Petition for Writ of Certiorari — Sony Music Entertainment, et al., Petitioners v. Cox Communications, Inc., et al.

Supreme Court briefAug 16, 2024

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No. 24-_

IN THE

Supreme Court of the United States

_________

SONY MUSIC ENTERTAINMENT, ET AL.,

Petitioners,

COX COMMUNICATIONS, INC. AND COXCOM, LLC,

Respondents.

_________

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

_________

PETITION FOR A WRIT OF CERTIORARI

_________

MATTHEW J. OPPENHEIM

SCOTT A. ZEBRAK

JEFFREY M. GOULD

OPPENHEIM + ZEBRAK, LLP

4530 Wisconsin Avenue, NW

Fifth Floor

Washington, DC 20016

CATHERINE E. STETSON

Counsel of Record

JO-ANN TAMILA SAGAR

MICHAEL J. WEST

HOGAN LOVELLS US LLP

555 Thirteenth Street, NW

Washington, DC 20004

(202) 637-5600

cate.stetson@hoganlovells.com

Counsel for Petitioners

QUESTION PRESENTED

The Copyright Act grants the holder of a copyright

the exclusive right to reproduce, publicly perform, and

publicly distribute the underlying creative work, subject to some exceptions. See 17 U.S.C. § 106. In addition to codifying liability for direct infringement, the

Act incorporates certain “doctrines of secondary liability” drawn from “common law principles,” including

vicarious liability. Metro-Goldwyn-Mayer Studios Inc.

v. Grokster, Ltd., 545 U.S. 913, 930-931 (2005). A defendant “infringes vicariously by profiting from direct

infringement while declining to exercise a right to

stop or limit it.” Id. at 930. The circuits are split, however, on how a defendant must benefit from direct infringement in order to be vicariously liable.

The question presented is:

Whether the profit requirement of vicarious copyright infringement permits liability where the defendant expects commercial gain from the enterprise in

which infringement occurs (as the First, Second,

Third, Seventh, and Ninth Circuits have held), or

whether the profit requirement of vicarious copyright

infringement permits liability only where the defendant expects commercial gain from the act of infringement itself (as the Fourth Circuit has held).

(i)

PARTIES TO THE PROCEEDING

Petitioners in this Court are 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 Music

Publishing (US) LLC (f/k/a Sony/ATV Music Publishing LLC); EMI Al 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 Co., Inc.; Stone

Agate Music; Screen Gems-EMI Music, Inc.; Stone Diamond Music Corp.; Atlantic Recording Corporation;

Bad Boys Records LLC; Elektra Entertainment Group

Inc.; Fueled by Ramen LLC; Roadrunner Records,

Inc.; Warner Records Inc. (f/k/a Warner Bros. Records

Inc.); Warner-Tamerlane Publishing Corp.; W Chappell Music Corp., d/b/a WC Music Corp. (f/k/a WB Music Corp.); Unichappell Music Inc.; Rightsong Music

Inc.; Cotillion Music, Inc.; Intersong U.S.A., Inc.;

Warner Chappell Music, Inc. (f/k/a Warner/Chappell

Music, Inc.); W.C.M. Music Corp. (f/k/a W.B.M. Music

Corp.); 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

iii

Publishing Pty. Limited; Polygram Publishing, Inc.;

and Songs of Universal, Inc.

Respondents are Cox Communications, Inc. and

Coxcom, LLC.

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, Petitioners

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 Music Publishing (US) LLC (f/k/a

Sony/ATV Music Publishing LLC; EMI Al 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

Co., Inc.; Stone Agate Music; Screen Gems-EMI Music, Inc.; and Stone Diamond Music Corp. are whollyowned, indirect subsidiaries of Sony Music Corporation, which is a publicly-held company organized under the laws of Japan. No publicly-held company owns

more than 10% of Sony Music Corporation’s stock.

Petitioners Atlantic Recording Corporation; Elektra

Entertainment Group Inc.; Fueled by Ramen LLC;

Roadrunner Records, Inc.; Warner Records Inc. (f/k/a

Warner Bros. Records Inc.); Warner-Tamerlane Publishing Corp.; W Chappell Music Corp., d/b/a WC Music Corp. (f/k/a WB Music Corp.); Unichappell Music

Inc.; Rightsong Music Inc.; Cotillion Music, Inc.; Intersong U.S.A., Inc.; Warner Chappell Music, Inc.

(f/k/a Warner/Chappell Music, Inc.); and W.C.M. Music Corp. (f/k/a W.B.M. Music Corp.); are whollyowned, indirect subsidiaries of Warner Music Group

Corp., a publicly traded company with more than ten

percent (10%) of its stock owned by AI Entertainment

Holdings LLC and certain of its affiliates, which are

not publicly traded companies.

Petitioner Bad Boy Records LLC is a joint venture

in which Atlantic Recording Corporation, an indirectly wholly-owned subsidiary of Warner Music

Group Corp., holds a fifty percent (50%) interest. Bad

Boy Records, which is not a publicly traded company,

holds the remaining fifty percent (50%) interest in

Bad Boy Records LLC.

Petitioners 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; Music Corporation of America,

Inc., d/b/a Universal Music Corp.; Polygram Publishing, Inc.; and Songs of Universal, Inc. are wholly

owned indirect subsidiaries of Universal Music Group

N.V., a Netherlands public limited company. Compagnie de Cornouaille SAS and PS VII Master, L.P.

own more than 10% of Universal Music Group N.V.’s

stock. No other company owns 10% or more of Universal Music Group N.V.’s stock.

STATEMENT OF RELATED CASES

U.S. Supreme Court:



Cox Communications, Inc. and CoxCom, Inc. v.

Sony Music Entertainment, et al., No. __ (Aug.

15, 2024) (petition for a writ of certiorari)



Cox Communications, Inc. and CoxCom, Inc. v.

Sony Music Entertainment, et al., No. 23A1066

(application for an extension of time for Cox

Communications and CoxCom to file a petition

for a writ of certiorari) (granted June 3, 2024)

U.S. Court of Appeals for the Fourth Circuit:



Sony Music Entertainment, et al. v. Cox Communications, Inc. and CoxCom, LLC, No. 221451 (appeal of a post-trial ruling under Federal Rule of Civil Procedure 60(b)) (judgment

not yet entered)



Sony Music Entertainment, et al. v. Cox Communications, Inc. and CoxCom, LLC, No. 211168 (Feb. 20, 2024) (decision below)

U.S. District Court for the Eastern District of Virginia:



Sony Music Entertainment, et al. v. Cox Communications, Inc. and CoxCom, LLC, No. 1:18cv-00950-LFO-JFA (March 23, 2022) (order

denying relief under Federal Rule of Civil Procedure 60(b))

vii

TABLE OF CONTENTS

Page

QUESTION PRESENTED.......................................... i

PARTIES TO THE PROCEEDING ........................... ii

CORPORATE DISCLOSURE STATEMENT .......... iv

STATEMENT OF RELATED CASES ...................... vi

TABLE OF AUTHORITIES ...................................... ix

INTRODUCTION ....................................................... 1

OPINIONS BELOW ................................................... 4

JURISDICTION ......................................................... 5

STATEMENT OF THE CASE ................................... 5

REASONS FOR GRANTING THE PETITION ....... 11

I. The Fourth Circuit’s Holding Creates

A Circuit Split On The Profit

Requirement Of Vicarious Copyright

Infringement ................................................... 12

A. The Majority Of The Courts Of

Appeals That Have Addressed

This Issue Permit Vicarious

Liability Where The Defendant

Expects To Profit From The

Broader Operation In Which

Infringement Occurs ................................. 13

B. A Minority Of Courts Permits

Vicarious Liability Only Where

The Defendant Profits Directly

From The Act Of Infringement

Itself ........................................................... 21

viii

TABLE OF CONTENTS—Continued

Page

II. The Fourth Circuit Is Wrong ......................... 25

A. The Minority Approach Is

Inconsistent With This Court’s

Precedent ................................................... 25

B. The Minority Approach Is

Contrary To Congressional

Purpose ...................................................... 28

C. The Minority Approach Is

Divorced From First Principles ................ 29

III. Review Is Needed Now .................................. 31

CONCLUSION ......................................................... 34

APPENDIX

TABLE OF AUTHORITIES

Page(s)

