Cox Communications has been found guilty by a jury of contributory infringement, because it did not disconnect Internet access of its customers who were alleged to be pirates. Cox must pay $25 million in damages to BMG, the rights holder who sued Cox. The case appeared to be stacked against Cox when the judge had previously ruled that it was not eligible for safe harbor protection, and the judge later ruled that BitTorrent usage can be presented to a jury as proof of piracy.
In order to be guilty of contributory infringement, Cox must have materially contributed to infringement by some third parties. While it is long established that sites which host infringing content are contributing to infringement, this is the first lawsuit where a company has been found to contribute to piracy simply because pirates make use of their network without having their accounts terminated. Additionally, knowledge that infringement is occurring is also necessary to be found guilty on this charge. This is presumably covered by the DMCA notices sent to Cox by Rightscorp on behalf of BMG.
At first glance it may appear that ISPs must cut off Internet access based merely on the accusations of rightsholders if they want to avoid paying out damages. However the verdict form first asks the jury to determine if the preponderance of evidence shows that Cox customers were actually guilty of infringement. Only if that is the case would the jury consider Cox's own liability in contributing to the infringement. This suggests that it may be safe for ISPs to ignore DMCA notifications of infringement if they are very obviously false. However if an ISP is at all uncertain about claims of piracy, then the surest way to avoid paying damages is to cut off access.
It is believed that Cox will likely appeal the ruling, but they have not made any official statement on the matter yet.
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