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

• Decision Date: 02 June 2020
• Docket Number: Case No. 1:18-cv-950-LO-JFA
• Citation: 464 F.Supp.3d 795
• Court: U.S. District Court — Eastern District of Virginia
• Parties: SONY MUSIC ENTERTAINMENT, et al., Plaintiffs, v. COX COMMUNICATIONS, INC., et al., Defendants.

464 F.Supp.3d 795

SONY MUSIC ENTERTAINMENT, et al., Plaintiffs,

v.COX COMMUNICATIONS, INC., et al., Defendants.

Case No. 1:18-cv-950-LO-JFA

United States District Court, E.D. Virginia, Alexandria Division.

Signed June 2, 2020

Scott Alexander Zebrak, Oppenheim & Zebrak LLP, Washington, DC, for Plaintiffs.

Thomas M. Buchanan, Winston & Strawn LLP, Washington, DC, for Defendants

MEMORANDUM OPINION & ORDER

Liam O'Grady, United States District Judge

Before the Court are Defendants Cox Communications, Inc. and CoxCom, LLC's ("Defendants" or "Cox") post-trial motions: Renewed Motion for Judgment as a Matter of Law ("Renewed JMOL" or "Rule 50 Motion") (Dkt. 681); and Motion for Remittitur or, in the Alternative, a New Trial Under Federal Rule of Civil Procedure 59(a) (" Rule 59 Motion") (Dkt. 683).¹ Both post-trial motions are fully briefed, and the Court dispensed with oral argument, as it would not aid in the decisional process. The Court first will address the issues in the Renewed JMOL before proceeding to Cox's Rule 59 Motion, which challenges the jury's statutory damages award.

I. BACKGROUND²

On July 31, 2018, over fifty members of the music industry ("Plaintiffs" or "Sony"), including groups under Sony, Universal, and Warner, filed this action against Defendants.³ The plaintiff group comprises sixteen Record Company Plaintiffs who collectively produce, manufacture, distribute, sell, and license sound recordings. The group also contains thirty-seven Publisher Plaintiffs asserting protected musical compositions, which they acquire, license, and otherwise commercially exploit. Plaintiffs own or control exclusive rights to the copyrights to some of the most famous music, both classic and contemporary. Their claims are for vicarious liability and contributory infringement arising out of alleged copyright infringement by Defendants' subscribers.⁴ While the exact number fluctuated before trial, the total number of copyrights presented to the jury—including both musical compositions and sound recordings—was 10,017. The claim period for most Plaintiffs spans approximately twenty-two months from February 1, 2013, to November 26, 2014 ("Claim Period").

Cox is a broadband communications and entertainment company, providing internet, telephone, and home security services; for purposes of this litigation, Cox is an internet service provider ("ISP"). Cox Communications is "a wholly-owned subsidiary of Cox Enterprises, a privately-held, family-owned corporation with $20 billion in annual revenues (2016)." COX: COX COMMUNICATIONS FACT SHEET , https://newsroom.cox.com/company-overview (last visited May 15, 2020); see also Trial Tr. 882:9-12 (Trickey). It is the largest telecom company in the United States, with approximately 20,000 employees serving approximately 6 million customers.

The Recording Industry Association of America ("RIAA") is the Record Company Plaintiffs' trade association. The RIAA engages in a variety of anti-piracy endeavors, including hiring third party vendors to scan the internet for potentially infringing file-sharing activity, such as the anti-piracy company MarkMonitor. MarkMonitor serves over half of the Fortune 100 companies, operating online in an effort to protect brands and content across industries like fashion, technology, entertainment, and pharmaceuticals. Dkt. 325 at 4.

In this case, MarkMonitor searched for digital files potentially infringing Plaintiffs' copyrights. The alleged infringement occurred on peer-to-peer ("P2P") networks, and the specific claims—while predominantly from BitTorrent—involved four P2P protocols: BitTorrent, Gnutella, eDonkey, and Ares. One aspect of digital infringement on a P2P network is that the pirated files are "perfect digital copies," and there is no loss of quality, as there can be in other forms of piracy. Trial Tr. 277 (Marks). Central to MarkMonitor's evidence-gathering process for these perfect digital copies is a file's cryptographic hash value. A cryptographic hash value ("hash value" or "hash") is an alphanumerical representation of the contents of a file, and two files with the same hash value will almost invariably contain the same content, regardless of when downloaded.⁵

Upon the first instance of encountering a file, MarkMonitor downloaded the full file. It coordinated with Audible Magic, a major content recognition service, in large part by "fingerprinting" technology to identify a file's contents. Audible Magic used the file's fingerprint data to check its reference database for a match; a match generated artist, album, and track data that MarkMonitor then associated with the file's hash value.

