The Internet Archive's "Wayback Machine" is a set of snapshots of the Web over time. It's a wonderful way to delve into the past (see Ars in its 1999 black-and-green glory to learn why "ERD Commander turns me on"), but it's only possible thanks to rampant copying—and the potential copyright infringement that goes along with such copies. Thanks to US law, a successful copyright suit against the Wayback Machine could put the nonprofit Internet Archive on the hook for up to $150,000 per infringement.

Multiply that $150,000 by the number of individual pages in the Archive and you quickly run into some serious damages. The Electronic Frontier Foundation does the math (PDF):

As of December 18, 2010, the Internet Archive had 600 preserved images of the website for the Recording Industry Association of America (RIAA). Were the RIAA to sue the Internet Archive for copyright infringement based on these preserved images and prevail, the Archive would face up to $89 million in statutory damages, even absent a finding of actual harm or any reprehensibility. And these 600 images of the RIAA website are but a small drop in the large lake of information that the Archive has collected, which includes over 150 billion web pages. Based on this figure, if all copyright owners of those webpages (or a certified class of them) were to sue and prevail, the Archive would face potential statutory damages of close to 2,000 times the United States’ national debt.

Sure, it's quite possible the Archive would win such a case, just as Google won the right to make thumbnail copies of copyrighted images for its search engine, but the possibility of losing is so terrifying that it might encourage settlement—or scare entrepreneurs off such ideas altogether. And damages can be awarded without any need to prove actual losses.

"Without balance, and especially where there is no evidence of actual harm or reprehensibility, excessive statutory damage awards can stifle creativity and innovation that involves even a small risk of copyright liability," says the EFF.

In its view, these statutory damage awards must establish some connection between the harm and the damages; otherwise, judges are right to slash such awards.

That's what happened in the first two file-sharing lawsuits against young music swapper Jammie Thomas-Rasset of Minnesota and Joel Tenenbaum in Massachusetts. In both cases, juries awarded huge awards—$1.9 million against Thomas-Rasset and $675,000 against Tenenbaum. In both cases, the federal judges overseeing the trials cut these awards down to $54,000 and $67,500, respectively.

The Tenenbaum case is now on appeal to the First Circuit, which is considering whether the judge was right to cut a jury award by a factor of 10. The recording industry says no; Congress wrote the amounts into law, so there's no reason to overturn a jury's decision that stays within those legal limits.

But the EFF argues that the issue is a constitutional one about due process and that simply writing an amount into law has no ability to override that basic protection. EFF lawyers aren't particularly concerned with Tenenbaum in their new filing, but instead point out to the court that unconstrained statutory damage awards are hurting innovators.

This can be especially true in the digital world, where computers make copies simple. Do anything controversial with your business model, such as putting a commercial "autoskip" button on your DVR (as SONICblue did with ReplayTV in the early 2000s), and you could be liable for millions of infractions, even if the total harm was negligible or even nonexistent.

EFF argues that the Tenenbaum ruling linking statutory damages and harm must therefore stay in place, and it calls the issue "one of the most pressing problems in modern copyright."