[raattgift]

tl;dr: damages are claimed and argued by one of the parties in a lawsuit, or the prosecutor in criminal actions; the other side can argue that the calculation is wrong.

In an adversarial system (in particular most systems that descend from English law), the claimant/plaintiff/prosecutor generally must claim a quantized liability at the start of proceedings, and then justify the quantum of liability. In some cases, some fraction (or even all) of the quantum may be subject to assessment by the court, which can consider the adversarial parties' pleadings and covering law (staute or case) and alter the quantum. In any event, if the defendant is not found liable, it very likely simply does not matter what the quantum of damages in the claim is (although a very high quantum can have an impact on the assessment of costs payable by the unsuccessful claimant in some circumstances, e.g. if a cheaper court cannot lawfully deal with such a large claim, or if there is over-reach in the face of something like an offer under England & Wales's Civil Procedure Rules (CPR) part 36).

The key point here is that the defending party will generally argue that it is not liable in the first place, and if it is liable then the quantum of damages is too high "for the following reasons...". If the court doesn't agree that the defendant is liable at all, then it usually does not deal with the question of damages, even if how they are calculated by the claimant looks a bit suspect. If the claimed damages are overstated in an outrageous way, many courts will take that into account, and that will not benefit the claimant.

In a case like this there likely will be litigation where Dotcom's litigation team will argue that the $500 and/or $175 million figure should be put to strict proof, and/or that it is unreasonably high (pointing to similar cases, for example). On the other hand, depending on the NZ court's rule on disclosure or discovery of evidence, that may expose them to having their books examined (at some cost) by the U.S. authorities.

> Distributing copyrighted stuff is illegal, period.

No; one may have a license from the copyright holder to distribute the material in question, there may be statutory license, or there may be defences against infringement claims in case law. Remember: there is copyright in everything that is produced from scratch by a human being in practically every jurisdiction in the world. I have copyright in this reply to you. You have copyright in the message I'm replying to. The sentence I quote above is a poor basis for you to raise a claim of copyright infringement since there is an implicit licensing, plausibly a mandatory licensing under HN TOS (since they necessarily made a copy and distributed one of those copies for me to read), a variety of defences based on concepts related to the U.S. doctrine of fair use, and local statute. You are free to liberally quote from this message in reply, and may do so entirely lawfully.

[logfromblammo]

In any case, the "lost sale" doctrine is always inherently flawed, because it presumes that those downloading have unlimited entertainment budgets. No one can spend more on copies of information property than they have in discretionary income, and thus the purchase of one copy precludes the purchase of another.

It would be easy enough to presume that everyone is always spending their entire entertainment budget, and a dearth of funds for legal purchases may be why they are obtaining illegal copies. By this reasoning, the damage done due to piracy is always zero. But that's just as clearly bunk.

Some people pirate so they can spend their money on something else--something they would not have otherwise purchased if they were compelled to spend money on the information copy they might have preferred. Thus the media company is damaged because someone spent money on something else they didn't strictly need. Even by this argument, the damages would have to be capped by calculating the total discretionary income of all illegal copyholders and summing them. IP addresses assigned to an ISP serving US residential customers could likely be associated with a number for the median discretionary household income in that census tract.

You can't reasonably say that a homeless person who illegally copied 80 GB of music files from a public library computer is costing the music industry $80 million in lost sales. That person has negative discretionary income. They wouldn't ordinarily buy music until after paying for food, utilities, and rent. You might be able to argue that having already copied the music, they won't buy it when they finally do have the money to do so, but that's not strictly true. A lot of pirates do "settle up", so to speak, for the works they enjoyed most when they finally do get some extra money, by buying things legally when they previously copied them illegally.

So the sky-high plaintiff's calculations involve a lot of assumptions and shortcuts, and a competent defense would surely be able to cut them down to more reasonable, if still practically unrecoverable, numbers. But the court has no need to review those arguments unless the defendant is found liable in some way. Perhaps examination could be triggered even without finding of liability if there were also a counterclaim that the mere magnitude of the accusation constitutes defamation? I am not a lawyer, so I wouldn't know.

