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BMG v. Cox Communications – Volume II

So, do you remember back in 2014 when BMG and Cox Communications (an Internet Service Provider) were in litigation because Cox was allegedly not in compliance with the safe harbors of the Digital Millennium Copyright Act (DMCA)? Cox was essentially knowingly permitting its customers to use its services to infringe the copyrights of others. The DMCA’s safe harbor provisions shield ISPs from liability for unknown infringement, where they have put procedural safeguards in place to prevent repeat infringement, including the deactivation of a repeat infringer’s internet account. Cox had a procedure, they just didn’t implement it in a meaningful way. There were over 1.87 million instances of infringement of BMG works alone. Judge Liam O’Grady charged the jury that contributory infringement could be found where the defendant knew or should have known about the infringing activity and did nothing to stop it. The jury decided in favor of BMG and awarded them $25 million in damages.

Well, Cox appealed that decision and the 4th Circuit Court of Appeals upheld the lower court’s ruling with regard to the requirements of complying with the safe harbor provisions of the DMCA, but it also reversed the $25 million settlement granted to BMG and is sending the case back to trial. Circuit Court Judge Diana Motz explained that the failure to create and utilize a repeat infringer policy that is consistent and meaningful, is like having no policy at all, thereby forfeiting the shelter of the safe harbor defense.

In Cox’s appeal, they argue a number of points, all of which were denied by the Circuit Court, except one - the intent necessary to prove contributory infringement. The district court jury was charged that contributory infringement liability lies when it is demonstrated that the defendant knew or should have known of the infringing activity. Landmark case MGM Studios, Inc. v. Grokster, Ltd. taught us that one infringes contributorily by intentionally inducing or encouraging direct infringement. Grokster also taught us that intent can be presumed according to the “rules of fault-based liability derived from the common law.” Common law tort doctrine states that if a person “knows that the consequences are certain, or substantially certain, to result from his act, and still goes ahead, he is treated by the law as if he had in fact desired to produce the result.” All this means is that a person will be presumed to intend the natural consequences of his actions.

The ruling of the District Court set out a negligence standard, one that the 4th Circuit found as insufficient. While Judge Motz agreed that a willful blindness standard for determining intent was acceptable, anything short of that (reckless, negligent, etc.) was unacceptable in this context. “It appropriately targets culpable conduct without unduly burdening technological development,” she states in her ruling.

Judge Motz decision probably leaves us in more of a state of confusion than ever, as it relates to this issue. She is essentially saying that ISP’s must not ignore red flags that point to piracy, but to find liability, “should have known” isn’t gonna cut it. So that begs the question, what suffices as a red flag that induces or encourages versus one that amounts to a “should have known”? If one is presumed to intend the natural consequences of his actions, isn’t that like saying he should have known?

The battle continues for Cox and BMG and the struggle ensues for ISPs everywhere, who will undoubtedly have a hard time determining whether their policies keep them within the DMCA’s safe harbor defense.

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