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The U.S. Solicitor General has urged the Supreme Court to accept Cox Communications' petition in a landmark piracy liability lawsuit. The USSG argues that ISPs are not necessarily liable for pirating subscribers and warns that the current precedent may lead to disconnections for many innocent subscribers. At the same time, the USSG urged the court to deny a petition from the opposing music companies, which seeks to expand the current liability verdict. In 2019, Internet provider Cox Communications lost its legal battle against a group of dozens of record labels, including Sony and Universal. Following a two-week trial, a Virginia jury held Cox liable for its pirating subscribers. The ISP failed to disconnect repeat infringers and was ordered to pay $1 billion in damages. This case is one of many. Other ISPs have been accused of being similarly lax in their stance against alleged piracy. Rightsholders believe that ISPs are motivated by profit, while ISPs typically argue that they shouldn’t be held liable for the alleged wrongdoing of subscribers. Landmark Piracy Battle Cox challenged the verdict through several routes and last August filed a petition at the U.S. Supreme Court asking it to hear the case. The Internet provider stressed that the current verdict ‘jeopardizes’ internet access for all Americans. Around the same time, the music companies filed their own petition, hoping to strengthen the verdict at the Supreme Court. Specifically, the record labels argued that the ISP should also be held liable for vicarious copyright infringement. Both petitions essentially boil down to questions on liability. Are ISPs liable for copyright infringement if they don’t disconnect subscribers accused of copyright infringement? And can ISPs be held liable for infringing subscribers, even if they don’t directly profit from their activities? Last November, the Supreme Court suggested that it is indeed interested in the questions. Before deciding, however, the U.S. Solicitor General was invited to share the Government’s view on the matter. The Solicitor General is a high-ranking official in the U.S. Department of Justice who serves as the federal government’s primary lawyer before the Supreme Court. Needless to say, their input weighs strongly for the Supreme Court’s decision whether to accept these petitions or not. U.S. Backs Cox’s Petition Yesterday, the Solicitor General submitted its amicus brief in this matter, clearly siding with the Internet provider. The Solicitor General argues that the Fourth Circuit’s decision, which held Cox liable for contributory infringement, “departs from this Court’s contributory-infringement precedents” and is in “substantial tension” with the Supreme Court’s recent analysis of secondary liability in Twitter v. Taamneh. “The Taamneh Court’s reasoning reinforces the conclusion that imposing liability on Cox for copyright infringement committed by its users, based on Cox’s failure to terminate service to IP addresses associated with infringement, is incompatible with traditional common-law limitations on secondary liability,” the brief reads. The U.S. also cites the Sony and Grokster cases, which make clear that contributory liability for copyright infringement requires more than knowing about pirating activity. Instead, it requires “culpable intent” to cause copyright infringement. “If Cox had explicitly or implicitly marketed its service as being particularly useful for infringers, or if it had encouraged subscribers to use Cox’s internet service to infringe, liability might be appropriate,” the Solicitor General writes. According to the view of the U.S. Government, an ISP is not automatically liable for copyright infringement if it fails to terminate subscribers after receiving copyright infringement notices. This is a strong statement that targets the central issue in many similar lawsuits in U.S. courts. Not Liable Innocent Subscribers at Risk The amicus brief goes on to state that the current verdict of the Court of Appeals can have broad implications for ISPs and their subscribers. Cox previously argued that, based on this precedent, ISPs find themselves ‘forced’ to terminate subscribers who may have done little wrong. The U.S. Solicitor General acknowledges this potential threat. If copyright infringement notices from third parties can trigger liability, Internet providers may take more drastic action to avoid legal trouble. “Given the breadth of that liability, the decision below might encourage providers to avoid substantial monetary liability by terminating subscribers after receiving a single notice of alleged infringement,” the Solicitor General writes. “Losing internet access is a serious consequence, as the internet has become an essential feature of modern life. And because a single internet connection might be used by an entire family—or, in the case of coffee