Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 1 of 38 PageID# 29797
`
`SONY MUSIC ENTERTAINMENT, et al.,
`Plaintiffs,
`
`
`
`v.
`
`
`COX COMMUNICATIONS, INC, et al.,
`
`
`Defendants.
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`
`
`Civil No. 1:18-cv-950 (LO / JFA)
`
`
`
`
`
`
`
`COX’S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR
`REMITTITUR OR, IN THE ALTERNATIVE, A NEW TRIAL
`UNDER FEDERAL RULE OF CIVIL PROCEDURE 59(A)
`
`
`
`[PUBLIC VERSION]
`
`

`

`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 2 of 38 PageID# 29798
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`
`TABLE OF CONTENTS
`
`Page
`
`STANDARD ................................................................................................................................... 1
`ARGUMENT .................................................................................................................................. 1
`I.
`The $1 billion award is a miscarriage of justice; it is shockingly excessive and
`unlawfully punitive, and should be remitted or result in a new trial. ................................. 1
`A.
`This Court has inherent power to remit a grossly excessive statutory damages
`award. ...................................................................................................................... 2
`Remittitur is required here; the $1 billion verdict is completely divorced from
`the trial evidence and constitutes a miscarriage of justice. ..................................... 2
`1.
`The award is grossly excessive in light of statutory damages awards
`in other copyright cases. ............................................................................. 3
`The $1 billion award is grossly excessive in light of the evidence and
`the damages factors the jury was instructed to consider. ............................ 6
`A substantial remittitur is warranted here. ................................................ 17
`3.
`The jury award is so “wholly disproportioned to the offense” that it violates Cox’s
`right to due process of law. ............................................................................................... 19
`A.
`The magnitude of the award is shocking. ............................................................. 19
`B.
`Cox’s “offense” lacks the reprehensibility that would warrant such a massive
`damage award. ...................................................................................................... 20
`Combined, the shockingly large size of the award and nature of Cox’s
`“offense” establish that the award must be reduced as a matter of due
`process................................................................................................................... 21
`The award is a product of Plaintiffs’ efforts to encourage the jury to “punish” a
`“deep-pocketed” defendant. .............................................................................................. 23
`A.
`At Plaintiffs’ urging, the jury was instructed to “punish” Cox. ............................ 23
`B.
`At Plaintiffs’ insistence, the jury was instructed to consider and improperly
`heard evidence relating to Cox’s “total profits.” .................................................. 26
`The award was based on irrelevant and highly prejudicial evidence of Cox’s
`revenues untethered to the infringement. .............................................................. 29
`CONCLUSION ............................................................................................................................. 30
`
`
`
`B.
`
`C.
`
`C.
`
`2.
`
`II.
`
`III.
`
`
`
`i
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`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 3 of 38 PageID# 29799
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`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Atlantic Recording v. Media Group Inc.,
`00-CV-6122 (Aug. 23, 2002), 2002 Jury Verdicts LEXIS 52291 .........................................3, 4
`Basic Books, Inc. v. Kinko’s Graphics Corp.,
`758 F. Supp. 1522 (S.D.N.Y. 1991).........................................................................................28
`Benedict v. Hankook Tire Co.,
`2018 WL 3352952 (E.D. Va. July 9, 2018) ...............................................................................6
`BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc.,
`149 F. Supp. 3d 634 (E.D. Va. 2015) .............................................................................. passim
`BMW of North America v. Gore,
`517 U.S. 559 (1996) ...........................................................................................................15, 20
`Capitol Records v. Thomas-Rasset,
`680 F. Supp. 2d 1045 (D. Minn. 2010) ............................................................................ passim
`Cline v. Wal-Mart Stores, Inc.,
`144 F.3d 294 (4th Cir. 1998) .....................................................................................................1
`Columbia Pictures Indus. v. Krypton Broad. of Birmingham, Inc.,
`259 F.3d 1186 (9th Cir. 2001) .............................................................................................4, 25
`Columbia Pictures Television v. Krypton Broadcasting of Birmingham, Inc.,
`106 F.3d 284 (9th Cir. 1997) ...................................................................................................25
`Cretella v. Kuzminski,
`640 F. Supp. 2d 741 (E.D. Va. 2009) ......................................................................................17
`Dimick v. Scheidt,
`293 U.S. 474 (1935) ...................................................................................................................2
`Disney Enterprises, Inc. v. VidAngel, Inc.,
`371 F. Supp. 3d 708 (C.D. Cal. 2019) .......................................................................................4
`Disney Enters., Inc. v. Vidangel, Inc.,
`16-cv-04109-AB-PLA, 2019 WL 4565168 (Sept. 5, 2019) ..................................................3, 4
`Ez-XBRL Sols, Inc. v. Chapke,
`No. 1:17-cv-700, 2018 U.S. Dist. LEXIS 224803 (E.D. Va. Sep. 25, 2018),
