[Infowarrior] - Why the MP3.com Decision Was Never Appealed

[Richard Forno]

Why the MP3.com Decision Was Never Appealed

http://www.techliberation.com/archives/038260.php

In my DCMA paper I note in passing the sad case of MP3.com, which settled
its copyright lawsuit after losing its case in district court, and before it
could appeal the case. What I didn¹t realize is the reason the case wasn¹t
appealed.

I was delighted to receive an email from Michael Robertson, the founder of
MP3.com (who has since founded Linspire and MP3tunes), who read the paper
and wrote to explain why they didn¹t appeal the case:

    We didn¹t want to settle. I wanted to take it to the appellate court for
examination of our issues. However we weren¹t able to do this. This is
because the media companies can elect for statutory damages. So although
they could not prove they were harmed even $1 (and we had ample evidence
that they actually profited from our technology) they were able to elect
statutory damages which meant potentially tens of billions of dollars in
damages.

    The problem arises in that to appeal you have to first bond the judgment
assuming you lose at any step. Well there¹s no way a small company can bond
even a hundred million dollar award much less a multi-billion one. This
means that the media companies can find just one judge to rule in their
favor, elect statutory and the legal battle is over. No appellate court. No
supreme court. One and done. And as you probably know often with new issues
Judges and lower courts are hesitant to make new law, but rather leave that
up to the higher courts.

    So instead of a full legal hearing MP3.com got in front of one Judge in
media company friendly NYC and the battle and war was over. That¹s not how
our court system is supposed to work. It¹s too easy to get one Judge to
misread a situation.

And misread it the judge did. In his poorly reasoned and over-literal
opinion, Judge Rakoff describes MP3.com¹s service (which permitted legal
owners of CDs to stream the music on those CDs to other computers via the
Internet) as an unauthorized retransmission of the content through another
medium. It seems not to have occurred to him that all digital media devices
work by converting content from one format to another. Nor did he seem to
find it relevant that the music was being ³retransmitted² to people who had
already purchased a legal copy of the CD containing the music.

I hadn¹t realized the pernicious effect of statutory damages in the case.
The appeals court may or may not have overruled the decision (I think they
should have), but they deserved the chance to appeal.