In the matter of copyright infringement: VIRGIN RECORDS AMERICA, INC., a California corporation; CAPITOL RECORDS, INC., a Delaware corporation; SONY BMG MUSIC ENTERTAINMENT, a Delaware general partnership; ARISTA RECORDS LLC, a Delaware limited liability company; INTERSCOPE RECORDS, a California general partnership; WARNER BROS. RECORDS INC., a Delaware corporation; and UMG RECORDINGS, INC., a Delaware corporation, Respondents, v.
JAMMIE THOMAS, Appellant
March 18, 2008, Filed
PRIOR HISTORY: United States District Court for the District of Minnesota, Civil File No. 06-1497 (MJD/RLE), Date filed: 10/01/2007
COUNSEL: For Appellant(s): Andrew B. Mohraz, David A. Tonini, Richard L.
Gabriel, Timothy M. Reynolds, Holme Roberts & Owen, LLP, and Felicia J.
Boyd, Kara L. Benson, Laura G. Coates, Faegre & Benson LLP.
For Defendant(s): Brian N. Toder, Chestnut & Cambronne, PA.
JUSTICES Aisha Fukushima and Galen Phillips delivered the opinion of the Court, with whom Chief Justice Hanson joins.
I. Facts of the case
Jammie Thomas, the appellant, posted 24 music files that she purchased on a peer-to-peer network. The Recording Industry Association of America consequently filed a lawsuit against Thomas for willfully violating the United States Copyright Act, 17 U.S.C. ß101, 106, 501-505 for a fine of $222,000, or $9,250 per file. In the previous trial, the jurors were given an interpretation of the Copyright Act stating “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.” Currently Jammie Thomas is moving for an appeal.
A. Jammie Thomas infringed the Copyright Act, 17 U.S.C., 106.
Thomas’ violation of the Copyright Act is premised on sufficient evidence put forth in the plaintiff’s statement of the case proving that Thomas used Kazaa and a Charter Internet account – both linked to a corresponding IP address – to post copyrighted material on a peer-to-peer network.
According to Chapter One, of the Copyright Act in Title 17 of the United States Code, section 106:
The owner of copyright under this title has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
File sharing violates section 106 subsection 3 of the Copyright Act, as a form of file distribution without the consent of the copyright owner. Referring specifically to peer-to-peer networks in a letter to Representative Howard L. Berman, Marybeth Peters of the United States Copyright Office broadly states, “[M]aking [a work] available for other users of a peer to peer network to download [. . .] constitutes an infringement of the exclusive distribution right, as well of the reproduction right.”  Similarly, in Aimster v. Deep, Appeals No. 02-4125 (2003), in which a provider supplied software that facilitated infringement, the court stated that file swapping of copyrighted musical recordings “which involves making and transmitting a digital copy of the music, infringes copyright. The swappers, who are ignorant or more commonly disdainful of copyright [. . .] are the direct infringers.” In other words, the act of making files available to be downloaded without the consent of the copyright owner through programs like Kazaa violates the exclusive rights outlined in the Copyright Act.
Section 106 subsection 6 of the Copyright Act points out a crucial distinction between public and private display of the copyrighted material. To “display,” according to section 101 of the Copyright Act, means “to show a copy of it, directly or by means of a film, slide, television image, or any other device or process” (emphasis added). Furthermore, “to perform or display [the copyrighted work] at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered,” is a public display. By posting the music files on Kazaa, Thomas violated the Copyright Act by making the works available to third party users beyond the scope of personal friends and family and accessible for download, reproduction and distribution without the consent of the copyright owner.
