December 2015, a Virginia federal jury ruled that Internet provider Cox Communications was responsible for the copyright infringements of its subscribers.
The ISP was found guilty of willful contributory copyright infringement and ordered to pay music publisher BMG Rights Management $25 million in damages.
Unhappy with the outcome, Cox filed an appeal, with some success.
Earlier this year the Court of Appeals for the Fourth Circuit overturned the original verdict due to an erroneous jury instruction and ordered a new trial. However, the ISP would start at a significant disadvantage, without safe harbor protection, because it failed to implement a meaningful repeat infringer policy.
This week would mark the start of the new trial but this can be scrapped, as both parties have chosen to settle the matter out of court instead.
Cox agreed to pay an undisclosed settlement amount to BMG. While the scale of the settlement remains undisclosed the music rights group notes that it is “extremely happy” with the “substantial settlement.”
In the initial case, Cox was ordered to pay $25 million plus $8.5 million in costs. It would make sense that the settlement amount is lower than that, but it’s likely still in the millions.
“While the financial terms of the settlement are confidential, we are happy they reflect the seriousness of this case,” says Keith Hauprich, BMG’s General Counsel in North America.
“This was a landmark case in which BMG took on the third biggest internet service provider in the United States to defend and establish the principle that in order to benefit from a so-called ‘safe harbor’ defense, an ISP has responsibilities.”
BMG said it agreed to a settlement because it has already established in court that ISPs are obliged to take action against repeat infringers. If ISPs don’t take reasonable measures, they can lose their DMCA safe harbor, which opens them up to piracy liability claims.
We reached out to Cox requesting a comment on the outcome but at the time of publication, we have yet to hear back.
The case has caused a lot of uproar in the ISP community. Several companies have taken a good look at their internal policies and likely tightened them where needed. Those who haven’t should pay attention, BMG’s General Counsel warns.
“Other ISPs should take note that the law gives protection to the work of artists and songwriters. We will not hesitate to take action where necessary,” Hauprich stresses.
The BMG vs. Cox case was the first of its kind, but it’s certainly not the last. Several Internet providers have been sued over the repeat infringer issue over the past several years, including Grande Communications, which was taken to court by the major record labels.
Seizing the opportunity, the same labels also filed a lawsuit against Cox recently. This case lists more than 10,000 works, which means that the potential damages exceed a billion dollars.
Update: Cox confirmed that they reached a confidential settlement but are not commenting on the case beyond that.