“[Cox] makes the same amount of money when its customers use the internet to work remotely, order groceries, stream Netflix, or watch cat videos as it does when its customers infringe copyrights.” – Cox’s Brief in Opposition
Cox Communications is the latest to file a brief in the battle between it and Sony Music Entertainment over whether an internet service provider (ISP) should be liable for infringement by its subscribers. According to Cox’s brief in opposition to Sony’s petition for certiorari, “[p]etitioners want to make a terrible situation even worse.”
Music publishers including Sony, Arista Records, Warner Music and Universal Music Group filed copyright claims against Cox in July 2018, alleging that Cox was liable for the infringement of 10,017 musical works that were illegally distributed by the ISP’s subscribers. A 2020 jury verdict found that Cox liable for both vicarious and contributory infringement, leading to a $1 billion damages verdict against Cox after damages were increased for the jury’s willfulness finding.
In February of this year, the Fourth Circuit ruled on Cox’s appeal, affirming the willful contributory infringement finding but remanding for a new trial on damages after overturning the vicarious liability finding for lack of Cox’s profit directly attributable to its subscribers’ acts of infringements.
Cox petitioned the Supreme Court in August asking whether the Fourth Circuit erred in finding that Cox materially contributed to infringement merely because it did not terminate Internet access to subscribers who were alleged to have committed infringement without proof. The petition also questions whether mere knowledge of infringement suffices to find willfulness under 17 U.S.C. § 504(c).
Sony filed a competing petition one day later asking the Court whether the profit requirement for vicarious liability only permits liability where the defendant expects commercial gain from the alleged infringing act, or whether other circuits are correct in holding that this requirement is fulfilled when the defendant expects to gain from the enterprise, allowing infringement to occur.
In September, amici representing both ISPs and music publishers weighed in on each petition.
In its brief in opposition filed yesterday, Cox reiterated the position outlined in its petition for certiorari that, even with demonstrated knowledge of infringement present, “an ISP is not contributorily liable without an affirmative, culpable act.” The brief also pointed back to the petition’s description of “the devastating societal consequences of a rule that requires mass evictions from the internet,” such as Grandma being “thrown off the internet because Junior visited and illegally downloaded songs”; “[a]n entire dorm or corporation [losing] internet because a couple of residents or customers infringed”; or [a] person without internet losing their job or having to drop out of school just for having illegally downloaded two songs.
Despite Sony’ argument about a circuit split, Cox’s brief argued that there is no circuit conflict and that ever circuit follows the rule set out in MGM Studios v. Grokster that “vicarious liability attaches only when the defendant ‘profits directly from the infringement.’” According to Cox, “[p]laintiffs invoke court of appeals opinions that have addressed vicarious liability in wildly disparate contexts—a dance hall’s liability for the live
band it enlists to entertain its patrons, or a flea market’s liability for the infringing sales from its stalls.” In those examples, said Cox, liability attached because the defendants did directly profit from the infringement. By contrast, Cox provides its service for a flat fee. The brief explained:
“[Cox] makes the same amount of money when its customers use the internet to work remotely, order groceries, stream Netflix, or watch cat videos as it does when its customers infringe copyrights—or, for that matter, perpetrate identity theft, spew hate speech, or sell counterfeit goods. Same flat fee.”
For its part, Sony filed a brief opposing Cox’s petition on October 16, arguing that there is no “three-way split” in the courts on the subject of contributory copyright infringement, as Cox contends in its petition, and that the Fourth Circuit’s ruling on willfulness also does not split from any court. And aside from those arguments, said the brief, the present case is a poor vehicle for Supreme Court review of the issues because they are not outcome-determinative; there are other ways courts could get to the same holdings as the Fourth Circuit.
If the Supreme Court grants either or both of the petitions, it could result in the Court’s greatest foray into indirect liability in the digital copyright infringement context since its 2005 ruling in Grokster.
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