ISP Cox Communications is squaring off against several major record labels at the Court of Appeals for the Fourth Circuit. The ISP warns of devastating consequences when it has to disconnect alleged pirates, equating it to a digital death penalty. The music companies doubt this, pointing out that Cox terminated the accounts of 600,000 subscribers who failed to pay their bills. Two years ago Internet provider Cox Communications lost its legal battle against a group of major record labels. A Virginia jury held Cox because it failed to terminate accounts after repeated accusations, ordering the company to pay $1 billion in damages. liable for pirating subscribers The ISP was disappointed with the verdict and filed an appeal. In , filed at the Court of Appeals for the Fourth Circuit last week, Cox argued that it’s incorrectly being held liable for pirating subscribers. its opening brief Not only that, but the company also warned against the harm that a loss of Internet access can cause to businesses and individuals, equating the sanction to a “digital death penalty.” The music companies disagreed. They countered that Cox is not as innocent as it claims. Instead, they argued that the ISP deliberately prioritized its own profits over limiting piracy. Cox Doesn’t Want a ‘Notice and Terminate’ Policy This week both sides filed their replies briefs, which highlights the differences in opinion even more. In its filing, Cox points out that the music companies want a “notice and terminate” scheme to boot persistent pirates off the Internet. “Plaintiffs do not deny it: If the judgment is affirmed, ISPs will be required to terminate any internet connection accused of infringement just once — exiling anyone using that connection, infringer or not—on pain of crushing damages. “They want to replace the flexible, fault-based doctrines of secondary copyright liability with notice-and-terminate … or else,” Cox adds. Cox Denies Liability The current verdict against Cox indeed requires ISPs to terminate repeat copyright infringers. However, Cox argues that this ruling should be overturned. Among other things, Cox’s brief stresses it can’t be held liable for vicarious copyright infringements because the company didn’t directly profit from pirating subscribers. It also denies that “repeat infringers” were particularly profitable because they paid for high-speed connections. On top of that, Cox says that it would be impossible to ‘supervise’ the activities of six million account holders in real-time, as a liability finding requires. “The only action that could stop a subscriber from infringing is termination. But the power to impose a draconian punishment is no substitute for proving ‘supervision’,” Cox writes. The ISP further believes that the court erred in holding it liable for contributory copyright infringement. On top of that, it notes that the $223 million damages for derivative works should not have been granted. Music Companies See a Profit Motive The music companies see things quite differently. They also submitted a reply brief, directly countering many of Cox’s arguments. They state, for example, that there is ample evidence to show that Cox kept pirating subscribers on board to earn extra money. This is an issue that was previously detailed during the trial. “The trial evidence showed that Cox kept loosening (and ignoring) its policies to avoid having to terminate paying subscribers. The evidence further showed that Cox routinely determined not to terminate accounts so it could continue to collect those infringers’ subscription fees,” the brief reads. 600,000 Disconnections The record labels also call Cox’s concerns for the Internet connectivity of subscribers into question. They directly quote the comparison to a “digital death penalty,” adding that Cox has terminated hundreds of thousands of subscribers on other grounds over the years. Cox’s Acceptable Use Policy allows the company to terminate customers for various reasons, which it has done repeatedly. “And terminate Cox did — just not for copyright violations. Its termination decisions were money-driven. In 2013 and 2014, Cox terminated over 600,000 residential and 20,000 business customers for nonpayment — over 800 terminations a day. “In Cox’s view, the occasional termination for repeated and flagrant copyright infringement is ‘downright monstrous.’ Termination for nonpayment? Downright common,” the music companies add. Landmark Case The above is just a selection of the arguments brought up by both sides. However, they clearly capture the tension, which isn’t expected to subside anytime soon. It is clear that the case will have a crucial impact on how pirating Internet subscribers will be handled going forward. As such, the appeal will be closely watched by Internet providers, copyright holders, and the public at large. — A copy of Cox’s reply brief is available and the reply brief from the music companies can be found here (pdf) here (pdf) Previously published here.

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