E.D. VA. Agrees with Jury: Cox Contributorily Liable For Infringing BMG’s Copyrights

In a case determining whether and under what circumstances internet service providers may be held liable for the uploading and downloading of infringing copyrighted musical works by their subscribers, the U.S. District Court for the Eastern District of Virginia held ISPs can be liable, if the ISP fails to properly follow the Digital Millennium Copyright Act (“DMCA”). See BMG Rights Mgmt. (US) LLC, v. Cox Commc’n, Inc., No 1:14-cv-1611, 119 USPQ2d 1165 (E.D.Va. August 8, 2016).

Following a two week trial, the jury found Cox Communications not liable for vicarious infringement, but liable for contributory infringement, and awarded BMG $25 million in statutory damages. Afterwards, both parties filed post-trial motions -- Cox seeking judgment as a matter of law, and BMG seeking judgment as a matter of law on its vicarious infringement claim. The District Court denied all post-trial motions, reasoning the jury made an appropriate decision.

Cox, a service provider, provides approximately 4.5 million U.S. customers with internet service and requires users to abide by its Acceptable Use Policy, through which Cox reserves the right to suspend users who infringe others’ IP. BMG operates as a music publishing company. It co-owns musical composition copyrights, and facilitates the payment of royalties to artists by helping to commercially exploit their works.

In November 2014, BMG sued Cox for the vicarious and contributory infringement of 1,397 musical composition copyrights over its network. Cox, in response, asserted protection under the safe harbor provisions of the DMCA pursuant through which internet service providers can avoid liability for infringing uses of their services if certain requirements are met, including the implementation of a repeat infringer policy. Under Cox’s policy, a user essentially gets 13-strikes before substantial action is taken. And, in some instances, even after 13 instances of alleged infringement, “repeat infringers were routinely spared termination.” Id. at 1675.

BMG enlisted internet monitoring service Rightscorp to watch BitTorrent for infringing uses and generate a notice to Cox, which it also requested to be forwarded to the infringer. The notice included the infringer’s IP address and port, a time stamp, the copyright owner’s name, the name of the copyrighted work, and a settlement offer that BMG would not bring suit pursuing monetary damages for the single instance, if a payment was made -- typically in an amount of $20 or $30. Rightscorp also gave Cox access to its “real-time” dashboard through which Cox could instantaneously see every notice generated and corresponding to a Cox IP address.

Cox objected to the settlement language in the correspondence and refused to forward the notices received from Rightscorp. After months of continuously receiving the notices, Cox then took steps to black-list, or “silently-delete” the e-mail messages from Rightscorp, resulting in 1.8 million never seen, deleted notices. Cox also failed to acknowledge the notices from the Rightscorp dashboard.

The court denied Cox’s Renewed Motion for Judgment as a Matter of Law seeking a finding it was not contributorily liable because Cox’s internet service is capable of substantial non-infringing uses. The Eastern District disagreed however, reasoning that because Cox had general knowledge of the infringement on its network, and because Cox materially contributed to the infringement by turning a “blind eye” to its occurrence, sufficient evidence existed for a reasonable jury to find Cox contributorily responsible for infringement of BMG’s copyrights. Additionally, because contributory infringement was established, the court affirmed the jury’s finding of willfulness.

The court also denied Cox’s Motion for a New Trial, finding no grounds to do so. It also denied BMG’s Renewed Motion for Judgment as a Matter of Law on its vicarious infringement claim, reasoning Cox did not maintain an obvious and direct financial interest in the infringement on its network. In denying BMG’s Motion for a Permanent Injunction, the court found BMG failed to show irreparable injury, including failing to show monetary damages would be inadequate.