shops, hospitals, universities, and the like, by hundreds of downstream users— the decision below could cause numerous non-infringing users to lose their internet access.” No Willful Infringement Aside from the liability question, the brief also criticizes the Fourth Circuit’s finding of “willfulness” against Cox, which led to the enhanced statutory damages. The Solicitor General argues that the jury instruction was “erroneous” because it allowed a finding of willfulness based on the notion that Cox knew its subscribers’ actions were unlawful, even though Cox believed its own response was lawful. The Solicitor General notes that “willfulness” generally requires knowledge or reckless disregard that the defendant’s own conduct was unlawful. Simply knowing about third-party infringements should not be sufficient. This broad interpretation would essentially undermine the Copyright Act’s two-tiered damages scheme, which reserves higher damages for willful copyright infringement than for non-willful infringement. Music Companies’ Writ Should be Denied While the U.S. supports Cox’s petition, it has asked the Supreme Court to deny a related writ from the opposing music labels, who argue that Cox should also be held liable for vicarious copyright infringement. Defendants can be held vicariously liable if they had the right and ability to control the infringing activities and a direct financial interest in those activities. According to the Solicitor General, the lower court correctly concluded that is not the case here. “There was no evidence that Cox would be forced to collect a lower fee if the users of its internet service ceased to infringe; that subscribers were drawn to Cox’s internet service because of the ability to engage in copyright infringement using that service; or that Cox had used the opportunity for customers to infringe to lend credibility to the service it offered,” the brief notes. All in all, it’s clear that the U.S. Solicitor General, and thus the U.S. Department of Justice, supports Cox’s attempt to overturn the piracy liability verdict. While the Supreme Court has yet to formally decide whether it will take on the case, the brief suggests the chance is now significantly higher. Conclusion While Cox will be pleased to see the supportive brief, there are no guarantees that the Supreme Court will agree with the U.S. Solicitor General, should it ultimately decide to take on the case. — A copy of the U.S. Solicitor General’s Amicus Curiae brief for the United States is available here (pdf). Source Hope you enjoyed this news post. Thank you for appreciating my time and effort posting news every day for many years. News posts... 2023: 5,800+ | 2024: 5,700+ | 2025 (till end of April): 1,811 RIP Matrix | Farewell my friend

In a recent filing at the Ninth Circuit Court of Appeals, ISP Cox maintains that DMCA subpoenas don't apply to Internet providers. Several movie studios hope to convince the court otherwise, as that would strengthen their piracy enforcement efforts, making it easier to identify online pirates. According to Cox, however, Congress clearly excluded ISPs from this legal 'shortcut'. Under U.S. law, rightsholders have an option to identify alleged copyright infringers, without directly having to file a lawsuit. Instead, they can request a DMCA subpoena. These documents are typically signed by a court clerk and don’t require any judicial oversight. Specifically, they allow rightsholders to obtain the personal details of anonymous alleged infringers through third-party internet services where the infringing material is shared or stored. That includes hosting companies and social media platforms. DMCA Shortcut? The DMCA specifies that these subpoenas don’t apply to all online services. Mere conduit providers that simply pass on bytes are typically excluded, for example. However, that didn’t stop some rightsholders from using this shortcut to request information from residential ISPs. Drawing inspiration from the RIAA’s early efforts to identify music pirates in the early 2000s, they once again used the DMCA subpoena process to obtain the personal details of suspected copyright infringers. While several courts effectively ruled out this option two decades ago, the more recent attempts cite fresh interpretations and conflicting case law to support the requests. Many court clerks granted these new subpoena requests, requiring Internet providers to identify hundreds, if not thousands of alleged pirates. Cox Successfully Intervened Following numerous successful attempts in courts around the U.S., Internet provider Cox Communications intervened in one of these cases, defending a subscriber who objected to the handover of their information. The ISP decided to challenge the use of DMCA subpoenas, as detailed in DMCA §512(h). Similar to the earlier opposition against the RIAA’s attempts, the ISP argued that DMCA subpoenas don’t apply to mere conduit providers, as