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." //

"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. //

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. //

Previous court decisions set important limits that were disregarded by the district court in the Cox case, the group argued:

First, vicarious liability requires proof of direct financial benefit to the defendant from another's copyright infringement. But since all subscribers (including infringers) pay a monthly fee for Internet access, courts have agreed that an ISP's receipt of such fees is not sufficient to meet this burden. Instead, the plaintiff must show in addition that the customer was "drawn" to use the defendant's Internet service (as opposed to any other Internet service) because of the availability of infringing copies of the plaintiff's works.

Second, because infringement occurs on all Internet networks, this Court, in BMG [see BMG Rights Management v. Cox Communications], refused to impose contributory liability on an ISP simply because it had generalized knowledge that some customers will use the ISP's Internet service to infringe. Instead, contributory liability can be imposed only where an ISP knows of (or willfully blinds itself to) specific acts of infringement by particular subscribers and also knows "that infringement is substantially certain to result from [its] continued provision of Internet access to particular subscribers."

The district court disregarded these critical limitations, sustaining vicarious liability even though there was no proof that infringers were specifically "drawn" to the Cox service, and finding on summary judgment that as a matter of law, Cox had the knowledge necessary to contributory liability solely from receiving the plaintiffs' DMCA notices. It refused to submit the knowledge issue to the jury despite Cox's showing evidence that some of [the] DMCA notices were false and that Cox could not be substantially certain of future infringement by subscribers named in the notices.