A federal court has dealt a body blow to the recording industry's efforts to sue people who use peer-to-peer software to download music from the Internet. In fact, says one copyright lawyer, the P2P decision could mean the end of the Recording Industry Association of America's litigation strategy.

In Atlantic Records v. Howell, U.S. District Court Judge Neil V. Wake rejected the RIAA's theory that the defendants distributed music files merely by making them publicly available through the Kazaa P2P application. Contrary to the music industry's theory, "Merely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder's exclusive right of distribution," the judge wrote.

The facts of the case are fairly typical. MediaSentry, the private investigator that researches these matters for the RIAA, used Kazaa to identify 4,000 files available from the Howells' computer, with 54 of them copyrighted music files. MediaSentry took screenshots showing the files available and downloaded 12 of the songs.

'Gold Standard'

The defendants, Jeffrey and Pamela Howell, say they made legitimate copies of their CDs for personal use and they didn't know Kazaa was making them public. Asked in a deposition if he was sharing music files online, Jeffrey Howell said, "I was not, no. The computer was, but I was not. The computer in some form ... made files that I did not know available on the Internet."

"This case harmonizes everything. It sets the gold standard," said Ray Beckerman, a copyright attorney with the New York firm of Vandenberg & Feliu and author of the Recording Industry v. The People blog, in a telephone interview. "Other district courts will follow it. Appeals courts will follow it."

In the Howell case, the recording industry now has to "show he actually disseminated to members of the public -- and that he did it, not someone else," Beckerman said.

A Fatal Blow?

The decision will be devastating to the recording industry's litigation strategy, Beckerman said. "In cases where the person admittedly or clearly made unauthorized copies, those people will be held to have violated the reproduction right" -- the copyright holder's exclusive right to reproduce content -- Beckerman said. But the industry will lose when it comes to the right of distribution, he added. "I believe they won't be able to prove actual dissemination."

The litigation strategy has made sense because of the statutory damages the Copyright Act allows for copyright infringement -- starting at $750 per song for unintentional infringement and as high as $150,000 per song for willful infringement. That was the basis of the verdict against Jammie Thomas, who was ordered to pay $9,250 per song for total damages of $222,000 -- based on the "making available" theory.

While Thomas has moved to set that verdict aside, the Howell decision strongly boosts her argument that the verdict was based on an erroneous jury instruction, Beckerman said. If the case eventually gets to appeal, "any appellate brief would come in firing on the Howell case," Beckerman said. "If I were writing the brief, I now have four cases holding the jury instruction was improper, and this is the strongest one yet."

Damages of $750 per song will also be held unconstitutional, Beckerman predicted, since the actual lost profit when a song is copied is about 40 cents. In cases where restaurants and bars have played music without paying royalties, damages have been limited to no more than four times actual damages, Beckerman said. At those rates litigation becomes impossible to justify.

"I'm pretty sure these P2P cases will be struck down," Beckerman said, "but I expect this to go away before it's all resolved." Shareholders will put a stop to the lawsuits before the courts do, he added.