Oops. The RIAA may have made a little tactical error. They did not account for the possibility that some people would not knuckle under to their “legal” extortion and actually fight back in court. But that’s what some people are doing, and it is beginning to expose some of the recording industry’s trade secrets.

In UMG v. Lindor, the defendants are challenging the RIAA’s supposition that when someone pirates a single piece of music on the Internet, the music labels lose $750 and should be compensated accordingly. The legal representatives of Marie Lindor make the counter-argument that “in a proper case, a court may extend its current due process jurisprudence prohibiting grossly excessive punitive jury awards to prohibit the award of statutory damages mandated under the Copyright Act if they are grossly in excess of the actual damages suffered.” Seeing as how the RIAA’s bottom-level figure of $750 per song is roughly 1000 times the actual maximum loss a music label would suffer in such a case, they argue that $2.80 to $7.00 per song (4 to 10 times the real value, supposing that the defendant would have purchased the song in the first place) is slightly more reasonable. Such punitive damages are far more in line with reality.

However, the big fish that the defendants are after is information on what pricing structure the labels use–how much they make per song, and more revealingly, how they collude to fix prices in the marketplace:

The pricing data really may not be all that secret. Late in 2005, former New York Attorney General (and current Governor) Eliot Spitzer launched an investigation into price fixing by the record labels, alleging collusion between the major labels in their dealings with the online music industry. Gabriel believes that making the pricing information public would “implicate [sic] very real antitrust concerns” as the labels are not supposed to share contract information with one another. …

[Defense counsel Ray] Beckerman argues in a letter to the judge that the only reason the labels want to keep this information confidential is to “serve their strategic objectives for other cases,” which he says does not rise to the legal threshold necessary for a protective order. The proposed order would force the labels to turn over contracts with their 12 largest customers. Most details—such as the identities of the parties—would be kept confidential, but pricing information and volume would not.

That’s how to hurt the industry back–show that if they want to extort money from grandfathers and 12-year-old honor students, they risk having their illegal market strategies exposed. The Inquirer puts it a bit more clearly:

This would reveal to the world if any price shenanigans were going on between the RIAA members and could cause them more problems with regulators than it would like.

Already investigations into industry pricing have revealed a Byzantine system of backscratching between record labels and distributors and the last thing the RIAA wants is to have details of this information made public.

If Lindor wins then the most the RIAA would ever be able to charge a pirate in the US will be between $2.80 and $7.00 per song. However the RIAA might also find itself up in front of a Senate inquiry.

Ah, it would be such sweet justice if the RIAA’s reign of courtroom terror would end up with them being stuck with punitive damages so reasonable that it would not be worth their while to sue anyone, while at the same time having their own corruption exposed in such a way to get them into real trouble.

I know, it probably won’t happen. But in a just world, it would.