Last Thursday, the Fourth Circuit decided a closely followed case on one of the safe harbor defenses under the Digital Millennium Copyright Act (DMCA). See BMG Rights Management (US) LLC v. Cox Communications, Inc., No. 16-1972 (4th Cir. Feb. 1, 2018). The court also addressed the intent standard for contributory copyright infringement.

BMG, an owner of copyrights in digital music files, sued Cox, an internet service provider, for contributory copyright infringement by Cox subscribers engaging in “peer-to-peer” music file sharing. The district court held that Cox was not entitled to the safe harbor defense under Section 512(a) of the DMCA because Cox did not satisfy the conditions under Section 512(i)(1)(A) that it “adopted and reasonably implemented … a policy that provides for the termination in appropriate circumstances of subscribers … who are repeat infringers.” At trial, a jury found Cox liable and awarded BMG $25 million.

Cox appealed.

Cox challenged, among other things, the denial of the safe harbor defense and the jury instructions given on contributory copyright infringement. The Fourth Circuit affirmed the denial of the safe harbor defense, but reversed and remanded on the jury instruction issue.

Cox argued that it was entitled to the safe harbor defense because it adopted and implemented policies to terminate subscribers who are adjudicated “repeat infringers.” The appellate court rejected such a narrow meaning of the “repeat infringers” provision under Section 512(i)(1)(A) for several reasons:

  • The ordinary legal definition of “infringer” and the way the term is used in the DMCA provided no support for an interpretation of the “repeat infringers” provision limited to infringers who have already been held liable. “Congress knew how to expressly refer to adjudicated infringement, but did not do so in the repeat infringer provision.” Id. at 13.
  • The legislative history of this provision reflected Congress’s concern for “those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others.” Id. at 14. The concern was not restricted to those sued for multiple instances of infringement and then found liable.
  • Cox cited no case holding that the “repeat infringers” provision meant adjudicated repeat infringers. In fact, the Second Circuit, in EMI Christian Music Grp., Inc. v. MP3tunes, LLC, 844 F.3d 79 (2d Cir. 2016), held that the provision meant something less — “someone who interferes with one of the exclusive rights of a copyright” “again or repeatedly.” BMG Rights Mgmt. at 14 (quoting EMI Christian). And earlier Seventh and Ninth Circuit cases dealt with the provision and made no mention of it applying only in cases of adjudicated repeat infringers.

Cox nonetheless argued that it still met the Section 512(i)(1)(A) conditions to qualify for the safe harbor defense. The appellate court disagreed. “Cox failed to qualify for the DMCA safe harbor because it failed to implement its policy in any consistent or meaningful way – leaving it essentially with no policy.” Id. at 20. The court highlighted these facts:

  • Cox employed an automated “thirteen-strike” policy before even considering terminating an infringing subscriber. And Cox reset the strike counter every six months.
  • Cox reactivated terminated subscribers. One executive wrote in an internal email that “Once the customer has been terminated for DMCA, we have fulfilled the obligation of the DMCA safe harbor and can start over.” This same executive noted that reactivation would allow Cox to “collect a few extra weeks of payments for their account. ;-).”
  • Cox automatically deleted BMG’s notices of copyright infringement.
  • Cox failed to show evidence in which it complied with its policies and terminated infringing subscribers after giving them final warnings.

In sum, the court believed that “Cox’s decisions not to terminate had nothing to do with appropriate circumstances but instead were based on one goal: not losing revenue from paying subscribers.” Id. at 20 (internal quotes omitted).

Still, the court vacated the verdict in BMG’s favor.

The district court’s jury instructions permitted the jury to find Cox contributorily liable for copyright infringement under the wrong intent standard. Whether Cox “should have known” – a negligence standard — its subscribers were infringing copyrights was not enough to hold Cox contributorily liable. Id. at 23. Cox had to be at least “willfully blind” – a standard closer to actual knowledge — to the infringement:

We are persuaded that the Global-Tech [Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011)] rule developed in the patent law context, which held that contributory liability can be based on willful blindness but not on recklessness or negligence, is a sensible one in the copyright context. It appropriately targets culpable conduct without unduly burdening technological development.

Id. at 27. Accordingly, the court remanded the case for a new trial because of the “reasonable probability” that the erroneous negligence jury instruction affected the verdict. Id. at 30.

The BMG decision clearly instructs internet service providers to do more than adopt and implement policies for the termination of adjudicated repeat copyright infringers. But how far providers must go to restrict internet access for “those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others” remains an open issue.

The standard to hold an internet service provider liable for contributory copyright infringement is less of a mystery. Following the BMG decision, the standard in the Fourth Circuit is “willful blindness,” offering protection to providers who might negligently allow subscribers to engage in infringing conduct.

Stay tuned for what happens on remand…