Case 1:18-cv-00950-LO-JFA Document 697 Filed 02/28/20 Page 1 of 35 PageID# 30236
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
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`Case No. 1:18-cv-00950-LO-JFA
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`SONY MUSIC ENTERTAINMENT, et al.,
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`v.
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`COX COMMUNICATIONS, INC., et al.,
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`Defendants.
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`Plaintiffs,
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`PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO
`COX’S MOTION FOR REMITTITUR OR NEW TRIAL
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`Case 1:18-cv-00950-LO-JFA Document 697 Filed 02/28/20 Page 2 of 35 PageID# 30237
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`TABLE OF CONTENTS
`INTRODUCTION .......................................................................................................................... 1
`LEGAL STANDARDS .................................................................................................................. 2
`ARGUMENT .................................................................................................................................. 4
`I.
`Remittitur or new trial is not warranted. .......................................................................... 4
`A.
`The evidence overwhelmingly supports the jury’s award. ..................................... 4
`1. P2P infringement on Cox’s network was overwhelming, Cox knew it, and
`Cox never questioned the reliability of the infringement notices. .................... 4
`2. Cox paid lip service to copyright enforcement but its assurances of
`compliance were meaningless. .......................................................................... 6
`3. As infringement on Cox’s network skyrocketed, Cox gutted the abuse
`department and relaxed its infringement policies. ............................................ 7
`i.
`Cox slashed the abuse team. ................................................................... 7
`ii.
`Cox ignored the first notice to each subscriber. ..................................... 8
`iii. Cox imposed arbitrary caps on the number of notices it would accept. . 8
`iv.
`Cox blacklisted complainants and deleted millions of notices. .............. 9
`v.
`Cox infinitely extended the graduate response program. ..................... 10
`vi.
`Cox limited daily suspensions. ............................................................. 11
`vii. Cox manufactured “unwritten semi-policies” on termination. ............. 12
`4. Cox prioritized profits over limiting infringement. ........................................ 13
`5. Cox’s profits were staggering, both overall and from infringement. .............. 14
`The statutory damages factors and relevant caselaw make clear that the jury’s
`award is justified and should stand. ...................................................................... 15
`The jury already rejected Cox’s numbers games. ................................................. 19
`C.
`The facts of this case are what matter in assessing the verdict. ............................ 21
`D.
`The jury’s verdict is constitutionally sound. .................................................................. 22
`II.
`III. Cox’s attack on the jury instructions and evidentiary rulings is meritless. .................... 26
`A.
`Copyright statutory damages allow for consideration of the need to punish. ....... 27
`B.
`Cox’s total profits, including dividends paid to its owners, are relevant to
`deterrence. ............................................................................................................. 30
`CONCLUSION ............................................................................................................................. 30
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`B.
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`i
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`Case 1:18-cv-00950-LO-JFA Document 697 Filed 02/28/20 Page 3 of 35 PageID# 30238
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`TABLE OF AUTHORITIES
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`CASES
`Agence France Presse v. Morel,
`No. 10-CV-2730 AJN, 2014 WL 3963124, at *11 (S.D.N.Y. Aug. 13, 2014) ........................ 18
`Arista Records LLC v. Usenet.com, Inc.,
`No. 07 Civ. 8822(HB), 2010 WL 3629587, at *4-*5 (S.D.N.Y. Sept. 16, 2010) .................... 25
`BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc.,
`199 F. Supp. 3d 958 (E.D. Va. 2016) ....................................................................................... 27
`Builders, Inc. v. Dan Chase Taxidermy Supply Co.,
`74 F.3d 488 (4th Cir.1996) ....................................................................................................... 16
`Capitol Records, Inc. v. Thomas-Rasset,
`692 F.3d 899 (8th Cir. 2012) ................................................................................................ 3, 16
`Cass Cty. Music Co. v. C.H.L.R., Inc.,
`88 F.3d 635 (8th Cir. 1996) ...................................................................................................... 29
`Davis v. The Gap, Inc.,
`246 F.3d 152 (2d Cir. 2001) ..................................................................................................... 28
`Energy Intelligence Grp., Inc. v. Kayne Anderson Capital Advisors, L.P.,
`948 F.3d 261 (5th Cir. 2020) .................................................................................................... 17
`F.W. Woolworth Co., v. Contemporary Arts,
`344 U.S. 228 (1952) ................................................................................................................. 16
`Feltner v. Columbia Pictures Television, Inc.,
`523 U.S. 340 (1998) ................................................................................................................. 28
`Fitzgerald Pub. Co. v. Baylor Pub. Co.,
`807 F.2d 1110 (2d Cir. 1986) ................................................................................................... 29
`Golan v. FreeEats.com,
`930 F.3d 950 (8th Cir. 2019) ..................................................................................................... 25
`Kepner-Tregoe, Inc. v. Vroom,
`186 F.3d 283 (2d Cir. 1999) ..................................................................................................... 17
`Lord & Taylor, LLC v. White Flint, L.P.,
`849 F.3d 567 (4th Cir. 2017) .................................................................................................... 27
`Lowry’s Reports, Inc. v. Legg Mason, Inc.,
`302 F.Supp.2d 455 (D.Md. 2004) ............................................................................................ 16
`Noel v. Artson,
`641 F.3d 580 (4th Cir.2011) ..................................................................................................... 27
`Parker v. Time Warner Entertainment Co., L.P.,
`331 F.3d 13 (2d Cir. 2003) ....................................................................................................... 24
`Psihoyos v. John Wiley & Sons, Inc.