defined under § 512(a). Earlier this year, a district court judge in Hawaii sided with Cox. The court ruled that DMCA subpoenas don’t apply to mere conduit services, but do apply to other providers that store or link to infringing content directly. As such, the movie companies’ request for a subpoena was denied. The rightsholders in this matter, film companies Voltage Holdings, Millennium Funding, and Capstone Studios, swiftly submitted a motion for reconsideration. This was denied as well, which prompted the filmmakers to file an appeal at the Ninth Circuit Court of Appeals. Filmmakers Appeal Filed this summer, the appeal argued that the district court’s interpretation relies on dated precedents, which don’t reflect the realities of the modern Internet. The movie companies noted that ISPs do play a role in facilitating piracy, even if indirectly, and should be subject to DMCA subpoenas. “A careful reading of the full text of 17 U.S.C. §512 leads to the unquestionable conclusion that Congress intended for DMCA subpoenas to apply to §512(a) service providers despite the contrary conclusions of Verizon and Charter,” their petition read. Alternatively, the appeal argues that residential ISPs could also be seen as information location tools under the DMCA. These fall under §512(d), which could make an ISP subject to DMCA subpoenas. “Cox can use measures to disable the link to the infringing material such as null routing the IP addresses, blocking the ports associated with BitTorrent activity from the subscribers’ endpoint, or filtering the BitTorrent content from the subscriber’s endpoint,” the movie companies wrote. Cox: DMCA Subpoenas Don’t Apply, Period This week, Cox filed its answering brief. In an 84-page-long response, the company rejects the movie companies’ theories. According to the ISP, the language of the law is clear, as Congress intended it. Cox argues that the DMCA is complex, but it clearly states that the subpoena provision is tied to the larger “notice-and-takedown” framework. These takedowns don’t apply to conduit ISPs, therefore the DMCA subpoenas shouldn’t either. “When it comes to conduit ISPs, there is no such thing as a DMCA-compliant notification. That is because Congress decided not to subject such ISPs to the notice-and-takedown framework at all. No DMCA notice, no DMCA subpoena.” The movie companies may disagree with this, and can take their concerns to Congress if they wish the law to change, Cox adds. “If Capstone thinks conduit ISPs should be subject to the notice-and-takedown framework — and are therefore proper recipients of DMCA notifications and subpoenas — it can push for that legislative change. But Congress made a different judgment when it enacted the DMCA,” the brief reads. Information Location Tools §512(d)? The answering brief also rejects the argument that conduit ISPs can fall under §512(d), which applies to information locations services such as search engines. ISPs can also locate information through their networks, and can potentially block or filter infringing content on their end, the argument goes. According to Cox, this argument is completely unsupported by any DMCA-related cases that went before courts over the past decades. “Capstone cites no case, no treatise or commentary, no snippet of legislative history that has ever even hinted at this reading of the DMCA. And the implications of sweeping conduit ISPs into subsection (d), thus subjecting them to notice-and-takedown requirements, are staggering.” If a court decided that conduit ISPs can be subject to takedown notices, it would send shockwaves across the ISP industry. These companies would then have to block and filter content en masse, based on third-party piracy allegations. This would effectively “upend decades of settled understanding, sending conduit ISPs across the country scrambling to create takedown-based DMCA programs that require swift denials of internet access based on a mere allegation of infringement,” Cox writes. Going Forward This doomsday scenario isn’t needed for copyright holders to enforce their rights, Cox notes, as they can file regular lawsuits in federal courts to obtain the identities of alleged file-sharers. This might be a more expensive route, but it’s the right path according to the ISP. The above is just a brief overview of some of the arguments laid out in the answering brief. Much of it goes into great detail on the various aspects of the DMCA, how these apply to ISPs, and what that means for the present case. The Ninth Circuit Court of Appeals will now review the arguments from both sides to decide if how the DMCA should be interpreted in this case. It’s clear, however, that the stakes are significant for all parties involved. — A copy of COXCOM LLC’s answering brief, filed at the Ninth Circuit Court of Appeals yesterday, is available here (pdf) Source Hope you enjoyed this news post. Thank you for appreciating my time and effort posting news every day for many years. 2023: Over 5,800 news posts | 2024 (till end of November): 5,298 news posts RIP Matrix | Farewell my friend

