Written by Eriq Gardner — A leading ISP suffers a huge legal setback, then is hit with a lawsuit from its insurer.
Cox Communications has one hell of a headache on its hands over the issue of user piracy. Recent developments seem to pointing in the direction of ISPs like Cox needing to take strong actions against those accused of infringing copyrights.
Last week, a federal judge issued a huge ruling by denying Cox safe harbor from copyright liability because it hadn't reasonably implemented a repeat-infringer policy. As a result, Cox is looking at a trial where it will have to defend itself from claims made by BMG Rights Management, a music publisher which controls works by David Bowie, Bruno Mars, Frank Ocean and many other artists.
It's certainly no sure thing that BMG will ultimately prevail over Cox, and even if that happens at a December trial, an appeal seems very likely.
However, the sheer act of a judge denying safe harbor could spur hard-thinking among ISPs to copyright notices sent by content owners and their agents like Rightscorp. That's because the ISPs may find themselves exposed on two fronts.
The court of law is one, but there's also the insurance angle.
This week, underwriters at Lloyds of London filed its own lawsuit against Cox in an attempt to avoid the potential damages bill for user piracy.
According to Lloyds' complaint filed in New York Supreme Court, Cox has been told that its insurance policy doesn't cover the BMG claim because it "arose out of intentional and not negligent acts" and "did not arise out of acts in rendering internet services but rather Cox's business policy and practice of ignoring and failing to forward infringement notices and refusing to terminate or block infringing customers' accounts."
In short, the insurer believes Cox should have kicked off customers from its service who were deemed to be pirates.
Cox didn't like Rightscorp shaking down its customers with demands for money and tried to shift the focus towards the behavior of the plaintiffs' agent. U.S. District Judge Liam O'Grady basically responded by shifting the focus back. It's one thing for an ISP to put up a brave front — and maybe even win some goodwill among customers by fighting those like Rightscorp — but to do so with neither safe harbor nor possibly insurance raises the risk level quite substantially. Time will tell if this is a game-changer on the piracy front.
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