`748 F.3d 120 (2d Cir. 2014) ..................................................................................................... 17
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`ii
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`Sony BMG Music Entm't v. Tenenbaum,
`660 F.3d 487 (1st Cir. 2011) .............................................................................................. 15, 16
`Sony BMG Music Entm't v. Tenenbaum,
`No. CIV.A. 07-11446-RWZ, 2012 WL 3639053, at *2 (D. Mass. Aug. 23, 2012) ............ 3, 21
`St. Louis, I.M. & S. Railway Co. v. Williams,
`251 U.S. 63 (1919) ............................................................................................................... 3, 23
`Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co.,
`74 F.3d 488 (4th Cir. 1996) ................................................................................................ 16, 28
`Superior Form New Form, Inc. v. Tekila Films, Inc.,
`357 Fed.Appx. 10 (9th Cir.2009) ............................................................................................. 16
`Teague v. Bakker,
`35 F.3d 978 (4th Cir.1994) ....................................................................................................... 27
`Terrier Media Buyer, Inc. d/b/a Cox Media Group v. Dish Network, L.L.C., 20-cv-583, ECF
`No. 1, ¶ 1 (N.D. Ill. Jan. 24, 2020) ............................................................................................. 2
`U.S. Equal Employment Opportunity Comm'n v. Consol Energy, Inc.,
`860 F.3d 131 (4th Cir. 2017) ...................................................................................................... 2
`Vanskike v. Union Pac. R.R. Co.,
`725 F.2d 1146 (8th Cir.1984) ................................................................................................... 22
`Warner Bros. Entm't v. X One X Prods.,
`840 F.3d 971 n.2 (8th Cir. 2016) .............................................................................................. 24
`Warner Bros. Inc. v. Dae Rim Trading, Inc.,
`877 F.2d 1120 (2d Cir. 1989) ................................................................................................... 16
`Zomba Enters., Inc. v. Panorama Records, Inc.,
`491 F.3d 574 (6th Cir. 2007) ................................................................................................ 3, 23
`STATUTES
`17 U.S.C. § 504 .............................................................................................................. 4, 16, 28
`RULES
`Fed. R. Civ. P. 59 ....................................................................................................................... 2
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`iii
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`INTRODUCTION
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`For years, Cox knowingly facilitated piracy of Plaintiffs’ copyrighted works on a massive
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`scale. Cox’s conduct was not that of a single, rogue employee. It was endemic to the culture of
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`a company that systematically helped infringers, openly mocked the copyright laws, and lied to
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`copyright owners about its allegedly “gold standard” policies. Cox did this to maximize its
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`billions of dollars of profits—with utter disregard for the law and copyright owners.
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`Against this backdrop, the jury returned a verdict well within the permissible statutory
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`damages range set by Congress—roughly $500 million below the maximum permitted. Cox now
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`attacks the jury for its hard work and considered judgment, going so far as to accuse it of seeking
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`“retribution.”
