Updated at 2:03 p.m. PST to include quotes from RIAA, music industry sources, and Jammie Thomas-Rasset's attorney.
A U.S. district court has dramatically slashed the amount of money a Minnesota woman must pay in damages for illegally sharing music online.
Last June, a federal jury in Minnesota found Jammie Thomas-Rasset liable for willful copyright infringement and ordered her to pay nearly $2 million. Michael Davis, chief judge for the U.S. District Court for the District of Minnesota, chopped the amount to $54,000, or $2,250 per song.
"The need for deterrence cannot justify a $2 million verdict for stealing and illegally distributing 24 songs for the sole purpose of obtaining free music," wrote Davis.
The Recording Industry Association of America accused Thomas-Rasset in 2007 of illegal file sharing, and after refusing to admit guilt or settle with the RIAA, she became the first person to take her case to court. She has become something of a cause celebre for anticopyright proponents. In a phone interview with CNET, Joe Sibley, one of Thomas-Rasset's attorneys, said the judge corrected an obvious injustice.
"His decision reflects that the jury committed an abuse and the judge corrected it," Sibley said. "He made it much more equitable and this was much closer to the $0 award that we were seeking."
An RIAA spokesman said that the lobbying group for the four major record companies is "reviewing the decision."
As for what happens next, Sibley said Thomas-Rasset's legal team hasn't decided whether they to accept the $54,000 award or challenge that as well.
On the other side, it is the music industry that must make some important decisions quickly. In Davis' decision, he told the RIAA that it has seven days to either accept the lower damage amount or schedule a new trial on damages. Whatever decision the music industry makes could have serious effects on all copyright owners, said Ben Sheffner, an entertainment attorney and former journalist who blogs about copyright issues and the person who broke the news about Davis' decision.
While the RIAA won't discuss its plans, music industry sources said leaders at the top four recording companies aren't displeased with Davis' decision. First, the RIAA never expected to collect $2 million from Thomas-Rasset, who has acknowledged being of limited means. Next, the judge affirmed the jury's decision that Thomas-Rasset was guilty of willful copyright infringement and that was pivotal.
The music industry never wanted to take Thomas-Rasset to a trial, but when she refused to settle, the music industry had to show that the courts considered the downloading of music without paying for it illegal.
But here's the rub. My sources say the music industry now wants the Thomas-Rasset story to go away. They don't want to spend any more resources challenging Davis' decision to lower the damages. RIAA executives have offered her settlement terms before, but look for new negotiations to get underway soon.
All of that notwithstanding, Davis' decision could be a setback for copyright owners. The music industry had argued that the court didn't have the authority to alter the amount awarded by the jury as it was within federal guidelines set by Congress, said Sheffner. RIAA attorneys held that as long as the jury awarded an amount within that range, the award was legal.
Obviously, Davis didn't agree and a lot of other groups, including the film industry, may have a stake in what happens now.
"The labels have a lot of hard thinking over the next week--tactically and strategically--about the various issues," Sheffner said. "The judge's ruling could have an effect on other cases."
It's important to note that Davis did not in any way condone illegal file sharing. He wrote that even reduced damages are still "significant and harsh." He also ordered Thomas-Rasset to never infringe the music industry's copyright again and to destroy music she obtained illegally.