As we noted a couple of weeks ago, Judge Liam O'Grady
rejected Cox Communication's attempt to protect itself under the DMCA's safe harbor concerning a "repeat infringer policy." At the time, he only said he would explain his reasons later, and late yesterday
he released his full opinion. It, unfortunately, brings to mind the phrase "hard cases make bad law."
As we explained when BMG and Round Hill Music (with the help of Rightscorp)
first sued Cox Communications, the company seemed like a slightly odd choice. While it was the largest of the internet access providers
not to sign onto the so-called "voluntary" six-strikes "Copyright Alert System" hammered out between the RIAA/MPAA and big ISPs, it already had a reputation for
actually disconnecting those accused of repeat infringements. None of the other major ISPs do that. In fact, a key prong of the whole six strikes thing was that no one would be getting kicked off the internet.
However, the RIAA has
long insisted that the DMCA's
512(i) required ISPs to kick people off the internet -- even as that theory had never really been tested until now. Many others had assumed 512(i)'s "repeat infringer" policy only really referred to service providers who actually had direct control over content -- i.e., a YouTube or SoundCloud style site. Kicking people entirely off the internet because one person who uses their account to infringe is quite draconian.
The issue here, however, gets muddied, because Cox made
such a mess of its "repeat infringer policy." Yes, it alone among the major ISPs will kick people off.
But (and this is the important bit), its
internal policy was apparently to kick people off... and then allow them to sign right back up for new service, at which point the count on "infringements" would be reset to 0. For obvious reasons, that
feels pretty sketchy, and it's the key point that Judge O'Grady focuses on. Doing something that feels sketchy will often obscure the more important legal arguments. Judge O'Grady basically tosses aside all the other issues because of this "bad behavior" by Cox, as immortalized in some internal emails.
The record conclusively establishes that before the fall of 2012 Cox did not implement its repeat infringer policy. Instead, Cox publicly purported to comply with its policy, while privately disparaging and intentionally circumventing the DMCA’s requirements. Cox employees followed an unwritten policy put in place by senior members of Cox’s abuse group by which accounts used to repeatedly infringe copyrights would be nominally terminated, only to be reactivated upon request. Once these accounts were reactivated, customers were given clean slates, meaning the next notice of infringement Cox received linked to those accounts would be considered the first in Cox’s graduate response procedure.
Numerous emails in the record, portions of which are reproduced below, support these conclusions. Even viewed in the light most favorable to Cox, the Court finds the contents of the emails cannot be explained away. Cox’s attempts to recast the emails are unavailing. Nor can they be pinned on low level employees whose views had no real significance. The name that appears again and again on these emails is Jason Zabek, Cox’s Manager of Customer Abuse Operations. In 2009, Zabek sent an email titled, “DMCA Terminations,” to the abuse group that said:
As we move forward in this challenging time we want to hold on to every subscriber we can. With this in mind if a customer is terminated for DMCA, you are able to reactivate them after you give them a stern warning about violating our AUP and the DMCA. We must still terminate in order for us to be in compliance with safe harbor but once termination is complete, we have fulfilled our obligation. After you reactivate them the DMCA ‘counter’ restarts; The procedure restarts with the sending of warning letters, just like a first offense. This is to be an unwritten semi-policy . . . We do not talk about it or give the subscriber any indication that reactivating them is normal. Use your best judgment and remember to do what is right for our company and subscribers. . . . This only pertains to DMCA violations. It does not pertain to spammers, hackers, etc.
And, based on that, the court decides that Cox does not have a "reasonably implemented" termination policy for repeat infringers. There are a bunch of other similar emails, indicating that this absolutely was Cox's policy. Of course, all of that obscures the question of whether or not 5129(i) is meant to apply to access providers, rather than online service providers.
Separately, the judge buys BMG's claim that in late 2012, Cox actually stopped terminating accounts almost entirely (leaving aside, again, that
no other major access provider terminates anyone). Again, some questionable internal behavior by Cox comes back to bite them. The judge highlights a case where Cox internally kept discussing a user who was frequently accused of infringing, and who they threatened to cut off... but didn't -- even admitting it's at least partly because of the large amount of money the customer pays.