Cox Communications is fighting a writ of certiorari filed by several record labels at the U.S. Supreme Court. The music companies argue that ISPs can be held vicariously liable for pirating subscribers, even when they don't directly profit from this activity. Cox argues that this "radical new theory" would make ISPs liable for virtually anything their users do online. In August, Cox Communications filed a petition at the U.S. Supreme Court, requesting a review of the Fourth Circuit ruling that held the company contributorily liable for pirating subscribers. The Internet provider ultimately challenged the $1 billion jury verdict from 2019, which went in favor of the major record labels. Labels Petition Supreme Court over Piracy Profits As Cox petitioned the Supreme Court, the music companies filed their own petition, hoping to strengthen the verdict. Specifically, they argued that the ISP should also be held liable for vicarious copyright infringement. In this case, and similar ones filed against Bright House and Grande, courts previously rejected the vicarious infringement claims, holding that there is no causal link between the pirating activities and the financial benefits. The major record labels, including Sony and Universal, want the Supreme Court to take a closer look at the “profit motive”. They asked the Court to consider whether an ISP must profit directly from the infringement itself, or if profiting from the overall operation in which the infringement occurs is enough. Repeat Infringers vs. Dance Halls The music companies argued that Cox profited from subscription revenue it would not have otherwise obtained if it had terminated the accounts of customers who were repeat infringers. Between February 2013 and December 2016, Cox received $208 million in revenue from subscribers who received three or more piracy notices. To support this argument, the music companies cited the dance hall cases, in which courts have held that the owners of venues can be held liable for copyright infringement committed by performers they hire. The petition further cited the Supreme Court’s holding in Herbert v. Shanley Co. that a hotel could be held liable for the infringing performance of an orchestra it employed. The Court concluded that the hotel profited from the performance, even though visitors only paid for their meal, not the music. Cox Opposes Petition In an opposition brief filed this week, Cox asks the Supreme Court to deny the petition. According to the Internet provider, the plaintiffs present a “radical new theory” that would make service providers liable, simply because they offer Internet access. “Under this theory, the plaintiff need not prove that the ISP is in the least bit culpable, that it knew about the infringement, or that it made a single extra penny because of the infringing activity,” Cox informs the Court. “In other words, because Cox, like any ISP, has a financial interest in offering internet service to customers, it is liable for anything those customers do online. To state the argument is to refute it. There is no such form of liability—not in copyright law or anywhere else.” Responding to the ‘hotel orchestra’ argument, Cox notes that in that case the infringing performance acted as a ‘draw’ for potential customers. There’s no such draw in this case, as pirated content is available though all ISPs, this reasoning suggests. Cox stresses that the Fourth Circuit correctly rejected the vicarious copyright infringement allegations. It sees no reason for the Supreme Court to consider the case, arguing, among other things, that there is no real disagreement in lower courts on this matter. As further support, ISP cites the Supreme Court’s holding in Grokster, which stated that vicarious liability requires proof that the defendant profited directly from the infringement. That’s not the case here, it notes. Draconian Internet Police In recent filings, Cox has put a lot of emphasis on the broader societal impact this case may have. If the labels have their way, it could mean that ISPs are ‘forced’ to terminate accounts of many thousands of subscribers, solely based on rightsholders complaints. “ISPs would not only be required to execute mass internet evictions at the slightest allegation of copyright infringement, but they would need to police the internet and terminate users upon any hint or accusation of misconduct practices as invasive as they are draconian. “That would imperil the livelihoods, safety, and social connections of a massive universe of downstream users who rely on internet connections to run businesses, pay bills, apply to jobs, read the news, connect with friends and family, petition their representatives, and attend school.” A verdict that goes against Cox will also mean significant financial consequences for the ISP, hence the decision to fight the matter up to the Supreme Court. If the Supreme Court decides to take on this case, it will undoubtedly result in a landmark decision; for Cox, for rightsholders, and for the public at large. The same is true for Cox’s petition, which is still under review. — A copy of Cox Communications’ opposition brief, filed Monday at the Supreme Court, is available here (pdf) Source Hope you enjoyed this news post. Thank you for appreciating my time and effort posting news every day for many years. 2023: Over 5,800 news posts | 2024 (till end of September): 4,292 news posts RIP Matrix | Farewell my friend