`adopted in full by 2018 U.S. Dist. LEXIS 224325 (E.D. Va. Oct. 22, 2018) ............................5
`F.W. Woolworth Co. v. Contemporary Arts,
`344 U.S. 228 (1952) ......................................................................................................... passim
`
`
`
`ii
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`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 4 of 38 PageID# 29800
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`
`Gentry v. East West Partners Club Management Co..,
`816 F.3d 228 (4th Cir. 2016) ...................................................................................................26
`Golan v. FreeEats.com,
`930 F.3d 950 (8th Cir. 2019) .......................................................................................19, 21, 22
`Golan v. Veritas Entertainment,
`2017 WL 3923162 (E.D. Mo. Sept. 7, 2017) .....................................................................21, 22
`Graduate Mgmt. Admission Council v. Raju,
`267 F. Supp. 2d 505 (E.D. Va. 2003) ........................................................................................5
`John Wiley & Sons, Inc. v. Book Dog Books, LLC,
`327 F. Supp. 3d 606 (S.D.N.Y. 2018)............................................................................5, 27, 28
`King v. McMillan,
`594 F.3d 301 (4th Cir. 2010) ...............................................................................................1, 17
`LifeNet Health v. LifeCell Corp.,
`93 F. Supp. 3d 477 (E.D. Va. 2015) ..........................................................................................6
`Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc.,
`658 F.3d 936 (9th Cir. 2011) .....................................................................................................5
`Lowry’s Reports, Inc. v. Legg Mason, Inc.,
`271 F. Supp. 2d 737 (D. Md. 2003) .........................................................................................25
`Maryland v. Universal Elections Inc.,
`862 F. Supp. 2d 457 (D. Md. 2012) ...........................................................................................2
`N.A.S. Imp., Corp. v. Chenson Enterprises, Inc.,
`968 F.2d 250 (2d Cir. 1992).....................................................................................................24
`Nat’l Football League v. PrimeTime 24 Joint Venture,
`131 F. Supp. 2d 458 (S.D.N.Y. 2001)........................................................................................5
`Oracle Corp. v. SAP AG,
`765 F.3d 1081 (9th Cir. 2014) .................................................................................................17
`Parker v. Time Warner Entertainment Co.,
`331 F.3d 13 (2d Cir. 2003)...................................................................................................5, 20
`Sara Lee Corp. v. Bags of New York, Inc.,
`36 F. Supp. 2d 161 (S.D.N.Y. 1999)........................................................................................28
`Sony BMG Music Entm’t v. Tenenbaum,
`2012 WL 3639053 (D. Mass. Aug. 23, 2012) .........................................................................22
`Sony BMG Music Entm’t v. Tenenbaum,
`660 F.3d 487 (1st Cir. 2011) ......................................................................................................2
`
`
`
`iii
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`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 5 of 38 PageID# 29801
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`
`Sony BMG Music Entm’t v. Tenenbaum,
`719 F.3d 67 (1st Cir. 2013) ..........................................................................................20, 22, 24
`St. Louis, I.M. & S. Railway Co. v. Williams,
`251 U.S. 63 (1919) .................................................................................................19, 20, 21, 22
`Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co.,
`74 F.3d 488 (4th Cir. 1996) .....................................................................................................24
`S. Union Co. v. Irvin, 563 F.3d 788, 790 (9th Cir. 2009) ..............................................................23
`TVB Holdings (USA), Inc. v. HTV Int’l Ltd.,
`No. 16-CV-1489, 2018 U.S. Dist. LEXIS 41323 (E.D.N.Y. Mar. 9, 2018) ..............................5
`U.S. Equal Employment Opportunity Comm’n v. Consol Energy, Inc.,
`860 F.3d 131 (4th Cir. 2018) .....................................................................................................1
`UMG Recordings, Inc. v. MP3.Com, Inc.,
`2000 U.S. Dist. LEXIS 17907 (S.D.N.Y. Nov. 14, 2000) .........................................................3
`UMG Recordings, Inc. v. MP3.Com, Inc.,
`92 F. Supp. 2d 349 (S.D.N.Y. 2000)......................................................................................3, 4
`Warner Records, Inc. et al. v. Charter Communications, Inc.,
`Case No. 1:19-cv-00874-RJB-MEH (D. Colo.).......................................................................30
`Other Authorities
`Fed. R. Civ. P. 50(b) ........................................................................................................................1
`Fed. R. Civ. P. 59(a) ........................................................................................................................1
`4 Nimmer on Copyright § 14.04 (2019) ..........................................................................................3
`6 Patry on Copyright § 22:208 .........................................................................................................3
`
`
`
`iv
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`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 6 of 38 PageID# 29802
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`Defendants Cox Communications, Inc. and CoxCom, LLC (“Cox”) respectfully move for
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`remittitur or, in the alternative, a new trial, pursuant to Fed. R. Civ. P. 59(a).1
`
`STANDARD
`
`Federal Rule of Civil Procedure 59(a) permits a district court to award a new trial for “any
`
`reason for which a new trial has heretofore being granted in an action at law in federal court.” Fed.