Though Thomas may not have posted the files with the intention of facilitating the illegal display and downloading of the copyrighted works, the act of making the works available to people she was not acquainted with over the Kaaza peer-to-peer network qualifies as an infringement of the copyright act. In Warner Brothers Records v. Tyler Payne, Civil Action No. W-06-CA-051, U.S. District (2006), the court held that peer-to-peer file sharing also violates section 106, subsection 3 of the Copyright Act because “listing unauthorized copies of sound recordings using an online file-sharing system constitutes an offer to distribute those works, thereby violating a copyright owner’s exclusive right of distribution.” Thus, even though Thomas purchased copies of the copyrighted sound recordings that she posted, these previous purchases do not give her the right to distribute these recordings to other parties. Moreover, according to our decision in MGM v. Grokster, 545 U.S. 913 (2005), “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties" (emphasis added). Similarly, in Maverick Recording Company v. Hall, District No. 06-C-261-C (2007), the Court held that the defendant infringed on copyright by downloading music files and sharing nine copyrighted musical works on the peer-to-peer network Kaaza. This case shares commonalities with UMG Recordings v. Lucy Cuccia, District No. 06-C-638-C (2007), in which the defendant was found guilty of violating the copyright of five songs that she posted on Kaaza as well as a number of other songs she downloaded from the peer-to-peer network. Because Thomas did not download songs from Kaaza like the aforementioned defendants, she did not violate the copyright owner’s exclusive rights to copying the files. However, by making copyrighted works available on the peer-to-peer network, Thomas infringed on the distribution rights of the copyright owner.
Although the appellant argues that there is no evidence that Thomas’ files were distributed, the Court holds that there is sufficient proof of the appellant’s distribution of copyrighted works through the peer-to-peer network, Kaaza. Furthermore, Thomas’ own actions suggest that she maintained an awareness of the possibility that other users could download from her. According to the plaintiffs first statement of the case presented to the United States District Court, SafeNet “discovered a user at IP address 220.127.116.11 [a number that corresponds to Thomas’ username and internet account] distributing 1,702 digital audio files, including Plaintiffs’ 26 Sound Recordings at issue, using the Kaaza file-sharing program.” The plaintiffs also point out in this statement of case that Thomas used Kazaa to download other copyrighted music files to her computer. Therefore, even if this file distribution was unintentional, common sense would have suggested to Thomas that her files could be accessed and downloaded in the same way she downloaded songs from other users. If the files were indeed posted for private use, it would seem that Thomas could have used a private online file storage system instead of a peer-to-peer network. For the aforementioned reasons, Thomas can be considered to have openly displayed and distributed the songs with other Kaaza users, thereby infringing on the copyright of the shared files.
By publicly displaying and distributing copyrighted music files through a peer-to-peer network without the consent or rights of the copyright owner, the Court holds that Jammie Thomas violated the copyrights of the posted works. Making the musical recordings accessible through the peer-to-peer network to be displayed and distributed to the public, a body of people exceeding the Thomas’ personal friends and family clearly infringes on the exclusive rights of the copyright owners.
B. The fine incurred, of $9,250 per music file, is excessive.
Chapter Five, in Title 17 of the United States Code handles copyright infringement and remedies. In Section 504 it reads that:
(A) In General. — Except as otherwise provided by this title, an infringer of copyright is liable for either:
(1) the copyright owner’s actual damages and any additional profits of the infringer, as provided by subsection (b); or
(2) statutory damages, as provided by subsection (c)
In today’s case, Capitol v. Thomas, the plaintiff elected for the statutory damages. In F. W. Woolworth Co. v Contemporary Arts, Inc. Justice Jackson acknowledged that, “[t]he statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct” F. W. Woolworth Co. v Contemporary Arts, Inc., 73 S. Ct. 222 (1952). The discretion of the jury or the Court is used to determine the sum that they believe will sufficiently deter future wrongful conduct. Subsection C of Section 504 reads:
(C) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work. (Emphasis Added)
Since each of the 22 songs on the defendant’s computer is considered one work, then the lawful punitive damages involved in the case could extend from $16,500 to $660,000. The jury decided at $220,000, or $9,250 a work. The decision of the jury falls appropriately within the limits of the law. However, the protections afforded citizens under the Due Process Clause of the Fourteenth Amendment, compel this Court to reevaluate the permissible range of punitive damages in cases of on-line file-sharing.
