Earlier this month, the Court of Appeals for the Fourth Circuit overturned the $25 million piracy liability verdict against Internet provider Cox.
The panel of three judges concluded that the district court made an error in its jury instruction and ordered a new trial.
The erroneous instruction said that the ISP could be found liable for contributory infringement if it “knew or should have known of such infringing activity.” The Court of Appeals agrees that based on the law, the “should have known” standard is too low.
As a result of the ruling, music publisher BMG Rights Management and Cox would have to go head to head again in a new trial. However, according to BMG, the Court of Appeals itself made a mistake.
A few days ago the copyright holder petitioned the court for a rehearing en banc, asking for a do-over before all the judges of a court.
The music publisher argues that the appeals court judges mistakenly reached their decision based on a legal principle that applies to “inducement” of liability, while BMG was pursuing a claim of “material contribution.”
“The panel’s unprecedented application of a heightened knowledge standard creates a conflict with decisions and pattern jury instructions from other circuits as well as with the common-law rules underlying contributory infringement.
“All of those recognize that BMG’s material-contribution theory requires only constructive knowledge,” BMG’s brief adds.
Even if the appeals court persists with its assertion that the liability standard is “willful blindness” rather than “should have known,” a new trial would not be warranted, according to the music publisher.
They point out that plenty of evidence was presented which proved that Cox was wilfully blind to the copyright infringements and describe the erroneous instruction as a “harmless error of the most benign kind.”
The music publisher’s request for a rehearing is supported by the RIAA, which filed an amicus curiae brief together with the National Music Publishers Association.
Both music industry groups back BMG’s arguments and ask the appeals court to consider a rehearing, stating that it would be in the best interests of artists, songwriters, and other rightsholders.
“The level of copyright infringement that takes place over the Internet is ‘staggering,’ and it is vital that copyright owners have effective mechanisms to address it. It is also critical that copyright owners can adequately address infringement that occurs in other contexts.
“If the panel’s decision is not corrected, it would threaten the very incentives of artists, songwriters, and others to create valuable works and distribute them to the public,” the RIAA and NMPA add.
For the RIAA the case is particularly important since it filed a similar lawsuit against Internet provider Grande Communications last year.
Given what’s at stake, we can assume that Cox will protest the request for a rehearing. And it wouldn’t be a big surprise if other telecommunications companies take the same position.
Update: The court denied BMG’s request for a rehearing (pdf).
BMG’s petition is available here (pdf) and a copy of the RIAA/NMPA motion can be found here (pdf).