Is Nesson crazy? Statuory damages need not relate to actual damages.

As I explained the other day, the merits of Professor Charles Nesson’s argument that peer-to-peer file music file sharing constitutes fair use entirely escapes me (and, apparently, others). But Nesson seems to be making another argument as well — that if the plaintiff cannot show actual damages it is not entitled to the alternative remedy under the copyright statute, up to $150,000 in statutory damages per infringement:

He will argue that statutory damages only apply to commercial infringers.  The law offers rightsholders the chance to seek either statutory or actual damages, but that the two are meant to be equivalent. If the two remedies are equivalent, and if “individual noncommercial copying results in no provable actual harm to the copyright harm holder,” then actual damages would be zero-and so would statutory damages.  

As he also has been quoted:

It would be a bizarre statute indeed that offered two completely unrelated remedies,” he writes, “one which granted actual damages and lost profits, and the other of which granted plaintiffs the right to drive a flock of sheep across federal property on the third day of each month. 

It doesn’t strike me as so bizarre. Statutory damages often serve the purpose of providing a remedy for a proven violation of law where the lawmakers have concluded it would be too burdensome to also require proof of damages, particularly in cases in which damages might be difficult to prove. It does not seem bizarre to believe that Congress in enacting the Copyright Act concluded that situations precisely like the one Nesson is defending — blatant individual infringements that cumulatively could have an impact on an industry but the individual effects of which are difficult to ascertain — should be subject to some liability. In addition, even if the statutory remedy bears no relationship to actual damage it can still serve a legitimate function: deterrence. And, indeed, my very brief research on the question has demonstrated the courts are quite aware of these arguments. In Pret-a-Printee, Ltd. v. Allton Knitting Mills, 218 U.S.P.Q. 150 (S.D.N.Y. 1982), the court stated:

An award of statutory damages is appropriate where the measure of actual damages is difficult to ascertain. See Peter Pan Fabrics v. Jobela Fabrics, Inc., 329 F.2d 194, 196 (2d Cir. 1964). Moreover, “[t]he broad discretionary power given the courts to make such an award serves the dual purposes of the Copyright Act: to compensate copyright owners and to provide a deterrent to would-be infringers.” Lauratex Textiles Corp. v. Allton Knitting Mills, 519 F. Supp. 730, 733 (S.D.N.Y. 1981), citing Lottie Joplin Thomas Trust v. Crown Publishers, 592 F.2d 651 (2d Cir. 1978).

So where is Nesson coming from. I confess: I can’t tell. Perhaps he believe damages divorced from damage somehow violate the Copyright Clause of the Constitution because they discourage rather than encourage innovation. Such arguments, however, have failed in far more compelling circumstances.

ADDENDMUM: “In effect, subject to the limits the statute places on maximum and minimum awards, this gives to the court or the jury the power to simply pick a sum of money to be awarded as damages instead of any other monetary remedies without any proof of monetary loss by the copyright owner.” Howard B. Abrams, 2 The Law of Copyright § 17:11 (2008) (emphasis added).

ADDENDUM 2: The question may be more complicated than I originally believed, and a statutory damage award entirely divorced from any relationship to damages might raise due process concerns. So the court stated in Zomba Enters. v. Panorama Records, Inc., 491 F.3d 574, 587-588 (6th Cir.), cert. denied, 128 S. Ct. 2429, 171 L. Ed. 2d 229 (2007). Nonetheless, the court in Zemba affirmed an award of statutory damages that were 44 times greater than actual damages and emphasized the extreme deference appellate courts must give in reviewing trial courts’ awards:

This review, however, is extraordinarily deferential — even more so than in cases applying abuse-of-discretion review. Douglas v. Cunningham, 294 U.S. 207, 210, 55 S. Ct. 365, 79 L. Ed. 862 (1935) (Congress’s purpose in enacting the statutory-damage provision of the 1909 Copyright Act and its delineation of specified limits for statutory damages “take[] the matter out of the ordinary rule with respect to abuse of discretion”); Broad. Music, Inc. v. Star Amusements, Inc., 44 F.3d 485, 487 (7th Cir. 1995)   (interpreting the modern Copyright Act and noting “that the standard for reviewing an award of statutory damages within the allowed range is even more deferential than abuse of discretion”).

In Atlantic Recording Corp. v. Brennan, 534 F. Supp. 2d 278, 282 (D. Conn. 2008)(citations omitted), the court, without addressing the question, observed that “[th]e defenses which have possible merit include: (1) whether the amount of statutory damages available under the Copyright Act, measured against the actual money damages suffered, is unconstitutionally excessive . . . .”