As Expected Judge Upholds His Own Problematic Ruling Concerning Cox's Repeat Infringer Policy & The DMCA

from the moving-on-up-to-the-appeals-court dept

For nearly two years now, we've been following an important DMCA-related case between music publisher BMG and the ISP Cox Communications. While the issues are a bit down in the weeds, what it really comes down to is a question of whether or not internet access providers are required to have a "repeat infringer" policy that removes customers who are seen to have been engaged in too much copyright infringement. Most people had assumed that the DMCA's requirements for a repeat infringer policy only applied to hosting providers -- i.e., those who help people host content -- as opposed to transit providers, who are merely providing the connectivity. In this case, though, that important nuance seemed to have gotten lost in the shuffle, mainly because of some stupid behavior on the part of Cox. Amazingly, Cox is basically the only major ISP out there that has a history of actually kicking people off its service for infringement. Most others have historically refused to do so. But Cox's policy is ridiculously complex, and involves something around 13 steps... and, on top of that, Cox admitted that once it's kicked people off they can just sign up for new service. Seeing all that, the court basically decided that Cox was acting in bad faith, and thus jumped right over the question of whether or not the repeat infringer policy even applied to Cox.

The judge in the case, Judge Liam O'Grady (who is also handling the Kim Dotcom case...) is not exactly known for his love of the internet. Earlier in the case, he had mocked the idea that there was any harm in kicking people off the internet. Responding to an attempt by Public Knowledge and the EFF to file an amicus brief, the judge mocked both organizations and the proposed brief itself:
It is a combination of describing the horrors that one endures from losing the Internet for any length of time. Frankly, it sounded like my son complaining when I took his electronics away when he watched YouTube videos instead of doing homework. And it's completely hysterical.
Up against that, it's no surprise that Cox found itself on the losing side. We explained why this ruling was so problematic and it goes way beyond the $25 million Cox was told to pay BMG.

As part of the process of moving on to appeal, Cox asked Judge O'Grady to reconsider his original ruling as a matter of law, and he's now rejected that plea with a fairly long and detailed opinion. Cox raised three specific concerns about the original ruling, saying that BMG failed to show actual direct infringement, that it failed to provide evidence of Cox's liability and that it also failed to show evidence of willfulness. O'Grady is not impressed.

On the question of direct infringement, Cox pointed out all of the problems with Rightscorp's system (which is what BMG was using) in identifying infringement -- and also argued that Rightscorp's own downloads aren't evidence of infringement. BMG responded that they tested Rightscorp's system and it seemed accurate to them. O'Grady says that Rightscorp's downloads are perfectly good evidence and doesn't go much deeper than that.

On the question of Cox's liability is where things really go off the rails. Cox points to the famous (and important) ruling in the Sony Betamax case that said that VCR devices are legal thanks to "substantial non-infringing uses." BMG then tried to use the Grokster ruling on inducement to undermine what the Supreme Court said in Sony. Here, O'Grady decides that the Sony ruling was a narrow one. That's a problem. O'Grady says that because Cox has an ongoing relationship with potential infringers, rather than ending that relationship at the point of sale, the Sony standard doesn't apply.
Such a claim is possible here because, unlike in Sony, Cox maintains an ongoing relationship with users of its service. Sony's last point of contact with users of the VTR was at the point of sale.... An ongoing relationship between a defendant and direct infringers presents a potential for culpability quite beyond distribution or design....
The judge also rejects the "in the alternative" argument presented by Cox that even if Sony doesn't apply, under Grokster the only way to apply liability is if Cox was found to have induced infringement (remember, the Supreme Court in the Grokster case made up -- out of thin air -- an "inducement" standard to explain why Grokster's file sharing system wasn't protected by the Sony ruling). Here, however, O'Grady takes the Grokster ruling to mean not just that there's an inducement standard, but rather as open season to come up with reasons why the Sony standard doesn't apply. Yikes.
Cox also argues that if Sony does not provide immunity, the Grokster Court made clear that BMG's only path to liability was through an inducement claim. The Court again disagrees. It bears noting that adopting Cox's reading of Sony and Grokster would greatly simplify this area of law. Sony would be a complete bar to contributory infringement whenever a defendant's product or service is capable of commercially significant noninfringing uses, and that safe harbor would be removed for only a distinct subset--those that actively induce infringement.
Well... yeah. That's what the courts have said. What's so terrible about that reading of the law? It makes perfect sense. Instead, O'Grady wants the law to be something different -- allowing courts to shut down services with substantial non-infringing uses by pinning liability based on... vague other claims. That's problematic on a number of levels as it almost writes the Sony ruling out of existence. (As an aside, in a footnote, O'Grady notes that if the appeals court disagrees with him on this point, the case is effectively over, as BMG didn't claim that Cox engaged in inducement until after the case was over, which he notes, correctly, "is far too little and far too late."

