On October 25, 2017, the U.S. Court of Appeals for the Fourth Circuit heard oral arguments in BMG Rights Management (US) LLC v. Cox Communications, Inc., an appeal of a decision in a copyright infringement lawsuit. In the case below, Cox was first stripped of its Digital Millennium Copyright Act (“DMCA”) safe harbor against liability for copyright infringement, and then a jury found Cox secondarily liable for copyright infringement by certain users of Cox's high-speed Internet access service. [1] BMG was awarded $25 million in statutory damages and $8.3 million in attorney’s fees.

The case has been monitored closely by copyright attorneys and Internet service providers (“ISPs”), and its outcome could have major ramifications on the fight against online piracy and the duty of ISPs to act as copyright police for the content industry. In this blog post, I’ll review the general background of the case below that led to the appeal. In a subsequent blog post, I’ll summarize the lower court’s decision and review the oral argument.

Background – DMCA Safe Harbor

The nature of the Internet exposes ISPs to potential liability for copyright infringement based on the actions of their subscribers. Generally, when material is transmitted over the Internet, each computer involved in the process makes and stores a copy of the material in temporary storage before sending it. Similarly, when an individual uploads material to a website or an online system, various computers and servers make copies of the material. Depending on the type of work at issue, these processes violate many of the exclusive rights in Section 106 of the Copyright Act. The DMCA, however, limits the liability of an ISP for copyright infringement when it is a mere conduit for transmission.

Congress enacted the DMCA in 1998 to, among other things, update U.S. copyright law to account for new technologies and the Internet. Title II of the DMCA – the Online Copyright Infringement Liability Limitation Act – was designed to clarify the scope of liability faced by service providers who store, copy, and transmit potentially infringing material over their networks and platforms. [2] The DMCA establishes four safe harbors that allow qualifying service providers to limit their liability for claims of copyright infringement based on (1) transitory digital network communications, (2) system caching, (3) information residing on systems or networks at the direction of users, and (4) information location tools. [3] The first safe harbor – § 512(a), transitory digital network communications – limits the liability of ISPs when they do nothing more than transmit, route, or provide connections for copyrighted material. [4]

To qualify for the safe harbor, an ISP must adopt and reasonably implement a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the ISP’s system or network who are repeat copyright infringers. [5]   An ISP must also notify its subscribers and account holders of its repeat infringer policy. If you’re wondering what a repeat infringer policy looks like, here is the policy of one of the largest ISPs in the U.S. – Comcast.

In general, here is a brief summary of how the safe harbor and notice process created by the DMCA applies to ISPs. First, a copyright owner becomes aware of an Internet user illegally copying or distributing the copyright owner’s work. The copyright owner records the Internet user’s IP address, and then sends a notice to the ISP that serves the IP address. The notice states, among other things, that the user has violated copyright law. The ISP is required to send the notice to the Internet user associated with the IP address, and the user is required to cease is unlawful actions. If that same Internet user continues to receive DMCA notices, the user may be considered a repeat infringer by the ISP, requiring the ISP to terminate the user. At least this is what the DMCA generally requires. The DMCA does not define repeat infringer. The DMCA does not explain what it means for an ISP to reasonably implement its repeat infringer policy. These issues are at the heart of BMG’s lawsuit against Cox.

BMG’s Complaint: Secondary Liability For Copyright Infringement

In November 2014, BMG filed a lawsuit against Cox, alleging that Cox is liable for contributory and vicarious copyright infringement. [6] BMG claimed that it notified Cox of thousands of repeated and blatant direct infringements of its copyrighted works by Cox broadband subscribers. BMG further claimed that despite these notices and Cox’s actual knowledge of repeat infringement, Cox continued to permit repeat infringer subscribers to use Cox’s broadband network to continue to infringe BMG’s copyrights without consequence. As relief, BMG sought maximum statutory damages in the amount of $150,000 with respect to each work infringed, along with injunctive relief and other fees and costs.  In its response to the complaint, Cox asserted a number of defenses, including eligibility for the DMCA’s liability-limiting safe harbor for ISPs.

Who is BMG?

