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Majors can’t access their billion dollar damages from the Cox case just yet

By | Published on Tuesday 9 February 2021

Cox Communications

Sony Music, Universal Music and Warner Music won’t be collectively getting a billion dollars cash from Cox Communications anytime soon. So, sorry guys, the big safe harbour party is on hold.

Though the US internet service provider has had to post a billion dollar bond, so should its appeals fail, the money is ready and waiting for the majors to cleverly invest in the very latest new musical talent / responsibly share with their existing artists / dividend up to their sinister shareholders / piss away on a massive piss up. You know, delete as applicable.

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. Such protection means 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 net firm had a repeat infringer policy, but – in a lawsuit pursued by BMG – it was successfully argued that it didn’t properly enforce that policy, because shouting at copyright infringing customers is a right big hassle. After BMG’s success in court, the majors sued a bunch of ISPs over the same issue, including Cox. Like BMG before them, the majors won the Cox lawsuit and were then awarded the crazy billion dollars in damages.

Various efforts by Cox to have that judgement set aside or the damages bill cut back in the original court that heard the case have failed. But now the more formal appeals process is underway. The whole dispute is heading to America’s Fourth Circuit court of appeal.

Under US law, Cox was technically obliged to pay up the damages to the successful plaintiffs even though it’s only at the start of its appeals journey. However, last month the ISP asked for a ‘stay of execution’ on the lower court’s judgement.

It said it was happy to set aside the billion dollars – and another $2 million in potential interest – as a bond, but that it didn’t want the pesky majors to get their hands on the money just yet.

The judge in that lower court, Liam O’Grady, has now agreed to accept the bond and grant a stay of execution. In a ruling on Friday, he stated: “No execution shall issue on the court’s judgment, nor shall proceedings be taken for enforcement, while any appeal or petition is pending”.

That ruling will apply even if the case ends up going beyond the Fourth Circuit all the way to the US Supreme Court. We now await to see how this particular dispute testing the often controversial copyright safe harbour proceeds as it goes through the appeals process.

Given the size of the damages bill – and the fact other ISPs have been sued by the majors on the same issue – both copyright owners and net firms will be following it closely.