`
`R. Civ. P. 59(a). The power to grant a new trial includes within it the power to order remittitur of
`
`an excessive verdict and, if the plaintiff rejects the remittitur, award a new trial. Cline v. Wal-Mart
`
`Stores, Inc., 144 F.3d 294, 305 (4th Cir. 1998).
`
`A district court may order remittitur or a new trial if it determines that the verdict was
`
`against the “clear weight” of the evidence or “will result in a miscarriage of justice.” See U.S.
`
`Equal Employment Opportunity Comm’n v. Consol Energy, Inc., 860 F.3d 131, 145 (4th Cir.
`
`2018). In that circumstance, the court “must set aside the verdict … and grant a new trial.” King v.
`
`McMillan, 594 F.3d 301, 314-315 (4th Cir. 2010) (emphasis added).
`
`ARGUMENT
`
`I.
`
`The $1 billion award is a miscarriage of justice; it is shockingly excessive and
`unlawfully punitive, and should be remitted or result in a new trial.
`
`The award of $1 billion appears to be the largest award of statutory copyright damages in
`
`history. This is not by a matter of degree. It is the largest such award by a factor of eight. It is the
`
`largest such award for secondary copyright infringement by a factor of 40. It is the largest jury
`
`
`1 For the reasons set forth in Cox’s Renewed Motion for Judgment as a Matter of Law Or, in the
`Alternative, A New Trial Under Federal Rules of Civil Procedure 50(b) and 59(a), filed this date,
`as well as for the reasons set forth in Cox’s memoranda in support of and in opposition to summary
`judgment, Cox respectfully submits that the evidence in this case did not support the jury’s findings
`of direct, contributory, or vicarious liability as to any of the works in suit, and that at least 8,000
`of the works in suit should not have been considered by the jury. Notwithstanding these
`fundamental flaws in the verdict, Cox submits this motion seeking remittitur of the statutory
`damages award or, in the alternative, a new trial because, even if all other defects in the verdict are
`ignored, the jury’s award was shockingly excessive and unsupported by the evidence and the law.
`
`
`
`
`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 7 of 38 PageID# 29803
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`verdict in the history of this District by a factor of more than 30. It is by any measure a shocking
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`verdict, wholly divorced from any possible injury to Plaintiffs, any benefit to Cox, or any
`
`conceivable deterrent purpose. Principles of remittitur and due process require that this baseless
`
`award be substantially reduced, or that Cox be granted a new trial on damages.
`
`A.
`
`This Court has inherent power to remit a grossly excessive statutory
`damages award.
`
`The district courts’ power to remit excessive damages awards is an established aspect of
`
`U.S. common law. More than 80 years ago, the Supreme Court explained that remittitur “has been
`
`accepted as the law for more than a hundred years and uniformly applied in the federal courts
`
`during that time.” Dimick v. Scheidt, 293 U.S. 474, 484-485 (1935). This well-established principle
`
`applies equally to statutory damages. See, e.g., Capitol Records v. Thomas-Rasset, 680 F. Supp.