[Blahah]

Just want to commend you on an outstanding comment. This kind of comment is why I keep coming back to HN. Careful thought and an intellectual commitment to relatively obscure aspects of a topic, that ultimately clarify the entire situation.

[raattgift]

While I agree with your first few paragraphs, and think that some of what you say could in principle be used in a skeleton argument mitigating against a large damages claim, it is unlikely that a downloader would be pursued as far as a formal claim for making a single copy, since the claimant is unlikely to recover all its costs even if it prevails in court. (Default judgments can be abused however; on the other hand it is probably more fruitful for sharp practice lawyers to pursue people who have downloaded something embarrassing with the threat of that being exposed on the claim form, even if there is no real intention to file the claim form to the court).

A downloader who has made lots and lots of downloads where the claimant has particularized the downloads and properly shown copyright in each them, might also escape with a low offer to settle, since the claimant still faces uncertainties if the defendant puts up a reasonable defence.

Instead, it is easier to aim for an uploader who has uploaded virtually uncountably many copies of a work. Statutory damages are often available in copyright law because if many many many copies are made of a work, it is hard to arrive at an exact quantum of damages, and few people want the courts to be burdened with assessing liability for each and every copy. Instead, statute often gives a "bulk" per-work figure which applies no matter how many copies are made, subject to conditions.

Faced with defending a claim in which one is alleged to be a serial uploader of many many copies of a work, there is no recourse via the type of argument you make. Sure, individual downloads (that one has allegedly uploaded) might be excused as non-infringing for logic similar to the argument you made (or more reliably, by an argument based in fair use or an equivalent, or some statutory exception). However, if there are still many downloads not so excused, the full statutory damages might still be sought and granted by the court.

An additional complication here is that the Dotcom matter is cross-jurisdictional and engages multiple aspects of the law. It is possible that the U.S. authorities sought N.Z. legal advice on what money amounts to use in pleadings, but it is equally possible that they have taken figures as they were made in U.S. proceedings, and can only justify them on the basis that they were made by some third party (and presumably should be answered in court by Dotcom, should he appear, which is at least one facet in the extradition action). A large figure also presumably justifies the ongoing costs the U.S. is incurring in trying to secure Dotcom's extradition, and whoever is making decisions in e.g. the State Department is happy with the $500 million figure ("Dotcom's REALLY bad, we should go after him still!"). On the other hand, extraditions for much lower-level criminals are frequently aggressively and expensively pursued by publicly-funded authorities.

> counterclaim ... accusation constitutes defamation

Statements made during the course of judicial proceedings almost always have strongly qualified -- or even absolute -- privilege in the face of defamation claims. It is hard to envisage any situation in which a court filing could be the basis of a successful defamation claim, unless its contents were overwhelmingly unrelated to the matter of the claim itself. A party can allege that the other party is engaged in abuse of process or perjury, however, and leave it up to the trial court to decide the matter. Such an allegation must be accompanied by credible evidence, however, and the remedies tend to be proportional (up to striking out the offending party's claim or defence, with consequent liability for the other party's costs, but almost certainly not beyond that maximum).

If the sky-high claim form by a studio with copyright in, say, A Random Santa Movie were to also state that the defendant in a copyright infringement claim involving that movie also dresses up as Santa in order to abuse children and elves, then the studio could lose a defamation claim, for instance. However, if the allegation is that the defendant is a serial uploader of Santa-themed movies, that would not be actionable even if the claimant fails to prove that even one copy of A Random Santa Movie had ever been uploaded by the defendant.

