BMG Rights Management (US) LLC v. Cox Communications, Inc. , 881 F.3d 293 ( 2018 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1972
BMG RIGHTS MANAGEMENT (US) LLC,
Plaintiff - Appellee,
and
ROUND HILL MUSIC LP,
Plaintiff,
v.
COX COMMUNICATIONS, INCORPORATED; COXCOM, LLC,
Defendants - Appellants,
and
COX ENTERPRISES, INC.; COXCOM, INC., d/b/a Cox Communications of
Northern Virginia; JOHN DOE 2, IP Subscriber 174.65.175.31,
Defendants,
RIGHTSCORP, INC.,
Party-in-Interest.
-----------------------------------------------------
AMERICAN COUNCIL ON EDUCATION; ASSOCIATION OF AMERICAN
UNIVERSITIES; EDUCAUSE; AMERICAN LIBRARY ASSOCIATION;
ASSOCIATION OF RESEARCH LIBRARIES; ASSOCIATION OF COLLEGE
AND RESEARCH LIBRARIES; AMERICAN INDIAN HIGHER EDUCATION
CONSORTIUM; APPA: LEADERSHIP IN EDUCATIONAL FACILITIES;
NATIONAL ASSOCIATION OF COLLEGE AND UNIVERSITY BUSINESS
OFFICERS; THURGOOD MARSHALL COLLEGE FUND; ASSOCIATION OF
CATHOLIC COLLEGES AND UNIVERSITIES; NATIONAL ASSOCIATION
OF INDEPENDENT COLLEGES AND UNIVERSITIES; PUBLIC
KNOWLEDGE; ELECTRONIC FRONTIER FOUNDATION; CENTER FOR
DEMOCRACY & TECHNOLOGY,
Amici Curiae,
and
CONSUMER TECHNOLOGY ASSOCIATION; COMPUTER &
COMMUNICATIONS INDUSTRY ASSOCIATION; UNITED STATES
TELECOM ASSOCIATION; AMERICAN CABLE ASSOCIATION; INTERNET
COMMERCE COALITION,
Amici Supporting Appellant,
RECORDING INDUSTRY ASSOCIATION OF AMERICA, INC.; THE
COPYRIGHT ALLIANCE; NATIONAL MUSIC PUBLISHERS’ ASSOCIATION;
NASHVILLE SONGWRITERS ASSOCIATION INTERNATIONAL; MOTION
PICTURE ASSOCIATION OF AMERICA, INC.,
Amici Supporting Appellee.
No. 17-1352
BMG RIGHTS MANAGEMENT (US) LLC,
Plaintiff - Appellant,
and
ROUND HILL MUSIC LP,
Plaintiff,
v.
COX COMMUNICATIONS, INCORPORATED; COXCOM, LLC,
2
Defendants - Appellees,
and
COX ENTERPRISES, INCORPORATED; COXCOM, INC., d/b/a Cox
Communications of Northern Virginia; JOHN DOE, IP Subscriber 174.65.175.31,
Defendants,
RIGHTSCORP, INC.,
Party-in-Interest.
No. 17-1353
BMG RIGHTS MANAGEMENT (US) LLC; ROUND HILL MUSIC LP,
Plaintiffs - Appellees,
v.
COX COMMUNICATIONS, INCORPORATED; COXCOM, LLC,
Defendants - Appellants,
and
COX ENTERPRISES, INCORPORATED; COXCOM, INC., d/b/a Cox
Communications of Northern Virginia; JOHN DOE, IP Subscriber 174.65.175.31,
Defendants,
RIGHTSCORP, INC.,
Party-in-Interest.
3
Appeals from the United States District Court for the Eastern District of Virginia, at
Alexandria. Liam O’Grady, District Judge. (1:14-cv-01611-LO-JFA)
Argued: October 25, 2017 Decided: February 1, 2018
Before MOTZ and WYNN, Circuit Judges, and SHEDD, Senior Circuit Judge.
Affirmed in part, reversed in part, vacated in part, and remanded by published opinion.
Judge Motz wrote the opinion, in which Judge Wynn and Senior Judge Shedd joined.
ARGUED: Michael S. Elkin, WINSTON & STRAWN LLP, New York, New York, for
Appellants/Cross-Appellees. Michael J. Allan, STEPTOE & JOHNSON LLP,
Washington, D.C., for Appellee/Cross-Appellant. ON BRIEF: Thomas P. Lane, New
York, New York, Jennifer A. Golinveaux, Thomas J. Kearney, San Francisco, California,
Steffen N. Johnson, Christopher E. Mills, WINSTON & STRAWN LLP, Washington,
D.C.; Craig C. Reilly, Alexandria, Virginia, for Appellants/Cross-Appellees. William G.
