BMG Rights Mgmt. (US) LLC v. Cox Commc'ns, Inc.

• Citation: 117 U.S.P.Q.2d 1359,149 F.Supp.3d 634
• Decision Date: 01 December 2015
• Docket Number: Civil No. 1:14-cv-1611
• Parties: BMG Rights Management (US) LLC, and Round Hill Music LP, Plaintiffs, v. Cox Communications, Inc., and Coxcom, LLC, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

149 F.Supp.3d 634

117 U.S.P.Q.2d 1359

BMG Rights Management (US) LLC, and Round Hill Music LP, Plaintiffs,

v.Cox Communications, Inc., and Coxcom, LLC, Defendants.

Civil No. 1:14-cv-1611

United States District Court, E.D. Virginia, Alexandria Division .

Signed December 1, 2015

Jeremy David Engle, Paul Gennari, Steptoe & Johnson LLP, Walter Dekalb Kelley, Jr., Hausfeld LLP, Washington, DC, for Plaintiffs.

Craig Crandall Reilly, Law Office of Craig C. Reilly, Alexandria, VA, for Defendants.

MEMORANDUM OPINION

Liam O'Grady

, United States District Judge

In this copyright action, the putative owners of more than 1,400 musical composition copyrights seek to hold Cox Communications, Inc. and Cox Com, LLC (collectively, “Cox”) contributorily and vicariously liable for alleged copyright infringement taking place over its high-speed internet service. At the close of extensive discovery, the parties cross-moved for summary judgment. Following oral argument, the Court issued an Order (Dkt. No. 675) granting in part and denying in part Plaintiffs' Motion for Partial Summary Judgment (Dkt. No. 310) and denying Cox's Motion for Summary Judgment (Dkt. No. 305) for the reasons stated in this memorandum opinion.

I. Background

Cox provides high-speed internet service to customers nationwide. Plaintiffs BMG Rights Management (US), LLC (“BMG”) and Round Hill Music LP are the putative owners or administrators of approximately 1,400 musical composition copyrights. Plaintiffs allege users of Cox internet service employ BitTorrent, a type of peer-to-peer (“P2P”) file sharing, to illegally upload and download music files, thereby violating Plaintiffs' exclusive rights.

A. BitTorrent

The innovation of P2P file sharing is that it allows “user's computers [to] communicate directly with each other,” rather than through a central server. Metro – Goldwyn – Mayer Studios, Inc. v. Grokster, Ltd. , 545 U.S. 913, 919, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005)

. All P2P protocols have “one thing in common: a decentralized infrastructure whereby each participant in the network (typically called a ‘peer,’ but sometimes called a ‘node’) acts as both a supplier and consumer of information resources.” Columbia Pictures Indus., Inc. v. Fung , 710 F.3d 1020, 1024 (9th Cir.2013). While P2P protocols have many benefits and non-infringing uses, see

Grokster , 545 U.S. at 920, 125 S.Ct. 2764 (noting that P2P networks are “employed to store and distribute files by universities, government agencies, corporations, and libraries, among others”), they have also been harnessed for less meritorious purposes by “those wanting access to pirated media, [such as] music, movies, and television shows.” Columbia Pictures Indus., Inc. , 710 F.3d at 1025.

The BitTorrent protocol is unique in “how it facilitates file transfers.” Id. at 1026

. BitTorrent breaks files into pieces, which “permits users to download lots of different pieces at the same time from different peers.” Id. It also allows users to begin sharing before the complete file has downloaded, meaning “at any given time, each user is both downloading and uploading several different pieces of a file from and to multiple other users.” Id. at 1027.

B. Rightscorp, Inc.

Plaintiffs enlisted Rightscorp, Inc. (“Rightscorp”) as their agent to identify infringing uses of their copyrighted works. Rightscorp's software searches websites that index torrent files and identifies files that appear to contain one or more of the Plaintiffs' copyrighted works. Defs.' SUMF ¶ 19. A torrent file does not actually contain any content. Id. ¶ 18. It contains metadata about the files available to be distributed and other information that allows Rightscorp to contact a tracker and find peers offering torrent payloads that contain the files. Id. If Rightscorp contacts a peer and determines that the peer has the torrent payload, Rightscorp will record the date, time, the peer's IP address, the port on the peer's computer through which the connection was made, the torrent file's unique hash value, and the name of the copyrighted work. Pls.' SAMF ¶ 7. Rightscorp then sends a notice of infringement to the internet service provider associated with the recorded IP address. Id. According to Plaintiffs, Rightscorp sent Cox 2.5 million notices corresponding to instances in which Cox internet users offered one of Plaintiffs' copyrighted works for download.¹ Id. ¶ 15. Plaintiffs also contend that Rightscorp downloaded more than 100,000 full copies of music files that violated Plaintiffs' musical composition copyrights from peers through Cox's internet service. Id. ¶ 10.

