How Legal Fees Might Stop the RIAA’s Campaign Against File Sharing

It’s no secret that the Recording Industry Association of America (RIAA) has responded to the growth of online file sharing with a wave of copyright infringement litigation. Often, the individuals targeted by the RIAA fear the overwhelming costs of defending themselves in court, and many have agreed to pay large settlements. A current federal case in Oregon, however, may dramatically alter the legal landscape by forcing the RIAA to pay attorneys’ fees for those who have been wrongfully accused.

Attorneys’ Fees in American Courts

Attorneys’ fees are the costs of legal representation. They are usually expressed in one of three ways: 1) as a contingency fee; 2) as a fixed fee or 3) as an hourly billing fee. The standard billing practice for law firms is the hourly rate system, and rates for large law firms can average over $300 per lawyer per hour.

Unless the parties have agreed in advance to a different result, under the default American Rule each party in a lawsuit is responsible for paying its own attorneys’ fees. Certain statutes, however, force the losing party to pay the prevailing party’s attorneys’ fees or else give the judge discretion to order such a payment. For example, under 17 U.S.C. § 505, a judge has the discretion to award attorneys’ fees to the prevailing party in a copyright dispute. In a recent case, Gonzales v. Transfer Technologies Inc., the judge considered the cost of prosecuting copyright infringement and the relatively low statutory damage award, and the judge chose to award attorneys’ fees.

The Andersen Case

In February 2005, the RIAA sued Tanya Andersen, a disabled single mother living in Oregon, for copyright infringement related to online file sharing. Alleging abusive practices, Andersen filed a counter-claim accusing the RIAA of, among other things, electronic trespass, deceptive business practices, invasion of privacy, fraud and negligent misrepresentation. Andersen demanded statutory and punitive damages, as well as attorneys’ fees.

On June 1, 2007, the RIAA filed for dismissal of its case with prejudice, reflecting its belief that the case was non-winnable. To determine whether Andersen can recover attorneys’ fees, the federal district court judge must decide whether the goals of the Copyright Act would be furthered by the award. The federal magistrate wrote the judge a recommendation stating that the RIAA’s suit “lacked prima facie evidence,” that the suit “did not appear justified as a reasonable exploration of the boundaries of copyright law” and that “copyright holders generally, and these plaintiffs especially, should be deterred from prosecuting infringement cases [in a similar manner].” Accordingly, the magistrate recommended awarding Andersen attorneys’ fees. The judge has not yet ruled on this recommendation. (reported at Ars Technica)

Legal and Strategic Implications of Awarding Fees

If legal fees are awarded to Andersen, the RIAA may be forced to rethink its tactics in prosecuting copyright infringers. Until now, the RIAA has relied on a “shotgun approach,” filing nearly three hundred lawsuits per week against alleged downloaders of copyrighted music, often without particularly strong evidence of illegal activity. If the court forces the RIAA to pay Andersen’s legal fees, it could establish a precedent upon which other accused copyright infringers will rely. This may cost hundreds of thousands of dollars per case, and it may prompt the RIAA to abandon the shotgun approach and focus its legal strategy on downloaders who can be more conclusively tied to illegal activity. On the other hand, the RIAA might not be particularly sensitive to these costs and may instead prefer to occasionally pay in order to pressure file traders to stop downloading copyrighted music.

No matter how the RIAA responds, it is certain that a ruling for Anderson would make it more difficult to bully defendants into settling to avoid costly legal fees. Defendants with strong cases may be more willing to go to trial and to stand up to the RIAA if they believe they will recover their legal fees. These recoveries can be quite large – Andersen’s lawyers, for example, estimate their fees to be well over $200,000. Some argue that this would simply force the RIAA to be more careful about whom it sues and to avoid frivolous lawsuits. Others believe that even the RIAA has a right to have its day in court. Therefore, it’s clear that the judge’s decision in the Andersen case may prompt a dramatic change in the way the RIAA approaches copyright infringement cases.

By James Alonso, Marc Friedenberg, Michael Nguyen, Shawn Oakley and Sarah Calvert; originally published at the Columbia Project on Law and Technology blog.

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