Whilst BMG acknowledged Cox had policies in place to deal with users who repeatedly infringed copyrights, it accused Cox of failing to implement it's own policies and argued that this meant the ISP should be denied safe harbor protection and should be liable for the infringement of its copyrights by Cox's customers.
And at first instance BMG prevailed and in August 2016 Cox Communications were ordered to pay a $25 million dollar penalty for copyright infringements to the music rights management company by a federal judge. The ruling followed a jury decision which found Cox liable for illegal movie and music downloads by its customers and the court found that the company's behaviour amounted to wilful infringement of copyright.
The Eastern Virginia District Court dismissed Cox’s appeal of the earlier verdict, and ordered Cox to pay BMG $25m in damages for copyright infringement - a ruling which at the time was thought to have widespread repercussions for online copyright infringement in the US. The court decided that Cox did not do enough to stop users pirating music from BMG, and therefore did not qualify for Digital Millennium Copyright Act (DMCA) ‘safe harbor’ protections. Crucially, BMG provided evidence that its agent, Rightscorp, had identified individual infringers and then alerted Cox to their wrongdoing - which Cox then failed to act on.
However, that ruling was subsequently overturned on appeal - but it was an interesting ruling: The decision, by a three-judge panel of the 4th Circuit Court of Appeals, returned the case to the District Court for a new trial, based on a decision that there was an error in jury instructions. Irrelevant of arguments about safe harbor protection at the heart of the case, Cox might not been responsible for users' infringement as companies are only liable for contributing to infringement if the companies either know about acts of infringement, or are wilfully blind to them, and the appellate court ruled that the trial judge, District Judge Liam O'Grady, had incorrectly told the jurors that they could find Cox liable if it knew or should have known about infringement by users. "The formulation 'should have known' reflects negligence and is therefore too low a standard," the appellate judges wrote. "Because there is a reasonable probability that this erroneous instruction affected the jury’s verdict, we remand for a new trial."
But, and its a big but, the 4th Circuit took a long hard look at how and why Cox would be protected by US "safe harbor" provisions that protect service providers from liability when users infringe copyright. - and here the Court ruled against Cox on a key point. The DMCA provides a degree of protection to ISPS and other platforms that respond expeditiously to takedown requests. But one of the requirements is that the ISP and other intermediaries have "adopted and reasonably implemented … a policy that provides for the termination in appropriate circumstances of subscribers … who are repeat infringers." The appeals judges said that as it stood, Cox wasn't entitled to rely on safe harbor because it did very little if anything even when told about repeat offenders, re-affirming the jury decision that sided with BMG and against Cox when they found the broadband carrier liable for piracy by its subscribers.
Indeed despite 'losing' the case, many in the entertainment sector were pleased with the February 2018 decision and the appeal court's conclusion that the safe harbor provision of the Digital Millennium Copyright Act require a meaningful implementation of a policy that terminates the service of repeat copyright infringers - not least because the appellate judges agreed with BMG that Cox wasn't entitled to rely on the safe harbor protections, writing that the broadband provider's policy was lacking. Cox had in place a "13-strike" repeat-offender policy, meaning that the company would consider terminating subscribers after they received 13 notices of copyright infringement. In practice, it has been alleged the company went to great lengths to avoid disconnecting people with the court acknowledging "Cox formally adopted a repeat infringer 'policy,' but ... made every effort to avoid reasonably implementing that policy ...... Indeed, in carrying out its thirteen-strike process, Cox very clearly determined not to terminate subscribers who in fact repeatedly violated the policy." It was alleged that Cox really maintained an "under the table policy purporting to terminate repeat infringers while actually retaining them as high-speed internet customers."
Judge Diana Motz was clearly unimpressed with Cox's efforts to stem piracy by its customers saying: "Indeed, the risk of losing one's Internet access would hardly constitute a 'realistic threat' capable of deterring infringement if that punishment applied only to those already subject to civil penalties and legal fees as adjudicated infringers" and saying a "ISP has not 'reasonably implemented' a repeat infringer policy if the ISP fails to enforce the terms of its policy in any meaningful fashion. Here, Cox formally adopted a repeat infringer 'policy,' but ..... made every effort to avoid reasonably implementing that policy. Indeed, in carrying out its thirteen-strike process, Cox very clearly determined not to terminate subscribers who in fact repeatedly violated the policy." Motz added that failure to implement a consistent and meaningful repeat infringer policy essentially means it has no policy and can't be entitled to a safe harbor defence.
Now Sony, Universal and Warner are also using the BMG decision to underpin a new lawsuit against Cox (Sony Music Entertainment et al v. Cox Communications, Inc. et al). The claimants say that while Cox claims to have an internal procedure to deal with repeat infringers in its customer base, the earlier case confirmed this process to be a "sham" and the labels say that Cox "knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers" and that when the labels notified Cox of infringements by its users "rather than working with plaintiffs to curb this massive infringement, Cox unilaterally imposed an arbitrary cap on the number of infringement notices it would accept from copyright holders" and this, the labels say, meant Cox was "wilfully blinding itself to any of its subscribers' infringements that exceeded its 'cap'" and the only justification for the arbitrary cap is alleged to be that "rather than stop its subscribers' unlawful activity, Cox prioritised its own profits over its legal obligations".