4th Circuit Nixes Billion Dollar Copyright Award Against Cox

Sony Music Entertainment, Warner Bros. Records Inc., and other music publishers saw their $1 billion copyright infringement award against cable and internet provider Cox Communications Inc. evaporate at an appeals court Tuesday.

The US Court of Appeals for the Fourth Circuit overturned the jury’s verdict that Cox had vicariously infringed more than 10,000 copyrighted works by not preventing its customers from pirating the music. The three-judge panel, however, upheld the jury’s finding of willful contributory infringement.

The appeals court vacated the damages award and directed the US District Court for the Eastern District of Virginia to conduct a new trial on the damages question, noting that the jury hadn’t specified what portion was tied to which theory of secondary infringement.

Cox didn’t profit from its subscribers’ infringing acts, one of the elements that must be proven for vicarious infringement, according to the opinion by Circuit Judge Allison Jones Rushing. “Without that legally erroneous” finding on vicarious liability, the jury may have assessed damages differently, Rushing said.

The 2019 verdict had been called a “wake up call” for internet service providers who were allegedly looking the other way on music piracy by their subscribers, in violation of their obligations under the Digital Millennium Copyright Act. That law provides a safe harbor for ISPs that take precautions to stop infringement—including terminating offending accounts—but internal Cox emails indicated the company had shirked those responsibilities, the district court found. The jury awarded nearly $100,000 for each song that had been infringed.

The three-judge panel disagreed with the district court’s conclusion that repeated refusal to cut off service to infringing customers was enough to show Cox was directly profiting from the infringement.

“The continued payment of monthly fees for internet service, even by repeat infringers, was not a financial benefit flowing directly from the copyright infringement itself,” Rushing said. “Indeed, Cox would receive the same monthly fees even if all of its subscribers stopped infringing,” she added.

Cox’s refusal to terminate repeat offenders—and its acknowledgment that they would likely infringe again unless their service was terminated—was enough to support the district court’s finding of willful contributory infringement on summary judgment, the opinion said.

“Lending a friend a hammer is innocent conduct; doing so with knowledge that the friend will use it to break into a credit union ATM supports a conviction for aiding and abetting bank larceny,” Rushing said.

Circuit Judge Pamela A. Harris and Senior Circuit Judge Henry F. Floyd joined the opinion.

Oppenheim & Zebrak LLP and Hogan Lovells US LLP represent the music publishers. Cox is represented by Orrick, Herrington & Sutcliffe LLP; Sparacino PLLC; and Winston & Strawn LLP.

The case is Sony Music Entertainment v. Cox Communications Inc., 4th Cir., No. 21-01168, affirmed in part, reversed in part, and remanded 2/20/24.