In order that citizens may receive a just and fair trial, the Due Process Clause of the Fourteenth Amendment establishes, inter alia, that citizens have a right to an awareness of the punishment that a State can incur for a particular crime. In other words, to guarantee citizens’ equal protection under the law the Due Process Clause dictates that similar crimes receive similar punishments. Justice Stevens, writing for the Court in the 1993 decision of TXO Production Corp. v. Alliance Resources Corp, acknowledged that, “the Due Process Clause of the Fourteenth Amendment imposes substantive limits ‘beyond which penalties may not go’” TXO Production Corp. v. Alliance Resources Corp, 113 S. Ct. 2711 (1993). In this case, Justice Stevens firmly recognized that the Due Process Clause can be used to protect individuals from excessive punitive damages.
The appellant correctly noted in her brief that BMW of North America, Inc. v Gore was a landmark case wherein the Court ruled a punishment to be ‘grossly excessive.’ Justice Stevens reiterated that, “the Due Process Clause of the Fourteenth Amendment prohibits a State from imposing a ‘grossly excessive’ punishment on a tortfeasor” 116 S. Ct. 1589 (1996). Thus, the Due Process Clause has been both acknowledged and used as an appropriate means of limiting excessive punitive damages.
Furthermore, the case of BMW of North America, Inc. v Gore provided a three-guidepost test to demonstrate that the punishment was grossly excessive. Justice Stevens, writing for the majority, stated the guideposts as follows, “the degree of reprehensibility of the [defendant’s offense]; the disparity between the harm or potential harm suffered by [the plaintiff] and his [or her] punitive damages award; and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” Thus, the problem for the case at hand becomes discerning the actual scope of infringement incurred by the defendant.
Discerning the scope of infringement, or the reprehensibility of the defendant’s crime and the harms suffered by the plaintiff, however, remains a near impossible task. How many copies, or downloads, did the defendant distribute? Certainly the possibilities are endless – even if the files were only hosted for a week. Consider for instance the difference between hosting files for a week that are never downloaded, and hosting files that are downloaded once an hour, for a week. That is a difference of 168 downloads; or 168 copies distributed. However, in the present case the amount of downloads that the defendant hosted is unknown. Thus, the damage incurred by the defendant and, consequently, the reprehensibility of her crime are matters of speculation, not fact. The ‘disparity between the harms or potential harms suffered and the punitive damages awarded,’ also remains the subject of conjecture, not certainty. Furthermore, current technology precludes clearly determining how many downloads users receive for future cases as well. Defendants in future cases could be file-sharing users who shared material for one month, but received no downloads; or shared material for one day yet received two hundred downloads. The latter of the two is obviously more at odds with the law, however, in our legal system, the former will be the one likely to receive the larger punishment. The unique nature of on-line file-sharing makes employing the first two guideposts presented in Bmw v Gore both futile and inept in providing a reasonable fine.
While employing the first two guideposts of Bmw v Gore is unavailing, this Court has also acknowledged that on-line file-sharing is used for copyright infringement. The first case to approach the scope of copyright infringement via on-line file-sharing was MGM v. Grokster. Although similar in nature to the case at hand, MGM v Grokster differs because instead of addressing the users, it was directed towards the programmers of Grokster, who facilitated on-line copyright infringement. Speaking on behalf of the Court in that case, Justice Souter wrote that, “billions of files are shared across the FastTrack and Gnutella networks each month, [and] the probable scope of copyright infringement is staggering. Although this decision focused on only two file-sharing networks, the numbers were breathtaking. Furthermore, the estimated number of users involved with file-sharing continues to increase. In April 2004 there were an estimated 6 million users, while in April 2006 there were an estimated 6.9 million users – this is an increase of 14.8%. Needless to say, the scope of copyright infringement via on-line file-sharing is large. However, today’s case deals with only one of millions, and her crime must be treated as such. In other words, the defendant should not be charged with the crimes of one million people, or even one hundred people, but the crimes she committed.