CASES:

A & M Records, Inc. v. Napster, Inc.,

114 F. Supp. 2d 896 (N.D. Cal. 2000).................. 22

A&M Recs., Inc. v. Napster, Inc.,

239 F.3d 1004 (9th Cir. 2001).................... 8, 21, 22

Arista Records, Inc. v. Usenet.com, Inc.,

633 F. Supp. 2d 124 (S.D.N.Y. 2009) ..................... 8

BMG Rights Mgmt. (US) LLC v. Cox

Commc’ns, Inc.,

881 F.3d 293 (4th Cir. 2018) .................................. 6

Broadcast Music, Inc. v. Blumonday, Inc.,

32 U.S.P.Q.2d 1474, 1994 WL 259253 (D.

Nev. 1994) ............................................................ 20

Buck v. Pettijohn,

34 F. Supp. 968 (E.D. Tenn. 1940) ...................... 21

Dreamland Ball Room v. Shapiro, Bernstein & Co.,

36 F.2d 354 (7th Cir. 1929) ............................ 13, 14

Ellison v. Robertson,

357 F.3d 1072 (9th Cir. 2004) .................... 8, 18, 22

EMI Christian Music Group, Inc. v.

MP3tunes, LLC,

844 F.3d 79 (2d Cir. 2016) ............................. 19, 20

Fahmy v. Live Nation Ent., Inc.,

No. 2:15-CV-01158-CAS, 2015 WL

3617040 (C.D. Cal. June 8, 2015) ........................ 18

Famous Music Corp. v. Bay State Harness

Horse Racing & Breeding Ass’n, Inc.,

554 F.2d 1213 (1st Cir. 1977) .............................. 15

TABLE OF AUTHORITIES—Continued

Page(s)

Fonovisa v. Cherry Auction, Inc.,

76 F.3d 259 (9th Cir. 1996) ..................... 2, 7, 15-17

Gershwin Publ’g Corp. v. Columbia Artists

Mgmt., Inc.,

443 F.2d 1159 (2d Cir. 1971) ............................... 15

Herbert v. Shanley Co.,

242 U.S. 591 (1917) .........................................25-28

In re Aimster Copyright Litig.,

334 F.3d 643 (7th Cir. 2003) ............................ 3, 14

J & J Sports Prods., Inc. v. Enriquez,

No. 1:19-CV-2384 (ERK), 2019 WL

4963108 (E.D.N.Y. Oct. 7, 2019).......................... 20

Joe Hand Promotions, Inc. v. Griffith,

No. 3:20-CV-382, 2023 WL 4752375

(E.D. Tenn. July 25, 2023) ................................... 27

Keene Corp. v. United States,

508 U.S. 200 (1993) .............................................. 26

Klein & Heuchan, Inc. v. Costar Realty

Info., Inc.,

425 F. App’x 833 (11th Cir. 2011) ....................... 23

Klein & Heuchan, Inc. v. Costar Realty

Info., Inc.,

707 F. Supp. 2d 1287 (M.D. Fla. 2010) ............... 23

Klein & Heuchan, Inc. v. CoStar Realty

Info., Inc.,

No. 8:08-cv-1227-T-30EAJ, 2011 WL

6097980 (M.D. Fla. Dec. 7, 2011) ........................ 27

Leonard v. Stemtech Health Scis., Inc.,

No. CV 08-067-LPS-CJB, 2014 WL

3367092 (D. Del. July 8, 2014) ...................... 19, 23

TABLE OF AUTHORITIES—Continued

Page(s)

Leonard v. Stemtech International Inc.,

834 F.3d 376 (3d Cir. 2016) ..................... 18, 19, 23

Metro-Goldwyn-Mayer Studios Inc. v.

Grokster, Ltd.,

545 U.S. 913 (2005) ................................. 2, 8, 32-34

Polygram International Publishing, Inc. v.

Nevada/TIG, Inc.,

855 F. Supp. 1314 (D. Mass. 1994) ........ 15, 16, 20,

26, 28, 30, 31

Realsongs v. Gulf Broad. Corp.,

824 F. Supp. 89 (M.D. La. 1993).......................... 20

Sekhar v. United States,

570 U.S. 729 (2013) .............................................. 29

Shapiro, Bernstein & Co. v. H. L. Green

Co.,

316 F.2d 304 (2d Cir. 1963) ........................... 14, 31

Sony Corp. of Am. v. Universal City Studios, Inc.,

464 U.S. 417 (1984) ........................ 2, 13, 15, 26, 33

Sony Music Ent. v. Cox Comm’ns, Inc.,

426 F. Supp. 3d 217 (E.D. Va. 2019) ..................... 8

UMG Recordings, Inc. v. Bright House

Networks, LLC,

No. 8:19-cv-710-MSS-TGW, 2020 WL

3957675 (M.D. Fla. July 8, 2020) .................. 23, 24

UMG Recordings, Inc. v. Grande

Commc’ns Networks, LLC,

2018 WL 1096871 (W.D. Tex. Feb. 28,

2018) ................................................................23-25

xii

TABLE OF AUTHORITIES—Continued

Page(s)

United States v. Carroll Towing Co.,

159 F.2d 169 (2d Cir. 1947) ................................. 30

STATUTES:

17 U.S.C. § 106 ................................................... 1, 29

28 U.S.C. § 1254(1) ................................................... 5

§ 1(e), 35 Stat. 1075 ............................................. 25

LEGISLATIVE MATERIAL:

H.R. Rep. No. 94-1476 (1976) ........................... 28, 29

OTHER AUTHORITIES:

Felix Frankfurter, Some Reflections on the

Reading of Statutes, 47 Colum. L. Rev. 527

(1947) .................................................................... 29

Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal

Texts (2012) .......................................................... 29

IN THE

Supreme Court of the United States

_________

No. 24-_

_________

SONY MUSIC ENTERTAINMENT, ET AL.,

Petitioners,

COX COMMUNICATIONS, INC. AND COXCOM, LLC,

Respondents.

_________

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Fourth Circuit

_________

PETITION FOR A WRIT OF CERTIORARI

_________

Sony Music Entertainment and its co-petitioners respectfully petition for a writ of certiorari to review the

judgment of the United States Court of Appeals for

the Fourth Circuit in this case.

INTRODUCTION

This petition raises an important question regarding the scope of vicarious liability under the Copyright

Act.

The Copyright Act grants the holder of a copyright

the exclusive right to reproduce, publicly perform, and

publicly distribute the underlying creative work, subject to some exceptions. See 17 U.S.C. § 106. In addition to making direct infringement of any of those

(1)

exclusive rights actionable under the Act, Congress

incorporated into the Act certain “doctrines of secondary liability” drawn from “common law principles,” including vicarious liability. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930-931

(2005). A defendant “infringes vicariously by profiting

from direct infringement while declining to exercise a

right to stop or limit it.” Id. at 930.

At issue in this case is the nature of that profit requirement. This Court has never addressed the contours of vicarious liability for copyright infringement,

but lower courts have long understood that the Copyright Act permits copyright owners to pursue claims

for vicarious liability where the defendant expects to

profit from the broader operation in which infringement occurs. See, e.g., Fonovisa v. Cherry Auction,

Inc., 76 F.3d 259, 263 (9th Cir. 1996) (rejecting the notion that vicarious liability requires the plaintiff to

“directly tie[] * * * the sale of particular infringing

items” to the financial benefit reaped by the defendant). That tradition stretches as far back as the “socalled ‘dance hall cases,’” from the first half of the

twentieth century, where nightclub owners and restauranteurs were held vicariously liable for copyright

infringement by bands performing at the establishments even if their patrons did not pay a cover charge

associated with the infringing music that they heard

there. Sony Corp. of Am. v. Universal City Studios,

Inc., 464 U.S. 417, 437 n.18 (1984); see also id. at 437

(calling “the imposition of vicarious liability” in these

cases “manifestly just”). Even if the owner of the establishment “does not” “benefit[] directly from the infringement that he encourages,” the owner is still held

liable because he benefitted from the broader

operation in which infringement occured. In re Aimster Copyright Litig., 334 F.3d 643, 654 (7th Cir.

