A US judge yesterday refused to slash the billion dollar damages awarded to the major record companies as part of their legal battle with American internet service provider Cox Communications. Despite previously accepting that there was a case for cutting back the damages bill, judge Liam O’Grady has ultimately decided that Cox should have presented that case in front of the jury when the big copyright dispute was initially in court.
Cox, of course, was the first American ISP to be successfully sued over its repeat infringer policy. Internet companies are obliged to have such policies in place if they want safe harbour protection under copyright law, so that they cannot be held liable for copyright infringement if and when their customers use their networks or servers to access or distribute copyright-protected content without licence.
The company did have a policy to deal with repeat infringers among its userbase, but BMG showed in court that the internet firm deliberately implemented that policy in a shoddy way, so as not to have to actually sanction or cut off any copyright infringing customers. As such, it lost safe harbour protection and was liable for its customers’ infringement.
Based on the precedent set in the BMG case, the majors sued various American ISPs over their repeat infringer policies, including Cox. In that case, a jury again concluded that, because of its shoddy repeat infringer policy, Cox was liable for the copyright infringement of its users. Therefore, it was ordered to pay damages to the major music companies for the 10,017 songs and recordings specifically identified in the labels’ lawsuit as having been infringed by Cox customers.
The jury then decided that Cox should pay statutory damages of $99,830.29 for each of the 10,017 infringed copyrights. That is how we ended up with the neat billion dollar damages bill. Needless to say, Cox was not impressed. It said the damages it had been ordered to pay the majors were “shockingly excessive and unlawfully punitive” and “wholly divorced from any possible injury to plaintiffs, any benefit to Cox, or any conceivable deterrent purpose”.
In a legal filing last February, the ISP raised various grievances with the judgement and how the jury reached it, and asked O’Grady to amend – as a matter of law – the jury’s conclusion, or to order a retrial, or to slash the damages bills through a process called ‘remittitur’.
Last June, the judge rejected most of Cox’s arguments, declining to amend the jury’s decision or to order a retrial. However, he did agree with Cox that there might be a case for cutting back the damages bill, mainly because of duplicates on the list of songs and recordings included in the majors’ original lawsuit.
O’Grady agreed that the majors were possibly receiving double or even triple damages for some tracks, because in some cases the majors controlled both the song and the recording copyright in a track, and both had been listed. There were also extra complexities around derivative works.
He said that while songs, recordings and derivative works are all distinct separate copyrights, for the purposes of damages, where such things crossover only one infringement should be counted.
On the back of that decision, Cox got busy with the list of infringed works included in the original lawsuit looking for any overlaps between songs and recordings and derivative works. Last August the ISP told the court that, as a result of all that counting, 2438 of the works on the original list should be removed. Which would equate to a massive $243 million saving in terms of the damages bill.
Such a saving would have been lovely for Cox. Except that, lawyers for the record companies argued, while the judge can rule that linked songs and recordings should only be counted once – because that’s a matter of law – only the jury can decide which songs and recordings are actually linked – because that’s a matter of fact. So, basically, Cox should have done the overlap maths earlier and presented that information to the jury during the trial.
The ISP did actually raise the overlap issue as the original lawsuit was going through the motions and requested that the jury consider the overlaps when deciding what damages were due. However, it didn’t present any evidence or testimony about the overlaps during the trial, and the judge concluded that it was unreasonable to expect the jury to go through and find the overlaps on their own.
And while Cox has now got some overlap maths to share with the court, it’s too late, because O’Grady has concurred with the record companies’ lawyers that the total number of works infringed is a matter for the jury to decide. As a result, he says, he can’t actually interfere with their conclusions after the fact.
Concluding that the number of works infringed – and the impact of any overlaps – was “a question for the jury”, O’Grady ruled: “The jury answered that question with the information available, and Cox did not provide the information to the jury that it has provided to the court in its post-trial brief”.
He added: “For the foregoing reasons, the court finds that the jury’s determination of the number of works infringed stands. Cox’s failure to present evidence of its own calculation to the jury at trial is determinative”.
Having failed to even get the damages bill cut in O’Grady’s court, Cox will now take its whole dispute with the record industry to the Fourth Circuit court of appeal. Good times.