No. 29

December 01, 2015

In a lawsuit filed by BMG Music Service against Cox Communications, it seems ISP's may have a problem on their hands over issues of user piracy requiring strong actions be taken against users infringing on copyrights. A federal judge has issued a ruling denying Cox safe harbor from copyright liability because it hadn't mplemented a repeat-infringer policy. Cox will now have to defend itself from these infringement claims made by BMG Rights Management, a music publisher which controls works by David Bowie, Bruno Mars, Frank Ocean and many other artists. It is too early to tell if BMG will ultimately prevail over Cox, and even if that happens at the upcoming December trial, Cox would likely appeal the verdict.

The fact that a judge would deny safe harbor to an ISP over copyright infringement should make ISP's nervous and could result in their taking notices of infringement by content owners more serious. The ISP's traverse a fine line of liability not only in courts of law, but also with insurance companies. As a result of this ruling, underwriters at Lloyds of London filed its own lawsuit against Cox in New York's Supreme Court in an attempt to avoid the potential damages from user piracy. According to Lloyd's of London, Cox has been told that its insurance policy doesn't cover the BMG claim because it "arose out of intentional and not negligent acts" and "did not arise out of acts in rendering internet services but rather Cox's business policy and practice of ignoring and failing to forward infringement notices and refusing to terminate or block infringing customers' accounts." The insurer believes Cox should have terminated customers from its service who were deemed to be pirates.

Rightscorp, Inc. is dedicated to the vision that digital creative works should be protected economically so that the next generation of great music, movies, video games and software can be made and their creators can prosper. Rightscorp uses software that monitors the global Peer-to-Peer (P2P) file sharing networks to seek out and find illegally downloaded digital media. On behalf of digital media copyright owners, and working in conjunction with major Internet Service Providers (“ISPs”), they automatically send out copyright infringement and demand notices to users who have illegally downloaded digital media.The violators remit payment to Rightscorp for the copyright infringement and Rightscorp makes payment to the copyright owners. More information on Rightscorp. Inc. can be found on their website at, click here.

Rightscorp began shaking down Cox customers with demands for money focusing on the actions of the plaintiffs' agent, leading to the recent lawsuit against Cox. U.S. District Judge Liam O'Grady basically responded by shifting the focus back. It's one thing for an ISP to put up a brave front by fighting those like Rightscorp, but to do so with neither safe harbor, nor backing by insurance, raises the risk level. Only time will tell if this could be a game-changer on the piracy front. If BMG wins this lawsuit and Cox is ordered to pay damages for user infringement, this would resonant among all ISP's who likely would rewrite their user policies demanding heavy actions for infringement. While most ISP's currently have clauses in their policies addressing user infringement, they are generally agreements by the user not to infringe and most ISP's don't follow up or take actions because they feel they have no liability in the matter. BMG told the judge that Cox's purported infringer policies were merely for show and that the ISP acted on fewer than five percent of copyright infringement notices in the two years before the lawsuit was filed. Under Federal Copyright Law, once the ISP has actual knowledge of copyright infringements that take place using its network, it has specific duties in relation to the enforcement of the rights of the owners of the material in question.

Every ISP is required by law to enforce a policy that provides, in appropriate circumstances, for termination of internet service to subscribers who become repeat infringers. An ISP’s terms of use typically states that it can terminate your service if you violate the copyrights of others. When the ISP notifies its subscriber of an infringement and passes along a notice from Rightscorp, the user is advised that based on current laws e/she could be liable for up to $150,000 in damages. If the user clicks on the link supplied, the user can avoid legal action by remitting payment to Rightscorp who then passes on a percentage to the copyright owner. As such, copyright infringement can be settled between user (infringer) and the copyright owner quickly and affordably.

A ruling here in favor of BMG could result in internet users facing immediate termination and possibly financial penalties from the ISP. Just like prices in the health care industry have risen in face of malpractice lawsuits, leading to doctors needing to protect themselves through malpractice insurance, so too could customers of ISP's see increased pricing to offset the cost of insurance that ISP's would need to protect themselves. Personally I feel it will be a good thing if BMG wins this lawsuit. ISP's should be responsible for the actions of its users and need to take infringement more seriously. This is just the thing to wake everyone up. There needs to be a path to finding a way that content creators can survive and prosper.

The ruling comes in the form of a short two-page order with a more detailed memorandum forthcoming that will hopefully explain the reasoning behind the decision. It will be a document that will be closely reviewed by attorneys in the tech and entertainment industries. On Dec 2, 2015 a trial is set that could deal with damages awarded.

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