1.8 Quadrillion Dollars: The Big Money of Copyright Damages

Filesharing is huge -- as of August 2005, 9.6 million people were logged into file sharing networks at any one time, and approximately one billion songs were traded each month.

What's the penalty for those billion infringements? Each willful infringement may be punished by statutory damages of up to $150,000. Potential total damages worldwide add up to 1,000,000,000 songs * $150,000 = $150 trillion per month. Multiply by twelve months, that's $1.8 quadrillion dollars per year in potential statutory damages from online filesharing.

Since the worldwide Gross Domestic Product is $66 trillion, filesharers are on the hook for up to 27 times the total economic output of the planet, each year. (If courts only awarded the statutory minimum of $750 per infringement, the total would come to only $9 trillion, 13% of world GDP).

These numbers sound absurd, but they're not all hypothetical. Recently a jury awarded $222,000 against one defendant, Ms. Jammie Thomas, for sharing 24 song files -- the potential maximum penalty was six times as much. Here's an interesting question: what if she had stolen $24 worth of iTunes gift cards, or a couple of CDs, from her local Best Buy and distributed them at random to strangers?

Well, check out the Massachusetts shoplifting statute. If the defendant had, instead of running Kazaa for a few hours, stolen less than $100 of merchandise from a brick-and-mortar store and handed it out on the street corner, she could be fined up to ... $250.

So, we have a situation where the penalty for stealing and distributing actual, physical property from a store is $221,750 lower than the penalty for copying files on a computer, even when the latter crime did not necessarily cost anyone a penny. (We should explore whether filesharing increases or decreases legitimate purchases in later posts).

• Can you justify that because shoplifting is much more likely to be punished than filesharing? (Is it fair to punish one person for 1000 crimes?)
  
• Or, can you justify that because the receivers of the Kazaa files might have turned around and distributed them, multiplying Ms. Thomas' crime (even though that could apply to the iTunes files too)?
  

Where Congress has imposed draconian measures to try to stop something that 27% of American internet users did routinely as of 2005, should we start asking if there's a better way? 

By the way, don't relax just because you're one of the majority who never open a filesharing program. You too are likely a routine and flagrant violator of copyright laws. Consider this thought experiment from law professor John Tehranian at the University of Utah:

By the end of the day, John has infringed the copyrights of twenty emails, three legal articles, an architectural rendering, a poem, five photographs, an animated character, a musical composition, a painting, and fifty notes and drawings. All told, he has committed at least eighty-three acts of infringement and faces liability in the amount of $12.45 million (to say nothing of potential criminal charges). There is nothing particularly extraordinary about John’s activities. Yet if copyright holders were inclined to enforce their rights to the maximum extent allowed by law, barring last minute salvation from the notoriously ambiguous fair use defense, he would be liable for a mind-boggling $4.544 billion in potential damages each year. And, surprisingly, he has not even committed a single act of infringement through P2P file sharing. (emphasis added)

The whole article is worth a read -- highlights of the hypo include $150,000 for reading a 1931 e.e. cummings poem to a law school class, and a court-mandated laser tattoo removal. (I found the thought experiment via this Slashdot article).

At this point you might wonder, can Congress really do that? One ongoing case, UMG v. Lindor, will test whether such high damage figures violate the due process clause:

[Defendant] cites to case law and to law review articles suggesting that, in a proper case, a court may extend its current due process jurisprudence prohibiting grossly excessive punitive jury awards to prohibit the award of statutory damages mandated under the Copyright Act if they are grossly in excess of the actual damages suffered.....Furthermore, Lindor provides a sworn affidavit asserting that plaintiffs' actual damages are 70 cents per recording and that plaintiffs seek statutory damages under the Copyright Act that are 1,071 times the actual damages suffered. (also found via Slashdot)

What should the outcome be?