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Recording Industry Settles with Students in File-Swapping Suit

BY Admin  May 2, 2003 at 12:00 PM EST

Under the settlements, the four college students each agreed to pay the RIAA fines ranging from $12,000 to $17,500 through annual installments until 2006.

While these fines will likely be a burden to the students involved, the settlements are far smaller than the $98 billion the recording association initially sought in its lawsuits filed against the students last month.

The RIAA accused the students of encouraging large-scale music piracy by running file-sharing networks on campus and illegally distributing millions of songs over the Internet.

Under the terms of the settlements, all four — Daniel Peng of Princeton University, Joseph Nievelt from Michigan Technological University, and Jesse Jordan and Aaron Sherman of Rensselaer Polytechnic Institute — promised to never again download copyrighted songs or in any way contribute to the infringement of the record companies’ copyrights over the Internet.

Although the students did not admit to any guilt, all agreed to shut down the file-swapping Web sites they created.

In a prepared statement, Peng said, “I don’t believe that I did anything wrong. I am glad that the case has been settled amicably, and I hope that for the sake of artists, the larger issues can soon be resolved.”

Under his deal, Peng will pay $15,000 over several years and will remove the file-trading functions on his wake.com site and post a statement.

Matt Oppenheim, RIAA senior vice president of business and legal affairs, said the lawsuits were meant to discourage unauthorized music downloading on campus, not financially devastate the students.

“Given that these were the first lawsuits of this kind, and that these individuals had limited means, we believe that the settlement amounts are appropriate,” Oppenheim said. “We would anticipate, though, that any future similar enforcement actions may require stiffer settlement obligations.”

The recording industry says the lawsuit prompted at least 18 other downloading online services at universities to shut down since the case began on April 3, Oppenheim said.

“The message … is clearly getting through that distributing copyrighted works without permission is illegal, can have consequences, and that we will move quickly and aggressively to enforce our rights,” Oppenheim said on Thursday.

“Many universities have started to look at this issue and educate their students about what they need to do … There are a few holdouts and a few disbelievers and we’ll obviously have to deal with them,” he said. In a statement, Peng’s attorney, Howard Ende, called the lawsuit “outrageous.” “It’s very unfortunate that the recording industry, in trying to protect their profits, has used the legal system to intimidate students who are often their best customers,” Ende said. “Rather, the industry should be working with colleges and universities to resolve its economic problems created by the development of new technologies.”

By law, the maximum penalty per copyright infringement is $150,000; the minimum is $750 per infringement. If the RIAA had won the cases in court, each student could have been fined a minimum of $100,000 to $200,000.

However, had Peng or the other students won in court, their victory could have established a legal precedent for the use of online music file-swapping sites.

The settlements mark the first time that the record industry recovered monetary damages from individuals in the U.S. accused of copyright infringement via file-sharing networks.