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`But this was no runaway jury. As the Court will recall, the jury was attentive and took
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`copious notes over the 12-day trial. The jury considered the Court’s detailed instructions,
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`engaged in substantial deliberations, and appropriately found Cox liable for willful contributory
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`and vicarious copyright infringement of 10,017 copyrighted works. Based on the evidence
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`presented, the jury understood the value of the music. The jury recognized the massive scope of
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`the infringement, Cox’s profits from the infringement, the harm to Plaintiffs, and the need to
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`deter future wrongful conduct. And the jury delivered its verdict.
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`In asking the Court to reduce the amount of that verdict or, alternatively, grant a new
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`trial, Cox ignores large and critical portions of the trial record, recasts others through creative
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`post hoc damages calculations, and raises ineffectual objections to the Court’s instructions and
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`evidentiary rulings. Cox not only fails to provide a legal basis for the Court to upset the jury’s
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`considered verdict, but also fails to explain why some other amount of statutory damages is
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`appropriate here. Cox simply wants to pay less.
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`1
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`Cox argues by ipse dixit that because the damage award is larger than other copyright
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`damage awards, it must be improper. That is not how it works. Courts evaluating a post-trial
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`motion like this one must evaluate the jury’s award in the context of the particular facts
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`presented. Cox’s hollow protests about an “excessive” verdict are divorced from the extensive
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`trial record and Cox’s flagrant disregard for the law. And, once again, Cox’s utter refusal to
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`accept any responsibility for its egregious conduct is on full display. A review of the particular
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`facts of this case amply supports the jury’s verdict: This case involved more copyrights than any
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`other in history that we know of (10,017); a larger, more profitable Defendant than most other
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`copyright cases (nearly $20 billion in revenue and over $8 billion in profit in the claim period
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`alone); and appalling misconduct on a large scale over a number of years by an unapologetic
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`company that embraced its own misdeeds to the very end, and sought to blame everyone else. A
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`mountain of evidence supports the jury’s award, and it is consistent with the limits of the
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`Copyright Act and the Constitution. To the extent the jury considered the concept of punishment
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`and Cox’s total profits in assessing statutory damages, that was entirely proper.1
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`LEGAL STANDARDS
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`A district court may not grant a new trial under Federal Rule of Civil Procedure 59(a)
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`unless the verdict is against the clear weight of the evidence, based upon false evidence, or will
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`result in a miscarriage of justice. U.S. Equal Emp’t Opportunity Comm'n v. Consol. Energy,
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`Inc., 860 F.3d 131, 145 (4th Cir. 2017).
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`1 Cox changes its approach to punishment as an element of copyright damages as it suits the
`moment. In this case, Cox contends that punishment has “no place in civil copyright law.”
`Roughly one month ago, however, Cox filed a lawsuit in which the very first paragraph of the
`complaint concedes that “[t]he Copyright Act expressly provides for enhanced statutory damages
`to punish and deter such brazen and knowing violations of the law.” Terrier Media Buyer, Inc.
`d/b/a Cox Media Group v. Dish Network, L.L.C., Case No. 20-cv-583, ECF No. 1, ¶ 1 (N.D. Ill.
`Jan. 24, 2020) (attached as Exhibit A).
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`2
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`The standard for remitting damages (or, alternatively, ordering a new trial) based on an
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`allegedly excessive verdict is a “formidable” one. Sony BMG Music Entm’t v. Tenenbaum, Case
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`No. 07-cv-11446-RWZ, 2012 WL 3639053, at *2 (D. Mass. Aug. 23, 2012), aff'd, 719 F.3d 67
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`(1st Cir. 2013) (denying remittitur of jury verdict against willful peer-to-peer copyright
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`infringer). Considering the evidence “in the light most favorable to the party who received the
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`verdict . . . a trial court will not disturb a jury verdict for damages which have been impartially
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`rendered and are dependent upon competent evidence.” Fairshter v. Am. Nat. Red Cross, 322 F.
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`Supp. 2d 646, 658 (E.D. Va. 2004) (denying motion to set aside jury verdict as excessive); see
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`also Shepard v. Capitol Foundry of Virginia, Inc., 554 S.E.2d 72, 75 (Va. 2001) (same and
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`explaining verdict should only be set aside if “the jury has been motivated by passion, corruption
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`or prejudice, or has misconceived or misconstrued the facts or the law” or the verdict “is not the
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`product of a fair and impartial decision”).