Pecau, John M. Caracappa, Jeffrey M. Theodore, STEPTOE & JOHNSON LLP,
Washington, D.C.; Walter D. Kelly, Jr., HAUSFELD, LLP, Washington, D.C., for
Appellee/Cross-Appellant. Seth D. Greenstein, CONSTANTINE CANNON LLP,
Washington, D.C., for Amici Consumer Technology Association and Computer &
Communications Industry Association. Jonathan Band, JONATHAN BAND PLLC,
Washington, D.C., for Amici American Council on Education, Association of American
Universities, Educause, American Library Association, Association of Research Libraries,
Association of College and Research Libraries, American Indian Higher Education
Consortium, APPA: Leadership in Educational Facilities, National Association of College
and University Business Officers, Thurgood Marshall College Fund, Association of
Catholic Colleges and Universities, and National Association of Independent Colleges and
Universities. David E. Weslow, Brett A. Shumate, Ari S. Meltzer, WILEY REIN LLP,
Washington, D.C., for Amicus United States Telecom Association. Ross J. Lieberman,
AMERICAN CABLE ASSOCIATION, Washington, D.C.; John D. Seiver, Ronald G.
London, William W. Hellmuth, DAVIS WRIGHT TREMAINE LLP, Washington, D.C.,
for Amicus American Cable Association. Andrew L. Deutsch, DLA PIPER LLP, New
York, New York, for Amicus Internet Commerce Coalition. Mitchell L. Stoltz,
ELECTRONIC FRONTIER FOUNDATION, San Francisco, California; Charles Duan,
PUBLIC KNOWLEDGE, Washington, D.C., for Amici Public Knowledge, Electronic
Frontier Foundation, and Center for Democracy & Technology. George M. Borkowski,
RECORDING INDUSTRY ASSOCIATION OF AMERICA, INC., Washington, D.C.;
4
Kannon K. Shanmugam, Thomas G. Hentoff, Connor S. Sullivan, WILLIAMS &
CONNOLLY LLP, Washington, D.C., for Amicus Recording Industry Association of
America, Inc. Linda M. Burrow, Eric S. Pettit, Albert Giang, Alison Mackenzie,
CALDWELL LESLIE & PROCTOR, PC, Los Angeles, California, for Amicus The
Copyright Alliance. Erich C. Carey, Vice President & Senior Counsel, Litigation,
NATIONAL MUSIC PUBLISHERS’ ASSOCIATION, Washington, D.C., for Amicus
National Music Publishers’ Association. Jacqueline C. Charlesworth, New York, New
York, for Amici National Music Publishers’ Association and Nashville Songwriters
Association International. R. Reeves Anderson, Denver, Colorado, Elisabeth S. Theodore,
Washington, D.C., John C. Ulin, ARNOLD & PORTER KAYE SCHOLER LLP, Los
Angeles, California, for Amicus Motion Picture Association of America, Inc.
5
DIANA GRIBBON MOTZ, Circuit Judge:
BMG Rights Management (US) LLC (“BMG”), which owns copyrights in musical
compositions, filed this suit alleging copyright infringement against Cox Communications,
Inc. and CoxCom, LLC (collectively, “Cox”), providers of high-speed Internet access.
BMG seeks to hold Cox contributorily liable for infringement of BMG’s copyrights by
subscribers to Cox’s Internet service. Following extensive discovery, the district court held
that Cox had not produced evidence that it had implemented a policy entitling it to a
statutory safe harbor defense and so granted summary judgment on that issue to BMG.
After a two-week trial, a jury found Cox liable for willful contributory infringement and
awarded BMG $25 million in statutory damages. Cox appeals, asserting that the district
court erred in denying it the safe harbor defense and incorrectly instructed the jury. We
hold that Cox is not entitled to the safe harbor defense and affirm the district court’s denial
of it, but we reverse in part, vacate in part, and remand for a new trial because of certain
errors in the jury instructions.
I.
A.
Cox is a conduit Internet service provider (“ISP”), providing approximately 4.5
million subscribers with high-speed Internet access for a monthly fee. Some of Cox’s
subscribers shared and received copyrighted files, including music files, using a technology
known as BitTorrent. BitTorrent is not a software program, but rather describes a protocol
— a set of rules governing the communication between computers — that allows individual
6
computers on the Internet to transfer files directly to other computers. This method of file
sharing is commonly known as “peer-to-peer” file sharing, and contrasts with the
traditional method of downloading a file from a central server using a Web browser.
