Intellectual Property

Thousands for Prosecution, $300 for Tribute

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Terri Frye is a single mother living in state-supported housing in Hickory, NC. In November 2005, she received a letter from the RIAA naming her as a music thief. She got a lawyer and fought. Thousands of dollars in legal expenses later, the RIAA eventually settled for a $300 payment and no admission of wrongdoing:

The RIAA's prelitigation settlement letters say that defendants are liable for costs of $750 per song. MediaSentry flagged 706 songs on the computer that became the basis for the lawsuit, and at $750 per song, that works out to a total of $529,500. The RIAA settled for a minuscule fraction of that number, one curiously close to the 70¢-per-track figure a record industry attorney said is close to the labels' share of each track sold. File-sharing defendants have argued that the $750-per-track damages sought by the RIAA are excessive, and here we have them accepting a judgment for about 40¢ per track. The RIAA appears willing to extract even a minuscule settlement from a single mother on federal assistance who was willing to help them discover the true identity of the alleged infringer rather than walk away emptyhanded….

The end result is that the RIAA likely spent thousands of dollars to obtain a $300 judgment.

Via Ars Technica

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  1. And, the RIAA has now established the new standard for settling these cases – 70 cents a song. That alone should dampen their enthusiasm for bringing any more of them.

  2. This is the sort of thing that gives me serious qualms about the whole “loser pays” idea of civil-lawsuit reform.

  3. Screw the RIAA – Abolish Copyright

  4. I’m still waiting for song prices to drop to .50 per song before I start buying them online. I feel that’s fair because I will pay on average 15 dollars for a full length movie DVD, which is on average 20-40 times more entertainment than a single track. I may pay more for more worthwhile artists or new material, but I feel on average, .50 is an appropriate figure.

  5. Jennifer,
    I don’t see your point. This case was settled so “loser pays” doesn’t enter into it. You think if we had loser pays she wouldn’t have been able to settle?

  6. I think a “loser pays” system may actually hurt people like Terri Frye. While it’s true that it may reduce a plaintiff’s incentive to file frivolous suits, it could increase a plaintiff’s incentive to file legally non-frivolous small claims suits, which is exactly what we have here.

    RIAA probably had a decent and rather clear-cut copyright infringement case — albeit for a very low sum ($600ish rather than 529,000). Under a loser pays system, they could have imposed legal costs that would have dwarfed their actual damages, thereby achieving the punitive effect they’re ultimately seeking here. They could also use such a system to economically pursue a larger group of clear infringers notwithstanding their paltry damages per defendant.

  7. The arguments against “lose pays” are that 1) It is a strong disincentive against bringing legitimate suits, for if you lose it costs even more. Most people can’t afford any lawyer at all, so its hard enough bringing a suit without some sort of contingency fee agreement. Now add in the possibility of a loss costing a small fortune (for instance, insurance companies often spend more on the legal fees defending claim than if they actually paid the claim), and its a frightening prospect to sue anybody, even with a very strong claim.

    2) It is extra leverage against the less financialy well off party, as the prospect of a loss could be financially devastating in that the legal fees for the opposing side could easily outstrip the value of any judgment. Especially when the more financially well off side is billing for multiple lawyers at $400/hour.

    Additionally, depending on how such a system would be implemented, it would give an incentive to hire as many lawyers as possible to ensure a victory, since the other side will have to pay for all those legal fees in the event of a loss.

  8. In our current system, a plaintiff can already take people to court and impose onerous legal fees on individuals. Hell, that’s how they force individuals to settle. In a loser pays system, the defendant doesn’t pay for the plaintiff if he loses, only the plaintiff pays for the defendant if he loses. It’s to protect the defendant from frivolous lawsuits, it’s not a winner-take-all system.

  9. So for a 99-cent track the record label gets “somewhere around” 40 to 70 cents? How do they even justify that? Is there any other industry where the agent gets a 40% to 70% cut??

  10. The real trouble with a loser pays systems is determining who the loser who must pay is. Our idea of a civil procedure is warped by the simplicity of TV courtrooms. In real cases, you can have claims, counter-claims, crossclaims, joinder of claims, impleaders, interpleaders, intervention and a host of other terms lawyers get paid to understand.

    Granted, we do need to start doling out more contempt fines for filing frivolous cases or even for seeking radically indefensible damages but be careful of solutions that only do more damage.

  11. Getting back to the issue.
    How many internet files and harddrives does RIAA have to search through before they find a “music thief”?
    I thought you guys didn’t like the Patriot Act but is it okay if your searching for thiefs?

  12. So for a 99-cent track the record label gets “somewhere around” 40 to 70 cents? How do they even justify that? Is there any other industry where the agent gets a 40% to 70% cut??

    The record label is more than just the agent. They usually produce front money for the performers, produce the recording, advertise it, and distribute it, often spending many thousands of dollars before the recording earns back it’s first penny. I don’t know if that justifies their take or not, but they’re not just agents.

  13. The Patriot Act is an abomination.

    However, I don’t think this is a result of the patriot act because they’re searching for shared files (files everyone can theoretically see). If they’re not doing so, I do not see how they could find files on the defendents computer, or even suspect her. I certainly do see them going around randomly and searching people harddrives.

    But who know, I could be wrong. After all, I didn’t RTFA.

  14. It would be interesting to know how “a single mother living in state-supported housing” can afford an attorney to fight the lawsuit. It would also be interesting to know how she can afford a computer and internet service to steal the music with in the first place.

  15. The end result is that the RIAA likely spent thousands of dollars to obtain a $300 judgment.

    From the RIAA’s standpoint, it spent thousands of dollars to obtain a lot of publicity about how it is serious, and how it will pursue even trivial cases that will cost the defendant thousands of dollars to defend. They’re trying to deter others, not to clear a profit in this case.

