Tuesday, July 28, 2009

Team Tenenbaum's biggest mistake

What has been the biggest mistake by Joel Tenenbaum's defense team? Failing to depose a single witness? Angering the judge by recording conversations with the court and opposing counsel? Spending time on a quixotic and ultimately unsuccessful effort to have the case webcast, rather than focusing on trial preparation? Part-way through the trial, it's now clear to me that the biggest mistake was a different one: failing to secure an expert to testify as to actual damages, i.e., the harm caused by Tenenbaum's downloading and "sharing" of the 30 songs at issue in this case.

Tenenbaum's liability for copyright infringement is an all-but-foregone conclusion. He has admitted under oath at his depositions that he used KaZaA and other p2p software for years, even after he was served with the complaint in this case. And now he will be forced to acknowledge those admissions on the stand, before the jury. The pile of forensic evidence from MediaSentry, Cox, and plaintiffs' expert Dr. Jacobson is mere icing on the plaintiffs' cake.

So the real action is in damages. The jury will be instructed that, if they find for the record labels on liability, they may award statutory damages ranging from $750 to $30,000 per work, or up to $150,000 if they find Tenenbaum's infringement was willful. That's a minimum of $22,500, and a max of $4.5 million -- obviously a huge range. The jury will be permitted to consider various factors in determining where within that range the award should fall, including the amount of actual damages.

Actual damages in a case like this are difficult to prove -- which is precisely why the law allows for statutory damages. Proving actual damages requires hard-core economic and statistical analysis -- more than having a company employee testify: There's been lots of piracy, and lots of job losses. Therefore piracy caused the job losses. Q.E.D.

Plaintiffs have such economic analysis, from their expert, University of Texas at Dallas economist Stanley Liebowitz. Defendant has...nothing. Barely a week before trial, Tenenbaum suggested he intended to call as a witness Felix Oberholzer-Gee, a professor at Harvard Business School who has concluded there is no evidence that peer-to-peer use has harmed the recorded music industry. But Judge Gertner granted the plaintiffs' motion to exclude him, on the obvious grounds that he was disclosed more than three months after the expert deadline. (It was never even clear that Oberholzer-Gee had actually agreed to testify.)

To be sure, Liebowitz vigorously disputes Oberholzer-Gee's findings and conclusions. But if Team Tenenbaum had retained him in a timely fashion, they would have at least been able to put a little meat on the bones of their "no harm, no foul" argument, and given the jury a plausible reason to choose an award at the low end of the range. But without any economist taking the stand on Tenenbaum's behalf, the defense can do little more than attempt to poke holes in Liebowitz's conclusions, and rely on their own arguments and assertions at closing.

So when we look back on what went wrong with the defense, failing to retain an economist to testify as to the lack of harm is probably Exhibit A -- rivaled only by the decision not to settle.

UPDATE: Today after trial I asked Tenenbaum's counsel Charles Nesson why he was not able to get Oberholzer-Gee to serve as a defense expert. Nesson told me he tried, but was never able to reach his colleague across the Charles. Nesson said he never actually had any contact with Oberholzer-Gee about this case.

12 comments:

  1. Probably end up like Thomas-Rasset - bad PR regardless.

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  2. Agree with this article, except to say that the defendant did make several offers to settle before this case was litigated, all of which were rejected as inadequate by plaintiffs.

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  3. You give too much credence to Liebowitz's methods. His report is full of conjecture, despite all the attempts at mustering fancy numbers. Clearly, there is no consensus on this -- just experts with their own stories to sell to commercial lawfirms.

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  4. I agree with you that the absence of expert testimony will prove a misstep but the decision not to settle is the only conscionable one available. The settlements in these cases will be remembered among the robber barons as shameful examples of corporate ethics gone bankrupt.

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  5. "There's been lots of piracy, and lots of job losses. Therefore piracy caused the job losses. Q.E.D."

    Ben, you're trained in logic and reasoning, you should know better than to make faulty statements like this.

    There is certainly a _correlation_ between piracy and job losses at the music companies; however proving a _causation_ requires more than making a (faulty) "logic" statement.

    - JBC

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  6. Anon: He isn't espousing that argument; he's just saying that it's the one the labels would make. Presumably if here were writing a legal brief and not a blog post he would A: express HIS position, instead of another party's presumed position, and B: go into it more deeply that he does here.

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  7. This case is about the constitutionality of statutory damages. That's their entire schtick (though I did think the pot anglein voir dire was clever). Their constitutional case is actually helped by the absence of actual damages, because then the BMW v. Gore multipliers are automatically not working. It frames the issue just about perfectly. Remember, as well, judge gertner's ruling about discovery on this issue only made sense (to me, at least) if she were planning to address this later on.

    FWIW, your coverage of this trial really has been excellent. Many thanks.

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  8. Just wanted to tell you what an excellent blog you are keeping. I work in anti-piracy in the UK and my firm is engaging in a similar type of campaign against on-line copyright infringers. It's a shame this is not being broadcasted, our firm would have found it useful. Personally I think it is a definite win for the RIAA. I will be tracking your blog with interest.

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  9. This was a good post. Only one note. I believe the defense did attempt to settle out of court before they went to trial. From what I've read the plaintiff refused the request to settle.

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  10. @Anonymous 8:17 am (JBC):

    I was actually making the opposite point you apparently thought I was making. My point was that the argument I paraphrased ("There's been lots of piracy, and lots of job losses. Therefore piracy caused the job losses. Q.E.D.") is NOT rigorous economic analysis. That's why the plaintiffs called Professor Liebowitz.

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  11. @Those who noted that Tenenbaum offered to settle:

    Yes, he did. But, given the state of the evidence, which may cause the jury to return a very large verdict against him, I think most lawyers would be urging him to settle now for *any* reasonable amount. I don't know what's the minimum amount the labels would accept. But I do know that if the jury finds liability on the 30 songs (which I think highly likely), the absolute minimum they could award is $22,500 (30 times $750). I would think it wise to settle for anything below that, and probably considerably more.

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  12. My bad. I guess I misread the paragraph. I'm glad to see that you weren't suggesting that the QED was a viable argument. :p

    - JBC

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Comments here are moderated. I appreciate substantive comments, whether or not they agree with what I've written. Stay on topic, and be civil. Comments that contain name-calling, personal attacks, or the like will be rejected. If you want to rant about how evil the RIAA and MPAA are, and how entertainment companies' employees and attorneys are bad people, there are plenty of other places for you to go.

 
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