But it will have to eventually pay something. In the seemingly endless fight between record labels and ISPs over music piracy, the Fourth Circuit Court of Appeals in Richmond, Virginia decided Tuesday that $1 billion is too much for Cox Communications to pay record labels in damages. Instead, as reported by Reuters, a new trial should be set in a federal district court to figure out what would be an appropriate amount. This new ruling overturns a 2019 US district court jury’s decision siding with the record labels involved in the lawsuit, which includes Sony Music, Universal Music Group, Warner Music Group, and EMI. The companies accused Cox of not addressing over 10,000 copyright infringement notices and failing to take action against music pirates, such as cutting off their broadband access. But the circuit court reversed the damages, noting that Cox “did not profit from its subscribers’ acts of infringement,” a legal prerequisite for part of the liability. This is not the first time Cox Communications has tried to appeal that $1 billion judgement, but it is the first time it has been successful. Cox previously asked a federal court in Virginia to lower the damages or give it a new trial. When that court said no, the ISP filed a motion with a district court in Colorado claiming Sony fabricated evidence to obtain a favorable verdict. The evidence in question was used in another music copyright infringement case against another ISP, Charter, and Cox sought to prove that evidence was created years after the music companies claimed it was illegally downloaded over Cox’s network. However, this allegation was not mentioned in the circuit court’s opinion Tuesday. Neither music companies nor ISPs have been able to do much to stop repeat pirates; both parties mutually decided to end their Copyright Alert System partnership (known as the “six strikes” rule) in 2017 after it failed to significantly reduce illegal music and video downloads. The system was successful at getting internet users who infrequently pirated copyright material, but it didn’t do anything against the ones who consistently pirated material. Source

Cox Communications has requested a rehearing en banc of the piracy liability lawsuit filed by several major record labels. While the Fourth Circuit Court of Appeals vacated the $1 billion damages award, it kept the contributory copyright infringement ruling intact. This precedent results in a "draconian regime" that threatens the Internet connectivity of millions of people, Cox warns. Internet provider Cox Communications has been on the sharp end of several piracy lawsuits in recent years. The biggest hit came four years ago when the Internet provider lost its legal battle against a group of major record labels, including Sony and Universal. A Virginia jury held Cox liable for pirating subscribers because it failed to terminate accounts after repeated accusations, and ordered the company to pay $1 billion in damages to the labels. This landmark ruling was appealed, leading to a mixed outcome last month. Appeals Court Issues Mixed Order After taking a fresh look at the case, the Fourth Circuit Court of Appeals ruled partly in favor of Cox. The Court concluded that Cox is not vicariously liable for piracy carried out by subscribers, as it didn’t directly profit from their activity. The Court did not reverse the lower court’s contributory copyright infringement finding, however. According to the Court of Appeals, there was sufficient evidence to show that Cox ‘knew’ piracy would likely occur if it continued to provide its Internet services to particular subscribers. While the ruling is a mixed bag, it also meant that the $1 billion damages award could not stand. Instead, the Court ruled that a new trial should determine the scale of the damages. Rehearing en Banc Neither party was pleased with the ruling and both Cox and the labels requested a rehearing en banc, essentially calling for a do-over. The labels, for example, would like the $1 billion in damages to remain unchanged, arguing that Cox waived a potential challenge of it earlier. In addition, the music companies argue that the Court’s decision conflicts with appeal court precedents. Cox also calls for a rehearing. The Internet provider argues that