Tag: DMCA

BMG Settles With Cox as Petitioner Asks Supreme Court to Interpret DMCA

On Saturday, Digital Music News reported that BMG Rights Management has reached a “substantial” settlement agreement with Cox Communications, thus ending a four-year legal battle that was teed up for a retrial in district court before the end of this month. In December of 2105, a jury awarded $25 million plus $8 million in fees to BMG, finding Cox guilty of contributory copyright infringement for the ISP’s role in the infringing activities of its customers.

For detailed discussion of this case, see posts here, here, and here.

Cox appealed to the 4th Circuit where most of its key defenses were rejected by the court with the exception of one procedural technicality—the instruction to the jury regarding the standard for contributory infringement. On that basis, the case was remanded for retrial, and in a new brief, Cox requested that copyright infringement not be referred to as “theft” or “stealing” during opening statements. Judge Liam O’Grady denied the request, writing, “Specifically, the Court does not find it appropriate to bar BMG from referring to copyright infringement as stealing, theft, or some other related term, as such language is not unduly prejudicial to Cox.” That news came on August 15th, nine days before the announced settlement agreement.

This case has been followed closely by both copyright advocates and digital rights groups as a potential landmark for online service providers with regard to their rights and responsibilities under the terms of the DMCA. Although Digital Music News is correct to report that a settlement does not render the force of legal precedent that a final decision in court would have, the fact-pattern and judicial opinions in BMG v. Cox will likely be instructive in future, similar litigation. Suffice to say, the general assumption that ISPs enjoy magical, blanket immunity vis-a-vis copyright infringement took a substantial beating at every phase of this case.

Evidence revealed that, by willfully avoiding any denial of service to repeat infringers, Cox vitiated its safe harbor under the DMCA. Its appeals to the “Sony standard” were rejected. Its attempts to redefine the term “repeat infringer” were rejected. Its claims to having no knowledge of infringing activity were rejected. And amici like EFF filing briefs in the case, asserting that denial of internet service for any reason was equivalent to cutting off someone’s access to water, were not persuasive due to the fact that account termination for repeat copyright infringement—if the ISP wants to be shielded from liability—is mandated by statute.

Most acutely, the facts, allegations, and defenses already presented and opined upon in this case do not bode well for Cox as it now faces a $1.5 billion lawsuit by several of the major record labels, including Sony, UMG, and Warner Music Group for “knowingly profiting from the infringing activity of its users.” It will be very interesting to see whether Cox even tries to fight this larger suit in court after the much smaller case has demonstrated how the narrative is likely to play out—and in the same circuit.

DMCA to SCOTUS?

In related DMCA news, pornographic producer Ventura Content has filed a petition for cert at the Supreme Court after the Ninth Circuit upheld a summary judgment in favor of the website Motherless, despite evidence that the site, like Cox, allegedly engaged in conduct that should have nullified the safe harbor shield. At the heart of the petition is Ventura’s assertion is that the Ninth Circuit in particular fosters “DMCA disarray” among various court interpretations of the statutes. “The result of the DMCA disarray is that abject bootlegging in the offline, brick-and-mortar world remains unlawful, but the same conduct online by and OSP-turned-publisher garners absolute summary judgment immunity,” the petition states.

Ventura alleges, for instance, that a split exists between the Ninth and other circuits with specific regard to the OSP’s requirement to maintain a repeat infringer policy, as was dispositive in Cox. The brief states …

“At root, the Second and Seventh Circuits have disallowed formulaic policies that allow OSPs to run brazen infringement machines and to purposefully engage in conduct to avoid knowledge—that is, behave like ostriches; in stark contrast, the Ninth Circuit in Ventura permitted a brazen infringement machine that is more actively involved in curating infringing content than even the business model this Court outright—and unanimously!—condemned in Grokster.”

Ventura argues that, after 20 years of “court gestation of online copyright standards,” it is time for the Supreme Court to provide guidance with a consistent reading of the statutes and to mitigate the unintended effect of the DMCA, which has too-often provided automatic immunity to online enterprises—an immunity that would never be afforded to organizations or individuals operating in the real world. While it is always a safe bet the Supreme Court will not grant cert, Ventura’s petition summarizes the frustration rightholders of every size have felt, watching some of the largest platforms in the world grow rich on the infringement of their works, all shielded by elastic interpretations of the DMCA.

Whatever the Response to the Facebook Fallout, Don’t Blame Copyright

Attorney and journalist Charles J. Glasser published an editorial  in The Daily Caller titled: Mind Manipulation? No, Censorship By Copyright is The REAL Threat to Elections.

