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Jammie Thomas rejects RIAA's $25,000 settlement offer

Music industry says Thomas-Rasset can put the case behind her if she agrees to ask judge to vacate his judgment from last week, and pay $25,000.

Update 12:01 p.m. PT: To include quotes from Joe Sibley, one of Jammie Thomas-Rasset's attorneys.

The four top recording companies on Wednesday made a settlement offer to Jammie Thomas-Rasset, the Minnesota woman who was found liable last summer of willful copyright infringement and ordered by a jury to pay $1.92 million in damages.

And wasting little time, Thomas-Rasset's attorneys rejected the settlement offer almost immediately.

Days after a federal court judge reduced the damage amount to $54,000, the Recording Industry Association of America forwarded settlement terms to her attorneys, according to a copy of the letter obtained by CNET. The RIAA, the trade group representing the four largest record labels, informed Thomas-Rasset that it would accept $25,000--less than half of the court-reduced award--if she agreed to ask the judge to "vacate" his decision of last week, which means removing his decision from the record.

Jammie Thomas-Rasset Jammie Thomas-Rasset

The RIAA said in the letter to Kiwi Camara and Joe Sibley, attorneys for Thomas-Rasset, that the $25,000 she would paid would go to a musician's charity. The RIAA said that if Thomas-Rasset declined the offer, the group would challenge the judge's ruling to lower her damages.

That's what the music industry will have to do, said Joe Sibley, one of Thomas-Rasset's attorneys, in an interview with CNET. What this means is the court fight will go on. The RIAA wasn't pleased with her decision.

"It is a shame that Ms. Thomas-Rasset continues to deny any responsibility for her actions rather than accept a reasonable settlement offer and put this case behind her," the RIAA said in a statement.

Sibley and Camara had already said that they planned to challenge even the lowered amount set by the court. Sibley told CNET last week they have always sought a $0 award.

"My clients have pursued this case to establish that the defendant was in fact responsible for the infringements alleged and that there were serious damages to them and to their artists as a result," wrote Timothy Reynolds, one of the RIAA's outside counsel. "Two juries resoundingly agreed. We do not believe embarking on a third trial is in anyone's interest."

Over the past four years, since Thomas-Rasset was first accused of illegally sharing more than a 1,000 songs, she has become deeply embedded into the debate over copyright and illegal file sharing. To some, Thomas-Rasset is the Joan of Arc of peer-to-peer. To others, she is a crook who denied sharing music but was contradicted by overwhelming evidence and eventually ordered to pay whopping damages by two separate juries.

My sources in the music sector predicted last week that the RIAA would try to settle. After Michael Davis, chief judge for the U.S. District Court for the District of Minnesota, lowered the damages amount, my sources said the big labels were satisfied to walk away after winning two trials and seeing Davis order Thomas-Rasset to pay a significant damage amount in $54,000. RIAA managers believe they have achieved whatever deterrent value the case can provide, the sources said.

But the RIAA likely won't lose much sleep over Thomas-Rasset's rejection of the settlement offer. They are just as happy to try and reverse a couple decisions made by Davis during the case. Davis reduced a damages award that was well within the range for statutory damages set by Congress. According to legal experts, no judge has done this in a copyright case and the RIAA may have had a good case for appeal, said lawyers.

Davis' other controversial decision was his ruling on "making available." During Thomas-Rasset's first trial in 2007, Davis said he erred by telling the jury that simply making music available for sharing was a copyright violation. In that case the jury ordered Thomas-Rasset to pay $222,000 but Davis threw the decision out after concluding he had erred.

The RIAA argued that Davis' original jury instructions were correct.

As for what happens next, Davis gave the RIAA seven day to decide whether to challenge his decision and schedule a hearing in his court to argue over the damages. What happens if Davis again finds that the $1.9 million is too much?

Whether the RIAA can appeal that is still unclear. Meanwhile, Thomas-Rasset's attorneys will continue to challenge any damages amount as unconstitutional.