Although peer-to-peer file sharing is not new, what makes BitTorrent unique is that
it allows a user to download a file from multiple peers at the same time — even peers who
only have a piece of the file, rather than the complete file. In other words, as soon as a user
has downloaded a piece of the file, he or she can begin sharing that piece with others (while
continuing to download the rest of the file). This innovation makes sharing via BitTorrent
particularly fast and efficient. Although BitTorrent can be used to share any type of digital
file, many use it to share copyrighted music and video files without authorization.
As a conduit ISP, Cox only provides Internet access to its subscribers. Cox does
not create or sell software that operates using the BitTorrent protocol, store copyright-
infringing material on its own computer servers, or control what its subscribers store on
their personal computers.
Cox’s agreement with its subscribers reserves the right to suspend or terminate
subscribers who use Cox’s service “to post, copy, transmit, or disseminate any content that
infringes the patents, copyrights . . . or proprietary rights of any party.” To enforce that
agreement and protect itself from liability, however, Cox created only a very limited
automated system to process notifications of alleged infringement received from copyright
owners. Cox’s automated system rests on a thirteen-strike policy that determines the action
to be taken based on how many notices Cox has previously received regarding infringement
by a particular subscriber. The first notice alleging a subscriber’s infringement produces
7
no action from Cox. The second through seventh notices result in warning emails from
Cox to the subscriber. After the eighth and ninth notices, Cox limits the subscriber’s
Internet access to a single webpage that contains a warning, but the subscriber can
reactivate complete service by clicking an acknowledgement. After the tenth and eleventh
notices, Cox suspends services, requiring the subscriber to call a technician, who, after
explaining the reason for suspension and advising removal of infringing content,
reactivates service. After the twelfth notice, the subscriber is suspended and directed to a
specialized technician, who, after another warning to cease infringing conduct, reactivates
service. After the thirteenth notice, the subscriber is again suspended, and, for the first
time, considered for termination. Cox never automatically terminates a subscriber.
The effectiveness of Cox’s thirteen-strike policy as a deterrent to copyright
infringement has several additional limitations. Cox restricts the number of notices it will
process from any copyright holder or agent in one day; any notice received after this limit
has been met does not count in Cox’s graduated response escalation. Cox also counts only
one notice per subscriber per day. And Cox resets a subscriber’s thirteen-strike counter
every six months.
BMG, a music publishing company, owns copyrights in musical compositions. To
protect this copyrighted material, BMG hired Rightscorp, Inc., which monitors BitTorrent
activity to determine when infringers share its clients’ copyrighted works. When
Rightscorp identifies such sharing, it emails an infringement notice to the alleged
infringer’s ISP (here, Cox). The notice contains the name of the copyright owner (here,
BMG), the title of the copyrighted work, the alleged infringer’s IP address, a time stamp,
8
and a statement under penalty of perjury that Rightscorp is an authorized agent and the
notice is accurate.
Rightscorp also asks the ISP to forward the notice to the allegedly infringing
subscriber, since only the ISP can match the IP address to the subscriber’s identity. For
that purpose, the notice contains a settlement offer, allowing the alleged infringer to pay
twenty or thirty dollars for a release from liability for the instance of infringement alleged
in the notice. Cox has determined to refuse to forward or process notices that contain such
settlement language. When Cox began receiving Rightscorp notices in the spring of 2011
(before Rightscorp had signed BMG as a client), Cox notified Rightscorp that it would
process the notices only if Rightscorp removed the settlement language. Rightscorp did
not do so. Cox never considered removing the settlement language itself or using other
means to inform its subscribers of the allegedly infringing activity observed by Rightscorp.
Rightscorp continued to send Cox large numbers of settlement notices. In the fall
of 2011, Cox decided to “blacklist” Rightscorp, meaning Cox would delete notices
received from Rightscorp without acting on them or even viewing them. BMG hired
Rightscorp in December 2011 — after Cox blacklisted Rightscorp. Thus, Cox did not ever
view a single one of the millions of notices that Rightscorp sent to Cox on BMG’s behalf.
B.
On November 26, 2014, BMG initiated this action against Cox. BMG alleged that
Cox was vicariously and contributorily liable for acts of copyright infringement by its
subscribers.
9
At the conclusion of discovery, the parties filed multi-issue cross-motions for
summary judgment, which the district court resolved in a careful written opinion. Among
these issues, BMG asserted that Cox had not established a policy entitling it to the safe
harbor defense contained in the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C.