The irony of that misleading headline, which does not truly reflect the substance of Glasser’s article, is that it reinforces a general bias about copyright (i.e. that it is censorship) for the simple reason that many people will not read past the headline itself. Thus, even before we get to the article, Glasser has, ironically enough, proven that the “mind manipulation” issue (though I wouldn’t call it that) is a legitimate problem.  He believes otherwise, stating …

“I have serious doubts about the veracity about “mind control” conspiracies favored by the progressive left that assumes Americans are not autonomous actors or are in fact stupid, gullible hicks who simply can’t be trusted to think for themselves.”

I’ve expressed a similar sentiment on this blog but take a different view that people across the political spectrum are both autonomous actors and stupid, gullible, hicks who can’t be trusted to think for themselves because everybody is, to some degree, susceptible to impressions made by words and pictures. If this were not the case, advertising simply would not work. But it does.

This susceptibility has nothing to do with intelligence, but it is a more relevant subject now that we acquire news and commentary via social media. We simply cannot read every article shared by every one of our friends, or we would never do anything else. Nevertheless, all those headlines and photos do leave impressions—even subconscious ones that function exactly like advertising. This is one reason why I think Glasser is wrong to outright dismiss the conversation finally being had about “manipulation” via social media—even if there were no party actively seeking to manipulate.

Meanwhile, his headline, feeding the false narrative–perhaps inadvertently–that copyright equals censorship, is a bit overwrought given the article’s central complaint. Glasser asserts that various parties are abusing the DMCA takedown provision for the purpose of censorship, and, in turn, this censorship is skewing the democratic process. Not helping the article’s credibility is the quote from Elliot Harmon of the EFF as stating, “…without fair use protections, people and companies in the public eye could use copyright law to ban coverage that’s critical of them.”

That’s overstating the relationship between criticism and fair use just a tad since a whole universe of criticism exists without appropriating copyrighted works.  In fact, I would argue the most important political criticism — thoughtful, researched editorials about candidates or policies — often don’t rely on fair use at all.  What does rely on fair use are the political ads to which Glasser refers in his article; and while it is perhaps inappropriate that these were removed, political ads are hardly the thinking American’s medium of choice.

Without unpacking each of the examples to which Glasser alludes, we can stipulate that various parties do use, or try to use, DMCA takedown as a means to silence opposition or criticism; and he fairly calls the practice a “pox on both houses,” meaning the left and the right. But I would offer a few caveats about this article.

First, because DMCA is an extra-judicial, sometimes automated, process, it’s going to be misused—either purposely or by accident—by rights holders, by non-rights holders, by users, and by platform owners. It is a 1998 remedy for copyright infringement and OSP liability that, at best, cannot truly respond to the scope of the contemporary internet. It is a unique sub-category of copyright law with its own complex narrative, and Glasser seems to be cherry-picking a small portion of that narrative to justify an article that lodges various unrelated complaints.  He also fails to mention the DMCA counter-notice procedure for restoring material and the fact that there is a path of legal remedy for abuse of DMCA.

Next, Glasser seems to have a personal or political beef with the current response to these data-mining revelations that, whether he’s right or wrong, should not be misdirected as an attack on copyright law. He writes …

“The panic about data-mining is driven largely by the paternalistic, if not authoritarian view that ‘only the right people’ should determine what is read and heard, because after all, those ‘bitter clingers’ are too stupid to have a voice.”

Responding as someone who criticizes ‘bitter clingers’ on the left and the right, I fail to see how this accusation does not imply a much bigger debate that has nothing to do with copyright. It seems that DMCA is being made into a  scapegoat in this regard, which brings me to the most substantive point.

In a society now brimming with equal parts journalism and gibberish, we would need a much larger data set than a few anecdotes to conclude that censorship by DMCA is both rampant and measurably effective in what I will generously call our current “political process.” In fact, Glasser’s own skepticism about data-mining manipulation should also serve to mollify his stated concerns about censorship via DMCA because I strongly suspect that incidents of abuse represent a drop in the bucket among the trillions of information exchanges occurring every day. And if Americans are indeed autonomous actors who can think for themselves, this should counterbalance the silence of a few deleted political ads as easily as Glasser suggests it would counterbalance the alleged “mind control.”  So, whatever he’s truly criticizing, I don’t think it’s copyright.