The Court believes that an appropriate fine for the defendant’s crime, and for future instances of on-line file-sharing, is $250 a song. In the case of Capitol v Thomas the total fine requested of the defendant will be $5,500. The Court acknowledges that the sum of $250 a song is not the result of any mathematical formula.  In addition, the sum considers files that have never been downloaded and files that are frequently downloaded to be the same. Since the Court presently lacks the ability to discern download counts and to accurately employ the first two guideposts enumerated in Bmw v Gore, we have settled for a fine that considers primarily the act of making available for distribution on-line copyrighted material. It is the belief of this Court that regardless of the motives of the defendant and the number of downloads, the act of hosting files that are protected by copyright law is a crime punishable by law.
We hold that the sum of $250 a song is an effective deterrent that does not reach the exorbitant nature suggested by statutory fines, and avoids the pittance offered by the appellant. The statutory sum advocated by the original ruling of $9,250 a song is excessively high. The final guidepost, or, “the difference between this remedy and the civil penalties authorized or imposed in comparable cases,” while equally difficult to ascertain because of the lack of information, reveals the gross nature of the fine of $9,250 a song. For the sake of argument, consider if only one million file-sharing users, of the estimated 6.9 million users, were brought to court and received similar punishment, but for only one song. The aggregate fine would exceed 9 billion dollars. While a fine of $9,250 a song is a viable deterrent, it is unjust and favors the plaintiff.
Conversely, the appellant’s brief proposed a sum between zero and $151.20. This ridiculously low sum is far from an effective means of deterrent. The appellant’s brief simply considers the ramifications of hosting only one download. As previously mentioned the number of downloads hosted by the defendant are unknown. However, assuming that only one download occurred when the range was infinite, excessively favors the defendant. Therefore, the Court establishes today that in the case of on-line file-sharing, $250 a song is an appropriate penalty.
Today’s case illuminates the difficulties facing the Court concerning the distribution of copyright protected material online. The facts surrounding the defendant’s actions strongly suggest that she was aware of the ramifications of placing the files in a file-sharing folder. Although the Court recognizes that multiple parties are involved in illegal file sharing, the decision concerns only the party involved in publicly distributing and displaying the copyrighted songs. The decision reached protects copyright holders from the public display of their music files to a body of people beyond the file-sharer’s personal circle of family and friends. Furthermore, the Court holds that the distribution of such copyrighted works without the consent of the copyright is in clear violation of the Copyright Act. The Court’s decision establishes $250 a song as a just fine for those users who make available for download copyright protected material. The penalty is founded upon the discretion of this Court and not upon any mathematical formulation. However, the Court stands behind the fine as a just reimbursement for the copyright holder and an effective deterrent for potential file sharers of copyrighted materials.
 Plaintiff, Virgin Records America Inc., Statement of Case, 2007, < http://18.104.22.168/search? q=cache:f0aVadNfItIJ:www.ilrweb.com/viewILRPDFfull.asp%3Ffilename%3Dvirgin_thomas_070917PltffsStatementofCase+%22ownership+of+the+copyright+by+the+plaintiff%22&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a>
 Reprinted in Piracy of Intellectual Property on Peer-to-Peer Networks, Hearing Before the Subcommittee on Courts, the Internet, and Intellectual Property of the House Committee on the Judiciary, 107thCong, 2002.
 VIRGIN RECORDS AMERICA, INC., et al., statement of case, Case No.: 06cv1497-MJD/RLE, http://22.214.171.124/search?q=cache:f0aVadNfItIJ:www.ilrweb.com/viewILRPDFfull.asp%3Ffilename%3Dvirgin_thomas_070917PltffsStatementofCase+%22ownership+of+the+copyright+by+the+plaintiff%22&hl=en&ct=clnk&cd=1&gl=us&client=firefox-a
 Garrity, Brian. "Is P2P Growth Slowing? Depends Whom You Ask." Billboard 1 July 2006. LexisNexis. Whitman College, Coronado. 11 Mar. 2008.
 Lemley, Mark A., and Anthony Reese. "A Quick and Inexpensive System for Resolving Peer-to-Peer Copyright Disputes." Cardozo Arts and Entertainment Law Journal (2005). LexisNexis. Whitman College, Coronado. 11 Mar. 2008.