Publications Incorrectly Report on Australian Piracy Incident, Blogger Gets It Half Right

Once again, blogger Campbell demonstrates a better legal understanding of the case than most journalists.

“So why would a judge fine him such an obviously ludicrous sum, and one based on a plucked-from-the-air figure backed up by no kind of evidence of any sort?

“Well, clearly they wouldn’t. And they haven’t, because this outlandish and spurious sum is in fact an out-of-court settlement between Nintendo and the accused. The only sense in which the payment is ‘court-ordered’ is that obviously, when a defendant and plaintiff reach an out-of-court settlement, the court tells them to abide by it as the formal means of closing the case.”

As far as the distinction between a court award (a “judgment”) and a settlement, Campbell is right yet again.  A judgment, order, award – whatever you want to call it – is a legally binding order imposed by a third party such as a judge, jury or arbitrator.  A settlement, however, is a voluntary agreement between two parties involved in litigation that ends the lawsuit by way of the parties agreeing to do or not do certain things.  In this case, Burt agreed to pay Nintendo $1.6 million to end the lawsuit rather than fight it any further.

A settlement is not proof in and of itself of liability, thus why many settlement agreements contain explicit statements that a party is settling “without admitting liability.”  Sometimes the cost of litigation is simply too much, and one party decides it is in its best interest to settle rather than continue a costly legal battle.  Of course, in this instance Burt has actually admitted liability.

Why does all of this matter?  For one thing, it’s false reporting.  Journalism exists to tell people the truth based upon currently available facts.  In this case, the truth wasn’t told – it was distorted.

By stating that Burt had been fined (or worse, “convicted” on criminal charges), journalists improperly shifted blame to Australia’s judicial system and made it seem like the court system had no sense of fairness or balance.  But the court didn’t determine the settlement – the parties did.  As someone who has worked in the legal profession for several years years, I can tell you from first-hand experience that the last thing the law needs is to have its public image tarnished even further.

But Campbell’s argument that there is “no kind of evidence of any sort” to support the number is not so well-grounded.  Nintendo claims via the interview with A Current Affair that 50,000 copies of New Super Mario Bros. Wii were downloaded on the Internet.  Even assuming Burt never made a dime off his upload, Nintendo could pursue its claim based upon lost sales that Burt may have caused.  Additionally, Nintendo may potentially have been able to recover its attorney fees against Burt on top of its costs of litigation.  And these factors don’t even include the possibilities of punitive damages, statutory damages (meaning money awarded specifically by a statute, regardless of proof of lost sales), and worst of all, criminal sanctions (remember that lovely FBI warning in the beginning of each movie?).  So damages (the amount awarded to compensate the plaintiff) relating to lost sales were not the only thing Burt had to worry about.  A party’s own attorney fees can often be the most crippling aspect of litigation.

Website Patents 101 readily admits that “it can often be difficult to prove how much money you lost as a result of someone’s copyright infringement.  Did the infringing sales cost you sales, and if so how many? How much revenue could you have gotten from licensing the work? The answers to these questions are frequently speculative.”  However, as any attorney will tell you, the fact that it may be difficult to prove your case does not mean that it is impossible.  Moreover, Patents 101 explains “That is one reason why the law provides for statutory damages for copyright infringement. Another reason is to deter infringers from violating copyrights even where the damages would be very slight or nonexistent.”

The real question surrounding this entire incident is not whether the $1.6 million settlement was an appropriate amount, but why Burt agreed to such an amount.

Campbell believes that Burt doesn’t have the money to pay such an award (highly plausible) and that the parties actually agreed to a hidden clause whereby Burt had to pay Nintendo little to nothing as part of the settlement but Nintendo could make a public example of him, deterring piracy and protecting its copyrights.  This sounds plausible, but its also plausible that Burt agreed to garnish his wages to pay the settlement over his lifetime.

While Campbell certainly did a better job reporting the incident than most journalists, he still wasn’t perfect.  After all, he did spell  “judgment” as “judgement” when the correct legal usage of the word includes only one “e.”