A billion-dollar judgment in a piracy lawsuit involving a major Internet service provider could force ISPs to terminate more customer accounts and “punish the innocent and guilty alike,” advocacy groups have warned. Urging an appeals court to overturn the ruling, the groups wrote that “upholding this verdict would result in innocent and vulnerable users losing essential Internet access.”
These concerns were raised in a court filing last week by the Electronic Frontier Foundation (EFF), the Center For Democracy and Technology, the American Library Association, the Association of College And Research Libraries, the Association of Research Libraries, and Public Knowledge. The groups’ filing was made to the US Court of Appeals for the 4th Circuit in support of an appeal seeking to overturn a ruling in a case launched by record labels against Cox Communications.
“In going after Internet service providers for the actions of just a few of their users, Sony Music, other major record labels, and music publishing companies have found a way to cut people off of the Internet based on mere accusations of copyright infringement,” the EFF wrote in a blog post announcing the filing. “When these music companies sued Cox Communications, an ISP, the court got the law wrong. It effectively decided that the only way for an ISP to avoid being liable for infringement by its users is to terminate a household or business’s account after a small number of accusations—perhaps only two. The court also allowed a damages formula that can lead to nearly unlimited damages, with no relationship to any actual harm suffered. If not overturned, this decision will lead to an untold number of people losing vital Internet access as ISPs start to cut off more and more customers to avoid massive damages.”
A jury ruled in December 2019 that Cox must pay $1 billion in damages to the major record labels. Sony, Universal, and Warner had sued the cable ISP in 2018 in US District Court for the Eastern District of Virginia. A district judge upheld the verdict in January 2021, approving the $1 billion judgment and paving the way for to Cox appeal to the 4th Circuit.
“Dangerous consequences far beyond this case”
“The core question in this litigation is whether an Internet service provider (ISP) was sufficiently aggressive in terminating the accounts of thousands of subscribers, and if not, the consequences of that policy decision,” the advocacy groups wrote in their court brief. “The district court’s answer misconstrued the law, the actual relationship between ISPs and subscribers, and the public interest. Affirming it would have dangerous consequences far beyond this case.”
Terminating Internet service “means withdrawing an essential tool for participation in daily life,” and cutting off an account because of the actions of one user “potentially cuts off every household member or—in the case of a school, library, or business—every student, faculty member, patron, and employee who shares the Internet connection,” they wrote. “And with little or no competition among broadband ISPs in many areas of the country, those users may have no other way to connect.”
Given this reality, the stakes of this case for Internet users are enormous. The district court’s judgment and the jury’s damage award in this case are founded on fundamental errors of law that, if affirmed, will force ISPs to terminate more subscribers with less justification or risk staggering liability. First, the judgment relies on unwarranted extensions of copyright’s two “secondary liability” doctrines, which will encourage ISPs to terminate subscribers when more proportionate means of addressing infringement exist. Second, the staggering and poorly justified $1,000,000,000 award of statutory damages against Cox thwarts basic principles of due process and the public interest.
Rightsholders routinely send copyright infringement notices to ISPs about their subscribers, based on IP addresses.
“As rightsholders file more cases against ISPs, those ISPs are also terminating subscribers more readily,” the groups’ court filing said. “More aggressive termination policies would punish the innocent and guilty alike. Unlike most accounts with edge providers, ISP subscriptions are shared by multiple users. For example, the record shows multiple instances of alleged infringement associated with accounts for universities, hospitals, local government agencies, and, in the case of subcontracted services, entire municipalities.”
The groups wrote that “Cox was rightly hesitant to terminate accounts like these.” But given the $1 billion judgment, “combined with the district court’s lower threshold for secondary liability, neither Cox nor other ISPs would hesitate again.”
“Even for residential accounts, the consequences of terminating Internet access will not be confined to individual repeat infringers,” the filing also said. “In other file sharing cases, rightsholders have estimated that 30 percent of the names of account holders identified as infringers were not responsible for the alleged infringement.”
The ruling could also cause ISPs to “be much less inclined to leave public Wi-Fi hotspots open in underserved neighborhoods, because doing so risks crushing liability,” the groups wrote.
Jury awarded damages of $99,830.29 per work
In its complaint against Cox, the record labels claimed that Cox “knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers.” The ISP “deliberately refused to take reasonable measures to curb its customers from using its Internet services to infringe on others’ copyrights—even once Cox became aware of particular customers engaging in specific, repeated acts of infringement,” they claimed.
Despite receiving “hundreds of thousands of statutory infringement notices” from record labels, “Cox unilaterally imposed an arbitrary cap on the number of infringement notices it would accept from copyright holders, thereby willfully blinding itself to any of its subscribers’ infringements that exceeded its ‘cap,'” the record labels also argued.
At trial, the record labels “presented to the jury a total of 10,017 copyrights that Defendants’ subscribers allegedly infringed upon during the claim period” of February 2013 to November 2014, District Judge Liam O’Grady wrote when he approved the jury verdict. “The Court found during summary judgment proceedings that Plaintiffs owned all of the copyrights in suit within the meaning of the Copyright Act, and that Cox had sufficient knowledge of the alleged infringement to satisfy the knowledge element of the contributory infringement claim.” The jury ultimately “returned a verdict holding Cox liable for both vicarious and contributory infringement of all 10,017 claimed works,” and it awarded the plaintiffs statutory damages of $99,830.29 per work, for a total of $1 billion.
As the EFF and other groups wrote in their filing, plaintiffs asked the jury “to punish Cox for harms suffered by the entire content industry,” and the district court found that “consideration of industrywide harms justified an award many multiples higher than actual damages or lost profits, because copyright protection ‘is meant to achieve an important public interest.'”