  16. This statement is meaningless:

    I thought you guys didn’t like the Patriot Act but is it okay if your searching for thiefs?

    Who is “you guys?” Reason’s editors? All libertarians? People on the Internet?

    It’s “you’re” not “your” and “thieves” not “thiefs”.

    This has nothing to do with the Patriot Act, it’s a private corporation that watches places on the Internet where people generally download pirated material and find their IPs.

  17. Nice reference to the XYZ Affair.

  18. The original fine sought by the industry might be excessive, but when did Reason turn against private property? We are talking about theft here.

    And Warren: Abolish copyright? Great incentive for anyone creating intellectual property.

  19. Art, it’s not a “search” of your hard drive if you willingly expose your file list in the net which most file sharers do.

    P.S. the plural of thief is thieves.

  20. Screw the RIAA – Abolish Copyright

    Reason #467 to abolish Warren.

  21. I thought you guys didn’t like the Patriot Act but is it okay if your searching for thiefs?

    Who is “you guys?” Reason’s editors? All libertarians? People on the Internet?

    I’ve forgotten: is a newcomer’s use of the second-person plural one of the cues in the drinking game? How about wanton misspelling / mispunctuation?

  22. Reason #467 to abolish Warren.

    What does that even mean? Jesus, don’t try to be witty if you’re not.

  23. Abolish copyright? Great incentive for anyone creating intellectual property.

    I’m not going to push anything like abolishing copyright, but I believe humans were writing songs and music long before anybody even conceived of “copyright.”

  24. Reason #467 to abolish Warren.

    What does that even mean? Jesus, don’t try to be witty if you’re not.

    Regular readers here will get it.

  25. The end result is that the RIAA likely spent thousands of dollars to obtain a $300 judgment.

    I dunno, they act like every city government I’ve ever dealt with.

  26. Regular readers here will get it.

    I must have missed that thread.

  27. close tags damnit

  28. How many internet files and harddrives does RIAA have to search through before they find a “music thief”?

    As others have mentioned, they are not surreptiously(sp?) searching through hard drives.

    If you are using some kind of file sharing program, your IP (Internet Protocol, not Intellectual Property) address can be found and traced back to a physical address. I’m guessing with this information the RIAA used this evidence to obtain a warrent for the police to search the address found and scan the contents of the computer.

  29. ‘m still waiting for song prices to drop to .50 per song before I start buying them online. I feel that’s fair because I will pay on average 15 dollars for a full length movie DVD, which is on average 20-40 times more entertainment than a single track.

    Well, in the free market, you have the right not to pay for something you don’t think is worth paying the asked price. But, you don’t have the right to steal it if you don’t think it’s worth paying the asked price.

  30. crimethink,

    ya think?

  31. Well, in the free market, you have the right not to pay for something you don’t think is worth paying the asked price. But, you don’t have the right to steal it if you don’t think it’s worth paying the asked price.

    While I agree in principle, the MP3 market (including players) would not be where it is today without piracy. Remember that MP3s came into being primarily through piracy while the companies fought it tooth and nail (and still are to a large degree).

    A little rebellion now and then is a good thing, and as necessary in the business world as storms in the physical (with apologies to Jefferson).

  32. I wish somebody would establish a defense fund solely to combat RIAA abuse. What’s to say that the MP3s on my computer aren’t from the internet? The truth is that they are from the CDs and records that I own, but I’m not sure I can prove that, and I’m not sure the law cares. Hell, some countries don’t recognize Media Sentry (the attack dogs) as legitimate. Of course, legitimacy isn’t what the big record companies are after. They’re looking for blood.

  33. Lurker Kurt: Close, but not quite. What happens is they log your IP address, as well as the files you are distributing. With that IP address, they then file a John Doe subpoena against the internet service provider. Theoretically, the ISP will have logs that go back for x days, and can tie that IP address to one of their customers.

    There are multiple problems with this:

    1) The logs that would have this information are notoriously iffy. (This can be linked better by getting the MAC address from the DHCP log, and tying it to the modem in the end users house).

    2) With most people using home routers now (and if you aren’t… may the gods have mercy upon your machine), all this says is that some machine was connected to your router, and connected to your internet connection. With the number of unsecured wireless routers out in the world it’s very easy to hop onto someone else’s service. Those home wireless routers will not keep any logs beyond a day or so (that’s if logging is even possible or enabled on it), so all you can track the connection back to is the end user’s router.

    Once RIAA “establishes” the end user’s identity, they then sue the end user.

    Nephilium

  34. Thanks for the clarification Neph.

    BTW, by keeping your wireless router unsecured and wide open to others with a wireless card, is that a valid defense against an RIAA lawsuit?

    “I’m sorry big huge money grubbing corporation. I accidentally left my wireless connection wide open. It wasn’t me who downloaded all of those Britney Spears remixes. Why it could have been anyone within a couple hundred feet of my router.”

  35. It would also be interesting to know how she can afford a computer and internet service to steal the music with in the first place.

    Yeah I was thinking the same thing. It seems to be that one can have cable tv, mobile phone, and all sorts of other ‘luxuries’ and still be “poor.”

  36. How do you know the internet isn’t a free service for the housing she is in? My apartment complex has a free wireless network, perhaps sleazy (and incredibly shoddy) Media Sentry found her computer on a wireless system, or other free system of some sort? Not sure how that might work.

  37. Lurker Kurt: Nope. That’s been tried already and tossed out of court. Also, no suit so far has been about downloading the songs, they’ve all been about offering songs up for downloading.

    Nephilium

  38. Thanks Neph,

    Good thing I move my music to an unshared folder and only have porn in my shared folder.

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