A federal judge has held that the maximum statutory damages award in copyright cases can be unconstitutional when the actual damages are small. The recording industry, which saw the dollar amount of its win reduced tenfold has appealed.
The original award was $675,000 for ten files shared in violation of copyright law with a market value of about $1 each. The award was reduced to $67,500 (three times the minimum statutory damages award).
There is absolutely no doubt in my mind that statutory copyright damages are excessive as a matter of policy in these cases, and there is likewise no doubt in my mind that the constitutional jurisprudence of constitutionally excessive punitive damages is relevant, even if it is not directly applicable. I am less certain that the ruling will be upheld on appeal.
In cases with large damages, the U.S. Supreme Court has held that the constitutional limit on punitive damages is a multiple of actual damages. But, the U.S. Supreme Court has also stated that in cases where the actual damages are minimal, that a higher multiple of actual damages that is not unreasonably large is permitted.
The question is how the line should be drawn.