In the law of England and Wales there are examples such as Seaman v Netherclift (1876) 2 C.P.D. 53. (excerpts: http://swarb.co.uk/seaman-v-netherclift-1876/ ) and, for comparison, Munster v Lamb (1883) 11 Q.B.D. 568. (excerpts: http://swarb.co.uk/munster-v-lamb-ca-1883/ ). There is other case law covering such matters, however, and the Defamation Act may be engaged in some phases of proceedings. Generally, however, using a court of law to make a deliberately malicious statement with the intent to harm a person's reputation is far from good practice, but probably won't incur outright liability if it is sufficiently true and germane to the proceedings at hand.

Other jurisdictions will have different rules.

[logfromblammo]

I was just trying to imagine a situation where the damage claims would have to be evaluated even if the defendant won, or a settlement was reached, or the case got dropped. If the courts only ever examined the proven-liable claims for accuracy in the amount of liability, wouldn't that tend to introduce biases?

Firstly, presupposing that the plaintiff's claims establish liability on the defendant, I think most people would tend to give more credence to their more subjective and speculative claims of magnitude. There would be a significant incentive to unreasonably overstate those claims, knowing that they will not be examined if you lose, and they will be more believable if you've already won part of the case. Furthermore, they anchor the settlement negotiations and the judgment amount arguments, so you'd want them as high as possible anyway. If there is no meaningful penalty for grossly overstating damages, everyone claims they lost a grillion dollars in lost wages, auto detailing, and quantum torment, then hopes the judge won't reduce it to less than a zillion dollars if the case gets that far. The plaintiff eats the defendant whole, and writes the remainder off as a loss, for their tax filings over the next 30 years.

Surely, there must be some penalty for putting a blatant and notorious ass-pull in your civil filing?

If your intent is to never go to trial no matter what, and a claim would only be examined if you were to win at trial, you could put whatever ridiculous crap you wanted in your initial filing, make careful press releases based upon the accusations, then settle, or continue indefinitely, or dismiss without prejudice. Then the damage would already be done. Certainly the courts don't act on claims that haven't been admitted or established at trial, but everyone else can. Most cases never get that far. What could we be missing if we never examine those claims?

[raattgift]

tl;dr: don't lie to a court; filing a claim is communicating to a court.

I don't think things are as bad as you think, and certainly not as bad as insufficient access to decent professional advocacy in the first place (due to pitifully underfunded systems of legal aid, poor systems of costs control for pre-trial and even pre-claim phases of litigation, and "gang-up" attacks where a private party pursuing a civil claim "inspires" a public prosecutor to make it difficult for the defendant to deal with that claim (if nothing else by having to split attention and resources with criminal law matters, including extradition)).

> imagine a situation where the damage claims would have to be evaluated even if the defendant won, or a settlement was reached, or the case got dropped

In private law (i.e., not a criminal or hybrid copyright case) this will happen only rarely in common law jurisdictions, and only if the judge suspects that one party or the other has been railroaded into an adverse outcome by sharp practice by the other party, and even then it will generally only happen on application (by a party to a court, including an appellate court).

Generally a settlement is considered a matter of contract between the private parties, and the court won't interfere with that unless it has reason to believe the contract is improper somehow. If there is a true meeting of the minds between the parties, the courts will be extremely reluctant to interfere absent a strong public interest. Likewise, withdrawing from a case is generally considered to be a voluntary action by the withdrawing party, and the courts again will generally avoid preventing that. Consider that in either case the court continuing proceedings will impose costs on all parties for the duration, and that ultimately one or more of the parties will be liable for those costs which would otherwise not have been incurred after the settlement agreement or unilateral withdrawal. That does not seem fair at first glance.

(Even in inquisitorial systems a party tends to have the right -- perhaps with agreement with the other parties -- to bring proceedings to a close earlier.)

