3).” Capitol Hill Records, Inc. v. Thomas, supra.

After reviewing a variety of sources – the language of the copyright statute itself, a dictionary, an opinion from the Register of Copyrights and the use of the term “distribute” in other sections of the U.S. Code – the Thomas court decided Ms. Thomas was correct in arguing that “the plain meaning of the term “distribution” does not including making available and, instead, requires actual dissemination” of the copyrighted material (the songs, in this instance). Capitol Hill Records, Inc. v. Thomas, supra.

The court also rejected the plaintiff’s argument that in this context “distribution” is synonymous with “publication:” The copyright statues at one point define publication as “the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership. . . . The offering to distribute copies or phonorecords . . . for . . . distribution . . . constitutes publication.” 17 U.S.Code § 101.

The court found that “[u]nder this definition, making sound recordings available on Kazaa could be considered distribution.” Capitol Hill Records, Inc. v. Thomas, supra. But it also found that the terms are not, in fact, synonymous:

[S]imply because all distributions within the meaning of § 106(3) are publications does not mean that all publications within the meaning of § 101 are distributions. The statutory definition of publication is broader than the term distribution as used in § 106(3). A publication can occur by means of the `distribution of copies . . . of a work to the public by sale or other transfer of ownership. . . .’ § 101. This portion of the definition. . . defines a distribution as set forth in § 106(3). However, a publication may also occur by `offering to distribute copies . . . to . . . persons for purposes of further distribution. . . .’ § 101. While a publication effected by distributing . . . of the work is a distribution, a publication effected by merely offering to distribute copies . . . to the public is merely an offer of distribution, not an actual distribution.

Capitol Hill Records, Inc. v. Thomas, supra.

The court then found that because it had erroneously instructed the jury that the “`act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive right of distribution, regardless of whether actual distribution has been shown”, Ms. Thomas is entitled to a new trial. As the court explained, “[l]iability for violation of the exclusive distribution right found in § 106(3) requires actual dissemination. Jury Instruction No. 15 was erroneous and that error substantially prejudiced Thomas's rights. Based on the Court's error in instructing the jury, it grants Thomas a new trial.” Capitol Hill Records, Inc. v. Thomas.

But the Thomas court didn’t stop there. In an aside – in what lawyers refer to as dicta, i.e., comments that are not essential to deciding the issues in the case – the judge in the Thomas case gave us his opinion of this and similar lawsuits:

The Court would be remiss if it did not take this opportunity to implore Congress to amend the Copyright Act to address liability and damages in peer-to-peer network cases such as the one currently before this Court. The Court begins its analysis by recognizing the unique nature of this case. The defendant is an individual, a consumer. She is not a business. She sought no profit from her acts. The myriad of copyright cases cited by Plaintiffs and the Government, in which courts upheld large statutory damages awards far above the minimum, have limited relevance in this case. All of the cited cases involve corporate or business defendants and seek to deter future illegal commercial conduct. The parties point to no case in which large statutory damages were applied to a party who did not infringe in search of commercial gain.

The statutory damages awarded against Thomas are not a deterrent against those who pirate music in order to profit. Thomas's conduct was motivated by her desire to obtain the copyrighted music for her own use. The Court does not condone Thomas's actions, but it would be a farce to say that a single mother's acts of using Kazaa are the equivalent, for example, to the acts of global financial firms illegally infringing on copyrights in order to profit in the securities market. . . .

While the Court does not discount Plaintiffs' claim that, cumulatively, illegal downloading has far-reaching effects on their businesses, the damages awarded in this case are wholly disproportionate to the damages suffered by Plaintiffs. Thomas allegedly infringed on the copyrights of 24 songs-the equivalent of approximately three CDs, costing less than $54, and yet the total damages awarded is $222,000-more than five hundred times the cost of buying 24 separate CDs and more than four thousand times the cost of three CDs. While the Copyright Act was intended to permit statutory damages that are larger than the simple cost of the infringed works in order to make infringing a far less attractive alternative than legitimately purchasing the songs, surely damages that are more than one hundred times the cost of the works would serve as a sufficient deterrent.

Thomas not only gained no profits from her alleged illegal activities, she sought no profits. Part of the justification for large statutory damages awards in copyright cases is to deter actors by ensuring that the possible penalty for infringing substantially outweighs the potential gain from infringing. In the case of commercial actors, the potential gain in revenues is enormous and enticing to potential infringers. In the case of individuals who infringe by using peer-to-peer networks, the potential gain from infringement is access to free music, not the possibility of hundreds of thousands-or even millions-of dollars in profits. This fact means that statutory damages awards of hundreds of thousands of dollars is certainly far greater than necessary to accomplish Congress's goal of deterrence.

. . . [B]y using Kazaa, Thomas acted like countless other Internet users. Her alleged acts were illegal, but common. Her status as a consumer who was not seeking to harm her competitors or make a profit does not excuse her behavior. But it does make the award of hundreds of thousands of dollars in damages . . . oppressive

Capitol Records, Inc. v. Thomas, 2008 WL 4405282 (D. Minn. 2008).