Calling the original penalty “unconstitutionally excessive,” the judge in the Joel Tenebaum file-sharing case slashed to $67,500 from $675,000 the amount the Boston University grad student was ordered to pay for infringing the copyrights of four record labels.

“This award is far greater than necessary to serve the government’s legitimate interests in compensating copyright owners and deterring infringement,” U.S. District Court Judge Nancy Gertner wrote in the 64-page ruling. “In fact, it bears no meaningful relationship to these objectives.”

Although she cut the penalty by 90%, Judge Gertner insisted the penalty is adequate enough to dissuade people from illegally sharing files. “There is no question that this reduced award is still severe, even harsh,” she wrote. “It not only adequately compensates the plaintiffs for the relatively minor harm that Tenenbaum caused them; it sends a strong message that those who exploit peer-to-peer networks to unlawfully download and distribute copyrighted works run the risk of incurring substantial damages awards.”

Tenenbaum told the Boston Globe he is pleased with the lower penalty but added “it's basically equally unpayable to me.”

In a statement, the RIAA said it disagrees with the judge’s ruling and will appeal. “With this decision, the court has substituted its judgment for that of 10 jurors as well as Congress. For nearly a week, a federal jury carefully considered the issues involved in this case, including the profound harm suffered by the music community precisely because of the activity that the defendant admitted engaging in. The judge appropriately recognized the egregious conduct of the defendant, including lying to the court about his behavior, but then erroneously dismisses the profound economic and artistic harm caused when hundreds of songs are illegally distributed for free to millions of strangers on file-sharing networks.”

Blogger Ben Sheffner points out that Tenenbaum could have had a better outcome in 2007. “Keep in mind that while the reduced award of $67,500 -- $2,250 multiplied by the 30 songs on which the record labels sought damages -- is certainly better from Tenenbaum's perspective than $675,000, he could have easily settled long ago for $4,000.”

The penalty in the Jammie Thomas-Rasset file-sharing case was also reduced, from about $2 million to $54,000. After the two sides failed to agree on a settlement amount, that case appears to be headed to court for the third time later this year.