The Digital Millennium Copyright Act (DMCA) provides internet service providers (ISPs) with immunity from copyright infringement for the infringing activity of their customers. That immunity, found at 17 USC § 512(a), comes at a modest price: To qualify, the ISP must have “adopted and reasonably implemented. . . a policy that provides for the termination in appropriate circumstances of subscribers. . . who are repeat infringers.”

BMG Rights Management is the fourth-largest music publisher in the world, with over 2.5 million compositions and recordings in its library. BMG hired Rightscorp, Inc. to police its copyrights over the internet. When Rightscorp detected Cox Communications customers “sharing” BMG’s music, it emailed an infringement notice to Cox. Rightscorp began sending these notices in the spring of 2011.

Each notice identified BMG as the copyright owner, and provided the title of the copyrighted work, the infringer’s IP address, a time-stamp identifying the time and date of the infringement, and a settlement offer asking the infringer to pay $20 or $30 in exchange for a release. RIghtscorp asked Cox to forward each notice to the infringer, but Cox refused to do so because it objected to forwarding a settlement offer. Rightscorp refused to remove the settlement offer, and Cox never considered removing it on its own initiative.

In the fall of 2011, Cox decided to “blacklist” Rightscorp, meaning that Cox would delete incoming emails from Rightscorp without reading them. After the blacklisting, millions of notices from Rightscorp were ignored in this fashion.

Cox, it turns out, had a “13 strikes” policy to deal with repeat infringers. Going through the chain of up to 13 infringing activities, subscribers might be suspended temporarily, but never terminated. After the 13^th infringing activity, the result was substantially the same–termination followed by reactivation. In fact, Cox had never terminated a subscriber for infringing activity without reactivating it.

The trial court granted BMG’s motion to disallow Cox’s attempt to raise the DMCA defense available to ISPs, holding that no reasonable jury could find that Cox implemented a policy that entitled it to the safe harbor that the DMCA provides to ISPs.

After a jury trial, BMG was awarded $25 million in damages for willful contributory infringement. Cox was ordered to pay an additional $8 million in attorneys’ fees.

On appeal, in BMG Rights Management v. Round Hill Music, the Fourth Circuit Court of Appeals upheld the trial court’s view of the DMCA safe harbor. It picked apart Cox’s argument that the obligation to terminate repeat infringers would apply only if an ISP had been presented with repeated adjudications of infringement. The Court of Appeals waded patiently through the history and text of the DMCA to discount this argument. It noted that Cox personnel had interviewed some of the infringers, who had admitted to infringing activity.

Getting down to brass tacks, the court considered whether Cox had reasonably implemented a policy aimed at terminating repeat infringers. It concluded that Cox had made every effort to avoid reasonably implementing its policy. The court made much of an internal email in which a Cox executive said that “if a customer is terminated for DMCA, you are able to reactivate them. … This is to be an unwritten semi-policy.” Another email summarized Cox’s practice more succinctly: “DMCA = reactivate.”

Cox was more succesful in challenging a key jury instruction given by the trial judge. The judge had instructed that the jury could find contributory infringement if Cox knew or should have known of the infringing activity. The Court of Appeals agreed with Cox that this was not the correct test. Rather, to establish contributory infringement, the jury must find that Cox either knew of the infringing activity or was willfully blind to it. In doing so, it imported concepts applied by the Supreme Court in patent cases, deeming them equally appropriate in the copyright context. Thus, it remanded the case for a new trial.

The Electronic Frontier Foundation (EFF) had taken Cox’s side in this fight, arguing that it is unreasonable to terminate an internet subscriber on the basis of mere accusations of infringement. The EFF argued that an internet connection is essential in today’s world, comparable to the need for running water. The trial court judge took note:

I read the (EFF) brief. It adds absolutely nothing helpful at all. 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 for not doing his homework. And it’s completely hysterical.

If the DMCA’s safe harbor langauge about repeat infringers were to be interpreted as requiring suspension only of adjudicated infringers, the DMCA requirement that a policy be reasonably enforced against repeat infringers would be effectively read out of the statute. No copyright holder could afford to obtain multiple judgments against a single subscriber. Often, the means used to obtain and distribute copyrighted material – such as certain peer-to-peer file sharing programs – combined with a huge collection of copyrighted material with no proof of purchase, should be sufficient to brand a repeat infringer.

On remand, another defeat for Cox seems probable. Ignoring millions of notices is hard to dress up as anything but willful. And since BMG has once won an $8MM award of its attorneys fees, the tab will only grow larger through a second trial and possibly another appeal.