Infringe, Recycle, Repeat: Not For a Healthy Digital Copyright Ecosystem

“DMCA=reactivate.” Not quite the phrase that inspires a sense of balance in the digital copyright space. This phrase, used by Cox itself to describe its DMCA repeat infringer policy, illustrates the growing concerns over service provider accountability online, a quality that seems to be reasonable enough to qualify for the DMCA safe harbor provisions. But Cox’s ineffective repeat infringer policy, which included other practices that were quite lenient, gave repeat infringers thirteen chances before considering termination of the account or if service was terminated, eventually reinstated the service.

In 2015, music publishers BMG and Round Hill Music sued Cox in the Eastern District of Virginia for contributory and vicarious infringement of their musical works via peer-to-peer file sharing by Cox’s customers. The district court found summary judgment for BMG on Cox’s safe harbor defense after which the jury found Cox liable for contributory infringement, awarding BMG $25 million in statutory damages.

Cox appealed, arguing that it was eligible for the safe harbor protections and that the jury instructions on contributory liability were erroneous. We filed an amicus brief to address the importance of effective copyright protection for all copyright owners and creators, and the need to preserve the balance Congress intended to strike in the DMCA between the rights of copyright owners and the liability of ISPs. On February 5, Judges Motz, Wynn, and Shedd of the Fourth Circuit Court of Appeals fortunately affirmed that Cox was not eligible for DMCA safe harbor provisions but vacated in part, reversed in part, and remanded on the point that the district court erroneously instructed the jury to find contributory liability based on a negligence standard.

Cox Not Eligible for Safe Harbor Protections

Congress passed the DMCA with the intention of balancing the rights of copyright owners with the needs of ISPs to operate without the threat of copyright liability for unknown infringements by their users. Congress wanted to encourage copyright owners and ISPs to work together and share the burden of combating infringement. The ISPs’ portion of this burden requires them to take several steps if they want to immunize themselves from potential liability for the copyright infringing acts of their users. One of these steps is that they adopt and reasonably implement policies that provide for termination in appropriate circumstances of subscribers who are repeat copyright infringers.

On appeal, Cox advanced several arguments to convince the Court that it qualified for the safe harbor provision. Cox’s first argued that the term “repeat infringers” in section 512(i)(1)(A) meant adjudicated infringers. This interpretation would have made the requirement meaningless. Requiring a copyright holder to obtain not one, but multiple judgments against a single subscriber before a conduit service provider like Cox could have any obligation to even threaten the subscriber with termination of services would effectively eliminate any incentive for the provider to assist copyright owners in responding to piracy by the provider’s subscribers, and would also pose a particularly unfair burden on individual creators, who already lack the means to police adequately their works in the first instance.

In response, the Court looked at the plain meanings of “repeat” and “infringer” while also examining different sections of the DMCA and the entire Copyright Act to conclude that Congress understood the difference and if it had meant to do so, would have expressly used the term “adjudicated infringers.”

The Court additionally found that Cox could not sufficiently prove that its DMCA policy was used to seriously terminate the service of repeat infringers in the appropriate circumstances. The Court noted that Cox implemented a generous thirteen strike policy which was coupled with the re-activation of services for those terminated, repeat-infringer customers. Later, Cox abandoned the reactivation process, but then simply failed to terminate services of repeat infringers despite the incoming volumes of infringement notices. In light of all of these practices, the Court labeled Cox’s enforcement of its policies as inconsistent and meaningless “leaving it essentially with no policy” and noted that Cox did not prove enough evidence to indicate otherwise.

Devices Capable of Non-infringing Use Do Not Automatically Excuse from Secondary Liability

If a service provider cannot qualify for safe harbor protection under the DMCA then it may be held liable for the infringements occurring on its services. Since Cox was unable to qualify for DMCA safe harbor protection, the Court then analyzed the district court’s jury instructions regarding Cox’s contributory liability. The Court found that the district court’s jury instructions on contributory infringement were partially erroneous and reversed in part, vacated in part, and remanded for a new trial.

The Court rejected Cox’s first argument that it could not be held liable for contributory infringement because its technology was “capable of substantial noninfringing use” based on the Supreme Court case, Sony v. Universal City Studios Inc. Granting a blanket exception for parties who create or distribute technology that is capable of substantial noninfringing use would render the § 512(a) safe harbor meaningless by eliminating any potential liability by conduit service providers since there is always some lawful use for such technology.

The Court noted that the Supreme Court clarified Sony, in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, by stating that when determining secondary liability, the intent to infringe cannot be presumed or imputed solely because the designed or distributed device had the capability for infringing use. The Court noted that this was not the equivalent to Cox’s argument that because a technology is capable of substantial noninfringing use it categorically excuses a party from secondary liability.

But “Should Have Known” Standard Too Low for Contributory Liability

Cox additionally argued that the district court erroneously instructed the jury to find Cox liable if Cox “knew or should have known about the infringing activity.” The Court accepted this argument and  stated that while willful blindness and actual knowledge are permissible levels of intent when determining contributory liability, a mental state of negligence (“should have known”) is not because it is “too low a standard.” The Court drew parallels to patent law and criminal common law concepts of aiding and abetting while shooting down BMG’s reliance on Ellison v. Robertson, a Ninth Circuit case, stating that the Ninth Circuit had since clarified that it requires either “actual knowledge of specific acts of infringement” or ‘[w]illfull blindess of specific facts.” Additionally, to highlight to the district court on how to instruct the jury on remand, the Court also noted that when determining contributory liability, the instructions must reflect that Cox must have had actual knowledge or willful blindness of specific instances of infringements.

However, this interpretation of the knowledge standard imposes a heavier burden for copyright owners in getting service providers to cooperate in addressing online infringements. A perfect knowledge standard is not only unrealistic, but it is also rather difficult for copyright owners to prove, especially in cases where large volumes of works are being infringed. This potentially unsettles that delicate burden balancing and cooperative nature contemplated by Congress when it passed the DMCA.

While the Court rejected a negligence standard for contributory liability, it still denied Cox access to the DMCA safe harbors based on its infringe, recycle, repeat approach to infringement notices. We hope the decision serves as an incentive for ISPs and copyright owners to continue to work together and address online infringement to achieve the balance Congress intended when it enacted the DMCA safe harbors.

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