Thursday, May 05, 2005

Kicking off the discussion

One of the basic questions about the copyright class action preliminary settlement is, Why is the total recovery only $10-to-$18-million (including attorneys' fees of $4.4 million and class notice costs of $1 million)? In the first copyright class action, Ryan v. CARL, the total recovery was $7.25 million. And that was an action against a single document-delivery service, UnCover, using a transitional technology, the fax machine. This case involves dozens of the largest online article services and participating publishers.

A related question is, Why is the preliminary settlement structured so that the vast majority of class members -- those who did not register the copyrights to their works -- are guaranteed to receive almost nothing, and indeed in one scenario (if the pre-registered claimants eat up the entire settlement fund) will receive literally nothing?

Let me address those questions.

First and fundamentally, I reemphasize that my intention is not to scuttle the settlement but to improve it. In the absence of additional information, which so far has not been provided and to which the class is entitled, it's impossible to say much more than that. Attorney Charles Chalmers, a specialist of unparalleled credibility when it comes to examining class action settlements, makes these points brilliantly in our motion to vacate the preliminary settlement.

Second, there's no question that holders of pre-registered copyrights hold a tremendous hammer. Under the law, only they are in line to recover statutory (punitive) damages and, perhaps even more important, attorneys' fees.

That said, popular notions of "actual damages or disgorgement of profits" are too cramped. In the declaration in support of my motion, I attempt to begin explaining a more ambitious economic model of actual damages. For now, the important point is that theories are available. If the theory can get past the legal challenge -- that is, "Was it a legally available theory?" -- then the amount of actual damages, at trial, would be set by a jury. Would that number likely be in the range of $10-to-18-million?


Post a Comment

<< Home