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Cox Communications requests delay on handing over a billion dollars to the majors, pending appeal of copyright battle

By | Published on Friday 29 January 2021

Cox Communications

US internet service provider Cox Communications has asked the court where it lost its big copyright legal battle with the major record companies for permission to hold off handing over the billion dollars in damages now due to Universal Music, Sony Music and Warner Music pending the outcome of its appeal. The majors have countered that a billion dollars in cash sounds like much more fun than the promise of a billion dollars in cash.

Cox, of course, was the first American ISP to be successfully sued over its repeat infringer policy. Internet companies are obliged to have such policies in place if they want safe harbour protection under copyright law, so that they cannot be held liable for copyright infringement if and when their customers use their networks or servers to access or distribute copyright-protected content without licence.

The company did have a policy to deal with repeat infringers among its userbase, but BMG showed in court that the internet firm deliberately implemented that policy in a shoddy way, so as not to have to actually sanction or cut off any copyright infringing customers. As such, it lost safe harbour protection and was liable for its customers’ infringement.

Based on the precedent set in the BMG case, the majors sued various American ISPs over their repeat infringer policies, including Cox. In that case, a jury again concluded that, because of its shoddy repeat infringer policy, Cox was liable for the copyright infringement of its users. Therefore, it was ordered to pay damages to the major music companies for the 10,017 songs and recordings specifically identified in the labels’ lawsuit as having been infringed by Cox customers.

The jury then decided that Cox should pay statutory damages of $99,830.29 for each of the 10,017 infringed copyrights. That is how we ended up with the neat billion dollar damages bill. Cox has dubbed those damages as “shockingly excessive and unlawfully punitive” and “wholly divorced from any possible injury to plaintiffs, any benefit to Cox, or any conceivable deterrent purpose”.

The ISP initially sought to have the judge who oversaw the case to amend the jury’s judgement, or order a retrial, or at least slash the damages bill.

For a while it looked like the latter might be possible, based on the argument that there was a crossover between some of the 10,017 songs and recordings listed in the label’s lawsuit, ie some of the songs were contained in some of the recordings. And while those songs and recordings are distinct separate copyrights, for damages purposes where were a song and a recording come together in one track that should only be counted as a single infringement.

The judge basically agreed with that principle, but ultimately said that Cox should have presented that argument – alongside the maths regarding how many crossovers there were – to the jury in the original hearing. The maths, he added, couldn’t be changed in hindsight.

And so, having exhausted all options to overturn or cut back the billion dollar judgment against it in the lower court, Cox is now taking the whole case to the Fourth Circuit appeals court. Which means the precedents set in this and the BMG case will be tested one more time before some appeal judges.

In the meantime, however, what about that billion dollars? Universal, Sony and Warner quite like the idea of getting that cash and having a big party. I mean, a really big party. But Cox, understandably, would rather not pay up just yet, in the hope it prevails – or at least cuts back the damages bill – on appeal.

In the US, Cox needs court approval to delay paying its damages pending appeal. With the majors not willing to voluntarily wait for payment, the ISP has asked the court to approve a ‘stay of execution’ on the damages payment. To achieve that, it’s proposing it set up a so called supersedeas bond, basically setting aside the billion dollars and another $2 million to cover the interest that will likely accrue in the two years an appeal could take.

The ISP concludes: “Cox respectfully asks the court to promptly approve the form of bond and enter the stay of execution pending resolution of Cox’s appellate remedies. Upon receipt of such approval, Cox will lodge the fully executed bond with the court”.

It remains to be seen how the judge rules on this. But the majors may have to postpone their billion dollar damages party for a while. Not that you could have much of a party at the moment anyway. I mean, how do you spend a billion on a Zoom pub quiz?