Whether encountering a file for the first time or one with a known hash, MarkMonitor engaged in a so-called handshake with the potentially infringing peer. The MarkMonitor software connected with the subscriber to confirm the subscriber was online, running a file sharing program, and downloading or distributing a file, identified by its hash value; the Cox subscribers in suit that engaged in the handshake reported percentages of shared files with MarkMonitor.⁶ Dkt. 325 at 5-6. MarkMonitor used this information as "evidence packages" to generate infringement notices sent to Cox. In the Claim Period, MarkMonitor sent Cox 163, 148 infringement notices. Id. at 7. The notices included, inter alia , the subscriber's IP address, the specific date and time of the infringing act, the cryptographic hash value, and the P2P protocol used.

Every Cox subscriber agrees to an Acceptable Use Policy ("AUP") as a condition of access to Cox's network. Subscribers relevant to the underlying facts either agreed to the Cox AUP or the Cox Business AUP. Both prohibit users from infringing intellectual property, including copyrights, and allow Cox to suspend or terminate service upon violation of the agreement. See, e.g. , PX 178 ("Complaints and AUP Violations"). Defendants employed the Cox Abuse Tracking System ("CATS") to receive and process infringement notices and other content related to AUP violations and reported abuse of the network. Specifically, Cox created the CATS system in the early 2000s to handle customer-facing internet related issues. Dkt. 394 at 2. During the Claim Period, CATS implemented a graduated response system to address the reported infringing activity; the graduated response involved a thirteen-strike policy, or "13-plus," given that the customer-facing action generally began at the second notice. The first seven notices resulted in an email warning to the subscriber's account; the eighth and ninth notices required the user to click an agreement before accessing the internet again; the tenth and eleventh would suspend service until the subscriber called Cox for reactivation; the twelfth and thirteenth notices were also suspensions, though the thirteenth made the user eligible for termination.

The point person overseeing CATS during the Claim Period explained that Cox referred to DMCA as synonymous with copyright infringement. Trial Tr. 1275:5-6 (Zabek; "Q: And by DMCA, you were referring to copyright infringement? A: It was interchangeable as we would speak."). Ultimately, termination was rare.

Cox's Abuse Team, which has been renamed as the Customer Safety Team, managed and operated the CATS system. During the Claim Period, a relatively small Abuse Team had to handle complaints relating to phishing, spam, malware, copyright infringement, among other issues.⁷ Trial Tr. 1635:4-10; 1640:8-12 (Sikes Vid. Dep.). It is undisputed that Cox's desire to reduce the volume of calls to the abuse team representatives motivated, at least in part, expanded leniency within its graduated response system. Trial Tr. 1301:20-23 (Zabek Vid. Dep.). Between 2008 and 2010, CATS implementation allowed additional infringement notices against a single account before considering termination of internet service. Trial Tr. 1651:17-19 (Sikes Vid. Dep.).

To control the overall number of complaints or notices it received from certain sources, Cox used hard limits, or caps. Cox raised the cap for RIAA incrementally, eventually holding it at 600 notices per day, though RIAA requested more. See PX 234 (requesting the cap be at least 800 or 1000). Internal correspondence at Cox included the abuse team's enthusiasm toward caps, such as one email in reference to hundreds of daily DMCA complaints from Fox: "WE NEED TO CAP THESE SUCKERS!" 1653:6-9 (referencing PX 251, Bates No. COX_SONY_520018). Another email—this one from the head of the Abuse Team—targeted the statute, the Digital Millennium Copyright Act, rather than a particular complainant: "F the dmca!!!" See Trial Tr. 1656:6-10 (referencing PX 335, Feb. 19, 2010 email from Jason Zabek). The team remarked, "we told each copyright holder to limit [the notices] or give us money to hire people." Trial Tr. 1656:11-12 (Id. ).

Plaintiffs brought suit to challenge the CATS procedure and Cox's conduct as it related to Cox subscribers' copyright infringement of Plaintiffs' protected works. The Court denied the Parties' cross summary judgment motions in large part, but established: (1) Plaintiffs owned all of the copyrights in suit within the meaning of the Copyright Act; and (2) Cox had sufficient knowledge of the alleged infringement to satisfy the knowledge element of the contributory infringement claim. The Parties also filed, collectively, nine Daubert motions and twenty-one motions in limine. The Court ruled on all thirty of these pre-trial motions.⁸

There was a twelve-day jury trial in December 2019, and Defendants moved for judgment as a matter of law at the close of evidence, pursuant to Federal Rule of Civil Procedure 50(a).⁹ The Court denied the motion. After deliberation, the jury returned a special verdict that held Cox both vicariously and contributorily liable for willful infringement of all 10,017 claimed works. Plaintiffs elected statutory damages under 17 U.S.C. § 504(c), thus the damages had to fall within the statutory range under §...