In June, a senior engineer in the abuse group said this about a customer who had been given a final suspension and advised to remove all P2P file-sharing programs: “This customer will likely fail again, but let’s give him one more change [sic]. [H]e pays 317.63 a month.”
The judge uses this and other examples to note that Cox knew of "repeat infringers" but didn't terminate them. Of course, the vague language of 512(i) doesn't say that you have to terminate someone as soon as you know they're repeat infringers -- just that you have a "reasonably implemented policy." However, Judge O'Grady uses these examples to suggest the policy implementation is not reasonable.
Cox's defense to that is it can't know for sure if people are infringing based solely on accusations. This is correct, but Judge O'Grady doesn't care.
Although Cox was under no duty to monitor for infringement, Cox did not have leeway to wait until an account holder was adjudicated as an infringer to find that circumstances were appropriate for termination. As explained above, the Court disagrees that a repeat infringer policy applies only to those who have been held liable in a copyright suit. Rather, an account holder must be considered an infringer, at minimum, when the service provider has actual knowledge that the account holder is using its services for infringing purposes. Nor do service providers have complete discretion to define “appropriate circumstances.” Appropriate circumstances arise when an account holder is repeatedly or flagrantly infringing copyrights. Thus, when Cox had actual knowledge of particular account holders who blatantly or repeatedly infringed, the responsibility shifted to Cox to terminate their accounts.
That, alone is quite troubling. Kicking people off the internet based merely on
accusations of infringement is
really dangerous, especially given the number of false infringement allegations that we see.
The one good thing is that the court rejects BMG's troubling definition of "making available." This has been a fight that's been going on for ages. Copyright law says that one of the
exclusive rights given to a copyright holder is the "distribution" right. What is not settled law at all is whether or not "making available" violates this distribution right, or if copyright holders have to show
actual distribution. The courts are somewhat split on this, with O'Grady recognizing that merely making available is not distribution.
At the threshold, the Court questions the evidence relied on by those courts that purportedly establishes that distribution is interchangeable with publication. Those courts build upon comments in legislative history as well as an excerpt from the Supreme Court’s decision in Harper & Row Publishers, Inc. v. Nation Enterprises.... Legislative history cannot override the plain meaning of “distribution” under § 106(3), however, and Harper & Row involved a narrow discussion of first publication and not the meaning of distribution and publication generally....
Nor does the definition of “publication” support a broader reading of the distribution right. The Act defines “publication” as the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication.
...The first sentence of the definition tracks the language in § 106(3), making it clear that all distributions are publications. It does not follow from that proposition that the inverse—all publications are distributions—is also true.... In short, § 101 provides no support for BMG’s “making available” theory.
There's some more in the ruling, but it seems pretty clear that Cox's own internal emails and policies really sunk the company here, and out of that could come some potentially dangerous law. Some have been making a big deal over the fact that Cox's insurance company, Beazly, has filed for declaratory judgment that it's
not responsible for any judgment in this case -- but again, that seems to focus on Cox's own actions, which may not apply more broadly to other providers.
Also, important is the fact that the trial still is about to go forward. Losing the safe harbor protections does not, necessarily, mean that Cox will lose the overall case, but it's an ominous start. Judge O'Grady's rulings and statements so far certainly do not bode well for the company. It's also a little bit ridiculous that O'Grady focuses so much on Cox's bad behavior, but leaves out Rightscorp's
much worse behavior -- but I can see where he's coming from.
In the end, this is unfortunate and it's certain that this case will be appealed, no matter how it turns out. But the bad behavior by Cox poisons the well a bit in terms of focusing on the rather important question of what 512(i) actually means, and whether it really applies to internet access providers. As it stands right now, however, a potentially dangerous precedent could be set, whereby people could be forced to completely lose internet access based on mere accusations of copyright infringement. It's hard to believe that Congress intended such a result, but that's how Judge O'Grady is now reading the law.
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