§ 512(a). To qualify for that safe harbor, an ISP, like Cox, must have “adopted and
reasonably implemented . . . a policy that provides for the termination in appropriate
circumstances of subscribers . . . who are repeat infringers.” Id. § 512(i)(1)(A). The
district court agreed with BMG and held that no reasonable jury could find that Cox
implemented a policy that entitled it to that DMCA safe harbor. The court explained that
BMG had offered evidence that “Cox knew accounts were being used repeatedly for
infringing activity yet failed to terminate” those accounts and that Cox did “not come
forward with any evidence” to the contrary. Accordingly, the court granted summary
judgment to BMG on Cox’s safe harbor defense.
The case proceeded to a jury trial that involved the testimony of more than a dozen
witnesses and admission of numerous documents. At the conclusion of the trial, the district
court instructed the jury that to prove contributory infringement, BMG had to show “direct
infringement of BMG’s copyrighted works” by Cox subscribers, that “Cox knew or should
have known of such infringing activity,” and that “Cox induced, caused, or materially
contributed to such infringing activity.” The court further instructed the jury that BMG
could prove Cox’s knowledge of infringing activity by showing willful blindness, if Cox
“was aware of a high probability that Cox users were infringing BMG’s copyrights but
consciously avoided confirming that fact.”
10
The jury found Cox liable for willful contributory infringement and awarded BMG
$25 million in statutory damages. The jury also found that Cox was not liable for vicarious
infringement. The district court denied all post-trial motions and entered judgment in
accordance with the verdict. Cox appeals, arguing that BMG should not have been granted
summary judgment as to the DMCA safe harbor and that erroneous jury instructions entitle
it to a new trial. 1
II.
We first address Cox’s contention that the district court erred in denying it the
§ 512(a) DMCA safe harbor defense. We review de novo the grant of summary judgment.
Henry v. Purnell, 652 F.3d 524, 531 (4th Cir. 2011) (en banc).
A.
The DMCA provides a series of safe harbors that limit the copyright infringement
liability of an ISP and related entities. As a conduit ISP, Cox seeks the benefit of the safe
harbor contained in 17 U.S.C. § 512(a). To fall within that safe harbor, Cox must show
that it meets the threshold requirement, common to all § 512 safe harbors, that it has
“adopted and reasonably implemented . . . a policy that provides for the termination in
1
After trial, both parties moved for fees and costs. The district court awarded BMG
over $8 million in attorney’s fees but limited some of the costs recoverable by BMG. The
court denied Cox’s motion for fees and costs against an earlier plaintiff in the litigation,
Round Hill Music LP, against whom Cox prevailed on summary judgment. The parties
appeal these orders. Because our holding as to the jury instructions requires us to vacate
this award of fees and costs, we do not address the merits of those awards.
11
appropriate circumstances of subscribers . . . who are repeat infringers.” 17 U.S.C.
§ 512(i)(1)(A).
Cox’s principal contention is that “repeat infringers” means adjudicated repeat
infringers: people who have been held liable by a court for multiple instances of copyright
infringement. Cox asserts that it complied with § 512(i)(1)(A)’s requirement and is
therefore entitled to the § 512(a) DMCA safe harbor because BMG did not show that Cox
failed to terminate any adjudicated infringers. BMG responds that Cox’s interpretation of
“repeat infringers” is contrary to “the DMCA’s plain terms.” Appellee Br. at 31.
Because the statute does not define the term “repeat infringers,” to resolve that
question, we turn first to the term’s ordinary meaning. See Sebelius v. Cloer, 569 U.S. 369,
376 (2013). The ordinary meaning of an infringer is “[s]omeone who interferes with one
of the exclusive rights of a . . . copyright” holder — in short, one who infringes a copyright.
Infringer, Black’s Law Dictionary 902 (10th ed. 2014). A repeat infringer, then, is one
who infringes a copyright more than once.
Cox contends that because the repeat infringer provision uses the term “infringer”
without modifiers such as “alleged” or “claimed” that appear elsewhere in the DMCA,
“infringer” must mean “adjudicated infringer.” But the DMCA’s use of phrases like
“alleged infringer” in other portions of the statute indicates only that the term “infringer”
alone must mean something different than “alleged infringer,” otherwise, the word
“alleged” would be superfluous. Using the ordinary meaning of “infringer,” however, fully
accords with this principle: someone who actually infringes a copyright differs from
someone who has merely allegedly infringed a copyright, because an allegation could be
12
false. The need to differentiate the terms “infringer” and “alleged infringer” thus does not
mandate Cox’s proposed definition.
