Cox Communications Moves to Delay Its $1 Billion Payment to the Major Labels

Earlier this month, a federal court upheld the $1 billion copyright infringement penalty that a jury levied against Cox Communications back in December of 2019. Now, the mega-ISP has moved to delay its billion-dollar payment to the major labels while it pursues an appeal.

To recap, the underlying courtroom confrontation between Cox Communications and the RIAA initiated in July of 2018, when the major labels alleged in part that the Atlanta-headquartered company had profited off “massive copyright infringement” committed by its subscribers. A jury agreed with the plaintiffs in December of the following year, finding the 58-year-old Cox Enterprises subsidiary guilty of both vicarious and contributory infringement on 10,017 works.

More pressingly, the jury attached a $99,830.29 fee to each of the alleged infringements, bringing Cox’s obligation to a (rounded-down) total of $1 billion. The defendants’ legal team then moved to provide an updated list of the allegedly infringed media, with the specific aim of removing “derivative” works.

But as mentioned, a federal court refused to condense the list – and, in turn, decrease the $1 billion penalty – earlier this month. Explaining his ruling, Judge Liam O’Grady wrote, in part: “Cox’s failure to present evidence to the jury that it had infringed on only 7,579 works resulted in the jury’s determination that Cox had infringed on 10,017 works. … Cox did not provide the information to the jury that it has provided to the Court in its post-brief trial.”

Digital Music News obtained an exclusive copy of a recently submitted “emergency motion,” in which Cox Communications asked the court to “approve a supersedeas bond and thereby stay execution of the final judgment pending resolution” of their upcoming appeal. The automatic stay on the judgement, under Rule 62(a), is set to expire on Thursday, February 11th.

If the court doesn’t approve the request for a supersedeas bond before the date, the defendants have asked that it delay enforcing the judgement – i.e. ordering the $1 billion payment – “until this motion is resolved.” And predictably, the major labels’ legal team “declined to consent to the approval of the proposed bond.”

After citing case law in support of pausing judgements (pending appeals) when a supersedeas bond has been provided, Cox Communications noted that it “has arranged for a full supersedeas bond to secure the full amount of the judgment plus two years of statutory post-judgment interest.”

Liberty Mutual, Federal Insurance Company, and Pacific Indemnity Company issued the bond, which the defendants claimed “is substantively identical” to that which they finalized in their separate legal showdown with BMG. Despite the $1 billion judgement, the “two years of statutory post-judgement interest” totals just $2,001,000, calculated at “‘a rate [0.1 percent] equal to the weekly average 1-year constant maturity Treasury yield for the calendar week preceding the date of the judgment.’”

The defendants announced in a January 27th notice that they intend to “present oral argument in support of” the emergency motion on the morning of Friday, February 5th “or as soon thereafter as counsel may be heard.” And an order signed by Judge O’Grady, dated January 28th, indicates that the plaintiffs should “file their objection” to the emergency motion by February 3rd, “at which time the Court will consider the parties’ respective positions.”

More as this develops.

2 Responses

  1. Avatar
    Roberto

    ONE BILLION DOLLARS and not one comment on here! Advertising revenues now run the music business but somehow along the way the people who make the music got stiffed and left out of the equation. So when the labels get this ONE BILLION then do the people who provide all the CREATIVE CONTENT get one dollar or not?? Hmmmmmmm …..

    • Avatar
      Larry miller

      They never have and never will. Look at the dot com boom when labels got huge advances then magically never accounted for them or distributed that money to artists.