2003).

Consistent with that principle, a federal jury found

that Respondents Cox Communications and CoxCom

(collectively, “Respondent” or “Cox”) had vicariously

infringed thousands of Plaintiffs’ copyrighted works

because Cox had profited from its subscribers’ infringement on its internet service. As the District

Court explained, the jury had ample evidence that

Cox profited from its subscribers’ infringement, including evidence “that when deciding whether to terminate a subscriber for repeat infringement, Cox considered the subscriber’s monthly payments,” and “Cox

repeatedly declined to terminate infringing subscribers’ internet service in order to continue collecting

their monthly fees.” Pet. App. 16a.

Despite this clear evidence of profit, the Fourth Circuit reversed the jury’s vicarious-liability finding. In

the panel’s view, the profit requirement “demands

proof that the defendant profits directly from the acts

of infringement for which it is being held accountable.”

Pet. App. 17a (emphasis in original). Because “[a]n internet service provider would necessarily lose money

if it canceled subscriptions,” proof that Cox pursued

“[t]he continued payment of monthly fees for internet

service, even by repeat infringers * * * demonstrates

only that the service provider profits directly from the

sale of internet access.” Id. “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.” Id. (emphasis

in original).

The Fourth Circuit’s requirement that the defendant profit directly from the act of infringement itself—

as opposed to profiting from the operation in which infringement occurs—stands opposite to the rest of the

field. Every other circuit to have considered the question has employed a different approach to the profit

requirement, asking instead whether the defendant

profits from the operation in which infringement occurs.

The Fourth Circuit’s approach to the profit requirement of vicarious liability is also wrong on the merits.

It is inconsistent with this Court’s precedent; although this Court has never addressed vicarious copyright infringement, this Court has held that the Copyright Act itself does not require evidence of a profit

from the sale of a specific product. The Fourth Circuit’s rule is contrary to Congress’s stated purpose in

enacting the 1976 Amendments to the Copyright Act.

It is incompatible with the first principles that animate secondary liability. And it eliminates an especially important tool in the digital age where pursuing

direct infringers—in this case, thousands of faceless

individuals who cannot be identified except through

an internet service provider like Respondent—is impractical at best and impossible at worst.

This Court should grant review to vindicate its Copyright Act precedent, to resolve the confusion among

the lower courts regarding the scope of vicarious liability in the digital age, and to protect the rights of

creators.

The petition should be granted.

OPINIONS BELOW

The Court of Appeals’ opinion (Pet. App. 1a-36a) is

published at 93 F.4th 222. The District Court’s

opinion denying Cox’s motion for judgment as a matter of law regarding the jury’s vicarious-liability finding (Pet. App. 37a-130a) is published at 464 F. Supp.

3d 795.

JURISDICTION

The Fourth Circuit issued its decision on February

20, 2024. Petitioners and Respondent each timely

sought panel rehearing and rehearing en banc. The

Fourth Circuit denied rehearing on March 19, 2024.

On June 3, 2024, Chief Justice Roberts extended the

time to file a petition for a writ of certiorari to August

16, 2024. This Court has jurisdiction under 28 U.S.C.

§ 1254(1).

STATEMENT OF THE CASE

1. Plaintiffs are the leading record companies and

music publishers in the world. See Pet. App. 6a, 38a39a. They own or control the copyrighted works of

some of the most iconic recording artists and songwriters of our time. Id. Their businesses depend on developing musical talent and protecting the sound recordings and musical compositions these artists and

songwriters create.

Online music piracy costs Plaintiffs billions of dollars a year. Music piracy has long been an issue, but

the advent of the internet made stealing music easier

and faster than ever. Historically, web services like

Napster allowed infringers to download one recording

at a time from one location using a centralized database. More recently, however, platforms using filesharing protocols like BitTorrent and Gnutella have

become the dominant channels for theft of copyrighted

music. See Pet. App. 41a. These “peer-to-peer” (P2P)

protocols allow individual users (“peers”) to download

and upload music files directly from and to multiple

users simultaneously. See id.; see also Pet. App. 8a;

BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc.,

881 F.3d 293, 298-299 (4th Cir. 2018) (explaining P2P

and BitTorrent). They also do not rely on a single central repository that can be targeted or shut down.

Peers can be identified only by their internet protocol

(IP) addresses, meaning that only their internet service providers (ISPs), like Cox, know the peers’ identities. Pet. App. 8a-9a. This process exponentially increases both the efficiency and volume of online piracy

and the difficulty of combatting it—and thus fosters a

staggering amount of infringement.

In an effort to combat online piracy, the record-company Plaintiffs, through their trade association, the

Recording Industry Association of America (RIAA),

began sending infringement notices to Cox when its

subscribers were observed distributing or downloading Plaintiffs’ works through P2P networks. Pet. App.

8a-9a, 41a-42a. Cox largely ignored these notices.

Cox’s lax policies and practices ensured that infringement would continue apace on Cox’s platform. Pet.

App. 9a, 42a-44a & n.7, 108a-109a.

Cox also openly prioritized its profits over limiting

infringement. Cox’s “abuse team”—charged with addressing copyright infringement on Cox’s service—

confirmed as much. The abuse-team leader himself instructed team members to give repeat infringers who

otherwise should have been terminated under Cox’s

own policies a “clean slate” so that Cox could “collect

a few extra weeks of payments for their account ;-).”

CA4 J.A. 1485 (Vol. 5) (Aug. 27, 2021). The abuse team

was told “to hold on to every subscriber we can” and

to “keep customers and gain more RGU’s” (“revenue

generating units,” otherwise known as “subscribers”).

CA4 J.A. 1484, 1480 (Vol. 5) (Aug. 27, 2021). Another

supervisor offered similar instructions to retain flagrant infringers—who were particularly lucrative

customers—explaining that one infringing “customer

will likely fail again, but let’s give him one more

chan[c]e. * * * [H]e pays 317.63 a month,” Pet. App.

110a (quoting PX347), and that another notorious infringer “pays us over $400/month and if we terminate

their [sic] internet service, they will likely cancel the

rest of their services,” id. (quoting PX342).

In this way, Cox profited from subscription revenues

it would not have otherwise obtained. Between February 2013 and December 2016, Cox received $208 million in revenue from subscribers caught infringing

three or more times. CA4 J.A. 593-594 (Corrected Vol.

2) (Sept. 8, 2021), 1709 (Vol. 5) (Aug. 27, 2021). By

contrast, Cox did not hesitate to terminate users when

its own revenues were at stake. In 2013 and 2014, Cox

disconnected almost 620,000 subscribers—approximately 25,000 per month—for failure to pay their internet bills. Pet. App. 109a. In the same period, Cox

terminated just 32 subscribers for copyright infringement. Id.

2. In July 2018, Plaintiffs sued Cox for contributory

and vicarious infringement of 10,017 of Plaintiffs’ copyrighted sound recordings and musical compositions.

“[T]o establish contributory liability,” a plaintiff

need only show that the defendant “provid[ed] the site

and facilities for known infringing activity,” especially

where “it would be difficult for the infringing activity

to take place in the massive quantities alleged without the support services provided by the [defendant].”

Fonovisa, 76 F.3d at 264.

With respect to Plaintiffs’ contributory-liability

claim, the District Court found at the summary-judgment stage that “[n]o genuine issue of material fact

remains” as to “the knowledge element of contributory

liability,” because the notices that RIAA sent to Cox

regarding its subscribers’ infringement showed that

Cox had “knowledge of specific conduct which allegedly infringed all sound recordings and musical compositions identified in suit.” Sony Music Ent. v. Cox

Comm’ns, Inc., 426 F. Supp. 3d 217, 233 (E.D. Va.

