9:00am PT by Eriq Gardner
Judge Rules Cox Not Absolved from User Piracy
In a lawsuit that's become closely followed by leading entertainment industry trade associations with the potential of shaking up relations between content owners and internet service providers, a judge ruled on Thursday that Cox Communications is not entitled to safe harbor from copyright liability because of its failure to reasonably implement a repeat-infringer policy with regards to piracy.
The decision on the verge of a trial beginning early December amounts to a partial victory — but a big one — for the plaintiffs who filed suit against Cox in November 2014 for refusing to terminate the service of some of its customers who were repeatedly flagged for improper file-sharing.
The plaintiffs in the case are BMG Rights Management, a music publisher which controls rights to works by David Bowie, Bruno Mars, Frank Ocean and many other artists, as well as Round Hill Music, claiming control over several works by The Beatles among others.
Both companies retained Rightscorp, a firm that specializes in hunting down copyright infringements happening online and through torrent networks, and controversially, sending out letters to accused pirates with demands to pay for their misdeeds or face litigation. To achieve this, however, Rightscorp needs cooperation from ISPs like Cox to identify the customers behind certain IP addresses.
Many big ISPs including Comcast and Time Warner Cable have mostly facilitated content owners and their agents, through joint programs like the "Copyright Alert System" or through court subpoenas, but Cox has been more resistant.
After BMG and Round Hill sued, Cox fought back hard, and the high-stakes litigation became quite nasty.
Cox maintained it was merely a "conduit" service provider and had procedures including a "graduated response" system for handling notices of infringement on its network. But it asserted that Rightscorp telling its customers that payment was required to keep internet service from Cox went too far.
"Rightscorp and Plaintiffs tried to abuse Cox’s system," Cox told the judge. "Rightscorp sells shady services to copyright holders. It shakes down ISP customers for money without regard to actual liability, and it tries to enlist ISPs in its scheme. Cox explained it would not accept Rightscorp’s wrongful notices and asked Rightscorp to fix its notices. Rightscorp refused, instead dumping thousands of notices per day on Cox. As a result, Cox blocked Rightscorp’s notices. This suit is Rightscorp’s retribution, with Plaintiffs’ complicity, for Cox’s refusal to participate in Rightscorp’s scheme."
Besides maintaining that its repeat infringer policy was adequate, Cox challenged the plaintiffs' ownership of works allegedly pirated, pointing to copyright registrations listing "claimants" rather than "owners," and particularly objected to the standing of Round Hill, which it posed as a private equity firm who only had a tangential relationship with the copyright works through partnerships.
BMG hit back by telling the judge that Cox's purported repeat-infringer policies were merely for show and that the ISP acted on fewer than five percent of copyright infringement notices in the two years before the lawsuit was filed.
"For several years, Cox had an 'under the table' policy of purporting to terminate repeat infringers while actually retaining them as high speed internet customers," it said in a legal brief. "The 'terminations' were in name only as Cox immediately reactivated these infringers without ever canceling their accounts... As a matter of law, allowing known, repeat, flagrant infringers to continue to use the network does not satisfy the DMCA’s requirement of an appropriate repeat infringer termination policy."
Meanwhile, Round Hill defended its standing by pointing to agreements that gave it "full control" over works.
On Thursday, U.S. District Judge Liam O'Grady ruled against Round Hill, finding it "does not own any exclusive right with respect to the copyrights at issue." The judge is satisfied, though, by BMG's own arguments over ownership.
The bigger story is O'Grady's determination that there is "no genuine issue of material fact as to whether defendants reasonably implemented a repeat-infringer policy as is required by §512(i) of the DMCA," granting a motion that Cox is not entitled to a safe harbor defense.
The ruling comes in the form of a short two-page order with a more detailed memorandum forthcoming that will hopefully explain the reasoning behind the decision. It will be a document that will be closely reviewed by attorneys in the tech and entertainment industries. A trial that could go into damages awarded is currently set for Dec. 2.