Moreover, other provisions of the Copyright Act use the term “infringer” (and
similar terms) to refer to all who engage in infringing activity, not just the narrow subset
of those who have been so adjudicated by a court. For example, § 501(a), which creates a
civil cause of action for copyright owners, states that “[a]nyone who violates any of the
exclusive rights of the copyright owner” provided for in the statute “is an infringer of the
copyright or right of the author.” 17 U.S.C. § 501(a) (emphasis added).
Similarly, the DMCA itself provides that ISPs who store copyrighted material are
generally not liable for removing “material or activity claimed to be infringing or based on
facts or circumstances from which infringing activity is apparent, regardless of whether
the material or activity is ultimately determined to be infringing.” Id. § 512(g)(1)
(emphases added). This provision expressly distinguishes among three categories of
activity: activity merely “claimed to be infringing,” actual “infringing activity” (as is
apparent from “facts or circumstances”), and activity “ultimately determined to be
infringing.” The distinction between “infringing activity” and activity “ultimately
determined to be infringing” in § 512(g) shelters ISPs from being liable for taking down
material that is “infringing,” even if no court “ultimately determine[s]” that it is infringing
— because, for example, the copyright holder simply does not file a lawsuit against the
person who uploaded the infringing material. As this provision illustrates, Congress knew
how to expressly refer to adjudicated infringement, but did not do so in the repeat infringer
provision. See also id. § 512(b)(2)(E)(i) (addressing circumstance in which “a court has
13
ordered that . . . material be removed”). That suggests the term “infringer” in § 512(i) is
not limited to adjudicated infringers.
The legislative history of the repeat infringer provision supports this conclusion.
Both the House Commerce and Senate Judiciary Committee Reports explained that “those
who repeatedly or flagrantly abuse their access to the Internet through disrespect for the
intellectual property rights of others should know that there is a realistic threat of losing
that access.” H.R. Rep. No. 105-551, pt. 2, at 61 (1998); S. Rep. No. 105-190, at 52 (1998).
This passage makes clear that if persons “abuse their access to the Internet through
disrespect for the intellectual property rights of others” — that is, if they infringe copyrights
— they should face a “realistic threat of losing” their Internet access. The passage does
not suggest that they should risk losing Internet access only once they have been sued in
court and found liable for multiple instances of infringement. Indeed, the risk of losing
one’s Internet access would hardly constitute a “realistic threat” capable of deterring
infringement if that punishment applied only to those already subject to civil penalties and
legal fees as adjudicated infringers.
The only circuit to expressly consider the definition of a “repeat infringer” in the
DMCA has defined it to mean “someone who interferes with one of the exclusive rights of
a copyright” “again or repeatedly.” EMI Christian Music Grp., Inc. v. MP3tunes, LLC,
844 F.3d 79, 89 (2d Cir. 2016) (alterations, internal quotation marks, and citations omitted);
accord, e.g., Ellison v. Robertson, 357 F.3d 1072, 1080 (9th Cir. 2004) (finding material
dispute of fact as to whether ISP was entitled to invoke safe harbor provision because there
was “ample evidence” that ISP did not terminate “repeat infringers,” but not suggesting
14
that the infringing subscribers were adjudicated infringers); In re Aimster Copyright Litig.,
334 F.3d 643, 655 (7th Cir. 2003) (finding ISP ineligible for safe harbor defense where ISP
“invited” “the use of its service by ‘repeat infringers,’” but not discussing any evidence
that users were adjudicated infringers). Cox does not cite a single case adopting its
contrary view that only adjudicated infringers can be “repeat infringers” for purposes of
the DMCA. 2
Accordingly, we reject Cox’s argument that the term “repeat infringers” in § 512(i)
is limited to adjudicated infringers. 3
B.
Section 512(i) thus requires that, to obtain the benefit of the DMCA safe harbor,
Cox must have reasonably implemented “a policy that provides for the termination in
appropriate circumstances” of its subscribers who repeatedly infringe copyrights.
17 U.S.C. § 512(i)(1)(A). We are mindful of the need to afford ISPs flexibility in crafting
repeat infringer policies, and of the difficulty of determining when it is “appropriate” to
2
Nor do we find Cox’s reliance on Professor Nimmer’s copyright treatise
convincing. Although the treatise discusses several possible meanings for the term
“infringer,” it ultimately concludes that “an ‘infringer’ in the statutory sense may be either
a party who has been adjudicated to have committed copyright infringement, or a party
about whom the service provider has actual knowledge that s/he has engaged in
infringement.” 4 Nimmer on Copyright § 12B.10[B][3][c] (emphases added); see
id. § 12B.10[B][3][a]. That conclusion lies at odds with Cox’s assertion that only an
adjudicated infringer qualifies as an “infringer” for purposes of the DMCA.
