Cox Asks Supreme Court to Reject Record Labels' Petition over ISPs 'Piracy Profits'

Cox Communications is currently challenging a writ of certiorari filed by several major record labels at the U.S. Supreme Court. The music companies contend that Internet Service Providers (ISPs) should be held vicariously liable for their subscribers’ piracy activities, even if the ISPs do not directly profit from such actions. Cox argues that this “radical new theory” would make ISPs accountable for virtually any online behavior of their users.

In August, Cox submitted a petition to the Supreme Court, seeking a review of a Fourth Circuit ruling that found the company contributorily liable for its subscribers’ piracy. The Internet provider is contesting a $1 billion jury verdict from 2019 that favored the major record labels.

While Cox petitioned the Supreme Court, the music companies filed their own petition aiming to bolster the verdict. They specifically argue that the ISP should also be held liable for vicarious copyright infringement.

In this case, as well as similar ones against Bright House and Grande Communications, courts have previously dismissed vicarious infringement claims, stating there is no direct link between the pirating activities and the ISPs’ financial gains.

The major record labels, including Sony and Universal, are urging the Supreme Court to re-examine the “profit motive.” They have asked the Court to consider whether an ISP must profit directly from the infringement itself or if profiting from the overall operation where the infringement occurs is sufficient.

The music companies assert that Cox benefited from subscription revenues it wouldn’t have received had it terminated the accounts of repeat infringers. Between February 2013 and December 2016, Cox reportedly collected $208 million from subscribers who received three or more piracy notices.

To support their argument, the music companies cited the “dance hall cases,” where courts held venue owners liable for copyright infringements committed by performers they hired.

Their petition also referenced the Supreme Court’s decision in Herbert v. Shanley Co., where a hotel was held liable for the infringing performance of an orchestra it employed. The Court concluded that the hotel profited from the performance, even though guests only paid for their meals, not the music.

In a recent opposition brief, Cox urged the Supreme Court to deny the petition. The Internet provider claims that the plaintiffs are presenting a “radical new theory” that would make service providers liable merely because they offer internet access.

“Under this theory, the plaintiff need not prove that the ISP is in any way culpable, that it knew about the infringement, or that it made a single extra penny because of the infringing activity,” Cox stated in its filing.

“In other words, because Cox, like any ISP, has a financial interest in offering internet service to customers, it is liable for anything those customers do online. To state the argument is to refute it. There is no such form of liability—not in copyright law or anywhere else.”

Addressing the ‘hotel orchestra’ analogy, Cox noted that in that case, the infringing performance served as a ‘draw’ for potential customers. In contrast, there is no such draw in this scenario since pirated content is accessible through all ISPs.

Cox emphasized that the Fourth Circuit correctly rejected the vicarious copyright infringement allegations and sees no reason for the Supreme Court to review the case. The company argues that there is no significant disagreement among lower courts on this issue.

As further support, the ISP cited the Supreme Court’s decision in MGM Studios Inc. v. Grokster, Ltd., which stated that vicarious liability requires proof that the defendant profited directly from the infringement. Cox argues that this is not the case here.

In recent filings, Cox has stressed the broader societal implications this case may have. If the record labels succeed, ISPs could be compelled to terminate the accounts of thousands of subscribers solely based on rightsholders’ complaints.

“ISPs would not only be required to execute mass internet evictions at the slightest allegation of copyright infringement, but they would need to police the internet and terminate users upon any hint or accusation of misconduct—practices as invasive as they are draconian,” Cox warned.

“That would imperil the livelihoods, safety, and social connections of a vast number of users who rely on internet connections to run businesses, pay bills, apply for jobs, read the news, connect with friends and family, petition their representatives, and attend school.”

A verdict against Cox would also have significant financial repercussions for the ISP, which is why the company is taking the fight to the Supreme Court.

If the Supreme Court decides to hear the case, it could lead to a landmark decision impacting Cox, rightsholders, and the general public. The same applies to Cox’s own petition, which remains under review.