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UMG v. Grande Communications: Another Victory for the Music Industry in Its Battle to Hold ISPs Liable for Peer-to-Peer File Sharing
Since the advent of the Internet, the music industry has been in a pitched battle to combat online piracy. Initially, the industry focused on shutting down services that offered peer-to-peer or other similar platforms, such as Napster, Aimster and Grokster. (See, A&M Records, Inc. v. Napster, 239 F.3d 1004 (9th Cir. 2001); In re Aimster Copyright Litig., 334 F.3d 643 (7th Cir. 2003); MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)). For a time, the industry also focused on filing claims against individual infringers to dissuade others from engaging similar conduct. In recent years, the industry seems to have shifted focus toward Internet Service Providers (ISPs), which provide Internet connectivity to their users.
Cox Communications
In November 2014, the music industry launched their first attack on ISPs, with an action against Cox Communications in the Eastern District of Virginia. A little over a year later, after stripping Cox of its safe harbor protection under the Digital Millennium Copyright Act (DMCA) on summary judgment, the case culminated in a jury trial that resulted in a multi-million dollar verdict for BMG. On appeal, in a February 2018 decision, while reversing and remanding for a new trial in light of certain errors in the jury instructions, the Fourth Circuit Court of Appeals largely sided with BMG. See, BMG Rights Mgmt. (US) LLC v. Cox Commc'ns, Inc., 881 F.3d 293 (4th Cir. 2018).
The Fourth Circuit's decision in BMG sets out two basic principles. First, to receive DMCA safe harbor protection, an ISP will be required to take action against subscribers where there is evidence a subscriber has engaged in repeated acts of infringement even if the subscriber has never been proven to be an infringer. Second, an ISP can be held contributorily liable for its subscribers' actions, notwithstanding that the service — providing access to the Internet — is capable of substantial non-infringing uses.
On remand to the Eastern District of Virginia, matters moved forward swiftly with a retrial set for late August 2018. On the eve of the retrial, BMG and Cox settled their claims with BMG reporting that it had received a "substantial" cash settlement.
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