A recent court order from the United States District Court for the Eastern District of Virginia—and a resulting jury verdict – may be instructive to internet service providers (“ISPs”) when it comes to their “repeat infringer” policies under the DMCA.  The Court found Cox Communications (“Cox”) was not entitled to “safe harbor” protection under the Digital Millennium Copyright Act (“DMCA”) and a jury subsequently found it contributorily liable for the copyright infringement of its internet subscribers.  The jury ordered Cox to pay $25 million dollars in damages to BMG Rights Management LLC (BMG”).  The decision is a good reminder to ISPs to make sure that they actually implement their “repeat infringer” policies and to not ignore infringement notifications from copyright owners.  Here’s a basic summary of the facts:

Cox had an Acceptable Use Policy with every internet subscriber that allowed Cox to terminate internet services of those that infringe any intellectual property owned by third parties.  To deal with infringers, Cox would create a single “ticket” per subscriber per day once Cox received a notification alleging that the subscriber infringed copyrighted material (only the first infringement notification received that day for each subscriber was counted).  Cox would only consider terminating the subscriber’s internet service after Cox created 14 tickets for the subscriber within an “abuse cycle” (the abuse cycle restarts if no notifications are received within 6 months from the last notification).  Even then, however, termination was left to the discretion of Cox employees and, apparently, rarely happened.  Once a subscriber was terminated, though, Cox would often times reactive the subscriber’s service upon request (even if the request is made only a few days later).

In November 2014, BMG filed suit against Cox alleging that Cox was contributorily and vicariously liable for the alleged infringement of BMG copyrighted materials by Cox’s internet subscribers.

Prior to filing the suit, BMG had sent Cox hundreds of thousands of infringement notifications through BMG’s agent, Rightscorp.  The infringement notifications included proposed settlement agreements that BMG requested be forwarded to the subscribers that had allegedly infringed.  However, Cox repeatedly blocked (e.g., intentionally did not receive) the infringement notifications from Rightscorp because Cox had an internal policy refusing to forward settlement agreements to subscribers and because Cox would cap the number of infringement notifications it would receive from a single entity.

In 2015, both parties filed motions for partial summary judgment.  In Cox’s motion, Cox argued that it was not liable for the infringement of its subscribers under the safe harbor provisions of the DMCA.  The safe harbor provides, in relevant part, that an ISP is not liable for the infringement of its subscribers so long as the ISP “reasonably implemented… a policy that provided for the termination in appropriate circumstances of subscribers… who are repeat offenders.”  Id.  Cox argued that the safe harbor only required: (1) the termination of internet services; and that (2) the internet services only needed to be terminated when a subscriber has been adjudicated an infringer in court.

The court rejected Cox’s arguments.  First, the court found that Cox failed to actually implement its policy because Cox declined to terminate internet services to infringers in an attempt to continue to collect revenue.  For example, prior to Fall 2012, Cox’s internal policy was to permit reactivation of a terminated subscriber soon after the subscriber was terminated thereby allowing Cox to continue to generate revenue from the repeat offender.  The court found that this internal policy rendered Cox’s repeat infringer policy an “absolute mirage.”  Second, the court held that ISPs are required to terminate internet services to alleged infringers when the ISPs have “sufficient evidence to create actual knowledge of blatant, repeat infringement by particular users.”  Id.  (internal citations omitted).  The court held that notifications from copyright owners can meet the sufficient evidence standard, even if the ISP blocked the notifications.  Therefore, the court rejected Cox’s arguments that it only needed to terminate adjudicated infringers.  The court found, as a matter of law, Cox was not protected under the safe harbor provisions.

Two weeks after the court ruled on the motions for summary judgment, a jury found Cox guilty of willful contributory infringement of over 1,000 BMG copyrighted materials.  The jury awarded BMG $25 million in damages.

This case is a good reminder that to be protected by the safe harbor provisions, the ISP must actually follow its repeat infringer policy.  Following the internal policy includes actually terminating internet access to subscribers for a prolonged period of time when the repeat infringer policy dictates termination.  Additionally, this case demonstrates that ISPs cannot ignore infringement notifications from copyright owners since receiving several such notifications can be used to infer that the ISP had actual knowledge of copyright infringement.