• by Wendy Davis  @wendyndavis, January 20, 2009

Last summer, entertainment companies claimed victory when an administrator of a site that enabled piracy became the first person in the country who was convicted by a jury of criminal copyright infringement.

But a more recent court ruling in the case could make it harder for copyright owners to obtain damages from defendants in civil lawsuits.

U.S. District Court Judge James Jones in the western district of Virginia declined to order Daniel Dove to make restitution because the entertainment companies had not proven how much money they lost as a result of the Web piracy.

"Customers who download music and movies for free would not necessarily spend money to acquire the same product," Jones wrote in his decision.

Dove is currently serving 18 months in prison for helping to run the site EliteTorrents, which allowed Web users to find and download pirated music, movies, video games and other content. Two entities, the Recording Industry Association of America and Lionsgate, also sought restitution.

Although Jones's ruling was made in the context of a criminal case and not a civil lawsuit, some defense lawyers say the decision could affect whether other judges impose fines against civil defendants, including grad student Joel Tenenbaum or Minnesota resident Jammie Thomas.

"Our case stands on its own merits, but each additional judge that sees the outrageousness of the amounts that are being sought, in proportion to the damage supposedly caused, is a big plus," says Harvard Law professor Charles Nesson, who leads Tenenbaum's defense team.

Defense attorney Ray Beckerman, who authors the blog Recording Industry vs. The People, also said he anticipated the ruling would benefit defendants facing civil lawsuits. "It directly refutes the RIAA's entire theory in support of the reasonableness of its damages," he said.

The copyright statute mandates damages of between $750 and $150,000 per infringement, regardless of whether the copyright owners prove they were injured by piracy. But Tenenbaum, facing suit in federal court in Boston for allegedly sharing tracks, argues that such an amount would be unconstitutional because it's "far in excess of any possible damages" the group suffered.

Jammie Thomas, the first RIAA defendant found liable by a jury, made a similar argument in a motion to set aside the verdict ordering her to pay $220,000 for sharing 24 tracks on Kazaa. The judge in her case, Michael Davis of Duluth, declared a mistrial for other reasons, but also said that the damages awarded, which amounted to more than 500 times the cost of purchasing three CDs, were "wholly disproportionate to the damages suffered."

The RIAA recently said it will stop bringing civil lawsuits against individuals suspected of sharing music at peer-to-peer sites, but cases in progress are continuing. Since 2003, the organization has targeted more than 30,000 alleged file-sharers and extracted four-figure settlements from many of them.

In the Dove case, the RIAA submitted evidence that Dove's server transferred 183 albums a combined total of 17,281 times. The RIAA calculated that it was owed more than $124,000--a figure it arrived at by multiplying the number of album transfers by the average wholesale price of $7.22.

Jones rejected the RIAA's formulation, ruling that there was no proof that each person who downloaded an album would have otherwise purchased it. "I am skeptical that customers would pay $7.22 ... for something they got for free," he wrote.

Jones issued the ruling last November, but the opinion just recently surfaced on blogs that report on the record industry's lawsuits. The RIAA declined to comment for this article.