Many users of peer-to-peer (P2P) file sharing networks have been subjected to copyright infringement lawsuits regarding the unauthorized uploading and downloading of copyrighted material. The vast majority of these lawsuits have settled, with the file sharer agreeing to pay compensation to the copyright holders. Several of the cases have resulted in default judgments against the defendants or summary judgment motions in favor of the plaintiffs. However, a few of these cases have gone to trial, and two cases in particular resulted in substantial jury awards to the plaintiffs. Those jury awards, based on the Copyright Act's statutory damages provision, were later reduced by federal judges who found the awards to be grossly excessive and unjust, and even a violation of the U.S. Constitution's Due Process Clause. This report provides an overview of this type of copyright infringement, explains the Copyright Act's statutory damages provision, and reviews the recent P2P file sharing litigation. Copyright is a federal grant of legal protection for certain works of creative expression, including books, movies, photographs, and music. A copyright holder possesses several exclusive legal entitlements under the Copyright Act, including the right to control reproduction and distribution of the protected material. Unauthorized use of a copyrighted work by a third party in a manner that implicates one of the copyright holder's exclusive rights constitutes infringement. The copyright holder may file a lawsuit against an alleged infringer for a violation of any of the exclusive rights conferred by copyright. The Copyright Act provides several civil remedies to the copyright holder that is harmed by infringement, including the possibility of obtaining injunctive relief, actual damages suffered by the copyright owner due to the infringement, statutory damages, and costs and attorney fees. File sharing software programs that create P2P network connections between computers enable the transmission of data and communications over the Internet. A variety of P2P programs are typically available for free download from the distributors' websites. After installing a P2P program (called a "client application") onto the computer, the user runs the application to connect to the computers of other users of that particular P2P software who are currently "on-line." The client application allows users to "share" files located on their computer hard-drives. Once users make files available for sharing with each other, anyone who uses the same company's software to connect to the respective P2P network may locate and download desired files easily and at no cost. For example, a user of the LimeWire software can directly access files saved on another LimeWire user's computer hard-drive. Or a user can search for a particular file name, such as an MP3 song title, across all users' computers connected to the LimeWire network, and then download a copy of that file onto his or her computer. While P2P file sharing technology could be used for legitimate purposes, the overwhelming majority of files available for sharing on peer-to-peer networks are copyrighted works —digital files that are electronic copies of copyrighted sound recordings, television shows, and motion pictures. Uploading and downloading of these copyrighted works without the authorization of the copyright holders using P2P file sharing technology is a violation of the copyright holders' exclusive rights to control the reproduction and distribution of their works. The Copyright Act imposes a remedy of actual damages "as a result of the infringement, and any profits of the infringer that are attributable to the infringement." The copyright holder may also elect to obtain statutory damages prior to final judgment in the case, rather than actual damages. These statutory damages do not require proof of actual damages and create a range of $750 to $30,000 per infringed work upon a finding of copyright infringement, as the court considers just. If the infringement is found to be willful, the Copyright Act permits "enhanced" statutory damages of up to $150,000 per infringed work. The remedy of statutory damages for copyright infringement was adopted by the First Congress in the Copyright Act of 1790; with subsequent revisions of the Copyright Act, Congress retained the statutory damages provision and increased the authorized amounts. According to the Supreme Court, statutory damages "give the owner of a copyright some recompense for injury done him, in a case where the rules of law render difficult or impossible proof of damages or discovery of profits." In addition to this compensatory purpose, statutory damages also serve to punish the infringer and deter others from infringement. The most recent increase in the statutory damages amount range occurred when Congress passed the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999. According to the legislative history of this statute, Congress deemed the increase necessary because, By the turn of the century the Internet is projected to have more than 200 million users, and the development of new technology will create additional incentive for copyright thieves to steal protected works.... Many computer users are either ignorant that copyright laws apply to Internet activity, or they simply believe that they will not be caught or prosecuted for their conduct. Also, many infringers do not consider the current copyright infringement penalties a real threat and continue infringing, even after a copyright owner puts them on notice that their actions constitute infringement and that they should stop the activity or face legal action. In light of this disturbing trend, it is manifest that Congress respond appropriately with updated penalties to dissuade such conduct.