2019). And at trial, the evidence showed that Cox continued to provide known repeat infringers with highspeed internet service, without which its subscribers

could not infringe. See Pet. App. 43a-44a. The jury

also heard testimony that P2P infringement on Cox’s

network was extensive and persistent, and that Cox’s

provision of high-speed internet service was the necessary ingredient for the massive quantity of infringement that occurred. See Pet. App. 60a-61a, 62a-63a.

To establish vicarious liability, a plaintiff must point

to evidence that the alleged vicarious infringer

“profit[ed] from direct infringement while declining to

exercise a right to stop or limit it.” Grokster, 545 U.S.

at 930. “Profit” here refers to “a causal relationship

between the infringing activity and any financial benefit a defendant reaps.” Ellison v. Robertson, 357 F.3d

1072, 1079 (9th Cir. 2004). And “the ability to block

infringers’ access to a particular environment for any

reason whatsoever is evidence of the right and ability

to supervise.” A&M Recs., Inc. v. Napster, Inc., 239

F.3d 1004, 1023 (9th Cir. 2001); Arista Records, Inc. v.

Usenet.com, Inc., 633 F. Supp. 2d 124, 157 (S.D.N.Y.

2009) (quoting Napster).

With respect to Plaintiffs’ vicarious-liability claim,

the evidence at trial showed that Cox continued to

provide service to known serial infringers, and indeed

took deliberate steps to ensure that infringement continued unabated so Cox could continue to reap massive profits from these known serial infringers. The

trial evidence also showed that repeat infringers were

particularly profitable. Cox’s business model is built

on charging customers increased fees for higher

speeds and data usage. See Pet. App. 135a-139a, 144a145a. And ample evidence showed that infringing P2P

activity consumes significant bandwidth and creates

the need for subscribers to purchase more expensive

plans, with higher monthly payments for Cox. See Pet.

App. 139a-143a. The evidence at trial also showed

that Cox’s subscriber terms of service permitted Cox

to take a variety of actions against repeat infringers,

including suspension or termination of their access to

Cox’s services. Pet. App. 42a.

After twelve days of trial, the jury returned a special

verdict finding Cox liable for willful contributory and

vicarious copyright infringement of Plaintiffs’ copyrighted works. The jury awarded Plaintiffs $1 billion

in damages for the infringement of 10,017 copyrighted

works.

3. Cox appealed. The Fourth Circuit reversed the

District Court’s judgment as to vicarious liability and

remanded for a new trial on damages. Pet. App. 7a,

35a-36a.1

The Fourth Circuit’s vicarious-liability ruling

stemmed from its cramped view of the profit

The Fourth Circuit affirmed the jury’s finding of willful contributory infringement. Pet. App. 7a, 35a.

requirement. The District Court concluded that Plaintiffs had shown direct financial benefit through evidence “that when deciding whether to terminate a

subscriber for repeat infringement, Cox considered

the subscriber’s monthly payments,” and that “Cox repeatedly declined to terminate infringing subscribers’

internet service in order to continue collecting their

monthly fees.” Pet. App. 16a. The Fourth Circuit saw

it differently. In its view, the profit requirement “demands proof that the defendant profits directly from

the acts of infringement for which it is being held accountable.” Pet. App. 17a (emphasis in original).

Thus, only if the infringement itself “draws customers

to the defendant’s service or incentivizes them to pay

more for their service” may the defendant be said to

“profit” from infringement. Pet. App. 16a. And because “[t]he continued payment of monthly fees for internet service, even by repeat infringers, was not a financial benefit flowing directly from the copyright infringement itself,” the evidence of Cox’s avid support

of flagrant infringers failed the test. Pet. App. 17a

(emphasis in original).

The Fourth Circuit rejected the rest of Plaintiffs’ copious trial evidence as similarly insufficient to meet

the demanding vicarious-liability standard it had articulated. Plaintiffs had introduced evidence that

“roughly 13% of Cox’s network traffic was attributable

to peer-to-peer activity and over 99% of peer-to-peer

usage was infringing,” such that the jury could permissibly “infer from the volume of infringing activity

on Cox’s network that the ability to infringe was a

draw for customers.” Id. The panel rejected this argument, holding that the profit standard required direct

evidence that “infringing subscribers purchased internet access because it enabled them to infringe

copyrighted music,” or that “customers chose Cox’s internet service * * * because of any knowledge or expectation about Cox’s lenient response to infringement.”

Pet. App. 18a.

Plaintiffs also had put on evidence at trial that “subscribers were willing to pay more for the ability to infringe,” as demonstrated through evidence that (1)

Cox maintained “a tiered pricing structure by which it

charged customers higher monthly fees for increased

data allowances,” (2) “peer-to-peer activity” required

increased data, (3) “residential subscribers who were

the subject of 20 or more infringement notices * * *

paid Cox more per month, on average, than residential subscribers who were the subject of only 1 or 2 infringement notices,” and (4) “Cox advertised its network speeds in relation to how quickly a user could

download songs.” Id. The panel concluded that this evidence, too, was insufficiently tailored: “None of this

raises a reasonable inference that any Cox subscriber

paid more for faster internet in order to engage in copyright infringement.” Id. After all, it also takes bandwidth to “legally stream[] movies, television shows,

and music,” and “[s]ubscribers may have purchased

high speed internet for lawful streaming and downloads or because their households had many internet

users.” Pet. App. 18a-19a.

4. Plaintiffs and Cox each timely sought panel rehearing and rehearing en banc. The Fourth Circuit denied rehearing. Pet. App. 131a-134a.

REASONS FOR GRANTING THE PETITION

This petition readily satisfies the traditional criteria

for review. The Fourth Circuit’s narrow conception of

the profit requirement of vicarious liability creates a

square conflict with the First, Second, Third, Seventh,

and Ninth Circuits, and entrenches an erroneous understanding of profit that has been percolating in the

district courts for years.

The Fourth Circuit’s decision is also wrong. It

breaks with this Court’s precedent, which recognizes

that profit from a business that permits infringement

is profit from infringement; contravenes Congress’s

stated purpose in enacting the relevant provision of

the Copyright Act; and is divorced from the commonlaw principles that animate secondary liability.

The Fourth Circuit’s new test will also have farreaching consequences across the law of copyright; by

substantially narrowing the scope of vicarious liability, the Fourth Circuit’s rule removes a core incentive

to stop or limit piracy. Certiorari is warranted.

I. The Fourth Circuit’s Holding Creates A

Circuit Split On The Profit Requirement Of

Vicarious Copyright Infringement.

The courts of appeals are divided on how to interpret

the profit requirement of vicarious copyright infringement. The majority of courts find liability where the

defendant expects to profit from the operation in

which infringement occurs. But some courts—including the Fourth Circuit—employ a strict causation requirement, permitting liability only where the defendant profits directly from the acts of infringement

themselves.

A. The Majority Of The Courts Of Appeals

That Have Addressed This Issue Permit

Vicarious Liability Where The Defendant

Expects To Profit From The Broader Operation In Which Infringement Occurs.

The majority of the courts of appeals that have addressed this issue adhere to the traditional understanding of vicarious liability employed in the “socalled ‘dance hall cases,’” from the first half of the

twentieth century, where nightclub owners were held

vicariously liable for copyright infringement by bands

performing at the clubs. Sony, 464 U.S. at 437 n.18;

see also id. at 437 (calling “the imposition of vicarious

liability” in these cases “manifestly just”). These

courts have concluded that holding a defendant vicariously liable for copyright infringement is appropriate

where the defendant profited from the operation in

which infringement occurred, even if profit cannot be

traced precisely and exclusively to the performance of

infringing works.

