Virginia Court Blocks $1 Bln Penalty On Cox For Copyright Infringement

(RTTNews) - The U.S. Court of Appeals for the Fourth Circuit overturned the jury's verdict that slapped $1 billion penalty on Cox Communications Inc. (COX) for infringement of more than 10,000 copyrighted works.

The 2019 verdict was in favor of the plaintiffs, including Sony Music, Universal Music Group, Warner Music Group, and EMI, who accused the internet service provider for not strictly addressing the copyright violations and failing to take actions against music pirates. The jury awarded fine of approximately $100,000 for each copyright infringed song.

On Tuesday, Judge Pamela Harris and Senior Circuit Judge Henry Floyd along with Judge Allison Jones Rushing discarded the verdict by arguing that "Cox did not profit from its subscribers' acts of infringement, a legal prerequisite for vicarious liability."

"The continued payment of monthly fees for internet service, even by repeat infringers, was not a financial benefit flowing directly from the copyright infringement itself," Rushing stated.

However, the court upheld Cox Communication's lack of action to terminate license of music pirates, which "accords with principles of aiding and abetting liability in the criminal law. Lending a friend a hammer is innocent conduct; doing so with knowledge that the friend will use it to break into a credit union ATM supports a conviction for aiding and abetting bank larceny."

The appeal court asked the US District Court for the Eastern District of Virginia to conduct a new trial regarding the damages penalty.

Previously, Cox Communications' appeal to lower the penalty in a federal court in Virginia had failed, following which the company filed a motion with a district court in Colorado against Sony for allegedly fabricating evidence.