C. Cox's Copyright Policy and Graduated Response Procedure

Cox's Acceptable Use Policy (“AUP”) provides that account holders may not use Cox's internet service “to post, copy, transmit, or disseminate any content that infringes the patents, copyrights, trade secrets, trademark, moral rights, or propriety rights of any party.” Theodore Decl. Ex. 10; Trickey Decl. ¶ 11. The AUP further provides that “[v]iolation of any terms of this AUP may result in the immediate suspension or termination of either ... access to the Service and/or [the] Cox account.” Theodore Decl. Ex. 10; Trickey Decl. ¶ 11. Cox informs account holders of the policy in subscriber agreements. Trickey Decl. ¶ 12. The terms on Cox's website also incorporate the AUP's policy by reference. Id. ¶ 13.

Cox's abuse department handles misconduct on Cox's network. Abuse ranges from copyright infringement to hacking to excessive bandwidth usage. Pls.' SUMF ¶ 17. Cox offers copyright owners an email address, abuse@cox.net, to which they can send notices of infringement. Beck Decl. ¶ 3. Cox processes the notices it receives using a largely automated system called CATS—Cox Abuse Tracking System. Pls.' SUMF ¶ 19. CATS scans

the messages in the inbox and culls certain information, such as the date of the alleged abuse, the IP address, and so on. Beck Decl. ¶ 7. That information is then used to create a “ticket.” Id. ¶ 3.

Three features of the CATS system are worth mentioning. First, when Cox receives multiple complaints in one day for a single account, the tickets are “rolled up,” meaning Cox counts only the first ticket. Id. ¶ 8 & n.4; Zabek Decl. ¶ 9; Theodore Decl. Ex. 1 at 155–56. Second, Cox imposes a “hard limit” on the number of complaints a complainant can submit that will receive customer-facing action. Beck Decl. ¶ 8. If a complainant exceeds the hard limit, CATS automatically sends an email informing the complainant that the daily limit has been reached and the tickets created from those emails are automatically closed. Theodore Decl. Ex. 42 at 7. The default limit is 200 complaints per complainant per day, but Cox says it will work with a complainant to set a reasonable number. Id. ; Zabeck Decl. ¶ 30. Cox claims such limits are necessary to keep the number of complaints at a manageable capacity for staff and to prevent a single complainant from overwhelming the company. Beck Decl. ¶ 10. Third, Cox defines its “abuse cycle” in 180-day periods. Theodore Decl. Ex. 17 at 2. While Cox maintains a record of its customers' full ticket histories, if no complaints are received within six months from the last complaint, the cycle restarts. Id. ; Zabek Decl. ¶ 9.

Cox handles tickets generated by CATS according to its graduated response procedure. Beck Decl. ¶ 12; Theodore Decl. Ex. 39 at 10; id. Ex. 17. This process, which Cox does not publicize to customers, progresses from warnings to suspensions and ultimately, the possibility of termination. Theodore Decl. Ex. 17 at 11–12. Cox takes no action on an account's first ticket because a “substantial percentage” of accounts never receive a second complaint within one abuse cycle. Zabek Decl. ¶ 9; Theodore Decl. Ex. 17 at 11; id. Ex. 39 at 13. When a second complaint arrives, CATS generates an email to the account holder that includes a letter from Cox explaining the alleged infringement as well as the complete text of the infringement notice Cox received from the copyright owner.² Beck Decl. ¶ 12; Zabek Decl. ¶ 9. When Cox has “rolled up” complaints over the course of a day, CATS will only send the first complaint received that day. Beck Decl. ¶ 12 n.9. This process of sending an email warning repeats on the third, fourth, fifth, sixth, and seventh complaints Cox receives for an account within a six-month period. Theodore Decl. Ex. 17 at 11.

When Cox receives an eighth notice, it suspends the account and places the account holder in what Cox calls a “soft-walled garden.” Beck Decl. ¶ 9. That means the account holder's internet access is temporarily limited to a single webpage that displays a warning message. Id. ; Zabeck Decl. ¶ 9. The account holder can exit the soft-walled garden and self-reactivate service by clicking a link on the webpage. Beck Decl. Ex. 3 (“After deleting the files and disabling file sharing, you may click here to reactivate your service.” (emphasis omitted)); Theodore Decl. Ex. 17 at 11; id. Ex. 2 at 178–79. On the ninth complaint, the account holder is again sent to the soft-walled garden. Beck Decl. ¶ 9; Theodore Decl. Ex. 17 at 11.

The tenth complaint results in what Cox calls a “hard-walled garden.” Beck Decl. ¶ 9. The account holder is now directed to a webpage with instructions to call Cox customer service. Theodore Decl. Ex. 17 at 11. When the account holder calls Cox, he or she can request reactivation. Id. ; id. Ex. 1 at 73. The eleventh complaint is the same. Id. Ex. 17 at 11. The twelfth and thirteenth complaints also place account holders in the hard-walled garden, but now they must speak to higher-level Cox customer service representatives to request reactivation. Id. ; id. Ex. 1 at 79–80. When Cox receives the fourteenth complaint in an abuse cycle, it will review the full account history and consider termination. Id. Ex. 17 at 12. Termination is never automatic, however, and is left to the discretion of Cox employees. Beck Decl. ¶ 13. In the “vast majority” of cases,...