3
We note that even were we to adopt Cox’s position that its policy must only target
adjudicated repeat infringers, Cox undisputedly did not have such a policy. As
summarized above, Cox’s policy focused on the number of complaints (or strikes) a
subscriber received, not whether a court had adjudicated the subscriber a repeat infringer.
15
terminate a person’s access to the Internet. See id. At a minimum, however, an ISP has
not “reasonably implemented” a repeat infringer policy if the ISP fails to enforce the terms
of its policy in any meaningful fashion. See In re Aimster Copyright Litig., 252 F. Supp.
2d 634, 659 (N.D. Ill. 2002), aff’d, 334 F.3d 643 (7th Cir. 2003) (“Adopting a repeat
infringer policy and then purposely eviscerating any hope that such a policy could ever be
carried out is not an ‘implementation’ as required by § 512(i).”). Here, Cox formally
adopted a repeat infringer “policy,” but, both before and after September 2012, made every
effort to avoid reasonably implementing that policy. Indeed, in carrying out its thirteen-
strike process, Cox very clearly determined not to terminate subscribers who in fact
repeatedly violated the policy.
The words of Cox’s own employees confirm this conclusion. In a 2009 email, Jason
Zabek, the executive managing the Abuse Group, a team tasked with addressing
subscribers’ violations of Cox’s policies, explained to his team that “if a customer is
terminated for DMCA, you are able to reactivate them,” and that “[a]fter you reactivate
them the DMCA ‘counter’ restarts.” The email continued, “This is to be an unwritten semi-
policy.” Zabek also advised a customer service representative asking whether she could
reactivate a terminated subscriber that “[i]f it is for DMCA you can go ahead and
reactivate.” Zabek explained to another representative: “Once the customer has been
terminated for DMCA, we have fulfilled the obligation of the DMCA safe harbor and can
start over.” He elaborated that this would allow Cox to “collect a few extra weeks of
payments for their account. ;-).” Another email summarized Cox’s practice more
succinctly: “DMCA = reactivate.” As a result of this practice, from the beginning of the
16
litigated time period until September 2012, Cox never terminated a subscriber for
infringement without reactivating them.
Cox nonetheless contends that it lacked “actual knowledge” of its subscribers’
infringement and therefore did not have to terminate them. That argument misses the mark.
The evidence shows that Cox always reactivated subscribers after termination, regardless
of its knowledge of the subscriber’s infringement. Cox did not, for example, advise
employees not to reactivate a subscriber if the employees had reliable information
regarding the subscriber’s repeat infringement. An ISP cannot claim the protections of the
DMCA safe harbor provisions merely by terminating customers as a symbolic gesture
before indiscriminately reactivating them within a short timeframe.
In September 2012, Cox abandoned its practice of routine reactivation. An internal
email advised a new customer service representative that “we now terminate, for real.”
BMG argues, however, that this was a change in form rather than substance, because
instead of terminating and then reactivating subscribers, Cox simply stopped terminating
them in the first place. The record evidence supports this view. Before September 2012,
Cox was terminating (and reactivating) 15.5 subscribers per month on average; after
September 2012, Cox abruptly began terminating less than one subscriber per month on
average. From September 2012 until the end of October 2014, the month before BMG
filed suit, Cox issued only 21 terminations in total. Moreover, at least 17 of those 21
terminations concerned subscribers who had either failed to pay their bills on time or used
excessive bandwidth (something that Cox subjected to a strict three-strike termination
policy). Cox did not provide evidence that the remaining four terminations were for repeat
17
copyright infringement. But even assuming they were, they stand in stark contrast to the
over 500,000 email warnings and temporary suspensions Cox issued to alleged infringers
during the same time period.
Moreover, Cox dispensed with terminating subscribers who repeatedly infringed
BMG’s copyrights in particular when it decided to delete automatically all infringement
notices received from BMG’s agent, Rightscorp. As a result, Cox received none of the
millions of infringement notices that Rightscorp sent to Cox on BMG’s behalf during the
relevant period. Although our inquiry concerns Cox’s policy toward all of its repeatedly
infringing subscribers, not just those who infringed BMG’s copyrights, Cox’s decision to
categorically disregard all notices from Rightscorp provides further evidence that Cox did
not reasonably implement a repeat infringer policy. See Ellison, 357 F.3d at 1080 (holding
that “the district court erred in concluding on summary judgment that [the ISP] satisfied
the requirements of § 512(i)” because the record showed that the ISP “allowed notices of
potential copyright infringement to fall into a vacuum and to go unheeded,” indicating it
“had not reasonably implemented its policy against repeat infringers”); Aimster, 334 F.3d
at 655 (holding that a defendant who “disabled itself from doing anything to prevent
infringement” did not reasonably implement a repeat infringer policy).