… Courts and juries must be able to render awards that deter others from infringing intellectual property rights. It is important that the cost of infringement substantially exceed the costs of compliance, so that persons who use or distribute intellectual property have a strong incentive to abide by the copyright laws. Defendants in cases involving a jury's award of particularly large statutory damages have challenged the award as unconstitutional, arguing that a statutory award that far exceeds the harm suffered by the plaintiff constitutes a deprivation of due process. Historically, judicial review of statutory damages has been assessed under the standard the Supreme Court outlined in a 1919 decision, St. Louis, I.M. & S. Railway Co. v. Williams . This standard is quite deferential and overrules an award within a statutory range only when it is "so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable." Elements the court considers are whether Congress has given "due regard for the interests of the public, the numberless opportunities for committing the offense, and the need for securing uniform adherence to [the law]." In Williams, the plaintiffs had sued a railroad that charged them 66 cents more than the statutorily prescribed fare. The state law under which the plaintiffs brought suit allowed a statutory damages award of between $50 to $300 for each overcharge. Each plaintiff was awarded statutory damages of $75, for a violation that resulted in actual damages of only 66 cents—approximately 114 times greater than the damages each plaintiff had incurred. The Supreme Court found that the awarded damages did not violate due process and upheld the constitutionality of the court's award. In 2009 and 2010, federal juries in Minnesota and Massachusetts returned particularly large verdicts on non-commercial entities undertaking peer-to-peer file sharing of copyrighted sound recordings based upon the statutory damages range for copyright infringement. However, the judges in these cases subsequently decreased the awards based on common law doctrines and also the U.S. Supreme Court's punitive damages jurisprudence. These large damages awards by the juries, and their reduction by the judges, have been the subject of much debate among commentators and also the courts. These cases will be discussed below. In Capitol Records Inc. v. Jammie Thomas-Rasset , the defendant Thomas-Rasset had used the popular peer-to-peer file sharing program Kazaa to download at least 24 copyrighted sound recordings to her computer and then had made those digitized music files available for "sharing" (downloading) to other Kazaa users. The jury found her guilty of willful copyright infringement and awarded to the plaintiff (recording companies that owned or controlled exclusive rights to copyrights in the sound recordings) $1.92 million in statutory damages ($80,000 per infringed song). Thomas-Rasset appealed the jury's damages award, arguing that it was either (1) violative of the Due Process Clause of the U.S. Constitution; (2) excessive and shocking, resulting in the necessity of remittitur to the minimum statutory damages amount of $750 per copyright infringement; or (3) excessive and shocking, resulting in the necessity of a new trial. The United States filed a memorandum in the case in defense of the constitutionality of the Copyright Act's statutory damages provision. First, the United States argued that the court should decide the propriety of the verdict based upon non-constitutional grounds before relying upon the Due Process Clause, unless the constitutional question "is necessary to decide a case before it." These non-constitutional grounds, according to the government, include the admission of further evidence or the common law doctrine of remittitur. Furthermore, even if the Due Process Clause must be relied upon, according to the government, the proper standard for evaluating the statutory damages range, and the jury's award, was the Williams test described above, and not the Supreme Court's more recent punitive damages jurisprudence (as the defendant had argued). Punitive damages and statutory damages, according to the government, were distinct because punitive damages are awarded to punish a wrongdoer, while statutory damages "exist in large part to compensate victims of wrongdoing in areas where actual damages are difficult to calculate or prove." As a result, through a "carefully crafted statute," and based upon the distinct policy rationale surrounding statutory damages, the government argued that the due process concerns surrounding punitive damages (namely, fair notice and unconstrained discretion ) were not implicated for copyright infringement because the damages provision put individuals on notice of a specific range of damages to which they may be subject.