> wouldn't that tend to introduce biases

Settlement law is an important area of knowledge for a litigation unit, and knowledge being power and settlements (in private law cases) being private agreements, it is unsurprising that the answer to that is "we don't really know because we don't have a full history to examine". Pitching a settlement figure vs the money value of a claim thus remains something of a dark art. Worse, since so few cases come to trial in places where the civil procedures encourage settlements, it is often hard for parties to guess whether their outcomes will be better or worse in accepting an offer vs proceeding to final judgement. It is even harder for parties to think about without expert advice when (as in the English system) costs follow the event. (I.e., when "loser pays", there is pressure on a party to think about how much that will be in the event it does not succeed at trial, especially when considering settlement offers early in proceedings.)

> knowing they will not be examined if you lose

That's not always the case. There can be cost consequences on a partially successful claimant, i.e., one who establishes liability but the court determines a much smaller money amount in damages may not be able to recover its costs from the defendant (and in some cases may have to contribute towards some of the defendant's costs!). This will strongly depend on the procedural rules of the trial court, and can vary e.g. between county court and high court in England & Wales almost as much as between an English court and a U.S. district court.

Moreover, there are money value thresholds which can determine the appropriate court, and if a higher value claim results in a more senior court deciding that its time has been wasted by a matter best tried in a more junior court, you can bet that the claimant may face a costs order that may wipe out any damages awarded.

> meaningful penalty for grossly overstating damages

Systems of private law tend to adapt to such things in due course.

(Indeed, if they do not do so on their own then that may provoke a legislature to try to fix things.)

In the U.K., for instance, overstating damages can lead to prosecution for fraud, and since the 2012 Zurich case [1] it is fairly clear that a trial judge is generally free to strike out the whole claim if a party dishonestly exaggerates a claim, the logic being that if a trial judge cannot trust that the claim is honest, then why should the judge trust any of the claimant's evidence.

Finally, if you do not intend to go to trial you should not file a claim! If you file a ridiculous claim for the purposes you suggest, you will find the defendant will quickly engage a no-win-no-fee (or similar) abuse-of-process litigator and it will cost you quite a bit of money to settle that (and even more if you are stupid enough to contest the matter). In general, it is not easy for a claimant to simply drop a claim (once filed) without the consent of the defendant. (As noted above, withdrawing unilaterally is permissible, but likely to be expensive!)

The details vary by jurisdiction, but in general private law courts are aware that there are abusive litigators and will usually try to disincent them very strongly. This fails sometimes in systems where one can "shop" for a judge on e.g. a subject-matter basis and where judges develop reputations as being particularly claimant-friendly. Specific examples, particularly in the U.S. district courts, have been discussed from time to time on HN... :-) However, one cannot hide such apparent failures of the system from appellate courts forever, and eventually unlucky abusive claimants can find their court-of-first-instance victories very expensively reversed or at least reopened.

(Although exceptionally uncommon, serially or outrageously abusive litigators in the UK -- and that includes legal persons who massively overstate damages -- may get added to this list: https://www.gov.uk/guidance/vexatious-litigants ; many ministries of justice in commonwealth jurisdictions maintain similar lists. The England&Wales list is almost exclusively litigants-in-person, since abusive companies and charities may be wound down).

- --

[1] Hayward v Zurich Insurance Company PLS [2016] UKSC 48 with an overview online here http://www.9goughsquare.co.uk/news/1195/

[logfromblammo]

> Finally, if you do not intend to go to trial you should not file a claim!

Should not? When only 1% of civil cases actually do go to trial, and the system is set up to encourage settlement, that sounds like an ethical argument.

There are plenty of lawyers out there that file their lawsuits primarily for the purposes of producing a settlement--patent trolls are an entire named subcategory of these.

There are plenty of litigants out there that never even intend to get to discovery, and you can just forget about the trial.

[raattgift]

Yes, it's an ethical argument.

There are plenty of unethical litigating attorneys out there.

Some legal cultures are much better at weeding them out than others; some legal cultures even cultivate them as if they are valuable to the profession and the society it is embedded in. They aren't. They're caustic, and worse, they occasionally become elected politicians and elected or appointed judges.