MPAA Says Piracy Damages Can’t Be Measured

In a new filing submitted to a California federal court, the MPAA says that actual piracy damages "are not capable of meaningful measurement." The group fears that looking at actual damages in the isoHunt case would be "perverse" and "unfair." What the MPAA can measure, however, is how much it will take to bankrupt the BitTorrent search engine isoHunt. According to the movie studios, two to five million dollars will be enough to put the Canadian company out of business.

mpaa-logoAs the trial date moves closer, the arguments between the MPAA and BitTorrent search engine isoHunt are heating up.

One of the issues the two parties are in disagreement over is whether isoHunt should be able to question the notion that piracy is actually hurting the movie industry.

To argue that piracy might not be as disastrous as it’s often portrayed, the torrent site has listed researcher and economics professor Koleman Strumpf as one of its witnesses. Strumpf’s research has previously shown that piracy is not hurting sales at all, and isoHunt is expected to use this in its favor during the trial.

The MPAA, however, prefers not to discuss the topic of actual damages during the trial. They argue that the issue is too complex and that it could mislead the jury. For example, isoHunt may be able to show that movie industry profits are increasing, but that doesn’t mean that piracy has had no effect.

The movie studios are therefore asking the court to exclude the issue, arguing that actual damages can’t be measured.

“To permit consideration of actual damages under these circumstances would be perverse – and particularly unfair – given that Plaintiffs elected statutory damages precisely because their actual damages are not capable of meaningful measurement,” the MPAA’s legal team writes.

The MPAA argues that since the court has decided to award statutory damages, it is irrelevant to what extent their revenues are negatively impacted by online piracy.

“Defendants should not be permitted to exploit the inherent difficulty of proving actual damages in a case such as this as a basis for lowering the statutory damages award, especially when the very purpose of statutory damages was to provide a remedy that is not dependent on proof of actual damages.”

While the MPAA admits that the effect of online piracy is nearly impossible to measure, the movie studios do have a very clear picture of what’s needed to bankrupt isoHunt. The transcript from a recent court meeting reveals that two to five million should exhaust the company.

Court: What do you estimate to be the resources of [Defendants]? . . . What do you suspect?
MPAA’s counsel: Based on our estimate, Your Honor, we believe a couple to a few million dollars would exhaust Mr. Fung’s or defendants’ ability to pay…
MPAA’s counsel: A couple to a few million dollars would exhaust defendants’–
Court: Does that mean, like $2 million
MPAA’s counsel: Two million dollars to $4 million, $5 million at the most.

When the court asked the MPAA’s counsel why it was going for nearly $600 million in damages when a few million would be enough to put the company out of business, the MPAA argued that the high amount is needed to deter others from starting their own torrent search engines.

Court: So why are you making such a fetish about 2,000 or 3,000 or 10,000 or 100 copyrights?
MPAA’s Mr. Fabrizio: Your Honor, the purpose of statutory damages is not only to seek compensation from the defendants, the extraordinarily important purpose is to create — send a message to other would-be infringers like defendants, and there are thousands of them…
Court: But if you strip him of all his assets — and you’re suggesting that a much lesser number of copyright infringements would accomplish that, where is the deterrence by telling the world that you took someone’s resources away because of illegal conduct entirely or 50 times over?

In a reply to the MPAA’s opposition, isoHunt argues that actual damages are important information for the jury to have, so a more balanced sum can be reached. If there is no proof of piracy hurting the movie industry, a $3 million fine might be more appropriate than $600 million.

“Evidence on Plaintiffs’ overall and specific revenues relating to the works at issue will allow the jury to infer that Plaintiffs have not suffered any actual damages, which can be contrasted with the financial condition of Defendants in the jury fashioning an appropriate award,” isoHunt’s counsel argues.

“For example, if Plaintiffs enjoyed uninterrupted profits, and their overall revenues did not decline during the time that isoHunt was launched and Defendants began complying with the Injunction, the jury could conclude that it would be unjust and a windfall to award Plaintiffs anything more than the near $3 million statutory minimum.”

The court will now have to decide whether the issue of actual damages can be brought up in court. If that’s the case, then the trial is going to be a numbers game with experts from all sides trying to prove whether or not piracy is hurting Hollywood, and if so to what extent.

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