BMG Rights Mgmt. (US) LLC v. Cox Communs., Inc. - 881 F.3d 293 (4th Cir. 2018)

Rule:

An Internet service provider (ISP) cannot claim the protections of the Digital Millennium Copyright Act (DMCA) safe harbor provisions merely by terminating customers as a symbolic gesture before indiscriminately reactivating them within a short timeframe.

Facts:

BMG Rights Management (US) LLC ("BMG"), which owned copyrights in musical compositions, filed the present suit alleging copyright infringement against Cox Communications, Inc. and CoxCom, LLC (collectively, "Cox"), providers of high-speed Internet access. BMG sought to hold Cox contributorily liable for infringement of BMG's copyrights by subscribers to Cox's Internet service. Following extensive discovery, the district court held that Cox had not produced evidence that it had implemented a policy entitling it to a statutory safe harbor defense and so granted summary judgment on that issue to BMG. The case proceeded to a jury trial that involved the testimony of more than a dozen witnesses and admission of numerous documents. At the conclusion of the trial, the district court instructed the jury that to prove contributory infringement, BMG had to show "direct infringement of BMG's copyrighted works" by Cox subscribers, that "Cox knew or should have known of such infringing activity," and that "Cox induced, caused, or materially contributed to such infringing activity." The court further instructed the jury that BMG could prove Cox's knowledge of infringing activity by showing willful blindness, if Cox "was aware of a high probability that Cox users were infringing BMG's copyrights but consciously avoided confirming that fact." The jury found Cox liable for willful contributory infringement and awarded BMG $25 million in statutory damages. Cox appealed, asserting that the district court erred in denying it the safe harbor defense and incorrectly instructed the jury.

Issue:

1. Was Cox entitled to the safe harbor defense?
2. Did the district incorrectly instruct the jury that the Cox could be found liable for contributory infringement if they knew or should have known of such infringing activity?

Answer:

1) No. 2) Yes.

Conclusion:

The Court held that the district court did not err in denying Cox a safe harbor defense under the Digital Millennium Copyright Act (DMCA), 17 U.S.C.S. § 512(a), because the evidence showed that they always reactivated subscribers after termination, regardless of their knowledge of the subscribers' infringement; the ISPs failed to implement their policy in any consistent or meaningful way, leaving them essentially with no policy. However, the Court held that the district court erred in charging the jury that Cox could be found liable for contributory infringement if they knew or should have known of such infringing activity because the formulation "should have known" reflected negligence and was therefore too low a standard. Because there was a reasonable probability that the erroneous instruction affected the jury's verdict, it was necessary to remand for a new trial.