`
`2d 1045, 1051 (D. Minn. 2010) (judgment vacated on other grounds, 692 F.3d 899 (8th Cir. 2012))
`
`(noting that “there is no authority for Plaintiffs’ assertion that the Court does not have the power
`
`to remit an award of statutory damages” and remitting damages of $80,000 per work to $2,250);
`
`Sony BMG Music Entertainment v. Tenenbaum, 660 F.3d 487, 508 (1st Cir. 2011); Maryland v.
`
`Universal Elections Inc., 862 F. Supp. 2d 457, 466 (D. Md. 2012). Indeed, the First Circuit has
`
`held that the district courts are required to consider common-law remittitur before addressing any
`
`due process-based challenge to an excessive award. See Tenenbaum, 660 F.3d at 508.
`
`B.
`
`Remittitur is required here; the $1 billion verdict is completely divorced
`from the trial evidence and constitutes a miscarriage of justice.
`
`The $1 billion verdict in this case is a shocking miscarriage of justice. It vastly exceeds any
`
`previous statutory damages award under the Copyright Act. It is wholly disproportionate to the
`
`evidence of harm to Plaintiffs, benefit to Cox, or any demonstrated need for deterrence, and is
`
`unsupportable under the Court’s jury instruction on damages. It should be vacated for retrial, or
`
`remitted down the largest dollar amount consistent with the trial evidence.
`
`
`
`2
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`

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`1.
`
`The award is grossly excessive in light of statutory damages awards in
`other copyright cases.
`
`The gross excessiveness of the $1 billion award is vividly illustrated by comparison not
`
`just to analogous statutory damages awards but to every statutory damages award ever rendered.
`
`Until now, the largest award of copyright statutory damages to survive appeal was $136 million—
`
`roughly one-eighth of the verdict here. See Atlantic Recording v. Media Group Inc., 00-CV-6122
`
`(Aug. 23, 2002), 2002 Jury Verdicts LEXIS 52291. The second-largest award was $62.4 million.
`
`See Disney Enters., Inc. v. Vidangel, Inc., 16-cv-04109-AB-PLA, 2019 WL 4565168, at *1 (Sept.
`
`5, 2019). The third-largest was $53.4 million. See UMG Recordings, Inc. v. MP3.Com, Inc., 2000
`
`U.S. Dist. LEXIS 17907 (S.D.N.Y. Nov. 14, 2000). Even that amount drew sharp criticism from
`
`the leading copyright scholar, who wrote: “[a]bsent any nexus between damage to plaintiff and
`
`benefit to defendant at any magnitude even roughly comparable to that awarded, the result is to
`
`introduce randomness or worse into the litigation calculus …. By any reasonable metric, the award
`
`in UMG v. MP3.Com seems … disproportionate.” 4 Nimmer on Copyright § 14.04 (2019); see
`
`also 6 Patry on Copyright § 22:208 (describing award as “so monstrous as to shock anyone’s
`
`conscience”). That “monstrous” award was approximately one-twentieth of the jury verdict here.
`
`In fact, according to a recent study of copyright damages, the verdict in this case exceeds
`
`the aggregate dollar amount of every statutory damages award rendered in the years 2009-2016
`
`by more than four hundred million dollars. See Lex Machina, Copyright Damages Report 2016,
`
`at Fig. 27 (Jan. 2017) (attached as Ex. A) (calculating that from January 1, 2009 through September
`
`30, 2016, there were 1,338 awards of statutory damages with a total value of $568,996,344).
`
`Importantly, the three largest statutory damages verdicts described above were rendered
`
`against direct infringers—people who actually misappropriated the copyrighted material for their
`
`own use and profit. In most cases, those infringers were conducting businesses based upon
`
`
`
`3
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`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 9 of 38 PageID# 29805
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`copyright infringement; they were adjudicated pirates. For example, the defendant in Vidangel was
`
`found to use software to bypass anti-piracy measures to copy hundreds of films from DVDs and
`
`stream the copied films to customers for a fee. See Disney Enterprises, Inc. v. VidAngel, Inc., 371
`
`F. Supp. 3d 708, 712 (C.D. Cal. 2019). The defendant in Atlantic Media was a CD manufacturing
`
`plant that willfully made and sold copies of 1,514 copyrighted songs. See Atlantic Recording v.
