Cox Not Entitled to DMCA Protection Given Lax Infringer Policy

In its February 1, 2018 decision in BMG Rights Management (US) LLC, et al. v. Cox Commc'ns et al., No. 16-1972 (4th Cir. 2018), the U.S. Court of Appeals for the Fourth Circuit affirmed the denial of Cox Communication’s eligibility for Digital Millennium Copyright Act (“DMCA”) Safe Harbor protection.  Specifically, the Court agreed that no reasonable jury could find that Cox was entitled to DMCA Safe Harbor protection in light of its relaxed and loosely enforced repeat infringer policy, which failed to meet the requirements of 17 U.S.C. § 512(i).

Section 512(i) of the DMCA requires ISPs claiming DMCA safe harbor protection to “reasonably implement[]… a policy that provides for the termination in appropriate circumstances” of its subscribers who are “repeat infringers.”  While that provision includes several arguably highly subjective standards, i.e. “reasonable” implementation and “appropriate circumstances,” the Fourth Circuit agreed with the lower court in concluding that no reasonable jury could find that Cox’s specific repeat infringer policy met those standards.

In so finding, the Court recounted some of the details of Cox’s repeat infringer policy, which allowed for no less than 13 instances of infringement before any realistic possibility of account termination could arise.  The Court also noted other laxities in Cox’s repeat infringer policy, including daily restrictions on the number of notices Cox processed from any one copyright holder, daily limitations on infringement notices per subscriber (only one infringement notice per subscriber per day), and biannual “clean slates” for subscribers (such that a user with 12 strikes over six months would return to zero strikes in month seven).

On appeal, Cox argued that the lower court erred in its interpretation of “repeat infringers” as found in 17 U.S.C. § 512(i), arguing that “infringers” should be read as “adjudicated infringers,” i.e. “people who have been held liable by a court for multiple instances of copyright infringement.”  Accordingly, Cox argued that because there was no evidence presented that Cox failed to terminate the accounts of users that had previously been adjudicated to infringe copyright, the district court’s ruling should be overturned.  

The Fourth Circuit disagreed, finding that “repeat infringer” referred to someone that actually infringed, regardless of whether that infringement had been adjudicated.  Turning first to the language of 17 U.S.C. § 501(a), the Court held that “infringer” is defined as “[a]nyone who violates any of the exclusive rights of the copyright owner,” i.e. an actual infringer.  The Court also looked to Section 512(g)(1), which references “material or activity [that] is ultimately determined to be infringing,” concluding that “Congress knew how to expressly refer to adjudicated infringement, but did not do so in the repeat infringer provision.”  The Court also explained that its interpretation of “infringer” as “actual infringer” within the meaning of Section 512(i) was both supported by the DMCA’s legislative history and in accord with the Second Circuit’s decision in EMI Christian Music Grp., Inc. v. MP3tunes, LLC, 844 F.3d 79, 89 (2d Cir. 2016).

The Court also found that Cox “made every effort to avoid reasonably implementing [its] policy,” and held that Cox’s thirteen-strike policy essentially operated as an admission that Cox routinely refrained from terminating repeat infringer accounts.  The Court also contrasted that thirteen-strike policy with Cox’s three-strike policy for excessive bandwidth use, and pointed to internal communications and infringer reactivation practices, concluding that “Cox always reactivated subscribers after termination.”  The Court emphasized Cox’s failure to show that even a single repeat infringer account was terminated over a two-year period, despite more than 500,000 email warnings and temporary suspensions during that same period, and Cox’s auto-deletion of millions of infringement notices from BMG’s agent. 

Althoug it affirmed the lower court’s DMCA ruling, the Court reversed and remanded for a new trial based on an improper jury instruction that asked the jury to find contributory infringement if Cox “knew or should have known of the infringement.”  While acknowledging that “something less than actual knowledge” might satisfy contributory infringement, here the Court found that “negligence does not suffice to prove contributory infringement; rather, at least willful blindness is required.”  Thus, in light of the lower court’s improper jury instruction, the Court reversed the $25 million jury verdict against Cox and remanded the case for a new trial.