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`Constitutional review of a statutory damage award is similarly stringent. St. Louis, I.M.
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`& S. Railway Co. v. Williams, 251 U.S. 63, 67 (1919). Given Congress’s “wide latitude of
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`discretion” in setting statutory damages, a within-range award violates due process only if it is
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`“so severe and oppressive as to be wholly disproportioned to the offense and obviously
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`unreasonable.” Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899, 907 (8th Cir. 2012)
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`(quoting Williams, 251 U.S. at 67) (rejecting due process challenge to statutory damages against
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`willful peer-to-peer copyright infringer). Review of the jury’s award here is “extraordinarily
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`deferential—even more so than in cases applying abuse-of-discretion review.” Zomba Enters.,
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`Inc. v. Panorama Records, Inc., 491 F.3d 574, 587 (6th Cir. 2007).
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`3
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`ARGUMENT
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`I.
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`Remittitur or new trial is not warranted.
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`A. The evidence overwhelmingly supports the jury’s award.
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`After determining that Cox willfully infringed, the jury was permitted to return a verdict
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`anywhere from $750 to $150,000 per copyright. 17 U.S.C. § 504(c). The jury carefully
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`considered the evidence and instructions and returned a verdict of $99,830.29 per work—for a
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`total of $1 billion for the 10,017 copyrighted works in suit. The jury’s verdict was well below
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`the maximum amount of $150,000 permitted per work—which would have added up to
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`$1,502,550,000 in damages, or more than 50% higher than the actual award.
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`Cox does not like the result. But its arguments ignore mountains of evidence the jury
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`considered. Instead, Cox relies on hyperbole, facts and verdicts in unrelated cases, and its
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`selective review and self-serving interpretation of the evidence. This is plainly insufficient: to
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`succeed on its motion, Cox must confront the worst evidence against it, viewed in the light most
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`favorable to Plaintiffs, and justify a reduction or new trial based on that. Cox has failed in this
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`regard; indeed, it has failed even to address much of the evidence. But the evidence was
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`bountiful and damning and more than justified the within-range statutory award.
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`1. P2P infringement on Cox’s network was overwhelming, Cox knew it, and
`Cox never questioned the reliability of the infringement notices.
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`The jury heard compelling evidence that P2P infringement on Cox’s network was
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`overwhelming. Nearly 13% of traffic on Cox’s network was attributable to P2P activity, Tr.
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`1705:12-15 (Fuenzalida), and over 99% of P2P traffic is infringing, Tr. 1747:24-1748:13 (Lehr);
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`PX 439.2 From 2012 to 2014, MarkMonitor alone sent Cox approximately 270,000 infringement
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`2 Referenced trial exhibits have been submitted to the Court on a hard drive as Exhibit B,
`pursuant to ECF No. 696. Referenced trial testimony excerpts are attached hereto as Exhibit C.
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`4
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`notices, including more than 160,000 during the February 2013 through November 2014 claim
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`period. PX 14. In total, Cox received nearly 5.8 million infringement notices during the claim
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`period, not counting millions more it blocked from Rightscorp. PX 353 at 12-16; Tr. 1405:20-
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`1406:4 (Beck). Even this was a mere fraction of the true scope of infringement occurring
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`through Cox’s network. All the witnesses (including Cox’s experts) agreed that it is impossible
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`to measure the true amount of infringement because of the viral nature of P2P distribution and
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`the lack of a logging function. Tr. 613:1-21 (Bahun); Tr. 452:16-454:5 (Frederiksen-Cross); Tr.
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`2834:8-23 (Tregillis); Tr. 2467:10-16 (Bakewell); Tr. 1752:13-1753:7 (Lehr). And yet
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`MarkMonitor still collected data showing “more than 10,000 infringements per day . . . related to
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`subscribers or, you know, Cox customers.” Tr. 632:9-12 (Bahun).
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`It also is undisputed that P2P traffic is overwhelmingly infringing, and Cox knew that
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`too. The unrebutted evidence was that more than 99% of BitTorrent traffic is infringing. PX
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`439 at 29-30; PX 521 at 36; Tr. 1749:25-1750:4 (Lehr). The head of Cox’s abuse department,
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`Jason Zabek, confirmed as much when he said, “99 percent of DMCA violations is from people
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`using peer-to-peer on purpose.” PX 264; Tr. 1265:22-1266:1 (Zabek). Or as Zabek put it more
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`pointedly: “Bittorrent is used for one thing only ... and I would know. ;-)” PX 318.