this case isn’t merely about nuances of copyright law and associated liability, it’s much bigger than that. According to the ISP, the Internet connectivity of countless people is at stake. ‘Disconnecting Schools and Nanny Cams’ In its petition, the provider argues that the current precedent results in a highly restrictive regime where Internet providers may find themselves forced to disconnect ‘innocent’ people because someone allegedly used their connection to pirate content. “If an ISP receives more than one accusation that some anonymous person used a specified internet connection to download infringing songs, it can avoid liability only by swiftly throwing every person in that home or business off the internet, disconnecting the guilty and innocent alike from their schools, their livelihoods, their nanny cams, their news, and everything else they do online,” Cox warns. “If instead the ISP continues to provide the connection, a jury can find it engaged in ‘culpable conduct’ akin to aiding-and-abetting a crime.” The ISP argues that the liability finding is at odds with a recent Supreme Court decision which concluded that a service is not necessarily liable for ‘merely’ providing a service that’s used for illegal activity. The Court of Appeal didn’t consider this in its latest ruling, but should do so, Cox notes. A rehearing is also warranted because a party shouldn’t necessarily be held liable for willful secondary infringement, as is the case here. This conflicts with earlier precedent, the ISP argues. “[W]illfulness requires the defendant’s awareness that its own conduct violates the law, as the Eighth Circuit has squarely held in a secondary infringement case like this one,” Cox writes in its petition. ‘Draconian Regime’ These two earlier conclusions of the court created “the most draconian approach in the country,” Cox argues, stressing that a rehearing should be granted to address them. The matter ultimately boils down to an interpretation of the law, which can get quite technical. However, Cox also highlights the potential consequences, stressing that these issues are “extraordinarily important.” Not just for Cox, but for millions of Internet subscribers at risk of disconnection. “The issues presented here are deeply important, not only to copyright defendants like Cox, but to millions of people who depend on internet access every day,” Cox writes. “[T]he legal regime the panel decision and BMG enact requires an ISP to cut the cord on subscribers after receiving just a handful of notices alleging that some anonymous person has used the subscribers’ connection to infringe.” The current precedent requires ISPs to disconnect subscribers based on repeated third-party claims. If they don’t, they subject themselves to liability, as the previous $1 billion verdict showed. ‘Hobson’s Choice’ Cox suggests that this looming punishment is disproportionate. Not only in terms of the financial consequences for Internet providers but also because the public’s Internet connectivity will be put at risk based on unadjudicated piracy claims from rightsholders. “Without meaningful limits on secondary liability, ISPs face powerful incentives to swiftly terminate the internet connections of innumerable businesses and households, their monthly subscription fees a pittance compared to the threat of $150,000 in damages for every downloaded song. “The full Court should grant rehearing and reject a Hobson’s choice that threatens to throw countless ordinary people offline in service of the music industry’s bottom line,” Cox concludes. The ISP’s position is supported by several amici including the American Library Association, Public Knowledge, the Electronic Frontier Foundation, and fellow Internet provider Frontier Communications, which has filed supporting briefs. — A copy of Cox’s petition for a rehearing en banc is available here (pdf) and the record labels’ petition can be found here (pdf). Frontier’s proposed amicus curiae brief can be found here (pdf) and the brief of the other supporters is available here Source

Cox Appeals $1B Piracy Liability Verdict to ‘Save the Internet’ Cox Communications has submitted its appeal brief, asking the court to reverse the $1 billion jury verdict handed down following a piracy liability lawsuit filed by several major record labels. The Internet provider argues that it's being incorrectly held liable for pirating subscribers. Cox says that the music industry is waging war on the internet, which will never be the same again if the verdict is upheld. Late 2019, Internet provider Cox Communications lost its legal battle against a group of major record labels. Following a two-week trial, a Virginia jury held Cox liable for its pirating subscribers. The ISP failed to disconnect repeat infringers and was ordered to pay $1 billion in damages. Heavily disappointed by the decision, Cox later asked the court to set the jury verdict aside and decide