`
`Media Group Inc., Case No. 00-CV-6122 (C.D. Cal.), ECF No. 57. And the defendant in UMG
`
`Recordings, Inc. v. MP3.Com, Inc. “purchased tens of thousands of popular CDs in which plaintiffs
`
`held the copyrights, and, without authorization, copied their recordings onto its computer servers
`
`so as to be able to replay the recordings for its subscribers.” See 92 F. Supp. 2d 349, 350 (S.D.N.Y.
`
`2000).
`
`Cox did none of these things. It is not accused of direct infringement. It is not alleged to
`
`have exploited Plaintiffs’ copyrighted works. It is not in the business of distributing content, and
`
`its product offerings—internet service, television service, and voice calling services—have a
`
`nearly infinite array of non-infringing uses. Cox’s financial stake in its subscribers’ use of
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`Plaintiffs’ works is indirect, and (as discussed below) minuscule by any relevant metric.
`
`Awards rendered against secondary infringers like Cox are systematically smaller than
`
`awards against direct infringers. The largest statutory damages jury award against a secondary
`
`infringer appears to be $31.68 million, rendered against the owners of a group of three television
`
`stations that aired copyrighted programs without paying licensing fees. Columbia Pictures Indus.
`
`v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1191 (9th Cir. 2001). In fact, Columbia
`
`Pictures was essentially a direct-infringement case: the secondary infringer owned and controlled
`
`the direct infringers, and so benefited directly from their infringement. The largest statutory
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`damages against a secondary infringer situated like Cox is $25 million in BMG Rights Mgmt. (US)
`
`
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`4
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`LLC v. Cox Commc’ns, Inc., 149 F. Supp. 3d 634 (E.D. Va. 2015) (“BMG”).2 The $1 billion award
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`thus appears to be the largest ever against an infringer situated like Cox—by a factor of 40.
`
`Nor does the analysis change if the jury’s award is considered on a per work basis. For one
`
`thing, the courts to have considered the question have observed in analogous circumstances that a
`
`per work analysis is not necessarily apposite for assessing the proportionality of a verdict where
`
`high volumes of infringement are at issue, ballooning five- or six-figure per work damages awards
`
`into aggregate awards in the hundreds of millions of dollars, or, in this case, $1 billion. Cf. Capitol
`
`Records, 692 F.3d at 909-910 (discussing due process limitations on damages); Parker v. Time
`
`Warner Entertainment Co., 331 F.3d 13, 22 (2d Cir. 2003) (same).
`
`Moreover, even considered on a per work basis, this award was excessive. Awards of
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`damages approaching $100,000 per work are all but unheard-of in cases involving more than a
`
`handful of works—until this one.3 In cases involving the infringement of digital music files, no
`
`award has exceeded $25,000 per work. The most closely analogous precedent is BMG, in which
`
`the jury awarded $17,895 per work, or less than one-fifth of the present per-work award.
`
`Finally, if allowed to stand, the verdict will also be the largest award in the history of this
`
`District by a factor of almost 30. Excluding awards that were later remitted, reversed, or vacated,
`
`
`2 The $46.14 million judgment in TVB Holdings (USA), Inc. v. HTV Int’l Ltd., No. 16-CV-1489,
`2018 U.S. Dist. LEXIS 41323, at *20-21 (E.D.N.Y. Mar. 9, 2018) ($30,000 per work) included
`liability for direct and secondary infringement of more than 1,500 television programs.
`3 See, e.g., John Wiley & Sons, Inc. v. Book Dog Books, LLC, 327 F. Supp. 3d 606, 635 (S.D.N.Y.
`2018) ($100,000 per work for 142 works); Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc., 658
`F.3d 936, 940 (9th Cir. 2011) ($150,000 per work for two works); Graduate Mgmt. Admission
`Council v. Raju, 267 F. Supp. 2d 505, 511-12 (E.D. Va. 2003), report and recommendation
`adopted, Graduate Mgmt. Admission Council v. Raju, 267 F. Supp. 2d 505, 507 (E.D. Va. 2003)
`($150,000 per work for 22 works); Nat’l Football League v. PrimeTime 24 Joint Venture, 131 F.
`Supp. 2d 458, 479-80 (S.D.N.Y. 2001) ($100,000 per work for 18 works); Ez-XBRL Sols, Inc. v.
`Chapke, No. 1:17-cv-700, 2018 U.S. Dist. LEXIS 224803, at *26-27 (E.D. Va. Sep. 25, 2018)
`(Magistrate’s Report & Recommendation), adopted in full by 2018 U.S. Dist. LEXIS 224325 (E.D.