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`Cox knew it had a staggering infringement problem, as the rate of incoming DMCA
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`notices increased exponentially year over year. PX 240. Cox’s senior security architect, Matt
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`Carothers, observed that “[w]e are getting crushed” by DMCA notices reporting infringement on
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`Cox’s network. Id. And he confirmed that Cox “took those allegations to be fair and proper
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`infringement notices” and never questioned their accuracy or reliability. Tr. 1609:21-1610:3
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`(Carothers). According to Randall Cadenhead, Cox’s internal lawyer overseeing the company’s
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`so-called “graduated response” program, “Cox recognized that there was a real issue and a real
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`problem with, with copyright infringement” and “customers were infringing and almost certainly
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`knew they were infringing and needed to stop.” Tr. 2080:5-6, 2084:16-18 (Cadenhead).
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`2. Cox paid lip service to copyright enforcement but its assurances of
`compliance were meaningless.
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`The trial evidence repeatedly showed that Cox said one thing and did another. The
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`examples are legion. Cox had an Acceptable Use Policy (“AUP”) that prohibited use of its
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`network for copyright infringement. PX 175, PX 178. But the evidence showed that Cox
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`allowed subscribers to infringe unfettered.3 Cox said it had a policy that led to termination. But
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`the evidence showed that Cox applied an unwritten policy that undid terminations, and then
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`stopped terminating for infringement altogether. E.g., PX 253, PX 316, PX 351 at 25-27. Cox
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`said internet service was too precious to terminate lightly and it could never terminate business
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`customers because they include hospitals and schools. But the evidence showed that Cox
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`terminated over 619,000 customers—including 22,000 business customers—who were a month
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`or so late on their bills. Tr. 2754:17-21 (Mencher); PX 365 at 17.
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`Cox also told copyright owners that it “takes all reported abuse complaints seriously” and
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`“if we find that a Customer is in violation of [our] policies, that we will take the necessary action
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`to stop the activity in question.” PX 7. The evidence directly contradicted this. What Cox
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`actually did was delete 3.7 million (or 64%) of the 5.8 million notices it received during the
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`claim period, and took no customer facing action at all for an astonishing 90% of notices it
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`3 See, e.g., PX 547 (infringement ticket history of residential customer with 67 tickets, 28
`warnings, 23 hard limit replies with no customer-facing action, 9 suspensions, 9 reactivations, 0
`terminations); PX 545 (infringement ticket history of residential customer with 72 tickets, 7
`warnings, 1 suspension, 1 reactivation, 0 terminations, and no warnings at all on first 23 tickets);
`PX 549 (infringement ticket history of fraternity/business customer with 67 tickets, 48 warnings,
`9 hard limit replies with no customer-facing action, 0 suspensions and 0 terminations); Tr.
`1442:3-1453:24 (Beck).
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`received. PX 351, PX 353, PDX Beck at 2.4 For the cherry on top, Mr. Zabek and his top
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`lieutenant crowed “f the dmca!!!” and “F the DRC!” (Digital Rightscorp) when celebrating the
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`“silent deletion” of infringement notices and Cox’s imposition of hard limits on all complainants.
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`PX 335. And Cox’s own head of marketing, Sidd Negretti, agreed that creating an AUP but
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`refusing to enforce it to provide more value to customers, as the evidence showed Cox did here,
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`“essentially builds to fraud.” Tr. 1920:22-1922:20 (Negretti). It is hard to imagine taking abuse
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`complaints any less seriously or disrespecting copyright laws any more, and the jury agreed.
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`3. As infringement on Cox’s network skyrocketed, Cox gutted the abuse
`department and relaxed its infringement policies.
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`i. Cox slashed the abuse team.