4th Circuit Remands BMG v. COX, But …

Good news for authors, creators, and sanity was delivered yesterday by the 4th Circuit Court of Appeals. Despite remanding the case back to the district court for retrial on a specific matter of jury instruction, the opinion eviscerates two of COX’s most strained interpretations of copyright law, either of which could have had devastating effects for rights holders. BMG Rights Management sued ISP Cox Communications for contributory infringement in 2014 and was awarded $25 million in damages in December of 2015. Cox appealed, and these posts from January 2017 and November 2017 detail the company’s key defenses with my commentary.

DMCA Safe Harbor Still Doesn’t Apply

In its appeal, Cox argued that the district court erred in denying it the safe harbor defense as provided in the DMCA. As noted many times, despite the rhetoric of “digital rights” activists, the safe harbor is not unconditional; and one of the conditions is that a service provider must have a repeat-infringer policy in place that ultimately leads to account termination. The circuit court agreed with the lower court that Cox’s “thirteen-strike policy,” which only tended to lead to account reinstatement did not fulfill the intent of the DMCA that a policy should act as a deterrent to repeat infringement.

Most bizarrely Cox argued on appeal that the term “repeat infringers” in the statute could only mean people who’ve been held liable for multiple infringements in a court of law. As noted in my January 2017 post, this would be almost nobody since very few individuals are ever defendants in a single copyright infringement case, let alone one that actually goes to trial. The appeals court rejected Cox’s claim in less prosaic terms, including the citation of congressional reports on the drafting of DMCA, which the court summarizes thus:

“The passage does not suggest that they [users] should risk losing Internet access only once they have been sued in court and found liable for multiple instances of infringement. Indeed, the risk of losing one’s Internet access would hardly constitute a ‘realistic threat’ capable of deterring infringement if that punishment applied only to those already subject to civil penalties and legal fees as adjudicated infringers.”

Denied Appeal to Sony

The other extraordinary appeal by Cox was its assertion that the jury in the district court should have been instructed to consider the ISP’s protection under the principle established in the 1984 Sony case, namely that its internet service can be used for substantially non-infringing purposes. As explored at length in my November 2017 post, were Cox to prevail on this point, it would effectively immunize all internet providers against any form of liability for copyright infringement, and this begs the question as to why the ISPs petitioned for the DMCA safe harbors in the late 1990s if Sony had already established this immunity.

The 4th Circuit called Cox’s appeal to Sony “meritless,” stating that in Grokster (2005), the Supreme Court clarified that simply because a product is “capable of substantial lawful use,” this does not preclude the possibility that the producer or provider can never be held liable for contributory infringement. “Because the instruction Cox requested misstates the law, the district court did not err in refusing to give it [instruction to consider Sony],” states the opinion.

Remand for Retrial

Where the appeals court agreed with Cox, and the reason for remanding for retrial, was in regard to the district court’s instructions to the jury on the standard of intent for contributory infringement. Again citing Grokster the opinion quotes, “[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement.” Thus, the word intentionally suggests a distinction between “knowledge” of infringing activity (or any crime for that matter) and “negligence” that may cause a party to inadvertently contribute to criminal activity. Because the district court instructed the jury to consider whether “Cox knew or should have known of such infringing activity,” the circuit court held this to be in error. The term “should have known,” is described in the opinion as equivalent to “negligence,” which is often insufficient to establish secondary liability for criminal conduct.

It will be interesting to see whether Cox opts for a retrial or proposes a settlement. The facts presented have already been viewed by a district court judge, a jury, and now an appeals court panel as compelling evidence that Cox knew about repeat infringers and adopted a policy of avoiding account termination in its own financial interests. In fact, my favorite example cited in the 4th Circuit opinion is this one quoting a company email:

“But when Cox received another complaint, a manager directed the employee not to terminate, but rather to ‘suspend this Customer, one LAST time,’ noting that ‘[t]his customer pays us over $400/month’ and that ‘[e]very terminated Customer becomes lost revenue.’”

So, even with new jury instructions, evidence like this suggests Cox would have a hard time convincing anyone it had no knowledge of infringing activity. But the reason this quote is my favorite is that it’s a twofer—not only implicating an ISPs attempt to stretch the law beyond reason but also giving lie to so many rationalizations for media piracy by users. I mean this dude has the money to pay his ISP about $5,000 a year for bandwidth but won’t pay for music, movies, games, etc.? Damn that’s some big-ticket hypocrisy right there. He could probably pay an ISP about 35% of that total, acquire his entertainment legally, and still save money.