`Va. Oct. 22, 2018) (Brinkema, D.J.) ($150,000 per work for five works).
`5
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`
`
`

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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 11 of 38 PageID# 29807
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`the largest jury verdict ever in this District appears to be $34.7 million. See LifeNet Health v.
`
`LifeCell Corp., 93 F. Supp. 3d 477 (E.D. Va. 2015), aff’d, 837 F.3d 1316 (Fed. Cir. 2016). If
`
`remitted verdicts are included, the largest is $37.7 million. See Benedict v. Hankook Tire Co., 2018
`
`WL 3352952, at *28 (E.D. Va. July 9, 2018) (remitting award from $37.8 million to $37.7 million).
`
`If not vacated or remitted, the $1 billion verdict will be the largest damages award ever in this
`
`District by approximately 2,600%. By any measure, the $1 billion award is extraordinary. It is also
`
`out of all proportion to statutory damages awards in other cases.
`
`2.
`
`The $1 billion award is grossly excessive in light of the evidence and
`the damages factors the jury was instructed to consider.
`
`The Copyright Act’s statutory damages provision is not a license to award massive
`
`damages unmoored in the trial evidence or the policies underlying the Copyright Act, and absent
`
`“any nexus between damage to plaintiff and benefit to defendant at any magnitude even roughly
`
`comparable to that awarded, the result is to introduce randomness or worse into the litigation
`
`calculus.” See Nimmer, supra. The Court instructed the jury on the factors to be considered in
`
`rendering their award, which are designed to ensure that any award is sufficiently rooted in the
`
`evidence and consistent with the purposes of statutory damages—namely, “restitution of profit,”
`
`“reparation for injury,” and “discourag[ing] wrongful conduct.” F.W. Woolworth Co. v.
`
`Contemporary Arts, 344 U.S. 228, 233 (1952).
`
`Specifically, the Court’s damages instruction listed a series of factors that broadly
`
`correspond to those purposes, including “the profits Cox earned” and “expenses Cox saved”
`
`“because of the infringement”; the revenues that Plaintiffs lost because of the infringement and the
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`difficulty of proving Plaintiffs’ actual damages; the “circumstances of the infringement”;
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`“deterrence of future infringement”; and “in the case of willfulness, the need to punish Cox.” In
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`addition, the instruction stated that in considering deterrence, “you may consider Cox’s total profits
`
`
`
`6
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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 12 of 38 PageID# 29808
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`and the effect the award may have on Cox in the marketplace.”4 ECF No. 671, Instr. 28; see also
`
`Tr. 2927:8-2928:1.5
`
`Properly applied, these factors could have sufficed to tie the damages award to the trial
`
`evidence and ensure that it served the purposes of disgorgement of illicit profits, compensating for
`
`injury, and “discourag[ing] wrongful conduct” going forward. As applied by the jury, however,
`
`they resulted in an award that bore no relationship to these considerations, and was so grossly
`
`excessive as to constitute a miscarriage of justice. Because the extraordinary $1 billion verdict
`
`cannot be supported by the factors the jury was instructed to consider or the evidence informing
`
`those factors, Cox is entitled to a substantial remittitur or a new trial.
`
`a)
`
`“The profits Cox earned because of the infringement” do not
`support the award.
`
`Plaintiffs urged the jury to award massive damages based, in large part, on assertions of
`
`Cox’s massive profits. See, e.g., Tr. 2938:5-6 (Cox “put its profits above the law”); Tr. 2938:19
`
`(Cox’s “huge profit line”); Tr. 2941:19 (“[W]e saw what motivated Cox. It was profits.”); Tr.
`
`2974:5-6 (“[C]onsider Cox’s profits from its high-speed internet business ….
`
`”
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`[sic]); Tr. 2974:11 (“Cox’s profits were so excessive”); Tr. 2974:23 (“Cox’s profits were
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`massive”). But Plaintiffs were careful never to introduce evidence—let alone argue to the jury
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`regarding—what the instructions required: Cox’s “profits because of the infringement”; although
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`they acknowledged before trial that it was only the profits Cox earned “because of the
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`infringement” that the jury could consider on the damages issue.6 And the evidence that Plaintiffs
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`4 As discussed in Section III, Cox maintains that the instructions allowing consideration of Cox’s
`total profits and “need to punish” should not have been included in the charge. For purposes of
`this section, we assume that the charge as given was appropriate.
