Major labels’ $1bn copyright win against Cox Communications overturned on appeal

The Atlanta headquarters of Cox Communications parent company Cox Enterprises.

The major labels’ USD $1 billion copyright infringement victory against Cox Communications has been overturned.

A federal appeals court in Virginia has rejected parts of the 2019 verdict against Cox Communications, in which a jury found the cable and internet company – the third-largest provider of broadband services in the US, as of 2022 – liable for copyright infringement of 10,017 musical works by its subscribers.

The 4th US Circuit Court of Appeals has ordered a new trial to be held, after concluding that the $1 billion penalty against Cox was not justified, Reuters first reported on Tuesday (February 20).

The court said in its ruling on Tuesday: “We affirm the jury’s finding of willful contributory infringement. But we reverse the vicarious liability verdict and remand for a new trial on damages because Cox did not profit from its subscribers’ acts of infringement, a legal prerequisite for vicarious liability.”

The lawsuit, filed in a federal court in Virginia in 2018, included numerous plaintiffs from the music industry, including Sony Music Entertainment (the lead plaintiff), Universal Music Group and Warner Music Group.

The music companies argued that Cox Communications “knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers.”

“Cox received hundreds of thousands of notices of infringement and did not adequately respond or comply with its obligations to stop its subscribers from infringing on peer to peer networks,” National Music Publishers’ Association (NMPA) President David Israelite said at the time.

Jurors sided with the music industry plaintiffs, awarding $99,830.29 for each of the more than 10,000 infringed works.

Cox called that judgment “unwarranted, unjust and an egregious amount,” and challenged the ruling in January 2020. However, the following June, US District Judge Liam O’Grady rejected the company’s assertion that the damages awarded for each infringed copyright were “excessive”.

Cox then took the matter to the 4th Circuit appeals court, telling the court that the verdict meant that internet service providers (ISPs) would have to disconnect households and businesses from their internet services based on “isolated and potentially inaccurate allegations,” or would require ISPs to spy on their customers’ internet usage, according to Reuters.

In the opinion handed down Tuesday, the appellate court contradicted the lower court’s ruling that Cox Communications had profited from their subscribers’ infringement of copyrights.

The payment of monthly fees by subscribers to Cox’s internet service, “even by repeat infringers, was not a financial benefit flowing directly from the copyright infringement itself,” the appellate court concluded. “Cox would receive the same monthly fees even if all of its subscribers stopped infringing.”

The appeals court’s ruling in favor of Cox means the case will likely head to a retrial, and poses a potential setback for the music industry, which has since filed a number of similar copyright lawsuits against US internet providers on the argument that the ISPs are legally responsible for their customers’ infringements if they don’t take sufficient action to prevent piracy.

One such lawsuit was filed by the music majors against Charter Communications in 2019, which the cable and internet giant settled out of court in 2022.

Over the past year, Altice USA, another major ISP, was hit with two copyright infringement suits over their subscribers’ alleged music piracy, with music companies including BMG, Universal Music, Capitol Records and Concord Music Group seeking $1 billion in one case, and Sony Music and Warner Music Group seeking $1.6 billion in another.Music Business Worldwide

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