Richmond, Virginia – The 4th U.S. Circuit Court of Appeals has overturned a $1 billion jury award in a copyright infringement case against Cox Communications Inc., an internet service provider. However, the court affirmed Cox’s liability for repeated copyright infringement on its network. The decision came after the court found insufficient evidence to establish vicarious liability, which requires a causal link between the defendant’s financial interest and the copyright infringement.
The case, Sony Music Entertainment v. Cox Communications Inc., was remanded for a damages hearing as the jury award did not specify the amount between contributory and vicarious liability. U.S. Circuit Judge Allison Jones Rushing, along with Senior U.S. Circuit Judge Henry F. Floyd and U.S. Circuit Judge Pamela A. Harris, joined the decision.
The lawsuit against Cox Communications arose from the actions of some users on its network who infringed on copyrighted songs. Sony, along with other recording industry companies, sued Cox for both vicarious and contributory copyright infringement during the period of 2013 to 2014.
Cox had implemented a 13-strike policy to address copyright infringement. However, the evidence showed that Cox only terminated 32 subscribers out of the 163,148 infringement notices they received. The court found Cox’s response to be lackluster compared to the 600,000 terminations the company issued for non-payment.
The core question in the case was whether Cox had a financial interest in its subscribers’ copyright infringement. The court determined that Cox did not directly profit from the infringement, as subscribers paid a flat monthly fee for internet access regardless of their online activity.
Furthermore, the court looked at previous cases that examined the financial benefit requirement for vicarious liability. They found that Cox’s continued receipt of monthly fees for internet service was not directly tied to the copyright infringement itself. Even if a small percentage of the network’s traffic was attributable to file-sharing, there was no evidence that subscribers were attracted to Cox’s service because of its infringement ability.
Although Cox was found not liable for vicarious infringement, the court upheld the jury’s finding of contributory infringement. The court concluded that Cox had knowingly provided service to subscribers who were substantially certain to commit copyright infringement. Rushing stated that the knowledge of past infringement and the effectiveness of Cox’s 13-strike policy were relevant factors in establishing Cox’s culpability.
In light of the overturned jury award, the case will now proceed to a new trial on damages to determine the appropriate amount for both contributory and vicarious liability.