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IP/Entertainment Case Law Updates

Arista Records LLC v. Lime Group LLC

In copyright infringement litigation against peer-to-peer network, court limits plaintiffs to one award of statutory damages per song infringed.

In May 2010, the court granted summary judgment to plaintiff record companies on their claims against defendants for secondary copyright infringement. Defendants were affiliated with the Lime Wire online file-sharing network, and the court concluded that they had induced hundreds if not thousands of users of the site to infringe plaintiffs’ copyrights.

Now in the damages phase, the parties disputed how to calculate statutory damages, which plaintiffs elected to pursue for about 9,500 sound recordings pursuant to 17 U.S.C. § 504(c)(1) (providing for minimum damages of $750 and maximum damages of $30,000 when a work has been registered prior to its infringement).

The issue was whether the plaintiffs were entitled to a separate statutory damage award for each infringement for which the defendants were jointly and severally liable, or whether they were entitled to one statutory damage award per infringed work, regardless of how many individual Lime Wire users had directly infringed that particular work.

The court began its analysis by noting that a primary infringer who is individually liable is assessed statutory damages for each work infringed, regardless of the number of infringements. It found no reason why the same result should not apply with respect to defendants, like the Lime Wire defendants, who are secondarily liable. The court then noted that “the dollar amount of each statutory award that Plaintiffs ultimately receive can account for the number of direct infringers Defendants induced to infringe though the Lime Wire system.”

Turning to the practicalities of the issue, the court observed that if Plaintiffs were to recover statutory damages based on the number of direct infringers per work, defendants’ damages could reach into the trillions. It noted that the “absurdity of this result” was one of the factors that had motivated other courts to reject similar theories.

Turning to applicable case law, the court concluded that Columbia Pictures Television v. Krypton Board of Birmingham, 106 F.3d 284 (9th Cir. 1997), was unpersuasive. In that case, the Ninth Circuit held that a defendant was secondarily liable for each infringement of a television show committed by three different stations that he owned. With respect to damages, the defendant argued that he should pay one statutory award for each infringed work. The Ninth Circuit rejected that argument, ordering the defendant to pay three separate statutory damage awards for each work infringed.

The court distinguished Columbia Pictures on its facts, finding it inapplicable to cases involving large numbers of infringements. After surveying additional case law, the court held that “the most plausible interpretation of Section 504(c) is one that authorizes only a single statutory damage award per work against a secondarily liable defendant, particularly in the context of the mass infringement found in online peer-to-peer file sharing.”

In a related order, entered on March 11, 2011, the court denied defendants’ Rule 12(c) motion to dismiss plaintiffs’ claims of statutory damages for those works (1,355) for which plaintiffs had allegedly received a judgment from the primary direct infringers. The court held that defendants had presented insufficient evidence to support their argument that judgment had already been entered as to the 1,355 works.

Finally, in a related order entered on March 18, 2011, the court held that plaintiffs were barred from recovering statutory damages with respect to works infringed before their registration, even if there were other individual Lime Wire users who first infringed that work after it was registered. The court noted that plaintiffs could still recover actual damages for those works, and that plaintiffs would thus be compensated in the event that those works were infringed on the Lime Wire system.

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