Only EUR 20,- damages in file-sharing?

In a file-sharing lawsuit, the Local Court (AG) Düsseldorf had to decide whether a private individual who offers copyright-protected musical works can be equated with a commercial licensee or whether the assessment of licence damages in the case of a consumer should be evaluated differently.

A private individual had distributed a music album via his Internet connection using file-sharing software based on the BitTorrent protocol. A major German record label therefore had the file-sharer served with a cease and desist letter and demanded injunctive relief and compensation for damages for the unauthorised offering of its music album.

The private file-sharer issued the binding declaration of non-infringement with penalty clause that the label's lawyers had sent him with the cease and desist letter, but refused to pay the damages claimed by the music label. In justification, the file-sharer argued that he had not downloaded the entire album, but only one track from it. Furthermore, the damages claimed were not reasonable.

The record label subsequently sued for a sum of EUR 200 per track as licence damages plus cease and desist letter costs. The label justified this amount on the grounds that it did not offer licences for distribution on a small scale as a matter of principle, but only worked with flat-rate licences. According to the record label's legal opinion, a private infringer should not be treated any better, and thus the commercial tariff should be the starting point for licence calculation.

Court decision

The Local Court (AG) Düsseldorf ruled by judgement dated 03.06.2014 – Az. 57 C 3122/13 – that it was wrong to equate a private file-sharer with a commercial licensee when assessing damages in accordance with the principles of licence analogy.

The lack of commercial interest on the part of the file-sharer acting as a consumer, whose primary purpose was personal use of the downloaded tracks and saving the purchase price, distinguishes file-sharing fundamentally from the typical situation in copyright law, where a commercial market participant engages in unauthorised infringement of third-party copyrights for the purpose of generating profit. If one applies the assessment criteria used in commercial exploitation, one arrives at completely inappropriate results for private individuals who have no financial interest whatsoever in the further distribution of the musical works. When consumers are involved, one must rather assume a licence price for a single download in the amount of EUR 0.92. This amount should then be increased depending on the individual case on the basis of possible reproductions and download times. In the present case, a licence value per music track of EUR 20.24 was therefore appropriate.

For consumers, one must rather assume a licence price for a single download in the amount of EUR 0.92. This amount should then be increased depending on the individual case on the basis of possible reproductions and download times. In the present case, a licence value per music track of EUR 20.24 was therefore appropriate.

With regard to the number of tracks, the Local Court (AG) München nonetheless followed the record label.

According to the investigative documents submitted by the label, the entire music album had been made available for download. Furthermore, the file-sharer had signed the unrestricted declaration of non-infringement attached to the cease and desist letter in relation to the entire album. By issuing the declaration of non-infringement in connection with a cease and desist letter concerning a specific work, the consumer gave testimony against himself with regard to the entire album.

Conclusion

The Local Court (AG) München firmly rejects the assessment of damages claims against private file-sharers using commercial standards. Whether the legal opinion of the Local Court (AG) München will prevail remains to be seen. This case in any event clearly demonstrates that the damages sought by rights holders sometimes far exceed what is justified. In the present case, the record label was awarded only one-tenth of the claimed licence fees as damages.

Furthermore: Be careful when issuing declarations of non-infringement! These should always be reviewed by a specialised lawyer before signing and modified if necessary. In the present case, the court treated the issuance of the unrestricted declaration of non-infringement as if it were an admission of guilt.