RIAA and Exxon

In 1994, A jury charged Exxon $287 Million in damages and $5 Billion in punitive damages as fallout from the Exxon Valdez oil spill. The jury determined that $287 Million dollars of damages has been done by the accident and the $5 Billion was added as an additional punishment for Exxon. The $5B was one year’s profits for Exxon at the time.

In 2002, Exxon won an appeal to reduce the punitive damages to $4 Billion. Another appeal in 2006 reduced the punitive damages further to $2.5 Billion. By 2008, 14 years after the original award and 19 years after the accident, still not one cent of the punitive damages have been paid out. The Supreme Court decided that the damages were in excess of maritime common law and said that punitive damages are limited to the compensatory damages, or $507.5 Million.

So, quick recap. If you are Exxon, and you do something bad, your punishment fine is limited to the cost of the damages.

However, if you make a song available on the Internet, you could be charged for 2,142 to 428,571 times the actual damages.

I am not saying that one is right and the other wrong. I just think it is curious that a corporation who made $5B in annual profits (in 1989, $40+ Billion in 2007) has a 1 x damages limit, but the normal person (average home income in 2007 was $66,oo0) who is not a corporation has a situation that can be (428,571 x damages) limit on them. If that song was $0.99, you could be up for 6.5 years of your total annual salary!

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