Cox Torrent Piracy Trial Do-Over Seen Revolving Around Different Arguments

When BMG's copyright infringement complaint against Cox Communications goes to trial -- again -- in an Alexandria, Virginia, federal courtroom next week (see 1808160006), the jury will see a notably different trial from the first, meaning it's tough to handicap whether BMG will again prevail, experts told us. The Cox internal email -- central in the first trial -- indicating the company's enforcement of its own policy of terminating subscribers for copyright violations was toothless “put [Cox] in a difficult position," said Electronic Frontier Foundation Senior Staff Attorney Mitch Stoltz. But the second trial will no longer focus on whether Cox satisfied the narrow statutory standard of Digital Millennium Copyright Act (DMCA) safe harbor protections but instead on almost a more philosophical question of whether it's responsible for the actions of its subscribers, he said. BMG sued Cox in 2015, alleging the ISP was contributorily liable for infringement of BMG’s copyrights by its subscribers pirating BMG's catalog via Torrents.

The 4th U.S Circuit Court of Appeals decision earlier this year remanding the district court's 2016 decision (see 1802010026) was the first in a long time when ISPs didn't get DMCA protection, making it less certain they can rely on Section 512 -- limiting liability for material online -- for difficult copyright issues, said R Street Institute Director-Tech and Innovation Policy Charles Duan. DMCA Section 512 has obviated the need for courts to address questions of whether ISPs actually are involved in infringement, meaning there's not much case law there, Duan said. He said defense avenues for Cox could include raising issues about to what extent it participated in the copying actions its users took. He said a key issue for the trial will be the requirement that Cox knowingly engaged in contributory liability. Cox and BMG outside counsel didn't comment.

One possible avenue for Cox is a focus on the DMCA notices it was receiving from Rightscorp and whether the company legitimately thought they were proof of infringement or merely an allegation of infringement, said copyright and DMCA lawyer Jonathan Band.

A content industry executive said the 4th Circuit decided ISPs need to abide by their own repeat infringer policies, but it sent back all the factual issues to be decided on whether the particular circumstances in this case demonstrate liability. She said the 4th Circuit decision blocks Cox from arguing it wasn't required to terminate customer accounts, but the cable ISP can still argue the facts in the case don't amount to secondary liability. She said a second jury might come to a different decision or come up with a different damage award, since rarely do juries come to the same or similar damage awards when rehearing the same case.

A lawyer with cable clients said the evidence will be much the same as the first trial, but the presentation of that evidence will change because BMG's challenge will be to take the stricter 4th Circuit standard and fit the evidence into it. He said ISPs consider the 4th Circuit decision somewhat of an outlier but are watching the case carefully because there are concerns about the precedent possibly being set. If BMG prevails again, it could open the flood gates for similar suits against ISPs, he said.

There are different legal theories of secondary liability, and questions that might come up in the upcoming trial include whether ISPs make significant contributions to acts of copyright infringement just by being a connection to the internet, Stoltz said. Another possible issue in the do-over trial is whether Cox has an ongoing relationship with customers that requires it to police and monitor its customers, he said. Another issue could be whether it's reasonable for Cox to protect its customers from copyright violation notices from companies like Rightscorp, he said.

Regardless of who prevails in the second trial, many expect it will be appealed again to the 4th Circuit, given the financial stakes and the possible precedent. Stoltz said secondary liability is a judge-made concept not in the Copyright Act, so decisions about holding an ISP responsible for customer behavior aren't necessarily something that will see get broad agreement or disagreement. He said the entertainment industry resisted such precedents and wants to move the courts toward strict liability where ISPs are held responsible for what their customers do, making a BMG appeal particularly likely if Cox prevails at the District Court level.

But Band said the likelihood of a 4th Circuit appeal depends on what happens at the District Court level and if the losing side can find errors of law it can identify to make it worth trying for an appeal. Multiple factors go into whether to appeal, such as business considerations and matters of principle, and an appeal is typically a lot cheaper than a trial, meaning pursuing one can be relatively low risk, Band said.

Whether another BMG court win will lead to increased litigation against ISPs isn't clear. The first trial and appeal turned on Cox internal communications, and presumably other ISPs have learned to be sure they're following their own policies and thus preserving their DMCA defense, Stoltz said. The Cox situation "may have been a fluke," he said. Added Duan, going after ISPs as a means of tackling copyright infringement isn't likely a top strategy of copyright holders.

The content executive said before the 4th Circuit decision a lot of content owners weren't optimistic about court willingness to find ISP liability, given decisions at the 2nd and 9th circuits that held online platforms not liable. With the 4th Circuit decision applying liability to ISPs, some parts of the content industry are taking advantage, she said, citing music industry litigation against Grande Communications (see 1802080001) and Cox (see 1808020009). Other parts of the content industry are taking more of a wait-and-see approach, she said. The decline of peer-to-peer sharing in favor of other forms of piracy also lessened the need for such litigation, she said.