Cox Files Appeal to Overturn $25 Million Piracy Verdict

Internet provider Cox Communications has filed its appeal to overturn the $25 million damages verdict in its case against music publisher BMG. The ISP argues that the district court made several errors. As a result, millions of people now risk having their Internet access terminated based on one-sided evidence.

coxcommsLast December a Virginia federal jury ruled that Internet provider Cox Communications was responsible for the copyright infringements of its subscribers.

The ISP was found guilty of willful contributory copyright infringement and ordered to pay music publisher BMG Rights Management $25 million in damages.

The verdict was a massive victory for the music licensing company and a disaster for Cox.

After the Virginia federal court had denied Cox’s request for a new trial, the Internet provider elevated the case to the Court of Appeals where it hopes to have the verdict reversed.

In a 93-page filing submitted to the Fourth Circuit Court of Appeals this week, the company warns that the case has brought a lot of uncertainty to the industry, based on a verdict that’s rooted in erroneous conclusions.

“This case involves an unprecedented attempt to impose liability on an Internet service provider (ISP) for its subscribers’ alleged copyright infringement,” Cox begins, nothing that the district court was well aware of the stakes.

“Yet the court sanctioned a novel expansion of contributory liability to ISPs, based not on evidence that the ISP actually knew of specific infringing acts or took affirmative steps to foster infringement, but on the ISP’s constructive knowledge of the existence of infringing activity on its network.”

With the appeal, Cox hopes to reverse the judgment or at least have the opportunity to have a new trial.

The company explains that the case started when the ISP refused to forward infringement notices which contained “extortionate” settlement requests. They asked BMG’s anti-piracy partner Rightscorp to remove the settlement demands if they would like the notices to be forwarded, but they refused to do so.

The dispute over the settlement language eventually led to a guilty verdict by the jury, which according to Cox is based on several reversible errors.

First, Cox argues that the district court misread a binding Supreme Court authority, which prevents contributory copyright liability if a technology has substantial non-infringing uses.

“Cox’s Internet service has endless legal uses, and BMG failed to prove either that Cox actually knew of specific infringing acts by specific subscribers or that it took active steps to promote infringement,” the ISP writes.

In addition, the court took away the Internet provider’s safe harbor protection as it failed to terminate repeat infringers. However, Cox doesn’t believe that subscribers can be seen as such, solely based on one-sided accusations from Rightscorp.

Finally, Cox argued that the jury instructions on the damages aspect were incorrect on several points which led to an inflated $25 million verdict.

With the appeal, the ISP hopes to turn around the negative judgment. If not, the company fears that its subscribers, as well as those of other U.S. Internet providers, risk having their Internet access terminated based on ‘flimsy’ evidence.

“If allowed to stand, that judgment would force ISPs to terminate subscribers’ Internet access—and with it access to critical information, e-commerce, and entertainment—based on the say-so of third parties. This Court should reverse.”

The case will be crucial in determining what obligations ISPs have when it comes to repeat copyright infringers. Up until now, several Internet providers have argued that only a court could determine if a subscriber is a repeat infringer, but this has now become uncertain.

Cox Communication’s full filing is available here (pdf)

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