Cox Liability for Music Piracy Questioned by 4th Circuit

Music labels claiming Cox Communications is liable for copyright infringement by its broadband subscribers faced seeming skepticism by a 4th U.S. Circuit Court of Appeals panel of judges in oral argument Wednesday (docket 21-1168), as Cox appeals a U.S. District Court finding it liable and upholding a jury's $1 billion verdict (see 2101130025). Judge Allison Jones Rushing said the plaintiff-appellees are asking the court "to embrace an extremely broad theory of liability," and it's not clear why the lower court also agreed with it.

Courts have generally said a flat fee and monthly payments aren't enough to show direct profit from infringement, and accepting the music labels' arguments would seem to upend that rule, Rushing said. Cate Stetson of Hogan Lovells, representing Sony and the other labels, said the case doesn't involve flat fees but graduated ones, which is a direct financial benefit to Cox. She said there was evidence Cox wouldn't terminate subs because of that benefit.

The origins of vicarious liability have the infringer doing that infringement for the benefit of the company, and vicarious liability arguments in this case seem to "have gone really far afield" from that, Judge Pamela Harris said: "This seems like it's a whole different liability." She questioned whether Cox is vicariously liable since the infringing subscribers clearly weren't agents of Cox: "Whatever they are doing is not for the benefit of Cox." Stetson resisted that read of vicarious liability, arguing Cox was able to control access to its platform and it directly benefited.

Harris later asked Cox outside counsel Josh Rosenkranz of Orrick about hypothetically reversing on vicarious but not contributory liability and whether the case should then also be sent back to the lower court for a new damages trial. Rosenkranz argued it should.

The label plaintiffs never proved Cox directly benefited from subscriber piracy, said Rosenkranz. He said ISPs make the same money whether subscribers are downloading music illegally "or watch[ing] cat videos." It's undisputed ISPs can't granularly monitor what subscribers do, and copyright law never intended for an actor "this far removed" from the action to be liable, Rosenkranz said. He said ISPs would have to do "mass evictions" of subscribers based on a handful of notices of their violating copyright, and it could "break the internet."

Rosenkranz was challenged about whether jurors might have believed there was direct financial benefit since heavy peer-to-peer sharing takes up more bandwidth. He also was pressed on evidence that Cox failed to act quickly on complaints of copyright violations by subscribers and its infringement policy was toothless, and whether the jury could find culpability for that.

There's no indication subscribers want faster internet for the reason of pirating, or that people who are the heaviest internet users are instead more likely to also pirate, Rosenkranz said. He said there's no evidence that stopping a subscriber from infringing results in them stepping down to a slower, cheaper service. He said there are "no simple measures" other than termination. Judge Henry Floyd also heard the case and asked questions.