In 2004, the Recording Industry Association of America (RIAA) filed suit against Deborah Foster, an Oklahoma resident, alleging that her computer and her ISP account had been used to download and trade copyrighted recordings illegally. As usual in these suits, the RIAA offered to settle the case for a few thousand dollars.
Except that Deborah Foster knew she hadn't done anything wrong, and refused to pay up. After some initial discovery, the RIAA began to suspect that Deborah's adult daughter, Amanda, was responsible for the alleged downloads, and it added Amanda's name to the suit. But Deborah continued to press the RIAA, asking them to provide details of what was downloaded when. Seeing that this wouldn't be an easy case, the RIAA dropped the suit.
Deborah then sued the RIAA for attorneys' fees and won. After about a year of back and forth over the precise amount, today the judge ordered the RIAA to pay her $68,685.23. (A PDF of the order is available here.)
This judgment changes the calculations involved in the RIAA's strategy of suing alleged file-traders. It doesn't cost much to send an accusatory letter demanding a few thousand dollars. But if the defendant actually puts up a fight, the legal costs for the RIAA quickly mount. In that situation, the RIAA has to believe that it has enough evidence to win, and that the defendant will be able to pay a fine that's large enough to cover the RIAA's costs.
All this means the RIAA has to be extra careful about who it sues--as this case demonstrated, it may not be enough to trace file-trading back to a particular IP address, and work with (or sue) the ISP to figure out who's paying for Internet access at that adress. And taking extra care might raise the RIAA's initial costs enough to make this whole strategy too expensive to continue with.
That would actually be a good thing for the recording industry: the strategy of suing file-traders is error-prone, ineffective, and has created a blizzard of bad p.r. A better option would be to create and promote legal alternatives that still compensate copyright owners, such as ad-funded music-sharing services. Another possibility would be to press legislation forcing ISPs, PC hardware makers, and/or music software makers to chip a few cents per sale into a kitty to compensate content owners for the loss of revenue from file-sharing--something that's already done with the sale of certain blank media in the U.S. and elsewhere.