• by Wendy Davis  @wendyndavis, January 24, 2010

Ruling that damage awards in a file-sharing case must have some relationship to the actual loss suffered by the record labels, a federal judge has reduced the amount that file-sharer Jammie Thomas-Rasset must pay from $2 million to $54,000.

"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," U.S. District Court Judge Michael Davis in Minnesota wrote Friday.

Davis cut the damage award to $2,250 per track, which is triple the statutory minimum of $750 per track. He described even the reduced $54,000 award as "significant and harsh," but said that figure would mark "the maximum amount that is no longer monstrous and shocking."

The record labels filed a copyright infringement lawsuit against Thomas-Rasset in 2006, accusing her of sharing files on the peer-to-peer network Kazaa. She denied illegally uploading files, but last June, a jury found her liable for infringement and assessed damages of $80,000 per track. The statute provides for damages of up to $150,000 per instance of infringement.

That verdict marked the second time that a jury ruled against Thomas-Rasset. An earlier trial in 2007 resulted in a jury verdict of $220,000, or $9,000 per track. But Davis set that verdict aside and ordered a new trial because of a mistaken jury instruction.

After the second trial resulted in a $2 million verdict, Thomas-Rasset filed papers asking for the verdict to be set aside and a new trial -- which would have been the third -- or for the award to be reduced for several reasons, including that it was unconstitutional.

The record labels opposed that motion, but also said in court papers that they would be willing to compromise on the amount of damages.

Davis didn't rule on whether the damage award was constitutional, but instead reduced it under the court's historical power to slash verdicts.

He said in his order that the record labels have until Jan. 29 to decide whether to accept the new award or request a new trial on the issue of damages.