Sony Music Entm't v. Cox Commc'ns, Inc.

93 F.4th 222

SONY MUSIC ENTERTAINMENT; Arista Music; Arista Records, LLC;Laface Records LLC; Provident Label Group, LLC; Sony Music Entertainment US Latin LLC;Volcano Entertainment III, LLC; Zomba Recordings LLC; Sony/ATV Music Publishing LLC;EMI AI Gallico Music Corp.; EMI Algee Music Corp.; EMI April Music Inc.;EMI Blackwood Music Inc.; Colgems-EMI Music Inc.;EMI Consortium Music Publishing Inc., d/b/a EMI Full Keel Music;EMI Consortium Songs, Inc., d/b/a EMI Longitude Music; EMI Feist Catalog Inc.;EMI Miller Catalog Inc.; EMI Mills Music, Inc.; EMI Unart Catalog Inc.; EMI U Catalog Inc.;Jobete Music Company, Incorporated; Stone Agate Music; Screen Gems-EMI Music, Incorporated;Stone Diamond Music Corp.; Atlantic Recording Corporation; Bad Boys Records LLC;Elektra Entertainment Group, Incorporated; Fueled By Ramen LLC; Roadrunner Records, Inc.;Warner-Tamerlane Publishing Corporation; WB Music Corporation; Unichappell Music, Incorporated;Rightsong Music Inc.; Cotillion Music, Incorporated; Intersong U.S.A., Inc.; UMG Recordings, Incorporated;Capitol Records, LLC; Universal Music Corporation; Universal Music-MGB Na LLC;Universal Music Publishing Inc.; Universal Music Publishing AB; Universal Publishing Limited;Universal Music Publishing MGB Limited; Universal Music - Z Tunes LLC; Universal/Island Music Limited;Universal/MCA Music Publishing Pty. Limited; Polygram Publishing, Inc.; Songs of Universal, Inc.;Warner Records, Inc., f/k/a W.B.M. Music Corp.; Warner Chappell Music, Inc., f/k/a Warner/Chappell Music, Inc.;W.C.M. Music Corp., f/k/a W.B.M. Music Corp., Plaintiffs - Appellees,andNonesuch Records Inc.; Warner Bros. Records, Inc.; Warner/Chappell Music, Inc.; W.B.M. Music Corp.;Universal - Polygram International Tunes, Inc.; Universal - Songs of Polygram International, Inc.;Universal Polygram International Publishing, Inc.;Music Corporation of America, Inc., d/b/a Universal Music Corporation; Rondor Music International, Plaintiffs, v. COX COMMUNICATIONS, INCORPORATED; Coxcom, LLC, Defendants - Appellants.Internet Association; Electronic Frontier Foundation; Center for Democracy and Technology;American Library Association; Association of College and Research Libraries; Association of Research Libraries;Public Knowledge; NTCA The Rural Broadband Association; CTIA - The Wireless Association;USTelecom the Broadband Association; Internet Commerce Coalition;Intellectual Property Law Professors, Amici Supporting Appellant,andNational Music Publishers' Association; Nashville Songwriters Association International;Songwriters of North America; Copyright Alliance, Amici Supporting Appellee.

No. 21-1168

United States Court of Appeals, Fourth Circuit

Argued: March 9, 2022

Decided: February 20, 2024

Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O'Grady, Senior District Judge. (1:18-cv-00950-LO-JFA)

ARGUED: E. Joshua Rosenkranz, ORRICK, HERRINGTON & SUTCLIFFE LLP, New York, New York, for Appellants. Catherine Emily Stetson, HOGAN LOVELLS US LLP, Washington, D.C., for Appellees. ON BRIEF: Michael S. Elkin, Jennifer A. Golinveaux, Geoffrey P. Eaton, WINSTON & STRAWN LLP, New York, New York; Mark S. Davies, Sheila A. Baynes, Washington, D.C., Christopher J. Cariello, Rachel G. Shalev, Alexandra Bursak, ORRICK, HERRINGTON & SUTCLIFFE LLP, New York, New York, for Appellants. Matthew J. Oppenheim, Scott A. Zebrak, Jeffrey M. Gould, OPPENHEIM + ZEBRAK, LLP, Washington, D.C.; Jo-Ann Tamila Sagar, Patrick C. Valencia, HOGAN LOVELLS US LLP, Washington, D.C., for Appellees. Joseph C. Gratz, Samuel J. Zeitlin, DURIE TANGRI LLP, San Francisco, California, for Amicus Internet Association. Mitchell L. Stoltz, Corynne McSherry, ELECTRONIC FRONTIER FOUNDATION, San Francisco, California; Erik Stallman, Juliana DeVries, Samuelson Law, Technology & Public Policy Clinic, UC BERKELEY SCHOOL OF LAW, Berkeley, California, for Amici Electronic Frontier Foundation, Center for Democracy and Technology, American Library Association, Association of College and Research Libraries, Association of Research Libraries, and Public Knowledge. David E. Weslow, Megan L. Brown, Ari S. Meltzer, Kevin G. Rupy, Adrienne J. Kosak, WILEY REIN LLP, Washington, D.C., for Amici NTCA - The Rural Broadband Association, CTIA - The Wireless Association, and USTelecom - The Broadband Association. Andrew L. Deutsch, DLA PIPER LLP (US), Los Angeles, California, for Amicus Internet Commerce Coalition. Phillip R. Malone, Juelsgaard Intellectual Property and Innovation Clinic, Mills Legal Clinic, STANFORD LAW SCHOOL, Stanford, California, for Amici Intellectual Property Law Professors.