1. The majority approach is rooted in what are

known as the “dance-hall cases.” The leading example

is Dreamland Ball Room v. Shapiro, Bernstein & Co.,

where the Seventh Circuit considered whether dancehall operators were liable for copyright infringement

where a hired orchestra “at times” played copyrighted

music without authorization. 36 F.2d 354, 355 (7th

Cir. 1929). The operators argued that they did not direct that any particular musical selection be played,

did not know that the orchestra played copyrighted

music, and did not know that the orchestra played

that copyrighted music without authorization. Id. Nor

was there evidence that the operators had intentionally charged customers for the benefit of listening to

copyrighted music, or bargained for a discount on the

orchestra’s fees based on their intention to play infringing music. The Seventh Circuit nevertheless

found that the dance-hall operators were liable. As the

court explained, the “authorities are, we believe,

unanimous in holding that the owner of a dance hall

at whose place copyrighted musical compositions are

played in violation of the rights of the copyright holder

is liable, if the playing be for the profit of the proprietor of the dance hall.” Id.

Those “unanimous” authorities in 1929 multiplied in

the ensuing decades: “[T]he cases are legion which

hold the dance hall proprietor liable for the infringement of copyright resulting from the performance of a

musical composition by a band or orchestra whose activities provide the proprietor with a source of customers and enhanced income.” Shapiro, Bernstein & Co.

v. H. L. Green Co., 316 F.2d 304, 307-308 (2d Cir.

1963) (collecting cases).

In the century between Dreamland Ball Room and

this case, courts continue to recognize the dance-hall

scenario as the “canonical illustration” of vicarious infringement. Aimster, 334 F.3d at 654. As the Seventh

Circuit explained in Aimster, a dance-hall owner “does

not” “benefit[] directly from the infringement”; it “benefit[s]” only “to the extent that competition will force

the dance band to charge the dance hall a smaller fee

for performing if the band doesn’t pay copyright royalties and so has lower costs than it would otherwise

have.” Id.

The “dance hall” principle also is not limited to

dance-hall facts. Courts have applied the same rule to

uphold vicarious-liability findings against an array of

defendants whose establishments played infringing

music where the defendant profited from the larger

operation in which infringement occurred.

In a case this Court has cited with approval, see

Sony, 464 U.S. at 437 n.18, the First Circuit held that

a racetrack that hired a contractor to play music in

between races was vicariously liable for the contractor’s infringing performances, even though the plaintiff had offered no evidence that racetrack patrons

came to the racetrack to hear the music played between races, nor evidence that the patrons wanted to

hear unlicensed music as opposed to music that did

not infringe plaintiffs’ copyrights. Famous Music

Corp. v. Bay State Harness Horse Racing & Breeding

Ass’n, Inc., 554 F.2d 1213, 1214 (1st Cir. 1977).

In another case this Court has referenced, see Sony,

464 U.S. at 437 n.18, the Second Circuit held that a

music-festival promoter was vicariously liable for musical artists’ performance of copyrighted works at the

festival, even though the promoter was paid the same

fee for its services regardless of whether the performing artists chose to infringe. Gershwin Publ’g Corp. v.

Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1163 (2d

Cir. 1971). This Court characterized that fee as a “substantial benefit from the actions of the primary infringers.” Sony, 464 U.S. at 437 n.18.

As Judge Keeton explained in Polygram International Publishing, Inc. v. Nevada/TIG, Inc., 855 F.

Supp. 1314 (D. Mass. 1994)—an opinion acknowledged as “[t]he most * * * comprehensive discussion of

the evolution of the doctrine of vicarious liability for

the dance-hall and similar cases rely “on an inferred,

overall benefit that a performance of music confers on

an establishment,” 855 F. Supp. at 1330. After all, “it

is widely accepted that restaurant owners may be held

vicariously liable for infringing performances by musicians,” but none of the cases say “how many minutes

of music per meal * * * it take[s] to show” a “financial

benefit to a restaurant.” Id. at 1331. These courts thus

look for “commercial gain from the overall operation

and either a direct or indirect financial benefit from

the infringement itself.” Id. In Judge Keeton’s words,

this approach best “serves to limit vicarious infringement to the activities of those who in some measure

profit from the infringement, while at the same time

defining the benefit from the infringing activity itself

in a manner that allows the court to acknowledge the

more intangible, indirect benefits from performances.”

Id.

2. Even beyond the unauthorized public playing of

copyrighted works, courts’ approach to vicarious liability has remained the same. As the Ninth, Third,

and Second Circuits have held, Plaintiffs can show

profit through evidence that the defendant expects

commercial gain from the broader operation in which

infringement occurs.

The Ninth Circuit has issued the leading cases on

the profit requirement of vicarious liability. In

Fonovisa, the defendant, Cherry Auction, operated a

flea market—otherwise known as a “swap meet”—

where “over 900 vendors” rented stalls from Cherry

Auction to “sell their goods on any given day.” Cherry

Auction Br., 1994 WL 16014410, at *3-4. Some of

those 900-plus vendors sold counterfeit copies of music recordings owned by the plaintiff. Fonovisa, 76

F.3d at 261. Cherry Auction argued that Fonovisa

could not prove the auction had received any financial

benefit from those vendors; after all, the auction

owner explained, Cherry Auction “does not receive

any percentage of the sales. Indeed, Cherry Auction

receives its rental payment regardless of whether the

vendor makes any sales whatsoever.” Cherry Auction

Br., 1994 WL 16014410, at *9. The district court rejected Fonovisa’s vicarious-liability claim. 76 F.3d at

262.

The Ninth Circuit reversed. As the court explained,

“the defendants reap substantial financial benefits

from admission fees, concession stand sales and parking fees, all of which flow directly from customers who

want to buy the counterfeit recordings at bargain

basement prices.” Id. at 263. That was sufficient to

state a claim for vicarious copyright infringement. Id.

at 263-264.

In so holding, the Ninth Circuit rejected the defendant’s argument that vicarious liability requires a

strict causal link—such as “a commission, directly

tied to the sale of particular infringing items”—between the defendant’s profit and the act of infringement. Id. at 263. Swap-meet attendees did not pay

some separate premium for infringing works. Id.

What mattered instead was the commercial gain from

the broader operation: All attendees, whether they

shopped for counterfeit recordings or handmade textiles, paid the same admission fees and other expenses. Id. Like the dance-hall cases, the court explained, the infringement “enhance[d] the attractiveness of the venue to potential customers.” Id.; see also

id. at 263-264 (explaining that “the sale of pirated recordings at the Cherry Auction swap meet is a ‘draw’

for customers, as was the performance of pirated music in the dance hall cases and their progeny”).

The Ninth Circuit has applied the same approach to

internet service providers. In Ellison, the Ninth Circuit held that an ISP was not vicariously liable for its

subscribers’ infringement. The court explained that

its holding rested on the lack of evidence that the ISP

“attracted or retained subscriptions because of the infringement or lost subscriptions because” the ISP

blocked infringement. 357 F.3d at 1079. Such evidence, the Ninth Circuit noted, would have established that infringement was a “draw” to the defendant’s services, just as the sale of infringing records

was a “draw” to the swap meet in Fonovisa. Id. In so

holding, the Ninth Circuit expressly noted that vicarious liability could be supported by a “causal relationship between the infringing activity and any financial

benefit * * * regardless of how substantial the benefit

is in proportion to a defendant’s overall profits.” Id.

(emphasis in original); see also, e.g., Fahmy v. Live

Nation Ent., Inc., No. 2:15-CV-01158-CAS, 2015 WL

3617040, at *10 (C.D. Cal. June 8, 2015) (noting “that

courts including the Ninth Circuit have understood

the direct financial interest element as encompassing

a possible, indirect benefit”) (internal quotation

marks and alteration omitted).

The Third Circuit agrees. In Leonard v. Stemtech International Inc., 834 F.3d 376 (3d Cir. 2016), the Third

Circuit held that a plaintiff can demonstrate that a

defendant profited from copyright infringement

through evidence that the copyrighted material “len[t]

legitimacy” to the defendant’s product. Id. at 389 (citing Ellison, 357 F.3d at 1078-79). That case involved

a plaintiff photographer whose photographs of stem

cells were used, without permission, by the defendant

nutritional supplements company’s distributors. A

jury found the defendant vicariously liable for the

did not come to the distributors’ websites to purchase

or view photographs of stem cells. Nor was there evidence that customers paid more for supplements because of the photographs. Indeed, as the district court

had noted, the plaintiff did not “prove that any of the

infringement drove [the defendant’s] sales or caused

anyone to sign up as a distributor for [the defendant].”

