4th Circuit's Cox Torrent Piracy Ruling Not Seen Clearing Up Hazy DMCA Areas
The 4th U.S. Circuit Court of Appeals Thursday largely upholding a finding that Cox Communications was liable for willful contributory copyright infringement by ISP subscribers left unanswered questions about Digital Millennium Copyright Act safe harbor issues, experts told us. The lower court and appellate rulings give some guidance on issues like what constitutes repeat infringement, though not as much as many hoped, said IP lawyer Rick Sanders of Aaron Sanders. About the only thing clear for ISPs is to make sure they follow their policies -- something Cox was blasted for not doing, said Public Knowledge Senior Counsel John Bergmayer.
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Cox said it was "pleased" with the 4th Circuit's docket 16-1972 decision, which reaffirmed a lower court's denial of a safe harbor defense for the cable operator and remanded the case for a new trial because of jury instruction errors. BMG didn't comment.
The decision "sends an important message" that any entity relying on DMCA safe harbor protections needs to have a solid policy in place and must enforce it, said Sandra Aistars, director-copyright research and policy, George Mason School of Law Center for the Protection of IP. Sanders said the decision likely won't result in policy shifts by other ISPs since Cox's approach wasn't normal. He said the lower court will come up with a streamlined approach for the remanded case, not allowing for more discovery.
Judge Frederick Motz joined by James Wynn and Dennis Shedd rejected Cox's argument that repeat infringer means adjudicated repeat infringer. They said the company adopted a repeat infringer policy but "made every effort to avoid reasonably implementing" it, and its 13-strike process showed it was "very clearly determined not to terminate" subscribers repeatedly violating the policy by pirating BMG content via BitTorrent. The U.S. District Court in Alexandria, Virginia, decision (see 1608090047) also didn't provide much clarity for ISPs since Cox's implementation of its own policy "was farcical," Sanders said.
Aistars said Cox can't muster support for this contention from past cases, and Copyright Act language wouldn't make sense in other places if the interpretation were correct. She said the reason there isn’t much case law here is because "the law has never been 'unsettled' and courts and parties alike have relied on the plain language of the statute."
Much of the new decision focused on a 2009 email from an executive overseeing the team that addressed subscriber violations, indicating the company's "unwritten semi-policy" was to terminate customers for DMCA violations, then reactivate them with a clean slate. That "was odd and disturbing" and likely hard for Cox to shake off, said Syracuse University Technology Commercialization Law Center-Director Shubha Ghosh.
The court said ISPs can't claim DMCA safe harbor protections for terminating customers "as a symbolic gesture" before soon reactivating them. It said a supposed policy change in 2012 that ended reactivations was meaningless because the ISP stopped doing any almost any deactivations.
The ruling offers little guidance on what's reasonable termination plan, with the court not needing to get into that since it was clear Cox didn't even follow its procedures, Bergmayer said. DMCA Section 512 gives safe harbor protection for companies with policies for terminating repeat infringers in "appropriate circumstances." Bergmayer said what's appropriate circumstances for termination of repeat infringers remains a gray area. He said there's relatively little DMCA litigation on ISPs liability and repeat infringer policies and much more precedent and clarity on online platforms and takedown notices.
Since the district court ruling two years ago, small ISP clients reviewed their repeat infringer policies, with the $25 million jury award shocking them and making them want to be sure about compliance, said communications lawyer Anthony Veach. He said Cox practices of not even trying to enforce repeat infringer policies were seemingly out of the norm, but many ISPs share some of Cox's opinions and that terminating subscribers hurts revenue. Web-service sellers "don't like being the copyright police for the content industry," he said. He said ISPs not stripping settlement language out of Rightscorp DMCA notices likely will now. He said the ruling leaves unanswered how many DMCA notices should result in customer termination, what the relevant time for counting those should be, and how long a provider should wait until restarting service.
Sanders said copyright enforcement firm Rightscorp, a party in interest here, likely wanted the 4th Circuit to rule ISP failure to pass along copyright violation notifications to subscribers meant a failure of reasonably implementing a repeat infringer policy, though the court didn't. He said broadband providers likely now don't think they need to pass those along. Rightscorp didn't comment.
The 4th Circuit agreed with Cox that the lower court erred in telling the jury it could impose liability for contributory infringement if they decided the company knew or should have known about such infringing activity. Citing patent law and the Supreme Court's Sony and Grokster, the court said contributory infringement requires proof of, at minimum, willful blindness not just negligence.
The appellate court also vacated the lower court's grant of attorney's fees and costs to BMG and its denial of fees and costs to Cox (see 1709110017), saying the jury instructions holding requires vacation of the fees and awards. It wasn't addressing merits of the $8 million.
Experts say it's unlikely the 4th Circuit decision will be appealed to the Supreme Court. There aren't conflicts among circuit courts this brings to the front, Ghosh said.