BMG also provided evidence of particular instances in which Cox failed to
terminate subscribers whom Cox employees regarded as repeat infringers. For example,
one subscriber “was advised to stop sharing . . . and remove his PTP programs,” and a Cox
employee noted that the subscriber was “well aware of his actions” and was “upset that
‘after years of doing this’ he is now getting caught.” Nonetheless, Cox did not terminate
18
the subscriber. Another customer was advised that “further complaints would result in
termination” and that it was the customer’s “absolute last chance to . . . remove ALL” file-
sharing software. But when Cox received another complaint, a manager directed the
employee not to terminate, but rather to “suspend this Customer, one LAST time,” noting
that “[t]his customer pays us over $400/month” and that “[e]very terminated Customer
becomes lost revenue.”
Cox responds that these post-September 2012 emails do not necessarily “prove
actual knowledge of repeat infringement.” Appellants Br. at 59. Again, that argument is
misplaced. Cox bears the burden of proof on the DMCA safe harbor defense; thus, Cox
had to point to evidence showing that it reasonably implemented a repeat infringer policy.
The emails show that Cox internally concluded that a subscriber should be terminated after
the next strike, but then declined to do so because it did not want to lose revenue. In other
words, Cox failed to follow through on its own policy. Cox argues that these emails only
concerned “four cases,” and that “occasional lapses” are forgivable. Id. at 58. But even
four cases are significant when measured against Cox’s equally small total number of
relevant terminations in this period — also four. More importantly, Cox did not produce
any evidence of instances in which it did follow through on its policy and terminate
subscribers after giving them a final warning to stop infringing.
In addition, Cox suggests that because the DMCA merely requires termination of
repeat infringers in “appropriate circumstances,” Cox decided not to terminate certain
subscribers only when “appropriate circumstances” were lacking. Appellants Br. at 56–
57. But Cox failed to provide evidence that a determination of “appropriate circumstances”
19
played any role in its decisions to terminate (or not to terminate). Cox did not, for example,
point to any criteria that its employees used to determine whether “appropriate
circumstances” for termination existed. Instead, the evidence shows that Cox’s decisions
not to terminate had nothing to do with “appropriate circumstances” but instead were based
on one goal: not losing revenue from paying subscribers.
Cox failed to qualify for the DMCA safe harbor because it failed to implement its
policy in any consistent or meaningful way — leaving it essentially with no policy.
Accordingly, the district court did not err in holding that Cox failed to offer evidence
supporting its entitlement to the § 512(a) safe harbor defense and therefore granting
summary judgment on this issue to BMG.
III.
We turn to Cox’s other principal challenge to the judgment: that the district court
erred in instructing the jury as to contributory infringement. “We generally review a trial
court’s . . . jury instructions for abuse of discretion.” Coll. Loan Corp. v. SLM Corp., 396
F.3d 588, 595 (4th Cir. 2005). However, we review de novo whether jury instructions
correctly state the law, see United States v. Cherry, 330 F.3d 658, 665 (4th Cir. 2003),
because a trial court “by definition abuses its discretion when it makes an error of law,”
Koon v. United States, 518 U.S. 81, 100 (1996). Where an instruction is erroneous, we
will set aside the verdict if “[t]here is a reasonable probability” that the erroneous
instruction “affected the jury’s verdict.” See Cherry, 330 F.3d at 600.
20
A.
Cox’s initial jury instruction argument rests on its contention that it cannot be held
liable for contributory copyright infringement because its technology is “capable of
substantial noninfringing use.” Appellants Br. at 15, 38. According to Cox, the district
court erred in refusing “to instruct the jury on this principle.” Id. at 15.
This argument is meritless. Of course, the mere sale of a product that has both
lawful and unlawful uses does not in and of itself establish an intent to infringe. That is
the holding of Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984). In
Sony, copyright holders sought to hold Sony contributorily liable for selling video cassette
recorders (VCRs) that customers used to tape copyrighted programs. Id. at 419–20. The
Supreme Court rejected that claim, holding that because a VCR was “capable of
commercially significant noninfringing uses,” its manufacturer, Sony, could not be held
contributory liable for distribution of the VCR. Id. at 442.