Leonard v. Stemtech Health Scis., Inc., No. CV 08-067LPS-CJB, 2014 WL 3367092, at *2 (D. Del. July 8,

2014), vacated in part and remanded sub nom. Leonard v. Stemtech Int’l Inc., 834 F.3d 376 (3d Cir. 2016).

The Third Circuit nevertheless upheld the jury’s verdict, explaining that “[t]he jury could reasonably have

credited the testimony from Stemtech officials indicating that images of stem cells lend legitimacy to products that purportedly enhance stem cell production

and from this infer that the images could have drawn

customers to buy the product, which would financially

benefit Stemtech.” 834 F.3d at 389.

The Second Circuit reached the same conclusion in

EMI Christian Music Group, Inc. v. MP3tunes, LLC,

844 F.3d 79 (2d Cir. 2016). There, an individual defendant, who “was the near-exclusive funder” of an

online music service provider, was found vicariously

liable for copyright infringement “that drew subscribers” to the service provider’s website. Id. at 99. The

Second Circuit held that the district court had not

erred in instructing the jury that an “obvious and direct financial interest * * * may be established where

infringing material acts as a ‘draw’ to attract subscribers to a defendant’s business, even if it is not the primary, or even a significant draw.” Id. (ellipsis in original) (emphasis added and internal quotation marks

omitted). The court explained that there was “ample

evidence” to support a profit finding, citing evidence

that the music service provider’s employees “emphasized the availability” of the infringing material “in

connection with trying to get users to” make purchases, and that, using the infringing material, the

defendant “sought to * * * attract free users * * *

whom [the music service provider] could thereafter

‘upsell.’” Id. (internal quotation marks omitted). The

court did not cite evidence establishing the actual results of those efforts. Instead, it was enough for the

Second Circuit that the business owner wanted to attract and retain customers, and that permitting the

use of infringing works was part of that effort.

Numerous district court decisions spread across this

same hundred-year period are in accord with this approach. See, e.g., J & J Sports Prods., Inc. v. Enriquez,

No. 1:19-CV-2384 (ERK), 2019 WL 4963108, at *4

(E.D.N.Y. Oct. 7, 2019) (holding restauranter vicariously liable for displaying telecast of boxing event on

restaurant televisions because “it can reasonably be

inferred that he did it to attract patrons to the restaurant (or get them to stay longer) in order to increase

the restaurant’s sales, and thus his own income”); Polygram, 855 F. Supp. at 1330 (holding organizers of a

computer trade show vicariously liable for performance of copyrighted songs played by exhibitors during show); Broadcast Music, Inc. v. Blumonday, Inc.,

32 U.S.P.Q.2d 1474, 1994 WL 259253, at *2 (D. Nev.

1994) (holding proprietors of a restaurant vicariously

liable where the court recognized that the “direct financial interest” need only “be tied to the operation as

a whole, not exclusively to the infringement”); Realsongs v. Gulf Broad. Corp., 824 F. Supp. 89, 92 (M.D.

La. 1993) (holding that radio station could be held vicariously liable for infringing songs played by third

parties who paid flat fees for air time because the stations “still have a direct financial interest in the infringing activity if the station is a for-profit enterprise

and defendants benefit from its operation”); Buck v.

Pettijohn, 34 F. Supp. 968, 968 (E.D. Tenn. 1940)

(holding owner of night club vicariously liable, even

though no admission charged to hear orchestra, because he “received benefits to his business by this orchestral performance”).

B. A Minority Of Courts Permits Vicarious

Liability Only Where The Defendant Profits Directly From The Act Of Infringement

Itself.

1. In contrast to the approach adopted by the First,

Second, Third, Seventh, and Ninth Circuits, the

Fourth Circuit stands alone among the courts of appeals in “demand[ing] proof that the defendant profits

directly from the acts of infringement for which it is

being held accountable.” Pet. App. 17a (emphasis in

original). Because of this demanding standard, the

Fourth Circuit found insufficient evidence that courts

on the majority side of the split would have accepted.

To start, the Fourth Circuit declared it insufficient

that Plaintiffs showed direct financial benefit through

evidence “that when deciding whether to terminate a

subscriber for repeat infringement, Cox considered

the subscriber’s monthly payments,” and evidence

that “Cox repeatedly declined to terminate infringing

subscribers’ internet service in order to continue collecting their monthly fees.” Pet. App. 16a.

Yet the Ninth Circuit has recognized that the same

evidence—that the provider “attracted or retained

subscriptions because of the infringement or lost subscriptions

because”

the

provider

blocked

infringement—would show financial benefit. Ellison,

357 F.3d at 1079; see supra p. 18. The Ninth Circuit

also employed this reasoning in Napster, 239 F.3d

1004, where it upheld a vicarious-liability finding

even though the defendant operated a service that

was free to its infringing users. As the district court

explained, Napster could “monetize” its userbase

through various revenue sources, such as targeted email, advertising, and direct marketing. A & M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 902

(N.D. Cal. 2000), aff’d in part and rev’d in part on

other grounds, 239 F.3d 1004. The Ninth Circuit

therefore concluded that the defendant company “financially benefits from the availability of protected

works on its system” because the defendant’s “future

revenue” depended on “increases in userbase.” 239

F.3d at 1023.

Similarly, much of the Fourth Circuit’s reasoning

turned on the fact that Cox’s subscribers used its internet service for more than infringement. See, e.g.,

Pet. App. 18a (“No one disputes that Cox’s subscribers

need the internet for countless reasons, whether or

not they can infringe.”’); Pet. App. 19a (“Subscribers

may have purchased high speed internet for lawful

streaming and downloads or because their households

had many internet users; Sony’s expert didn’t claim to

know why any customer purchased a higher tier of

service.”). The Fourth Circuit reasoned that, because

subscribers used the internet for noninfringing activities, Petitioners could not show that subscribers were

drawn to Cox’s service by the possibility of infringement or that Cox subscribers paid more for the ability

to infringe.

Yet courts on the majority side of the split do not require a showing that the customers were attracted to

the defendant vicarious infringer’s service because of

the opportunity to infringe the plaintiff’s copyrights.

Instead, these courts look only to the defendant vicarious infringer’s motives in permitting the infringement. For example, as discussed above, supra pp. 1819, the Third Circuit upheld a vicarious-liability finding for infringement of copyrighted photographs on a

website selling nutritional supplements. See Leonard,

834 F.3d at 389. The defendant nutritional supplement company’s customers did not come to the defendant’s website to purchase photographs. The customers

sought supplements. Nor was there any proof that the

customers were persuaded to purchase defendant’s

supplements because of the plaintiff’s photographs.

See Leonard, 2014 WL 3367092, at *2 (district court

opinion noting that the plaintiff did not “prove that

any of the infringement drove Defendant’s sales”).

However, because the defendant had used the photographer’s works to enhance the attractiveness of the

defendant’s website, the Third Circuit upheld the vicarious-liability finding and agreed that the profit requirement had been satisfied. Leonard, 834 F.3d at

389.

2. Several district courts in other circuits have taken

a similar tack to the Fourth Circuit, see, e.g., Klein &

Heuchan, Inc. v. Costar Realty Info., Inc., 707 F. Supp.

2d 1287, 1298-99 (M.D. Fla. 2010), aff’d, 425 F. App’x

833 (11th Cir. 2011) (per curiam), including in the context of claims made by creators against ISPs. See, e.g.,

UMG Recordings, Inc. v. Bright House Networks, LLC,

No. 8:19-cv-710-MSS-TGW, 2020 WL 3957675, at *6

(M.D. Fla. July 8, 2020); UMG Recordings, Inc. v.

