The DMCA provides Internet service providers with immunity from copyright infringement claims based on content uploaded by users. DMCA immunity represents a key element of the legal foundation allowing the web to operate in the fashion it does, which makes it all the more amazing when companies such as Cox Communications waive the immunity.
As a business providing DMCA agent services, it often seems to us as though clients believe all they need to do is designate an agent, publish a DMCA policy, and register with the Copyright Office to be compliant with the law. This is incorrect. The DMCA requires you follow a particular process for handling DMCA claims as well as addressing repeat infringers.
If you are unfamiliar with the DMCA compliance process, you should speak with legal counsel ASAP or purchase this book. Why? A site failing to comply with the DMCA loses the immunity provided under the law. It does not matter if you are a small company or a large one as Cox Communications just found out.
Cox Blows It
Cox Communications is the seventh largest cable provider in the United States. The company serves 3.5 million Internet subscribers and 3.2 million digital phone subscribers. I’m accessing the web through Cox at this very moment. As with such large companies, Cox also has a bias for collecting every possible penny it can from customers, a policy now setting the company up for potentially crippling pain.
Under the DMCA, an Internet service provider must track users for which it receives copyright complaints. If a user receives multiple complaints, the user is considered a “repeat infringer.” Under the law, the ISP is supposed to terminate the account of any such party according to a repeat infringer policy. And here is where things went bad with Cox.
In December 2014, a number of music publishers sued Cox Communications for contributory copyright infringement based on music content passed through the Cox system by users. The DMCA is designed to protect Cox from this type of claim. However, the music publishers alleged that Cox failed to terminate the accounts of repeat infringers and, thus, waived the DMCA immunity.
Discovery in the case proved troublesome for Cox. The music publishers were able to find email messages in which the employees of Cox discussed terminating and then reactivating repeat infringers at higher prices to make more money for the company. This conduct is a direct violation of the repeat infringer requirements of the DMCA. For example, when one manager was asked whether to terminate a habitual copyright abuser by an employee, he replied:
“It is fine. We need the customers.”
The decision was not fine, and now Cox Communications faces a storm of copyright infringement lawsuits, legal fees, and settlements. Arguably, the company can be sued by copyright owners for each of the 3.5 million Internet subscribers uploading and downloading infringing materials as well as the 3.2 million phone subscribers. In short, a legal disaster leading to crippling financial losses.
** Update – The jury in this litigation returned an award of $25,000,000 against Cox.
To be clear, an “Internet service provider” includes any online property taking advantage of the DMCA. This definition includes companies as large as Cox Communications and as small as a person running a gardening blog allowing users to upload comments and photos.
DMCA compliance requires more than just designating an agent. Make sure you understand the obligations that exist under the law. Fail to comply, and you could end up in the shoes of Cox. Trust me, those shoes are very uncomfortable.