The Supreme Court case between several major record labels and Internet provider Cox Communications is one of the landmark copyright battles of this decade.
The outcome will determine how Internet providers should deal with pirating subscribers on their networks.
Should alleged pirates be disconnected from the Internet after repeated third-party allegations of copyright infringement? Or does that go too far?
In its opening brief, Cox argued that the company should not be held liable for contributory copyright infringement because it failed to terminate subscribers after multiple warnings. The U.S. Government, various tech companies, and other interested parties, supported Cox’s position.
Last month, the major record labels, including Sony and Universal Music, countered these arguments in their response brief. Describing Cox as a company that willingly prioritized profits over piracy, they argued that the $1 billion verdict against the ISP should be upheld. They also received broad support, including from lawmakers and legal experts.
Cox: Labels Must Defend Two-Strike Rule
Before the Supreme Court Justices hear the case, Cox took the opportunity to have the final word. The Internet provider submitted a reply brief where it doubled down on its earlier arguments while accusing the labels of distancing themselves from the “two-notices-and-terminate” rule that won them the $1 billion verdict at trial.
The labels wrote in their response brief that they are not pushing for a “two-notices-and-terminate theory,” nor are they asking for mass terminations of subscribers. Instead, they characterized Cox as a hypocritical bad actor that should take responsibility.
Cox suggests that, with this positioning, the labels are effectively trying to reframe the judicial history. The ISP argues that Sony’s brief confirms this, noting that the labels sued over subscribers with “at least three notices,” which legally means Cox is being held liable for failing to act after the second piracy notice.
This relatively low threshold would lead to mass suspensions, according to Cox, and the labels should effectively defend this position at the Supreme Court.
“For years, Plaintiffs have deluged the nation’s ISPs with automated notices, then sued those ISPs on the same flawed theory: Once an ISP receives two notices for any internet account, it must terminate the account—or become a willful contributory infringer
for all future infringement,” Cox informs the Court.
“They cannot deny that the courts below applied this two-notice threshold uniformly across 57,000 homes and businesses. The record unquestionably shows that included ‘hospitals’ and ‘senior citizens,’ dorms and barracks, and even regional ISPs.”
Cox forces the labels to own the most extreme version of their argument. If they do so, the ISP can point out that this will lead to many disconnections of innocent users. Alternatively, if the labels abandon the “two-notices-and-terminate” rule, Cox can argue that the $1 billion verdict should be invalidated.
Knowledge vs. Culpable Purpose
At the core of the Supreme Court battle is the question of whether ISPs can be held liable for having “passive knowledge” about infringements or if liability requires “culpable intent” to facilitate those infringements. Cox argues the latter.
The reply brief reiterates many of these arguments, and as a sign of strength, Cox explicitly mentions that it has the U.S. government on its side.
“Cox and the Government have laid out a simple culpable-conduct rule derived from this Court’s copyright and aiding-and-abetting cases: Contributory liability depends on proof of an affirmative act demonstrating a culpable intent to further infringement,” the reply brief reads.
Not a Bad Actor
The brief also addresses the record labels’ bad actor arguments. This includes an email in which a manager responsible for the company’s DMCA compliance told his team, “F the dmca!!!”. Cox notes that these frustrated, private emails do not suggest that the company actively encouraged or fostered copyright infringement.
Similarly, Cox also dismissed the profit-related bad actor argument, including the accusation that it failed to disconnect pirates to retain revenue. The ISP points out that the Fourth Circuit already rejected the profit argument when it threw out the separate vicarious liability verdict.
Finally, the ISP points out that it did have a graduated response system in place where subscribers suspected of piracy were issued with warnings. This had a 98% deterrence rate, Cox argues, which directly contradicts the ‘bad actor’ narrative.
“Cox’s anti-infringement program suspended over 67,000 accounts during the claim period alone, and deterred 98% of infringers,” the reply brief reads.
“If Plaintiffs can now vilify that program as a failure to ‘tak[e] any serious effort to stop these infringers from infringing,’ no ISP is safe.”
Government Agrees It’s Not “Willful”
In addition to the liability question, the Supreme Court will also review whether Cox’s actions were willful. This is relevant to the damages calculations, which ultimately resulted in the $1 billion verdict. Here, Cox again uses the government’s position as a key argument.
Cox argues it cannot be found “willful” just for knowing its customers were infringing if it did not believe that its failure to act was unlawful. That was a reasonable belief, Cox argues, especially since the U.S. Government now agrees with it.
“Plaintiffs are also wrong in repeatedly conflating an ISP’s knowledge that a specified user is infringing with knowledge that the ISP is itself illegally ‘facilitating’ the misuse unless it cuts the cord. If the United States Government rejects that equation, then surely
an ISP can reasonably reject it.”
With the final reply brief filed, all the key written arguments are now on the record. The Supreme Court is scheduled to hear oral arguments from Cox, the record labels, and the U.S. Government, in a few weeks. A final decision in this landmark case is expected next year.
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A copy of Cox’s reply brief, filed with the Supreme Court, is available here (pdf)
From: TF, for the latest news on copyright battles, piracy and more.
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