Grande Commc’ns Networks, LLC, 2018 WL 1096871,

at *9-10 (W.D. Tex. Feb. 28, 2018), adopted by 2018

WL 2182282 (W.D. Tex. Mar. 26, 2018), amended and

superseded by 2018 WL 1905124 (W.D. Tex. Mar. 28,

2018).

Bright House is illustrative. Much like the Fourth

Circuit, the Bright House court noted that “access to

infringing content generally available on the internet

is one of many reasons motivating some subscribers to

enroll with any ISP.” 2020 WL 3957675, at *5 (emphasis in original). According to the court, an ISP merely

“offers a conduit to the ‘World Wide Web’” and “the

available infringing content is found on the robust

peer-to-peer sharing platforms ubiquitous to the internet and driven largely by BitTorrent (and similar

networks), which are * * * in no way affiliated with or

controlled by Bright House or any other ISP, for that

matter.” Id. The court therefore dismissed the plaintiffs’ vicarious-liability claim because the plaintiffs

did “not allege that there is anything unique about the

service [the ISP defendant] offers * * * as a portal to

this alleged contraband content” or that “access to infringing content is the main draw to Bright House’s

service.” Id. Indeed, that court understood the direct

financial benefit inquiry to be so demanding that “the

very success of the defendant’s venture must depend

on the infringing activity.” Id. at *4 (internal quotation marks and alterations omitted).

Grande is similar. There, the district court held that

rightsholders had failed to adequately plead the profit

requirement of their vicarious-liability claim against

the ISP Grande Communications. See Grande, 2018

WL 1096871, at *10. The plaintiffs had alleged that

“the availability of music—and particularly [the

plaintiffs’] music—acts as a powerful draw for user[s]

of [defendant’s] service, who use that service to download infringing music files using BitTorrent protocols.” Id. (internal quotation marks omitted). The district court rejected those allegations on the ground

that they “would impose liability on every ISP, as the

music at issue is available on the Internet generally,

as is the BitTorrent protocol, and is not something exclusively available through Grande’s services.” Id.

The district court opined that the plaintiffs should

have offered more particularized allegations of a

causal connection between the ISPs’ alleged conduct

and the alleged direct infringement. Id.

II. The Fourth Circuit Is Wrong.

The Fourth Circuit’s approach to the profit requirement of vicarious liability is flawed from every angle.

It is inconsistent with this Court’s precedent, which

holds that the Copyright Act does not require evidence

of a profit from the sale of a specific product. It is contrary to Congress’s stated purpose in enacting the

1976 Amendments to the Copyright Act that govern

this case. And it is incompatible with the first principles that animate secondary liability.

A. The Minority Approach Is Inconsistent

With This Court’s Precedent.

1. Nearly eighty years before Fonovisa, this Court

considered whether a “defendant hotel company”

could be held liable for the infringing performance of

“an orchestra employed and paid by the company.”

Herbert v. Shanley Co., 242 U.S. 591, 594 (1917). At

that time, and as relevant here, the Copyright Act

granted rightsholders the exclusive right “[t]o perform

the copyrighted work publicly for profit if it be a musical composition.” Copyright Act of 1909, Pub. L. No.

60-349, § 1(e), 35 Stat. 1075. In analyzing whether

that “profit” element had been satisfied, this Court

held that the Copyright Act did not require evidence

of a direct profit from the sale of a specific product. As

the Court explained, “there is no need to construe the

statute so narrowly” that it would permit the hotel to

escape liability based on the fact that hotel restaurant

patrons paid only for their meal. Herbert, 242 U.S. at

594. The infringing performance instead is “part of a

total for which the public pays, and the fact that the

price of the whole is attributed to a particular item

which those present are expected to order is not important.” Id. at 594-595. “Whether it pays or not, the

purpose of employing it is profit, and that is enough.”

Id. at 595.

Many other lower court decisions followed suit. As

explained above, in the “so-called ‘dance hall cases,’”

Sony, 464 U.S. at 437 n.18, the courts determined that

financial benefit “could be inferred from the very fact

of playing music in a profit-making establishment.”

Polygram, 855 F. Supp. at 1330 (emphasis in original).

The profit element was satisfied by a showing that

music was played at these establishments for the enjoyment of the customers. These lower courts did not

require proof that the specific copyrighted works of

the plaintiffs attracted customers or caused them to

pay more. And this Court later endorsed those decisions as “situations in which the imposition of vicarious liability is manifestly just.” Sony, 464 U.S. at 437.

Herbert’s interpretation of a “predecessor” Copyright Act provision can “shed some light” on the current statute. Keene Corp. v. United States, 508 U.S.

200, 210 (1993). That is especially true here, where

courts continue to rely on Herbert’s reasoning, including in analyzing the profit requirement of vicarious-

liability claims. See, e.g., Joe Hand Promotions, Inc. v.

Griffith, No. 3:20-CV-382, 2023 WL 4752375, at *7

(E.D. Tenn. July 25, 2023) (citing Herbert’s profit

analysis in support of conclusion that defendant is vicariously liable for infringement); Klein & Heuchan,

Inc. v. CoStar Realty Info., Inc., No. 8:08-cv-1227-T30EAJ, 2011 WL 6097980, at *4 (M.D. Fla. Dec. 7,

2011) (similar).

2. The Fourth Circuit’s reasoning cannot be reconciled with Herbert. The Fourth Circuit seized on the

fact that “Cox’s subscribers need the internet for

countless reasons, whether or not they can infringe.”

Pet. App. 18a. Yet, as this Court made clear in Herbert, it makes no difference that accessing infringing

content is only one of many things that customers do.

Because Cox expressly refused to terminate its subscribers so it could continue to collect subscription revenue from those subscribers, the infringement contributes to “part of a total for which the public pays,”

even if “the price of the whole is attributed” to noninfringing uses. Herbert, 242 U.S. at 594-595.

The Fourth Circuit therefore erred in disregarding

the evidence that “Cox repeatedly declined to terminate infringing subscribers’ internet service in order

to continue collecting their monthly fees,” and in concluding that “[t]he continued payment of monthly fees

for internet service, even by repeat infringers,”

“demonstrates only that the service provider profits

directly from the sale of internet access” and cannot

show that Cox benefitted directly from infringement.

Pet. App. 16a-17a. If Cox’s subscribers infringed, and

Cox retained infringers’ business in order to retain infringers’ subscription revenue, then the causal connection between the infringing conduct and the

financial benefit to Cox is obvious. Cox’s purpose for

providing its subscribers with access to the internet—

including massive amounts of infringing content—is

“profit,” and that “is enough.” Herbert, 242 U.S. at

595.

B. The Minority Approach Is Contrary To

Congressional Purpose.

Congress reaffirmed the understanding of profit

that this Court described in Herbert (and later endorsed in Sony) when it enacted the Copyright Act of

1976. “Congress was aware when debating the 1976

amendments that the law had been interpreted as imposing vicarious liability on proprietors of nightclubs

and other establishments for the infringements of musicians,” and “the Judiciary Committee considered a

proposed amendment to the Act that would have exempted such proprietors from vicarious liability.” Polygram, 855 F. Supp. at 1326 (citing H.R. Rep. No. 941476, at 159-160 (1976) (“House Report”)). However,

“[t]he Committee decided * * * to reject the amendment because” it concluded that “‘no justification exists for changing existing law and causing a significant erosion of the public performance right.’” Id.

(quoting House Report at 160).

Instead of narrowing the scope of vicarious liability,

the Committee embraced the “well-established principle of copyright law” that the profit component of vicarious liability can be met through evidence that the

defendant benefits from the operation as a whole, as

opposed to from the infringement itself. House Report

at 159. As Congress put it: “To be held a related or

vicarious infringer in the case of performing rights, a

defendant must either actively operate or supervise

the operation of the place wherein the performances

occur, or control the content of the infringing program,

and expect commercial gain from the operation and either direct or indirect benefit from the infringing performance.” Id. at 159-160 (emphasis added).