Danielle M. Aguirre, Kerry M. Mustico, Christopher A. Bates, NATIONAL MUSIC PUBLISHERS' ASSOCIATION, Washington, D.C.; Ruthanne M. Deutsch, Hyland Hunt, Alexandra Mansbach, DEUTSCH HUNT PLLC, Washington, D.C., for Amici National Music Publishers' Association, Nashville Songwriters Association International, and Songwriters of North America. Nancy Wolff, Sara Gates, COWAN DEBAETS ABRAHAMS & SHEPPARD LLP, New York, New York, for Amicus The Copyright Alliance.

Before HARRIS and RUSHING, Circuit Judges, and FLOYD, Senior Circuit Judge.

Affirmed in part, reversed in part, vacated in part, and remanded by published opinion. Judge Rushing wrote the opinion, in which Judge Harris and Senior Judge Floyd joined.

RUSHING, Circuit Judge:

Defendant Cox Communications sells internet, telephone, and cable television service to 6 million homes and businesses across the United States. Plaintiffs—Sony Music Entertainment and numerous other record companies and music publishers—own some of the most popular copyrighted musical works of our time. Some users of Cox's internet service infringed Plaintiffs' copyrights by downloading or distributing songs over the internet without permission. Rather than sue those individuals, Plaintiffs sued Cox, seeking to hold it responsible for its customers' copyright infringement.

Federal law protects internet service providers from monetary liability for copyright infringement committed by users of their networks, but only if those service providers reasonably implement a policy to terminate repeat infringers in appropriate circumstances. In a prior case, our Court held that Cox had failed to reasonably implement an anti-piracy program and therefore did not qualify for the statutory safe harbor.

This case proceeded to trial on two theories of secondary liability: vicarious and contributory copyright infringement. The jury found Cox liable for both willful contributory and vicarious infringement of 10,017 copyrighted works owned by Plaintiffs and awarded $1 billion in statutory damages. Cox appealed.

We affirm the jury's finding of willful contributory infringement. But we reverse the vicarious liability verdict and remand for a new trial on damages because Cox did not profit from its subscribers' acts of infringement, a legal prerequisite for vicarious liability.

I.

Copyright owners possess the "exclusive rights" to "reproduce," "distribute," "perform," "display," or "prepare derivative works based upon" their copyrighted works, subject to limitations not relevant here. 17 U.S.C. § 106. Anyone who violates any of these exclusive rights of the copyright owner is "an infringer of the copyright." Id. § 501(a). A copyright owner may "institute an action" against an infringer, id. § 501(b), and receive either statutory damages, id. § 504(a)(2), or actual damages plus the infringer's profits, id. § 504(a)(1). Although the Copyright Act "does not expressly render anyone liable for infringement committed by another," the Supreme Court has long held that vicarious and contributory liability for copyright infringement rest on firm legal footing. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 434-435, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984).

Congress recognized that internet service providers may get caught in the cross-fire when infringers use the internet to reproduce or distribute copyrighted works, so it created a safe harbor defense in the Digital Millennium Copyright Act (DMCA). See 17 U.S.C. § 512. To be eligible for the defense, an internet service provider must have "adopted and reasonably implemented . . . a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers." Id. § 512(i)(1)(A). This Court previously held that Cox did not qualify for the safe harbor because its repeat infringer policy as implemented was inadequate under the DMCA. See BMG Rts. Mgmt. (US) LLC v. Cox Commc'ns, Inc., 881 F.3d 293, 301-305 (4th Cir. 2018). The claim period in this case coincides with the period during which Cox was ineligible for the safe harbor, so Cox faces the secondary liability claims here without that protection.¹

This lawsuit began when Sony and other owners of copyrighted musical works (collectively, Sony or Plaintiffs) sued Cox for infringement committed by subscribers to Cox's internet service from 2013 to 2014. During the claim period, Cox provided internet service to residential and commercial subscribers, charging different flat fees for different download speeds according to a tiered pricing plan.

Plaintiffs are members of the Recording Industry Association of America (RIAA), which hired the anti-piracy company MarkMonitor to catch infringements of its members' copyrights on peer-to-peer networks using file-sharing protocols like BitTorrent and others. See BMG, 881 F.3d at 298-299 (explaining peer-to-peer file sharing and BitTorrent). When MarkMonitor discovered an internet user downloading or distributing a copyrighted music file, it notified the user's internet service provider. Only the service provider can match an alleged infringer's internet protocol address to its owner's identity. When Cox received infringement notices from MarkMonitor, Cox's automated system sent notices to the infringing...