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`Rather than expanding its abuse team to address the onslaught of infringement and
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`DMCA notices, Cox did the opposite. It slashed the Technical Operations Center (“TOC”) abuse
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`team from 14 to nine members and, ultimately, a piddly four. PX 197; Tr. 1115:14-1116:4
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`(Vredenburg); Tr. 1330:14-25 (Zabek). It also reduced the TOC operating hours, Tr. 1116:20-
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`1117:4 (Vredenburg), and cut the corporate abuse team that handled escalations from TOC from
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`five to two. Tr. 1326:5-23 (Zabek). Cox knew it had a problem, so “[t]o deal with the decrease
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`in personnel, Corp Abuse has placed more automation on DMCA complaints…. increase[ing]
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`the number of times a customer can ‘self re-activate’ for a DMCA complaint …” PX 197 at 3.
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`All the while, Cox had more than 20,000 employees companywide and was reaping billions in
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`revenues and profits. PX 451; PX 443. It clearly had enough resources for adequate staffing;
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`instead it stripped the teams to a skeleton crew to increase its already outsized profits.
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`4 PDX refers to Plaintiffs’ Demonstrative Exhibits, which are attached hereto as Exhibit D.
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`ii. Cox ignored the first notice to each subscriber.
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`Cox relieved some of the burden on its decimated abuse team by ignoring the first
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`infringement notice to each subscriber. Cox’s purported rationale for this was Mr. Carothers’
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`unsupported say-so that doing nothing was as effective as doing something. PX 240; Tr.
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`1559:19-1560:8, 1610:22-24, 1615:5-1616:22 (Carothers). The jury understood the patent
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`absurdity of this theory, including why Cox conveniently produced no documents to support it—
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`because there are none. That Cox would ignore any notices contradicts its claim that its
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`graduated response system was designed to “educate” subscribers. It is also directly at odds with
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`Cox’s statement to its customers that “Cox is responsible under the Digital Millennium
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`Copyright Act, DMCA, to advise when we receive a notice asserting infringement by you.” PX
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`32A; Tr. 1419:14-1420:25 (Beck). It clearly did not do that.
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`iii. Cox imposed arbitrary caps on the number of notices it would
`accept.
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`Cox ignored the first notice to each subscriber, but it couldn’t ignore all of them. So
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`instead it capped the number of notices it would accept from any copyright holder to a default
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`limit of 200 per day, reluctantly increasing it to 600 for the RIAA over time. Cox then ignored
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`all notices sent over a complainant’s cap, closing those tickets automatically with no customer-
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`facing action. Tr. 1412:17-1414:19 (Beck). As a result, Cox gave the subscribers identified in
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`Plaintiffs’ infringement notices 46,997 free passes based on Cox’s hard limits. Tr. 1412:20-
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`1413:7 (Beck); PX 19. That is 46,997 times that Cox failed to pass on an infringement notice to
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`the subscriber, failed to warn, failed to suspend, failed to educate about the perils of their
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`infringement, failed to terminate, and failed to advance the subscriber to the next stage of Cox’s
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`graduated response. Tr. 1412:17-1419:14 (Beck).
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`RIAA even told Cox that it was finding vastly more infringements than the cap allowed.
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`For example, in a single day RIAA identified “3,606 infringements [for which] we were not able
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`to send a notice to Cox because they had instituted this unilateral cap,” Tr. 315:19-20 (Marks),
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`and over the course of a year Cox prevented RIAA from sending notices for fully 77% of
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`infringements found. PX 257; PDX Marks; Tr. 316:9-17 (Marks). Extrapolated over the claim
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`period, that’s nearly a million notices not sent to Cox due to the cap.
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`One example illustrates the damaging consequences: in a single day, one copyright
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`owner sent Cox 3,700 notices about Cox’s subscribers’ infringements. The hard limit at the time
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`was 200, PX 310, so Cox ignored 3,500 tickets with no customer-facing action. Mr. Beck, Cox’s
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`lead software engineer handling abuse issues, described this as “no big deal” because it was not
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`causing a technical problem for the Cox Abuse Tracking System (CATS). PX 310; Tr. 1415:16-
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`1417:12 (Beck). But it was a huge deal for the copyright holder whose rights were infringed.
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`And as Dr. Terrence McGarty explained, “the system from a technical perspective could have
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`easily handled a substantially larger number of complaints.” Tr. 2883:11-17 (McGarty). Yet
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`instead of processing more notices and addressing infringement, Cox’s approach was simply
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`“TO CAP THESE SUCKERS!” PX 251; Tr. 1653:3-9 (Sikes). Cox had no justifiable reason for
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`setting hard limits. But it amply demonstrated the company’s deep disrespect for copyrights.