`5 Relevant excerpts from the trial transcript are attached hereto as Exhibit B.
`6 Both parties’ proposed jury instructions on statutory damages included “profits because of the
`infringement” as a factor. See ECF No. 602-2, Instr. 30; ECF No. 645-1, Instr. 30.
`7
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`Case 1:18-cv-00950-LO-JFA Document 684 Filed 01/31/20 Page 13 of 38 PageID# 29809
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`did introduce for other purposes—specifically, to show Cox’s “economic and financial incentive”
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`to “tolerate having infringing subscribers on their network,” Tr. 1775:1-5 (Lehr direct)—showed
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`that Cox’s profits from the infringement were a tiny fraction of the billion-dollar award.
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`Plaintiffs introduced two kinds of evidence bearing on “the profits Cox earned because of
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`the infringement.” First, Plaintiffs presented evidence of Cox’s revenues generated, not by the
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`infringement itself, but by the Cox subscribers who repeatedly committed direct infringement. See
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`Am. Compl., (ECF No. 136) ¶ 10; ECF No. 590 at 3 (pretrial ruling limiting Plaintiffs to
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`“measur[ing] harms commensurate with the set of subscribers identified in three or more
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`notices”).7 Lehr testified that 31,514 subscribers received three or more infringement notices, and
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`that those subscribers generated
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` in revenues from February 2013-2016. Lehr Trial
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`Demonstrative 14; Tr. 1776:18-1777:1.8 That
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` included revenues from broadband,
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`television, and telephone services–not profits from those revenues. Tr. 1767:13-1768:14.
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`The Court’s order on the in limine motions held narrowly that “valuations considering
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`bundled services are relevant and admissible to help the jury understand the context of [the]
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`business decisions at issue.” ECF No. 590 at 3. The Court did not admit this evidence for proving
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`profits attributable to the infringement. Id. Lehr provided the information necessary to
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`disaggregate from the service bundle revenues only the revenues from the high-speed internet
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`service that was the basis for Plaintiffs’ allegations of secondary infringement. According to Lehr,
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`7 Notably, Plaintiffs adduced evidence of the
` of revenue associated with all infringers,
`including those who received only one or two notices and whose infringement is not alleged to
`have been a basis for Cox’s liability. Plaintiffs were allowed to adduce this evidence solely (though
`we believe erroneously) for the purpose of proving vicarious liability, but the Court specifically
`ruled that it could not be considered for damages purposes. See ECF No. 590 at 3.
`8 Referenced trial demonstratives are attached hereto as Exhibit C.
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`8
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`high-speed internet services generated approximately. of Cox’s total revenues.9 Id. Applying
`
`a
`tht
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`e
`o
`tth
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`in o a revenues
`ttl
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`—s ee in eme revenues
`'
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`YIIdSlll pd t
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`om re ea
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`infringers of_ Again, that_ figure represents gross revenues, not profits.
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`Lehr testified that Cox’s profit margin on intemet services was-. Tr. 1768:25—1769: 1. Thus,
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`applying Lehr’s analysis, Cox’s total profits from high-speed intemet services to repeat-infringing
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`subscribers was_ for the four-year period from February 2013 through 2016.
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`Reducing that figure by half to accormt for profits earned outside the Claims Period, results in
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`profits “earned from the infringement” of_
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`Moreover, that_ figure for profits from intemet service necessarily and
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`materially overstates the actual benefit to Cox “because of the infringement,” as it attributes the
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`entire value of Cox’s profits from infringing subscribers to their ability to use the service to
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`infringe. There is no evidence to support that highly implausible assumption. Instead, the evidence
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`suggests that Cox subscribers, like all ISP subscribers, use their high-speed intemet access for an
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`infinite number of non-infringing activities: email, shopping, following friends on Facebook, and
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`streaming movies from Netflix, videos from YouTube, and music from Spotify. See, e.g., Tr.
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`1358:9-16 (Zabek); Tr. 1892:7-18 (Negretti); Tr. 2423:7-15, 2434:4-11 (Bakewell). Cox’s profits
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`from its high-speed intemet service reflect the value of all those activities, not just the infringement
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`of Plaintiffs’ works, and any calculation of Cox’s profit from the infringement should have
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`accounted for that fact; though the ju