Jury Flunks Math, Awards Wrong Total
Oops.
Jurors who ordered online music provider MP3.com Inc. to pay about $300,000 to an independent record label for violating copyrights have told the trial judge that they checked their math and discovered they made a mistake: What they really meant was an amount closer to $3 million, the judge said Monday.
After seeing news reports about the award they handed down Friday to Tee Vee Toons, jurors on the eight-woman panel alerted U.S. District Judge Jed Rakoff that evening to the error in their calculations, he said.
“The total was supposed to be between $2 and $3 million,” Rakoff said. “This matter is far from obvious in how it should be adjudicated.”
Speculating that the situation may be unprecedented, Rakoff summoned the jurors to an afternoon hearing, where he interviewed them in private. Rakoff said he would issue a ruling in several weeks.
News that jurors had essentially dropped a zero in arriving at the announced award of $296,873 stunned both sides.
Lawyers for MP3.com told Rakoff Monday that there was no basis for upsetting the award. One of the jurors was a math teacher, an MP3.com attorney noted.
At the trial, the jurors had been asked to decide damages against MP3.com for posting online 145 copyrighted CDs controlled by Tee Vee Toons, known in the industry as TVT Records.
In the verdict they announced in court, panel members awarded amounts mostly ranging from $750 to $3,125, though MP3.com was ordered to pay $50,000 for one violation.
But the jury never gave a grand total.
Two jurors left voice-mail messages Friday evening for a court clerk indicating that the $3,125 figure “was supposed to be $31,250,” Rakoff said. He said it was possible that jurors had arrived at a grand total during deliberations, then “divided it wrongly.”
Friday’s verdict left MP3.com executives jubilant when jurors put such a low price tag on the copyright claims by Tee Vee Toons, the nation’s largest independent music label. Tee Vee Toons had sought a total of $8.5 million, its lawyers said.
MP3.com said other labels would be deterred from spending millions of dollars in legal fees for such a small recovery. MP3.com has paid out $130 million in copyright battles with record labels over the last year and still faces half a dozen or so more lawsuits by small companies.
MP3.com stored digitized copies of Tee Vee Toons compact discs in its computers. It provided access to music from that database, allowing its subscribers to listen to CDs from their personal collections on any computer, as long as they could show they already owned the disc.
Subscribers verified ownership by putting the CD into a computer and allowing MP3.com to scan it, although critics say the security system is flawed.
Last year, MP3.com was sued by five major record labels, including the world’s largest, Universal Music Group, a unit of Vivendi Universal. The company settled those cases with payments of as much as $53.4 million. But it still faces suits by other independent labels.
Before the Tee Vee Toons trial started, Rakoff ruled that MP3.com willfully violated the label’s copyrights. The jury was asked to decide how many copyrights MP3.com had infringed and how much the company should pay.
After deliberating for two days, the jury refused to award damages for dozens of violations, concluding, lawyers said, that Tee Vee Toons had not been harmed in those instances.
Among the CDs for which the jury refused to award damages were Tee Vee Toons-produced compilations of television and movie soundtracks, such as those for the hit TV show “Buffy The Vampire Slayer” and the film “Grumpier Old Men.”
But in a victory for Tee Vee Toons, Rakoff refused to invalidate copyrights held by the label that MP3.com had sought to nullify.
MP3.com’s shares have fallen sharply over the last year. The stock, which traded as high as $22.50 on June 9, closed up 26 cents at $2.07 on Nasdaq.
MP3.com has about $130 million in cash and, as of Dec. 31, a reserve fund of $42.9 million set aside for damage awards in pending suits, according to its financial statements and Chief Executive Michael Robertson.
Steve Gottlieb launched privately held Tee Vee Toons in 1985 by assembling the rights to songs from hit TV shows such as “Mission Impossible” and “Mister Ed.” The label now produces music by the likes of rapper Snoop Dogg and rock guitarist Jimmy Page.
Gottlieb on Monday criticized MP3.com for issuing a news release Monday morning claiming the jury had assessed damages of $296,873, when, he said, the company already knew that the amount of the award had been called into question.
“On Saturday morning, both MP3.com and ourselves were notified about several calls being made to the judge,” he said.
