Music Industry Finding Justice Versus ISPs

The "safe harbor" of the Digital Millennium Copyright Act, found specifically in Title 17, section 512 of the United States Code, seems to be decreasing in size. This has positive ramifications for copyright holders in the music industry.

Billboard Biz recently reported that Charter Communications is a defendant in a lawsuit filed by record labels and publishers alleging that it refused to take "reasonable measures" to limit copyright infringement by its subscribers.

Considering the result of a similar action initiated by BMG Rights Management in 2014 and decided  on appeal in February 2018 by the federal Fourth Circuit, the labels and publishers may be in a strong position to win a judgment against Charter.

The BMG vs. Cox Communications suit resulted in a settlement after the appellate panel found jury instruction errors and remanded the case.  But the key part of the opinion upheld summary judgment for BMG on the argument of Cox that it was entitled to the "safe harbor" defense against copyright infringement.

In short, case discovery revealed that Cox enjoyed receiving monthly fees from its 4.5 million subscribers. This enjoyment trumped any sort of interest in policing "peer-to-peer" file sharing and copyright infringement as required by law.

It reserved the right to suspend or terminate services for subscribers who used them "to post, copy, transmit, or disseminate any content that infringes the patents, copyrights ... or proprietary rights of any party."  But this policy had no real teeth or consequences during the period in question. 

A surprisingly lenient "thirteen-strike" policy determined the action to be taken based on prior notices of infringement by a particular subscriber. Soft penalties included warning emails, limitation of Internet access subject to full reactivation by the clicking of an acknowledgment, and warnings issued by specialized technicians. To add to the joke, only one notice per subscriber per day was counted, and the thirteen strike counter was reset for a subscriber every six months.

BMG, a mega music publishing company, hired Rightscorp, Inc. to assist in protection of its music copyrights.  It also filed the action against Cox alleging vicarious and contributory liability for copyright infringement.

Following a jury trial where more than a dozen witnesses testified and numerous documents were admitted into evidence, $25 million in statutory damages was awarded. The aforementioned error in jury instructions reduced this to an unknown settlement amount in the summer of 2018 (ouch!).

But the Fourth Circuit ruled that Cox did not meet the requirement of section 512 that it "has adopted and reasonably implemented ... a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers."

In a clever attempt to steer the interpretation of law their client's favor, the attorneys for Cox contended that "infringer" really means "adjudicated infringer" by a court and that Cox lacked "actual knowledge" of subscriber infringement.

But the lax policy regarding policing infringement was revealed in case discovery, and Cox failed to meet its burden on its safe harbor defense. Customers were terminated symbolically before being reactivated within a short time frame. Cox instituted automatic deletion of infringement notices received from Rightscorp, agent for BMG. In one instance, a manager directed an employee to suspend and not terminate a customer "one LAST time" because the customer paid over $400 per month and that every terminated customer resulted in lost revenue.

So the "safe harbor" defense has been dented, to say the least. I will keep my eye on developments stemming from the Digital Millennium Copyright Act (DMCA).

And if you thought jury instructions aren't all that important, think again.