BMG secures ‘substantial settlement’ from Cox in piracy suit

Music licensing body BMG Rights Management has won a “substantial settlement” from Cox Communications, an internet service provider (ISP), bringing a four-year piracy dispute to an end.

BMG announced the settlement on Friday, August 24, in relation to its litigation against Cox for contributory infringement.

The dispute began in 2014, when BMG took Cox to court, complaining that the ISP’s failure to terminate customer accounts known to be distributing pirated material through peer-to-peer networking meant that it did not qualify for safe harbour protection.

Safe harbour status under the Digital Millennium Copyright Act protects ISPs from claims of infringement if they are able to demonstrate that they are tackling the unauthorised distribution of copyright-protected material.

Back in December 2015, the US District Court for the Eastern District of Virginia ordered the ISP to pay $25 million in damages after it failed to introduce an anti-piracy mechanism in its service.

A month before, the situation was already looking bleak for the ISP after the court disqualified it from using safe harbour status.

However, in February this year, the US Court of Appeals for the Fourth Circuit tossed the $25 million verdict and ordered a new trial.

It wasn’t a complete victory for Cox—the Fourth Circuit also found that the ISP had forfeited its right to safe harbour status because it had failed to implement an anti-piracy policy in “any consistent or meaningful way”.

BMG then petitioned the Fourth Circuit for either a rehearing by the panel or a rehearing by the court en banc.

BMG’s petition was supported by two music associations, the Recording Industry Association of America and the National Music Publishers’ Association. They claimed that the Fourth Circuit’s holding that said liability based on a theory of material contribution cannot rest on constructive knowledge “erroneously undermines a critical protection that creators depend on”.

But before the companies went to trial, the "substantial settlement" was announced, according to BMG.

Keith Hauprich, BMG’s North America general counsel, said: “This was a landmark case in which BMG took on the third biggest ISP in the US to defend and establish the principle that in order to benefit from a so-called ‘safe harbour’ defence, an ISP has responsibilities.”

He added that although the financial terms of the settlement are confidential, BMG is happy that the terms “reflect the seriousness of this case” and that the company will not hesitate to take action where necessary.