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Landmark Ruling Against Cox ISP for 'Willful' Copyright Infringement

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By Jonathan R. Tung, Esq. on December 18, 2015 12:56 PM

A federal jury recently just handed down a $25 million verdict in favor of BMG, according to ArsTechnica, in what should be the most influential copyright case of this year. The mega-label company BMG holds the rights to works by Bruno Mars, David Bowie, and a handful of other artists. The victim of this sizable verdict? The Internet Service Provider Cox. According to the math, the $25 million sum amounts to somewhere in the neighborhood of $18,000 per song in controversy.

The lawsuit is definitely one for the books because it appears to be the first time in history that an appeals court has found an ISP responsible for the actions of its subscribers.

Getting Down to the Basics

Controversy originally began when BMG's agent Rightscorp sought to solicit the aid of Cox ISP in sending out demand letters to each of the individual infringing subscribers. The Rightscorp business model is essentially made up of sending waves of copyright email notices to alleged violators of BMG's copyrights and demanding $20-30 settlements for each song pirated. The business model hasn't been the most viable for Rightscorp, which has been looking over the edge at bankruptcy.

Cox refused to help. In the opinion of BMG, this was not simply a professional brush-off, but double dealing. BMG called Cox's actions "under the table policy purporting to terminate repeat infringers while actually retaining them as high-speed internet customers." Court documents show that even though there were well over 1.8 instances of copyright infringement alone by Cox users, only about 1,400 of them were subject to litigation in the suit.

This Just In: Condoning Can be Willful

Here's the thing ... based on the facts of the lawsuit, Cox technically did not aid copyright infringement, but it did provide the platform to make it possible. Still, the federal jury was not merciful to Cox and found the ISP liable for contributory copyright infringement after it was proved that Cox's users were using the service to infringe copyrights on a massive scale.

But what's most perturbing to ISPs now, is that the jury found that Cox was willful in its actions because it had failed to "reasonably implement a repeat-infringer policy" -- thus making it ineligible for enjoying safe harbor protections under the DMCA.

Actually, it's a little more complicated than that. What court documents reveal is that Cox would kick infringers off, and then invite them back -- in a practice called "soft termination." The court found that even in a light most favorable to Cox, its business policy of "slap-on-the-wrist" was clearly not a reasonable response to repeated copyright violations. "We need the customers," Jason Zabeck, Cox's Manager of Customer Abuse Operations allegedly said.

Finally Happening

The ruling is historic because it marks the first time that we can find that an ISP has been held liable for the copyright violations of its users -- at least during the implementation of DMCA. In the past, courts have been unwilling or at least reticent to bring the hammer down on ISPs who were at least aware of a rampant piracy. But who can tell what the long term effects will be? Copyright violations will likely continue, but how will ISPs respond?

Bad Days to be Cox

Cox is now facing more legal trouble from its insurer who wants to wriggle out of any payments. It points to "Cox's business policy" that ignored the culture of repeat-copyright infringement.

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