Cox Communications DMCA Woes Continue as Lloyds of London Cuts the Cord

The massive Internet Service Provider and cable operator Cox Communications currently being sued by BMG Rights Management and Round Hill has been dealt two body blows in a week.

First, Cox lost its DMCA “safe harbor” protection and now its insurance company (the venerable Lloyds of London) is refusing to cover any damages from claims for intentional copyright infringement.  Those two go together if you think like Lloyds of London because the safe harbor isn’t supposed to protect “intermediaries” from their intentionally bad behavior and you’re not going to get insured against it either.  Given how bad this is for similarly situated companies like Google (who also sells advertising), Cox should have no want of litigation financing, but it sends a chill up the spine, even so.  If Cox loses, that could push the company into bankruptcy where intentional infringement and crimes are not washed away.

Cox is getting sued by BMG Rights Management and Round Hill over the infringement of songs, a great example of publishers standing up for their songwriters and putting their money where it counts.  The case is going to trial next week in Virginia, and it’s starting to look like songwriters are finally going to get justice from ISPs who don’t understand the purpose of the DMCA safe harbors, eloquently summed up by Beggars Group Chairman Martin Mills at Canadian Music Week last year:

They were introduced, with some foresight, by the legislators in the USA framing the DMCA, to provide a notice and take down procedure for unlicensed content. But the legislation has been distorted into a protective wall behind which cyberlockers and torrent sites, and companies such as YouTube and Grooveshark, operate [or used to for Grooveshark].

The original intent was to protect reasonable people acting reasonably from falling foul of the law, to enable the digital economy to grow without “gotcha” law suits against ISPs who had no idea that their networks were being used for infringement. They were not intended to provide fortress walls behind which companies could build billion dollar businesses on content that had not been cleared. They were never intended to become a de facto “license”.

Mills captures the exact problem with the way that “intermediaries” like Cox profit themselves off the backs of creators, and especially songwriters.  Remember, Cox failed to join the Copyright Alert System, the user education and graduated response agreement signed by AT&T, Cablevision, Comcast, Time Warner and Verizon.  Also remember that songwriters and music publishers are also not covered by the CAS.

According to Ars Technica, the judge in the case apparently didn’t think much of Cox’s repeated failure over a couple years to properly adopt a repeat infringer policy.  We don’t have a full opinion yet from the judge in the case, but it’s starting to look like the whack a mole problem we have all experienced with Google, YouTube and others in the piracy chain may actually turn out to be evidence of a failed repeat infringer policy that will trump the safe harbor.  Once that opinion comes down, we will report back.

Google BMG

Now wouldn’t that be interesting.  That’s starting to sound like notice and stay down.

In other words, the availability of the safe harbor may turn on an objective truth.  If you get over x DMCA notices, you’re just not doing enough to be entitled to the special protection of the safe harbor law.

As Martin Mills also said at CMW:

Copyright is meant to allow you to control your own work. That is totally undermined when another law says that people in effect can ignore it with impunity. Would we consider a safe harbour law allowing small restaurants to ignore food hygiene laws ? Or a safe harbour for personal data being inappropriately used ? Of course not.

Cox is out of the safe harbor business (although somehow they’ll appeal that ruling–in a hurry because trial starts December 2 according to Ars).

On top of that, Digital Music News is reporting that Lloyds of London  (Cox’s insurance company) sued Cox in New York for a ruling that they don’t have to insure Cox against claims for intentional copyright infringement.

It’s the “intentional” part that will get Lloyds out of insuring Cox’s bad behavior.  Just like you can’t get insurance if you have a fatal wreck while driving drunk on alcohol, Cox can’t get insurance for destroying songwriters’ lives while drunk on power.  And they can’t get out of the liability by declaring bankruptcy for largely the same reasons.

There’s a very long way to go before this case is over, but Lloyds isn’t waiting around to find out.  They want out right now, which may–may–mean that they know something we don’t.

All in all, one of the best litigation weeks for songwriters in a very long time, and thanks to BMG and Round Hill (who was dismissed from the case on a technicality) for sticking it out.  But wait…there’s more.

Needless to say that Google is going to be very interested in this case.  Naturally, Google sent in its shills back in October to file friend of the court briefs intended to influence the judge–the Electronic Frontier Foundation and Public Knowledge.  According to Ars Technica, Judge O’Grady was having none of it, and refused to allow either the EFF or Public Knowledge to file their briefs (which is evidently at the discretion of the court).

“It adds absolutely nothing helpful at all,” O’Grady said of the EFF brief, according to Techdirt, based on a transcript of the October hearing. “It is a combination of describing the horrors that one endures from losing the Internet for any length of time. Frankly, it sounded like my son complaining when I took his electronics away when he watched YouTube videos instead of doing homework. And it’s completely hysterical.”

Yeah.

One other point to brighten up your Thanksgiving.  The same judge will be hearing the U.S. criminal case against Google Adsense customer Kim Dotcom/Megaupload once Dotcom is extradited from New Zealand.  Dotcom was no doubt thinking about making some of the same “head in the sand” defenses that Cox tried on Judge Liam O’Grady, so the betting is that Mr. KDC may be taking a long look at the hospitality of the federal government right about now.

That can have a tendency to focus the mind and loosen the tongue.

Please pass the turkey.