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`iv. Cox blacklisted complainants and deleted millions of notices.
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`Cox also blacklisted complainants based on its meritless contention that a copyright
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`holder’s proposed settlement of infringement claims within a DMCA notice was, somehow, an
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`extortionist “shakedown.” Based on this blacklist, Cox “silently deleted” nearly 3.7 million
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`notices—64% of all notices— that Cox received during the claim period. PX 353 at 13-16; PDX
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`9
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`Case 1:18-cv-00950-LO-JFA Document 697 Filed 02/28/20 Page 14 of 35 PageID# 30249
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`Beck; PX 335; Tr. 1396:9-1397:9 (Beck). That’s 3.7 million DMCA notices that Cox ignored,
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`excluding the millions more it blocked from Righstcorp. Tr. 1392:10-20, 1394:5-18 (Beck).
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`v. Cox infinitely extended the graduate response program.
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`Cox also set up sham policies and procedures that provided a safe haven for infringers.
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`In 2004, Cox had a three-strike policy, pursuant to which a subscriber caught infringing three
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`times would be terminated. PX 203 at 4-5; Tr. 1110:13-21 (Vredenburg). In the ensuing years,
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`Cox extended the policy for residential subscribers to 10 strikes, then 12 strikes, and ultimately
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`13 strikes before it would even consider termination. PX 165 at 11; PX 174 at 13; PX 179 at 11.
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`By 2012, Cox had expanded its graduated response for residential customers to 14 steps,
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`including: (i) ignoring the first notice; (ii) combining multiple notices into a single ticket; (iii)
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`sending automated, warning emails for the next seven notices; and (iv) issuing faux
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`“suspensions” of customers for the next four notices to a so-called “walled garden,” from which
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`the customer could self-reactivate with a simple click-through or call to Cox. Shortly after
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`announcing some of these changes, Mr. Zabek described them honestly in an email to the abuse
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`team: “I think we didn’t help anyone with this action (expect [sic] the law breaking customers).”
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`PX 242. The evidence overwhelmingly demonstrates that Cox knew its customers were breaking
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`the law and that its ever-more-accommodating policies were fostering the infringement.
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`For business customers, the policy was even more outrageous. There, Cox moved from a
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`mandatory four-strike policy where “the account is terminated with no recourse to get their HSI
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`[High Speed Internet] service back” to a never-suspend and never-terminate policy. See Tr.
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`1641:4-23, 1642:11-1645:8 (Sikes); PX 164 at 5-6; PX 172 at 5-7; PX 181 at 5-7; PX 19. Cox
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`acknowledged in the policy that “there may be excessive violations” by business customers but
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`“it is not likely that we would terminate a CB [Cox Business] customer for DMCA violation.”
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`Case 1:18-cv-00950-LO-JFA Document 697 Filed 02/28/20 Page 15 of 35 PageID# 30250
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`PX 181 at 7. The net result was impunity to infringe, with residential subscribers infringing up
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`to a hundred times and business customers infringing hundreds or thousands of times in the years
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`at issue. Tr. 1781:14-20, 1783:17-25 (Lehr).
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`Cox’s consistent refrain was that its business customers represent “critical infrastructure,”
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`such as hospitals and military bases, that could not be subjected to suspensions or terminations.
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`The trial evidence revealed Cox’s argument, much like its copyright abuse policies, to be a sham.
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`The overwhelming majority of its business customers were entities like Sal’s Seafood and
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`Chicken, Underground Audio, or fraternities. DX 358; Tr. 2510:13-2512:14 (Jarchow). The
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`only evidence presented was that Cox had no idea how its business customers used Cox’s
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`network, with one exception: one hospital used Cox’s service for public WiFi only—not for any
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`lifesaving, patient-facing applications. Tr. 2516:11-24 (Jarchow). Moreover, as Plaintiffs’
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`expert, Dr. McGarty, explained, hospitals tend to “have their own parallel internet network”
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`called “Internet2,” while the Department of Defense has a “private secure version of the internet”
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`called MILNET—both of which operate separate and apart from commercial internet services
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`like Cox. Tr. 2880:3-20, 2881:4-25 (McGarty).
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`vi. Cox limited daily suspensions.
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`Cox’s “14-strike” program was further nullified when the company set a daily limit of
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`300 for the maximum number of suspension