Fourth Circuit tosses $25m piracy verdict

[Len]

The US Court of Appeals for the Fourth Circuit tossed a $25 million piracy verdict earlier this week and ordered a new trial in a high-profile dispute between internet service provider (ISP) Cox Communications and music licensing body BMG Rights Management.

However, it was not complete victory for Cox Communications as the Fourth Circuit also found that the ISP had forfeited its right to a safe harbour provision under the Digital Millennium Copyright Act.

Safe harbour status protects ISPs from claims of infringement if they are able to demonstrate that they are tackling the unauthorised distribution of copyright protected material.

Yesterday, February 1, the Fourth Circuit upheld a finding by the US District Court for the Eastern District of Texas that Cox Communications had failed to implement an anti-piracy policy in “any consistent or meaningful way”, so was disqualified from the safe harbour.

“Cox formally adopted a repeat infringer ‘policy’, but … made every effort to avoid reasonably implementing that policy. Indeed, in carrying out its thirteen-strike process, Cox very clearly determined not to terminate subscribers who in fact repeatedly violated the policy,” said Judge Diana Motz.

Cox Communications had been ordered to pay $25 million to BMG, but this was overturned by the Fourth Circuit.

The ISP had argued that the district court had incorrectly instructed the jury on contributory infringement.

“Specifically, Cox Communications challenges the district court’s instructions that the jury could impose liability for contributory infringement if the jury found ‘Cox knew or should have known of such infringing activity’,” said the Fourth Circuit.

Motz agreed with Cox Communications that the lower court had erred in instructing this, and ordered a new trial.

“The formulation ‘should have known’ reflects negligence and is therefore too low a standard,” she noted.