the issue directly. In addition, the company argued that the “shockingly excessive” damages should be lowered. Both requests were denied by the court, which upheld the original damages award. Despite the setbacks, Cox isn’t giving up. The company believes that the district court’s ruling isn’t just a disaster for Internet providers. If it stands, the verdict will have dramatic consequences for the general public as well. Cox Files Appeal Brief This week the ISP submitted its opening brief at the Court of Appeals for the Fourth Circuit, hoping to reverse the lower court’s judgment. The filing begins by placing the lawsuit in a historical context. “The music industry is waging war on the internet,” Cox’s lawyers write. First, the music companies went after thousands of file-sharers and software companies such as Napster. When those tactics didn’t deliver the desired result, Internet providers became a target. “So, 15 years after Napster, the music industry launched an aggressive new strategy: Attack the internet itself, suing the internet service providers — the cable and phone companies, like Defendant Cox Communications, that deliver the internet.” How to Handle Repeat Infringers The entire dispute revolves around the legal obligations Internet providers have when it comes to pirating subscribers. According to the law, ISPs must adopt and reasonably implement a policy that allows them to terminate the accounts of repeat infringers in appropriate circumstances. According to the music companies, this means that ISPs should terminate accounts after rightsholders send several infringement notices, regardless of the circumstances. However, Cox and other ISPs have historically been very hesitant to disconnect subscribers, in part because they believe it’s ‘not appropriate’ to disconnect entire companies or households from the Internet. Cox reiterates this stance in its appeal brief. Impossible Spot “The legal rules Plaintiffs advocate put ISPs in an impossible spot. ISPs will have to boot entire households or businesses off the internet— cutting their lifelines, their livelihoods, and their social connections— based on a few isolated and potentially inaccurate allegations. “Or they will have to invade our privacy by developing new capabilities to monitor our internet usage 24/7 to ferret out illegal activity. The internet will never be the same,” Cox adds. This doesn’t mean that Cox simply ignored piracy. The company was actually one of the first US ISPs to implement its own ‘graduated response’ system to address copyright infringers. According to the music companies, however, these warnings and temporary disconnections were not good enough. According to Cox, the district court and the jury were wrong to side with the record labels for a variety of reasons. Vicarious Infringement The first argument is that an ISP should not be held vicariously liable for pirating subscribers when it doesn’t directly profit from this activity. “Cox receives no ‘direct financial benefit’ from infringement. Its subscribers pay the same flat fee for internet services whether they infringe or not. Subscribers are in no sense acting in Cox’s financial interest by downloading songs,” Cox writes. Adding to that, the ISP stresses that it can’t control or supervise its six million subscribers. Blocking or policing infringing activity is impossible, which also weighs against vicarious liability. Contributory Infringement The contributory liability verdict should be overturned as well, according to Cox. The district court was wrong to conclude that past infringement notices gave Cox enough reason to believe that subscribers would pirate again in the future. Separately, Cox argues that the district court was wrong to conclude that the ISP ‘materially contributed’ to pirating activities simply because people can use Internet access that way. “That means Cox cannot be liable based on ‘generalized knowledge’ that people infringe on its network; instead, Plaintiffs had to prove Cox knew of the ‘specific instances of infringement’ for which it was being held liable.” Excessive Damages In addition to overturning the vicarious and contributory liability verdicts, Cox also argues that the $1 billion damages award was wrong. This figure covers thousands of works that should not have been counted and is many times higher than the actual harm. “The district court’s errors have resulted in an award of historic proportions. The $1 billion judgment is entirely untethered from both the harm it caused —$692,000 in displaced downloads — and Cox’s culpability.” Cox says it didn’t directly infringe any of the music tracks, nor did it encourage anyone to infringe. Its liability rests on the decision to keep subscribers connected longer than the music companies liked. The ISP hopes that the Court of Appeals will reverse or vacate the district court ruling. If not, the consequences will be devastating. “If sustained, this judgment would elevate the interests of the music industry over those of ordinary, and often blameless, people who depend on the internet. The consequences will be devastating,” Cox concludes. —- A copy of Cox’s opening brief, filed at the Court of Appeals for the Fourth Circuit, is available here (pdf). Cox Appeals $1B Piracy Liability Verdict to ‘Save the Internet’