In declining the proposed revision to the Act, Congress effectively codified the dance-hall cases’ understanding of profit in the context of vicarious liability.

See Sekhar v. United States, 570 U.S. 729, 733 (2013)

(recognizing that when a legal concept “is obviously

transplanted from another legal source, whether the

common law or other legislation, it brings the old soil

with it”) (quoting Felix Frankfurter, Some Reflections

on the Reading of Statutes, 47 Colum. L. Rev. 527, 537

(1947)); see also Antonin Scalia & Bryan A. Garner,

Reading Law: The Interpretation of Legal Texts 320326 (2012) (describing “canon of imputed common-law

meaning” and “prior-construction canon”). The best

reading of the Copyright Act’s grant of the exclusive

right to reproduce, perform, and distribute the underlying creative work is therefore one that incorporates

a reading of vicarious liability’s profit requirement

that is tied to the enterprise, not to the infringement.

See 17 U.S.C. § 106. The Fourth Circuit’s narrow understanding of profit is impossible to reconcile with

Congress’s understanding of the “existing law.” House

Report at 160.

C. The Minority Approach Is Divorced From

First Principles.

One of the most basic principles animating the common law is that legal responsibility for harm should

fall on the person who can limit or eliminate harm in

the most cost-effective way. This principle, sometimes

described as finding the “least cost avoider” or “most

efficient risk bearer,” is fundamental to our legal

system. Every first-year law student in America studies Judge Learned Hand’s famous formula for determining when there is liability for negligently caused

harm: “if the probability be called P; the injury L; and

the burden [of adequate precautions to avoid the injury], B; liability depends upon whether B is less than

L multiplied by P; i.e., whether B less than PL.”

United States v. Carroll Towing Co., 159 F.2d 169, 173

(2d Cir. 1947). And, in learning that principle, every

student comes to understand that the common law

considers the party who is the “least cost avoider” or

the “most efficient risk bearer” to be legally responsible for unintended harm.

Tort law is organized around that principle, and so

are the rules for enforcement of contracts and property rights, including intellectual-property rights. Indeed, the “background * * * policy justification[] for vicarious liability” for copyright infringement is efficient harm avoidance—or, put in different words,

“[t]he law of vicarious liability treats the expected

losses” of copyright infringement “as simply another

cost of doing business.” Polygram, 855 F. Supp. at

1325-26.

The principle of efficient harm avoidance is particularly important in situations where the injured party

cannot efficiently deter the person who is directly liable. The prospect of secondary liability creates an incentive for the party able to prevent the harm at the

lowest cost to take steps to do so. Without the motivation of avoiding secondary liability, the least cost

avoider would have no reason, from an economic perspective, to make efforts to prevent or minimize the

harm. Holding the business liable for the infringement of those it controls and supervises acknowledges

that the “enterprise and the person profiting from it

are better able than either the innocent injured plaintiff or the person whose act caused the loss to distribute the costs and to shift them to others who have

profited from the enterprise.” Id. at 1325; see also, e.g.,

Shapiro, Bernstein & Co., 316 F.2d at 307 (“[T]he purposes of copyright law may be best effectuated by the

imposition of liability upon the beneficiary of that exploitation.”).

Viewed through this lens, the Fourth Circuit’s reasoning is completely backwards. The principle of efficient harm avoidance is served by focusing on the defendant’s overall profits from the business in which

the infringement occurs: “By focusing on benefit received from and control over an enterprise, a court can

evaluate the defendant’s ability to spread losses and

police conduct within the enterprise, as well as the underlying fairness of holding the defendant liable.” Polygram, 855 F. Supp. at 1326. But if the analysis is as

narrow as the Fourth Circuit claims, then the court

will be unable to assess the defendant’s role in the

larger scheme. In construing direct financial benefit

so narrowly as to absolve from liability the party who

can most efficiently limit harm, the Fourth Circuit has

issued a decision that is impossible to reconcile with

the foundation of secondary liability.

III.

Review Is Needed Now.

For at least three reasons, the Fourth Circuit’s interpretation of the profit requirement for vicarious

review.

First, the Fourth Circuit’s test is not only wrong; it

is fundamentally unworkable. Vicarious liability is an

especially important tool in the digital age where

pursuing direct infringers—in this case, thousands of

faceless individuals who cannot be identified except

through an ISP like Respondent—is impractical at

best and impossible at worst. See Grokster, 545 U.S.

at 929-930 (“When a widely shared service or product

is used to commit infringement, it may be impossible

to enforce rights in the protected work effectively

against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement.”). The Fourth Circuit’s rule makes it easy for ISPs to avoid liability by

structuring their fees so that the ability to infringe is

bundled in with some other service.

In requiring such an unnecessarily close correspondence between the vicarious-liability defendant

and the financial benefit from the infringement, the

Fourth Circuit has created a regime where liability

depends entirely on the nature and outcome of a business’s commercial pursuits. But it must not be that,

for example:



A restaurant can broadcast copyrighted music

over the restaurant’s sound system and avoid

vicarious liability—unless the copyright holder

can point to a separate charge the diners paid

for that music or show that playing the infringing music specifically attracted diners.



A company can air a commercial using copyrighted music without authorization and escape vicarious liability—unless the rightholder

can show that someone purchased the advertised product because of the music in the ad.



An investment bank can allow an analyst to

pull spreadsheets off a Bloomberg Terminal

and distribute them to clients, and not be vicariously liable—unless Bloomberg can point to a

particular transaction with a positive outcome

that was informed by the spreadsheets.



A law firm can hire former judicial clerks as associates, allow them to do legal research using

their old government Westlaw accounts, and

avoid vicarious liability for that copyright infringement—unless there is proof that that particular research led to the grant of a motion.

Those hypotheticals may all be permitted under the

Fourth Circuit’s new rule. After all, in the Fourth Circuit’s view, vicarious liability “demands proof that the

defendant profits directly from the acts of infringement for which it is being held accountable,” Pet. App.

17a (emphasis in original), such that financial benefit

may be profit from infringement only “[i]f copyright

infringement draws customers to the defendant’s service or incentivizes them to pay more for their service.” Pet. App. 16a.

Second, this Court’s intervention is necessary to provide guidance to lower courts on vicarious liability for

copyright infringement. The Court has issued two major decisions regarding secondary liability for copyright infringement in the digital age. Neither case analyzed the profit requirement, even though the plaintiffs pleaded the theory of vicarious liability in both

cases. Indeed, this Court acknowledged in Sony that

some of its reasoning would have implications for vicarious-liability claims, but ultimately chose to resolve the case on contributory-infringement grounds.

464 U.S. at 435 n.17. Twenty years later, in Grokster,

this Court “resolve[d] the case based on an inducement theory,” therefore finding “no need to analyze

separately MGM’s vicarious liability theory.” 545 U.S.

at 930 n.9. It is time to call the question.

Third, this petition is an ideal vehicle to resolve the

scope of the profit requirement. The Fourth Circuit’s

vacatur of the jury’s vicarious-liability finding turned

exclusively on its conclusion that Petitioners “failed,

as a matter of law, to prove that Cox profits directly

from its subscribers’ copyright infringement.” Pet.

App. 12a. The facts that underpin the jury’s profit

finding—Cox’s fees, its employees’ emails, its advertising, and its network traffic—are not in dispute. And

the Fourth Circuit’s error plainly was outcome-determinative: The panel’s erroneous interpretation of the

vicarious-liability standard wiped out a $1 billion jury

verdict.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

MATTHEW J. OPPENHEIM

SCOTT A. ZEBRAK

JEFFREY M. GOULD

OPPENHEIM + ZEBRAK, LLP

4530 Wisconsin Avenue, NW

Fifth Floor

Washington, DC 20016

CATHERINE E. STETSON

Counsel of Record

JO-ANN TAMILA SAGAR

MICHAEL J. WEST

HOGAN LOVELLS US LLP

555 Thirteenth Street, NW

Washington, DC 20004

(202) 637-5600

cate.stetson@hoganlovells.com

Counsel for Petitioners

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.