Yesterday an Eastern District of Virginia jury found Cox Communications, Inc. contributorily liable to BMG Rights Management (US) LLC for the copyright infringement of its subscribers, ordering Cox to pay the music publisher $25 million. The verdict is available here. BMG Rights Management (US) v. Cox Enterprises, Inc., No. 1:14-cv-01611. This undoubtedly will affect how ISPs handle repeat-infringer subscribers in the future.
BMG brought suit against Cox, alleging it was responsible for the direct infringement activities of its individual users engaging in P2P sharing of music files using Cox’s Internet services. The Copyright Act does not expressly provide for third party is liable based on the acts committed by another. However, common law doctrines of secondary liability for copyright infringement are well established under the law. In this case, BMG invoked theories of contributory and vicarious liability. Contributory infringement occurs when a party induces or encourages direct infringement. Vicarious infringement occurs when a party profits from direct infringement but declines to exercise its right to stop the direct infringement.
In other circumstances, the ISP may have a defense under the DMCA (Digital Millennium Copyright Act), which provides safe harbors for ISPs who adopt and implement a repeat infringer policy. Congress created the safe harbors to protect ISPs from the potential liability faced because of content transmitted over their networks by users. The safe harbors allow ISPs to innovate, provide their services and (though we all disagree each time we pay the cable bill) inexpensively because they do not have to be concerned, to an extent, about liability for the direct infringement of their users and potentially millions of dollars in damages.
This verdict comes just two weeks after Judge O’Grady ruled on the parties’ cross motions for summary judgment that Cox was not entitled to safe harbor protections. The decision is available here. Cox did adopt a repeat infringer policy; however, Judge O’Grady ruled that the record conclusively established that prior for fall of 2012, Cox did not implement that policy. Moreover, Cox publicly purported that it complied with its policy but privacy disparaged and intentionally circumvented the requirements of the DMCA. The record suggested keeping customers paying was a motivation for this. However, when an ISP has actual knowledge that a user is repeatedly infringing, it must take action and terminate the account if it wants to claim the benefits of the DMCA safe harbors.
Although it did not find Cox liability for vicarious infringement, the jury did find that Cox users infringe BMG’s copyrighted works and that Cox is liable for willful contributory infringement of BMG’s copyrighted works. The jury awarded BMG $25 million in statutory damages, but could have gone as high as the statutory maximum of more than $200 million.
This jury verdict signals that Internet service providers will need to take more seriously their role in protecting against copyright infringement. ISPs–in the customer service business–often do not terminate accounts of their infringing users. However, both Judge O’Grady’s order and the jury’s verdict will have implications for ISPs as well as consumers. We can expect to see ISPs being more proactive in curbing copyright infringement. ISPs likely will ramp up their enforcement efforts with respect to their repeat infringer policies and this undoubtedly will result in increased suspensions and terminations.
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