MAJOR LABELS: 1 (BILLION) v COX: 0

May 2020

COPYRIGHT: We have written about this ongoing litigation for a while now. In case, like us, you don’t want to scroll through the website to find it the background is:

EMI, Warner Music Group, Sony Music and Universal Music (the majors) sued Cox Communications last year. The suit claimed that Cox had shoddy systems in place to deal with piracy. It was claimed that Cox’s subscribers were engaging in mass scale piracy and the majors sent “hundreds of thousands” warning letters about the piracy with no resolution. Following this lack of success on part of the majors, they embarked on this piece of litigation in the US District Court for the Eastern District of Virginia.

This decision follows the earlier case between BMG v Cox. In the earlier case, BMG had accused ISP Cox Communications of running a deliberately ineffective system for dealing with repeat infringers:  At first instance the jury awarded $25 million against Cox when they found the broadband carrier liable for piracy by its subscribers. The US appellate court reversed that verdict in what might have been seen as a defeat for the record label – but many said at the time that a careful look at the judgment, which reversed the jury on a technicality, was actually a win in the battle against piracy.  

And the Fourth Circuit affirmed that internet service provider was not entitled to DMCA safe harbor defense because it had failed to reasonably implement its own policy to terminate accounts of repeat copyright infringers, and indeed remanded that for new trial, finding district court improperly instructed jury that contributory infringement could be based on negligence standard of culpability. And Cox then settled with BMG.  North America General Counsel Keith Hauprich, said at the time, “This was a landmark case in which BMG took on the third biggest internet service provider in the United States to defend and establish the principle that in order to benefit from a so-called ‘safe harbor’ defense, an ISP has responsibilities. While the financial terms of the settlement are confidential, we are happy they reflect the seriousness of this case.”

https://1.bp.blogspot.com/-vUeImrM-9Q8/Xf3gz5oF-PI/AAAAAAAAPXY/zHBywrYzZYkl685Vn4VMZFL_jO4u94K5QCLcBGAsYHQ/s320/cox2.jpg

And indeed that case had already been applied in another case, with a court denying ISP Grande Communications the benefit of safe harbour protection in a case brought by the Recording Industry Association Of America (RIAA). 

Here the majors argued that Cox was rubbish at enforcing its own policies and this led to piracy on an industrial scale. Usually, entities such as Cox can rely on the “safe harbor” provisions which essentially provides that entities that host content are “safe” from piracy claims if they remove pirated content swiftly following notification.

The majors argued that the safe harbor provisions should not apply to Cox because it was so bad at enforcing its policies. The majors went on: as the safe harbor provisions should not apply, Cox should be liable for its subscribers’ piracy. It was alleged that Cox deliberately refused to take reasonable steps to combat infringers.

Well, Thursday (19 December 2019) was D-day for Cox and what a way to end the year…for the majors – I certainly hope Cox still has money left for some Christmas presents and a nice carrot for Rudolph. The Virginia jury ruled against Cox and awarded the majors just under USD1 billion! It was claimed that 10,017 pieces of work were infringed meaning that the sums work out to be nearly $100,000 ($99,830.29 to be exact) per work that was infringed!

The major labels’ trade association, The Recording Industry Association of America (RIAA) had been heavily involved in the litigation and its chief legal officer Kenneth Doroshow explained“The jury recognized these companies’ legal obligation to take meaningful steps to protect music online and made a strong statement about the value of a healthy music ecosystem for everyone — ranging from creators to fans to the available outlets for legitimate music consumption.”

A considerably poorer Cox summarised its position and stated: “We are disappointed in the court’s decision. The amount is unjust and excessive. We plan to appeal the case and vigorously defend ourselves. We provide customers with a powerful tool that connects to a world full of content and information. Unfortunately, some customers have chosen to use that connection for wrongful activity. We don’t condone it, we educate on it and we do our best to help curb it, but we shouldn’t be held responsible for the bad actions of others.”

The decision is important in the sense that it is a huge amount of money and it sends a clear message to internet service providers: if they fail to take steps to combat infringements, they will not be able to rely on the safe harbor provisions to avoid liability for their users infringements. Is it a step to far, well its difficult to tell at this stage because after all if Cox had of taken preventative measures it would probably have more money in its pocket.

Of course, Cox is planning to appeal the decision so it looks like we will get at least one more blog out of this subject!

Samuel O’Toole (Briffa.com)

https://gizmodo.com/cox-communications-ordered-to-pay-1-billion-for-failin-1840564478

https://www.loeb.com/en/insights/publications/2018/02/bmg-rights-management-v-cox-communications

http://the1709blog.blogspot.com/2018/02/us-appeals-court-tells-isp-that-safe.html

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