Finally, on the question of whether or not Cox was "willfully" blind to infringement on its network, O'Grady again takes a very expansive and troubling view of what he believes the law says. While multiple courts have taken the quite reasonable view that "willful" blindness requires actual knowledge of infringing behavior, O'Grady goes with a broader definition, and takes jokey emails from Cox's abuse team as "proof" that it knew of infringement, and then combined that with the fact that Rightscorp bombarded Cox with notices (whose sole purpose was not to stop the infringement, but rather in hopes that Cox would pass them on to subscribers to get those subscribers to cough up money). But Judge O'Grady takes Cox's decision to treat Rightscorp notices more like spam as a sign of willful blindness:
There was a significant amount of evidence of Cox's general knowledge of infringement on its network. Cox received notices from other copyright holders complaining of infringement. Cox knew from its traffic analysis that subscribers were using BitTorrent.... There was evidence from industry reports that the overwhelming majority of traffic on BitTorrent was infringing, and emails among members of the Abuse Group indicated Cox's knowledge of that fact.... ("Bittorrent is used for one thing only... and I would know. ;-)")... ("99% of DMCA violations is from people using P2P on purpose and not Trojan activity.")

While generalized knowledge of infringement occurring on its network is not sufficient standing alone, it did provide the backdrop for Cox's decision to continuously ignore and take no action in response to the 1.8 million notices, weekly letters, and dashboard from Rightscorp. There was also evidence that Cox had configured its graduated response system in such a way as to reduce both the total number of notices that entered the system and the amount of customer-facing action that may be required. Moreover, internal Cox communications, which were admitted over Cox's objections, signaled that Cox's decision not to process Rightscorp's notices may have been due to more than just the presence of the settlement language and instead reflected a general disdain for any enforcement responsibilities.
Again, O'Grady reads this in the worst possible light. But an ISP should have disdain for copyright holders trying to lump all the liability on them. The whole idea that everyone thinks ISPs should be Hollywood's private police force is silly, and it's why the safe harbors of the DMCA are designed to keep most of the liability off of the ISPs.

Not surprisingly, O'Grady also rejects all of Cox's complaints about the jury instructions and the exclusion of certain evidence. This included O'Grady's decision to block evidence of Righscorp's seriously scammy behavior -- such as its phone script telling people who said they hadn't infringed that they needed to hand their computers over to the local police to search the hard drives. O'Grady says he was right to exclude that evidence because it might unfairly prejudice or confuse the jury.

Basically the only thing that goes Cox's way is O'Grady's decision to deny BMG's request for a permanent injunction
At the outset, the Court notes that BMG's brief in support of an injunction relied heavily on a statement of fact that was not true. Specifically, BMG alleged that, following the jury verdict, Cox had continued to ignore Rightscorp's detection of "massive infringement" on its network....

... In fact, Cox provided notice to BMG shortly after trial that Righscorp was no longer blacklisted.
The court goes on to note that BMG's request for an injunction is overly broad and extreme, and would basically allow Rightscorp to kick people off of Cox's service with little oversight. Hilariously, BMG also demands that Cox "hand over the identity, email address, mailing address, and telephone number of every subscriber that BMG identifies...." Which is basically "please let us let Rightscorp play its shakedown game." Thankfully, the court rejects that too and laughs off BMG's claim that this is necessary for "transparency."
Quite obviously, if that were the reason, there would be numerous ways to anonymize subscribers and still track Cox's actions. There certainly would never be a need for an email address, mailing address, and telephone numbers. When asked, counsel conceded that the infromation would be given to Rightscorp...
Anyway, all of this is just prelude anyway. It seems highly likely that Cox will appeal this decision (though, it's also possible that it will come to some sort of settlement agreement with BMG). It's the appeal where all of this will become especially interesting.

Filed Under: copyright trolling, dmca, intermediary liability, isps, liability, liam o'grady, willful blindness
Companies: bmg, cox, rightscorp


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  1. icon
    Anarres (profile), 10 Aug 2016 @ 5:37pm

    Re: Protectionism

    Your comment reminds me of Melancholy Elephants.

    We'd better win the copyright wars sooner.

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