Decision Raises Bar for DMCA Safe Harbor Defense

Decision Raises Bar for DMCA Safe Harbor Defense

RICHMOND, Va. — A recent federal appeals court ruling provides significant guidance on the obligations imposed on internet service providers to terminate repeat infringers under the DMCA.

Earlier this month, the 4th U.S. Circuit Court of Appeals Circuit affirmed a trial judge’s determination that cable giant Cox Communications Inc.’s lax policy toward piracy made it ineligible for a safe harbor statute that generally shields service providers from liability for their subscribers’ copyright infringement.

The appeals court rejected Cox’s defense of immunity to a lawsuit by music publisher BMG Rights Management over illegal music downloads but ordered a new trial anyway because of flawed instructions to a jury that ordered Cox to pay $25 million.

The court found that Cox’s 13-strike policy for repeat infringers was effectively no policy at all, and far less than the termination policy required in order to maintain safe harbor protections.

Industry attorney Lawrence Walters of Walters Law Group told XBIZ that the ruling by the 4th Circuit panel is important because it telegraphs to providers the possible outcome of not following the DMCA’s safe harbor provision, 17 U.S.C. § 512(a), which requires service providers to adopt and implement a policy to terminate users who post user-generated content and are repeat infringers.

“The court confirmed that failing to honor your own policy is a sure way to lose DMCA safe harbor,” Walters said. “Furthermore, termination should mean real termination, not ‘resetting the clock’ or allowing the user to sign up for the service again.

“Proper implementation of a repeat-infringer policy is a critical element of safe harbor protection. However, we often see this requirement overlooked by service providers,” Walters said.

“In light of this important decision, any site that seeks to rely on DMCA safe harbor should review its repeat-infringer policy, and make sure it is routinely followed.”

In the case, BMG, an owner of copyrights in musical compositions, sought to hold Cox vicariously and contributorily liable for the infringing activities of some of its 4.5 million subscribers who used BitTorrent to access and poach content. Over time, Cox either deleted the notices or took no action against the infringing users.

A lower court found Cox’s policies for terminating subscribers participating in infringing activities was insufficient to qualify for safe harbor protection, and the 4th Circuit agreed. Cox used an automated system for terminating user accounts that rested on a 13-strike policy, which Cox reset every six months.

“Cox’s automated system rests on a 13-strike policy that determines the action to be taken based on how many notices Cox has previously received regarding infringement by a particular subscriber,” the 4th Circuit wrote in its decision. “The first notice alleging a subscriber’s infringement produces no action from Cox. The second through seventh notices result in warning emails from Cox to the subscriber.

“After the eighth and ninth notices, Cox limits the subscriber’s Internet access to a single webpage that contains a warning, but the subscriber can reactivate complete service by clicking an acknowledgement,” the 4th Circuit wrote. “After the tenth and eleventh notices, Cox suspends services, requiring the subscriber to call a technician, who, after explaining the reason for suspension and advising removal of infringing content, reactivates service.

“After the twelfth notice, the subscriber is suspended and directed to a specialized technician, who, after another warning to cease infringing conduct, reactivates service. After the thirteenth notice, the subscriber is again suspended, and, for the first time, considered for termination. Cox never automatically terminates a subscriber.”

After rejecting Cox’s contention that the DMCA does not define the term “repeat infringers,” the 4th Circuit found that Cox could not be afforded safe harbor protections of the DMCA. But the court ultimately wiped out the $25 million verdict against Cox since the jury was wrongly instructed that liability could be imposed if Cox knew or should have known of the infringement. 

“Service providers cannot be found guilty based on this sort of negligence or recklessness standard,” Walters said. “Contributory copyright infringement requires that the service provider actually knew about, or remained willfully blind to, the infringing activity.” 

Upon retrial, consistent with the 4th Circuit’s decision, Cox must demonstrate that it did not have actual knowledge of, nor was it willfully blind to, specific subscriber infringements.