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BMG settles with Cox in landmark safe harbour case

By | Published on Tuesday 28 August 2018

Cox Communications

BMG announced on Friday that it had reached a “substantial settlement” with American internet service provider Cox Communications, which means the safe harbour testing case will not now go back to court next month as planned.

The BMG v Cox case began back in 2014. It tested the obligations of internet companies that claim protection under the so called copyright safe harbour, which says that net firms can’t be held liable for their customers’ copyright infringement.

BMG argued that Cox had a deliberately shoddy system for dealing with repeat infringers among its customer base, and therefore didn’t qualify for safe harbour protection under US law. And therefore could be sued for the infringement of its customers.

When the safe harbour was first being tested in the American courts in the 2000s, judges had a habit of setting the obligations of safe harbour dwelling companies pretty low. However, that has started to change in more recent years, and when a jury ruled in favour of BMG in this case in 2015, a solid new precedent was set regarding the obligations of American ISPs.

That ruling was subsequently overturned on appeal, but on a technicality relating to the way the judge had briefed the jury. It was generally agreed that the appeals court ruling actually enhanced BMG’s case against Cox. So much so, the Recording Industry Association Of America ramped up its efforts in its lawsuit with another American ISP – Grande Communications – citing the BMG v Cox appeals judgement. And it then sued Cox itself.

Therefore most were expecting a relatively easy win for BMG when the case returned to court, although Cox continued to pursue various lines of argument as to why it shouldn’t be held liable for the copyright infringement of its customers. Both sides had been busy making requests of the judge ahead of the trial. Cox wanted BMG banned from referring to piracy by using emotive terms like “stealing” and “theft”. But the judge declined to ban such terminology from his court.

Meanwhile, negotiations for an out of court settlement continued. BMG had been awarded $25 million in damages in the original court case. And in American copyright cases, where courts can award so called statutory damages of up to $150,000 per work wilfully infringed, damages can be huge for those found liable for wilful infringement.

Needless to say, the terms of the out of court deal agreed last week are not known, although BMG says the damages it will receive “reflect the seriousness of this case”. It also said that it believes its legal action has proven the obligations of safe harbour dwelling ISPs. For now we will have to rely on the appeals court ruling for that precedent. If the RIAA’s cases against either Grande or Cox do get to court, we may as yet get a little more judicial clarification on what exactly those obligations are in real terms.

Confirming the settlement, BMG’s General Counsel in North America, Keith Hauprich, said on Friday: “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 harbour’ defence, an ISP has responsibilities. While the financial terms of the settlement are confidential, we are happy they reflect the seriousness of this case. 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”.