BMG Rights Management is an international company focused on the administration and management of musical copyrights – music publishing, recording rights, and music distribution. In general, BMG offer artists and producers assistance to administer, manage, develop, market and exploit their copyrights globally.

Over the course of many years, BMG has acquired record companies and other music publishing companies in various countries, and it devotes significant amounts of time and money toward developing new musical talent. BMG owns or has the exclusive rights to administer or publish the copyrights in numerous popular musical works, recordings, and compositions. To help police its copyrights online, BMG employs Rightscorp, Inc.

Rightscorp, Inc. is a copyright enforcement agent. It “deploys software to monitor the global Peer‐to‐Peer (P2P) file sharing networks to prevent illegal downloading of digital media.” [7] For instance, Rightscorp monitors BitTorrent for users offering Rightscorp clients’ copyrighted works. When it discovers an alleged infringement, Rightscorp records the BitTorrent users’ Internet Protocol (“IP”) addresses, and then generates and sends DMCA infringement notices to the ISPs providing Internet access to the IP addresses on behalf of the rightsholder. [8]

Who is Cox Communications?

Cox Communications, Inc. describes itself as “a broadband communications and entertainment company, providing advanced digital video, Internet, telephone and home security and automation services over its own nationwide IP network.” [9] Cox is the largest private telecom company in the U.S. It serves more than 6 million residences and businesses. Cox provides broadband Internet access service to over 4 million subscribers, and like all ISPs, Cox has customers that illegally download music and movies using Cox’s broadband service.

BMG’s Copyright Infringement Lawsuit

The preceding information sets the stage for BMG’s copyright infringement lawsuit against Cox. The next blog post will cover the court’s summary judgment order finding that Cox’s failure to terminate the broadband service of repeat infringers is sufficient to bar Cox from invoking the DMCA’s safe harbor protection.

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[1] BMG Rights Management (US) LLC v. Cox Communications, Inc., 149 F.Supp.3d 634 (E.D. Va. 2015) (summary judgment opinion stripping Cox of DMCA safe harbor protection); BMG Rights Management (US) LLC v. Cox Communications, Inc., 199 F.Supp.3d 958 (E.D. Va. 2016) (memorandum opinion denying all post-trial motions).

[2] As early as the mid-1990s, it became apparent that the day-to-day operations of ISPs may render them liable for user infringement under existing copyright doctrine. See Religious Tech. Ctr. v. Netcom On–Line Commc'n Servs., Inc., 907 F.Supp. 1361, 1366, 1373-76 (N.D. Cal. 1995).

[3] 17 U.S.C. § 512(a)-(d).

[4] See In re Charter Commc’ns, Inc., 393 F.3d 771, 775 (8th Cir. 2005).

[5] 17 U.S.C. § 512(i)(1)(A).  In addition, a qualifying ISP must accommodate “standard technical measures” that are “used by copyright owners to identify or protect copyrighted works.”  17 U.S.C. § 512(i)(1)(B), (i)(2). While the ISP safe harbor statute does not expressly require designation of a DMCA agent, properly designating a DMCA agent will help determine whether an ISP has reasonably implemented a repeat infringer policy. See Ellison v. Robertson, 357 F.3d 1072, 1080 (9th Cir. 2004).

[6] BMG Rights Management (US) LLC and Round Hill Music v. Cox Enterprises, Inc., Cox Communications, Inc. and CoxCom, Inc.,d/b/a Cox Communications of Northern Virginia, Complaint for Copyright Infringement, Case 1:14-cv-01611-LO-JFA, U.S. District Court, Eastern District of Virginia (Nov. 26, 2014) (“BMG Complaint”).

[7] About Rightscorp, What We Do, https://www.rightscorp.com/about-rightscorp.html.

[8] BMG’s lawsuit against Cox is based on alleged infringement discovered by its agent Rightscorp, Inc., which “has developed a technological system that identifies actual infringements and the perpetrators of these infringements (by IP address, port number, time, and date) by monitoring BitTorrent systems and extracting information about the infringing activity, including, inter alia, the IP address, internet service provider, the infringing content being uploaded or downloaded, and the suspected location of the host computer accessing BitTorrent networks.” BMG Complaint at ¶2.

[9] Cox Communications Fact Sheet, http://newsroom.cox.com/company-overview.