Internet provider Cox Communication has fought several piracy-related claims in court over the past decade. In one of the lawsuits, against music rights group BMG, it chose to settle, presumably for millions of dollars. The company hoped that its insurers would help cover the costs, but after the companies declined, Cox is now back in court after suing them both. At the end of 2014, a novel type of lawsuit appeared on the docket of a Virginia federal court. BMG Rights Management and Round Hill Music sued Internet provider Cox Communications for failing to terminate the accounts of pirating subscribers. This was the first in a series of “repeat infringer” lawsuits which continue to this day. Most notable thus far is the $1 billion damages award against Cox in favor of several major record labels, which is still under appeal today. $25 Million Piracy Damages The BMG lawsuit is no longer active. After the court initially awarded $25 million in damages, plus $8.5 million in costs, Cox appealed the matter. Not much later, the dispute was settled for an undisclosed sum. Without mentioning any figures, BMG said that it was “extremely happy” with the “substantial settlement.” Not just that, the music rights company said that it had set a new standard for all U.S. Internet providers. “This was a landmark case in which BMG took on the third-biggest internet service provider in the United States to defend and establish the principle that in order to benefit from a so-called ‘safe harbor’ defense, an ISP has responsibilities,” BMG’s General Counsel Keith Hauprich told us at the time. Hauprich was right, as evidenced by many similar lawsuits that have since been filed. The ruling motivated many ISPs to change or refresh their repeat infringer policies while Cox turned to its insurance companies to pick up the bill. Following the original verdict, before the eventual settlement, Cox informed its insurance companies Hiscox and ACE American Insurance of its claim. The ISP hoped to receive compensation, but both insurers declined to cover its losses. Cox Sues Insurance Companies Hoping to break the stalemate, Cox engaged in a mediation procedure with both parties, also without result. This means that, nine years after losing its case against BMG, Cox is now suing its insurance companies for damages. In a complaint filed at a federal court in Atlanta, Georgia, the ISP accuses the insurance companies of contract breach. Cox alleges that the copyright infringement damages should be covered by the policies, which relate to claims from its ‘media activities’. The Hiscox policy has a limit of $15 million and includes legal defense costs, with a $500,000 per claim retention. ACE American’s policy has the same terms and, according to Cox’s reading, they require the insurers to cover its claim. There’s no mention of the amount at stake, so the settlement figure remains confidential. However, Cox does suggest that its defense costs alone were higher than the ‘remaining’ policy limit. “The amount of defense costs incurred by Cox in its defense of the BMG Action alone exceeds the amount of the Hiscox Policy’s remaining limit,” Cox writes. Breach of Contract? The ISP believes that its insurers should pay out, covering both the legal costs and the undisclosed settlement amount that Cox agreed to pay. “Defendants have breached their obligations under the Policies by denying coverage and refusing to indemnify Cox for the liabilities and costs incurred by Cox in connection with the BMG Action. “Defendants are obligated to indemnify Cox for all sums that Cox has paid or has or will become obligated to pay in connection with the BMG Action, including the costs incurred by Cox in its defending the BMG Action and the payment that effectuated the settlement of the BMG Action.” Insurance policies often prove to be complicated, especially when there’s wiggle room, but with millions of dollars at stake it’s an issue worth fighting for both parties. Interestingly, this isn’t Cox’s first insurance-related lawsuit related to the BGM case. In 2015, Lloyd’s underwriter Beazley Insurance requested a judgment declaring that it wouldn’t have to pay out anything. The insurer argued that the BMG lawsuit was the result of an intentional business policy, which shouldn’t be covered by its policy. This dispute was voluntarily dismissed a few months later, and any further outcome remains unknown. — A copy of the complaint, filed by Cox at the U.S. District Court for the Northern District of Georgia, Atlanta division, is available here (pdf) Source