In a highly publicised decision that caught most music industry watchers off guard, a federal jury in Minneapolis last week handed the Recording Industry of America (RIAA) an unprecedented and overwhelming victory in the form of a $1.92 Million (U.S.) award against a mother of four for allegedly file-sharing 24 songs. At $80,000 per track, it represents a ratio of 80,000 to 1 of punitive damages to the actual damages suffered, assuming each song could have been legally purchased for $1.00. News reports on the case, the first of thousands filed in the U.S. against individual file sharers to actually make it so far along in the litigation process, suggest that such discrepancy could result in constitutional grounds for an appeal.

However the defendant, Ms. Thomas-Rasset, may want to think twice about that: the $1.92 Million (U.S.) judgment awarded against her is actually much higher than the award of $220,000 that the RIAA won in an initial trial. Yet the RIAA claims it’s not really about the money: a representative of the group suggested that the RIAA had offered to settle this case for between $3,000 and $5,000 “from day one”.

In response to the judgment, counsel to the Electronic Frontier Foundation suggested that the Jury wanted to punish the defendant for the downloading habits of millions of others, rather than for her own seemingly modest transgressions. The list of songs in issue includes such schlock rock favourites as Journey’s “Don’t Stop Believing” (which could well become the theme song of the music industry on this issue), Bryan Adams’ “Somebody”, and other “classics” by bands such as Destiny’s Child, Vanessa Williams, Janet Jackson and Gloria Estefan. Maybe the Jury wanted to punish Ms. Thomas-Rasset for her musical tastes as well.

So how might this have played out in Canada? The legality of file sharing has been hotly debated in this country for many years, and the issue boiled over again recently with the Canadian Recording Industry Association (CRIA) trading pot shots in the press with copyright luminaries like Michael Geist and Howard Knopf over both the legality of the practice and its effect on the recording industry. The best guidance available to Canadians on the issue comes from two cases, decided in 2004 and 2008 respectively, which still leave some uncertainty as to the legality of file sharing in Canada. What is clear, however, is that thus far CRIA has not had nearly the same success in the Canadian Courts that the RIAA has had in the U.S.

Under Canada’s Copyright Act, private copying of a musical recording for private use is expressly permitted. The trade off is the requirement for payment by consumers of a blank media levy, which levy is payable on blank CD-ROMs and other “audio recording media”. The blank media levy provisions of the Act were inserted at the behest of CRIA and others, who have since collected multi–millions of dollars in such levies.

The private copying exemption was inserted into the Act in the days of LPs, cassettes, 8 Tracks and reel to reel recording devices – long before the Internet and digital recording media made the process of copying a recording much simpler and faster, with no degradation in the quality of the original recording, no matter how many generations removed the copy is from the original.

In the 2004 case, in the course of suing individual alleged file sharers à la the RIAA, CRIA attempted to force various ISP’s to divulge certain information that would allow CRIA to determine the identity of the defendants. The Federal Court of Appeal held that CRIA could potentially obtain such information, and set out the guidelines it would have to follow if it wanted to be successful in such a request. However, the Court concluded that the method CRIA had chosen to achieve this in this instance ran afoul of the relevant privacy laws.

What was perhaps most notable about the decision were the obiter comments expressing doubt as to whether downloading was illegal in Canada. Interestingly, CRIA has not seen fit to follow the blueprint set out by the Federal Court and has not taken another case forward, perhaps because it is fearful of a negative result based on the Court’s obiter.

In the 2008 case, the Federal Court of Appeal overturned a decision of the Copyright Board of Canada to apply a blank media levy to digital devices such as iPods and other MP3 players on the basis that they were embedded memory devices and therefore did not fall within the definition of “audio recording media”. If the Court had decided that such a levy was lawful, that decision would have clearly legitimized the use of such devices for downloading musical recordings in Canada, and would have also meant many more millions in collected levies – which, of course, would have benefitted CRIA. The irony here was that CRIA fought against the application of the levy to MP3 players: presumably it feared that the potential lost revenues from legalized downloading would be far greater than the benefits from increased revenues generated by blank media levies.

The 2008 decision addressed embedded memory devices, but did not address external hard drives and other non-embedded memory devices. Such devices may in fact fit the definition of “audio recording media”, meaning that a levy may be payable and downloading onto such devices may be legal in Canada, if done for private use. Neither the 2004 nor 2008 cases have specifically addressed uploading of musical recordings. The legality of uploading a musical recording in Canada is questionable, particularly where there is clearly no private use attached to such act.

The Federal Government has tried in the recent past, without success, to pass legislation that will clarify some of the above issues. Its last attempt was criticized from a number of angles as being too music and entertainment industry friendly.

Assuming that liability in Canada could be established then in terms of damages for copyright infringement, the Act includes a civil remedy of statutory damages which a successful plaintiff may elect to be awarded in place of an accounting of profits or damages. Such statutory damages can be between $500 and $20,000 per infringed work, and are in addition to any punitive damages that a Court may decide to award. The amount of statutory damages to be awarded is to be based on, among other things, the need to deter other infringements of the copyright in question. The Court is also directed to reduce the award if the damages awarded are grossly out of proportion to the damage suffered.

So, musical tastes aside, a case similar to the Thomas-Rasset case in Canada would by no means have the same result. Even if CRIA were able to convince a Court to order an ISP to divulge the identity of the alleged file-sharer, and even if CRIA could prove to a Court that the defendant’s conduct in uploading or downloading the recordings in question was not within the private copying exemption, the total statutory damages that could be awarded to CRIA, if not grossly out of proportion to the damage suffered, could not exceed $20,000 per recording, for a total of $480,000 (Can.). Not a trifling amount to be sure, and if the Canadian Court decided to add punitive damages on top of that, a result not far off the Thomas-Rasset decision could arise.

Having said that, the likelihood of the music industry actually receiving payment of such monies from file-sharing defendants is pretty remote: as Ms. Thomas-Rasset rightly quipped, "You can't get blood from a turnip". Clearly, it is the publicity from such monumental awards that RIAA and CRIA really covet in their efforts to deter what they see as a serious threat to their livelihood. Whether such deterrence is actually achieved in the long run is anyone's guess. In any event, we may never get the chance to see a case like this in Canada: it appears that the RIAA is now changing its strategy in the U.S. to target ISPs rather than individual file sharers, and it seems reasonable to assume that CRIA will, again, follow suit.