Business News Digital Labels & Publishers Legal Top Stories

BMG awarded $25 million in potentially landmark case on US safe harbours

By Chris Cooke | Published on Friday 18 December 2015

In a year when safe harbours were a big topic of discussion in music circles, a US court case that got underway relatively quietly just over twelve months ago could have just set an important precedent regarding the obligations of tech companies – and especially internet service providers – in helping rights owners tackle online piracy.

As much previously reported, BMG and Round Hill Music both sued US net firm Cox Communications last December. The music rights companies argued that Cox – which is not part of the Copyright Alert System scheme that involves most other major ISPs Stateside – was failing to deal with correspondence from their anti-piracy agent Rightscorp alerting them to customers on its network who were infringing BMG and Round Hill copyrights. That, the music firms claimed, meant that Cox itself should be held liable for the infringement.

Various legal technicalities were explored as the case went through the motions, with Cox insisting that it was fulfilling all of its obligations under US copyright law, while questioning the tactics and approach of Rightscorp, which the ISP liked to portray as a “copyright troll” that scared suspected file-sharers into paying fines without necessarily having sufficient evidence that any infringement had taken place. The fact that Rightscorp has been criticised for its tactics elsewhere aided this line of argument from Cox.

But last month, as the case was finally getting ready to be properly heard in court, the judge overseeing the proceedings made a significant and slightly surprising pre-trial summary judgement that pretty much blew most of Cox’s defence out of the water.

He said that BMG (at this point Round Hill was removed from the litigation) had sufficiently demonstrated that Cox had a deliberately slack approach to dealing with suspected infringers, so that it could keep selling those people internet services. In a subsequent expansion on his summary judgement, judge Liam O’Grady referenced emails sent between Cox employees that backed up that claim.

All of this meant that Cox could not rely on the safe harbours of US copyright law, which say that tech firms cannot be held liable for the infringement of their customers providing they have some measures in place to assist rights owners who identify people using the tech firm’s software or services to infringe.

With that summary judgement made, things weren’t looking good for Cox as the case went to court earlier this month. Meaning it was no real surprise that the jury hearing the case yesterday ruled that Cox was indeed liable for wilful contributory infringement by deliberately turning a blind eye to its customers accessing and sharing unlicensed content, even when made aware of it by BMG. Cox did manage to fight off claims that it was also liable for vicarious infringement, though it was nevertheless very much the loser in this case.

The jury then awarded BMG $25 million in damages. Given that Rightscorp said it had detected 1.8 million instances of infringement on Cox’s network, involving over 150,000 copyright works, and with 1397 specific BMG-controlled works listed as part of the lawsuit, actually those damages are relatively low. The maximum allowed under US law would have topped $200 million. But it is still a significant cost for a company which seemed pretty bullish that it could kick this action out of the court when BMG first went legal.

Cox – which is also in dispute with its insurance firm over who should cover the costs of this legal battle – will likely appeal O’Grady’s earlier decision on safe harbours. But even so, this ruling is likely to make net firms and tech companies in the US a little more wary of their obligations under copyright law, with the safe harbours on which they rely having been defined a little more precisely in this case that in past disputes.