A few courts initially interpreted Sony’s limitation, as Cox does, to mean that if a
product can be substantially used lawfully, its producer cannot be contributorily liable for
copyright infringement. See, e.g., Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd.,
380 F.3d 1154, 1162 (9th Cir. 2004), vacated and remanded, 545 U.S. 913 (2005); Vault
Corp. v. Quaid Software Ltd., 847 F.2d 255, 262, 267 (5th Cir. 1988). But in Grokster, the
Supreme Court rejected this broad reading. See Metro-Goldwyn-Mayer Studios Inc. v.
Grokster, Ltd., 545 U.S. 913 (2005). The Court clarified that “Sony barred secondary
liability based on presuming or imputing intent to cause infringement solely from the
design or distribution of a product capable of substantial lawful use, which the distributor
21
knows is in fact used for infringement.” Id. at 933 (emphasis added). The Grokster Court
explained that under Sony, intent to infringe will not be presumed from “the equivocal
conduct of selling an item with substantial lawful as well as unlawful uses,” even when the
seller has the “understanding that some of [his or her] products will be misused.” Id. at
932–33. More is needed. But the fact that a product is “capable of substantial lawful use”
does not mean the “producer can never be held contributorily liable.” Id. at 934.
Exactly the same flaw infects Cox’s related argument that the district court erred in
refusing to instruct the jury that “[i]t is not a material contribution to provide a product or
service that is capable of substantial non-infringing uses.” Appellants Br. 22–23. As the
Supreme Court explained, reversal was required in Grokster because the Ninth Circuit had
“read Sony’s limitation to mean that whenever a product is capable of substantial lawful
use, the producer can never be held contributorily liable for third parties’ infringing use of
it . . . . [t]his view of Sony, however, was error.” Grokster, 545 U.S. at 934.
Because the instruction Cox requested misstates the law, the district court did not
err in refusing to give it. See United States v. Smoot, 690 F.3d 215, 223 (4th Cir. 2012).
In fact, providing a product with “substantial non-infringing uses” can constitute a material
contribution to copyright infringement. See, e.g., Perfect 10, Inc. v. Amazon.com, Inc., 508
F.3d 1146, 1172 (9th Cir. 2007) (holding that Google’s image search engine “substantially
assists websites to distribute their infringing copies” of copyrighted images, and thus
constitutes a material contribution, even though “Google’s assistance is available to all
websites, not just infringing ones”). Grokster makes clear that what matters is not simply
whether the product has some or even many non-infringing uses, but whether the product
22
is distributed with the intent to cause copyright infringement. See Grokster, 545 U.S. at
934 (“Sony’s rule limits imputing culpable intent as a matter of law from the characteristics
or uses of a distributed product.” (emphasis added)).
Thus, contrary to Cox’s argument, the fact that its technology can be substantially
employed for a noninfringing use does not immunize it from liability for contributory
copyright infringement. The district court did not err in refusing to instruct the jury to the
contrary.
B.
Alternatively, Cox offers a more nuanced attack on the contributory infringement
instructions. Cox contends that the court erred in charging the jury as to the intent
necessary to prove contributory infringement. Specifically, Cox challenges the district
court’s instructions that the jury could impose liability for contributory infringement if the
jury found “Cox knew or should have known of such infringing activity.” We agree that
in so instructing the jury, the court erred.
i.
Grokster teaches that “[o]ne infringes contributorily by intentionally inducing or
encouraging direct infringement.” 545 U.S. at 930 (emphasis added). The requisite intent
may, however, be presumed according to the “rules of fault-based liability derived from
the common law.” Id. at 934–35. The most relevant of these common law rules is that if
a person “knows that the consequences are certain, or substantially certain, to result from
his act, and still goes ahead, he is treated by the law as if he had in fact desired to produce
the result.” See Restatement (Second) of Torts § 8A cmt. b (1965); Grokster, 545 U.S.
23
at 932 (a person “will be presumed to intend the natural consequences of his acts” (internal
quotation marks and citation omitted)). Under this principle, “when an article is good for
nothing else but infringement . . . there is no injustice in presuming or imputing an intent
to infringe” based on its sale. Grokster, 545 U.S. at 932 (internal quotation marks and
citation omitted). Assuming the seller is aware of the nature of his product — that its only
use is infringing — he knows that infringement is substantially certain to result from his
sale of that product and he may therefore be presumed to intend that result.
A similar result follows when a person sells a product that has lawful uses, but with
the knowledge that the buyer will in fact use the product to infringe copyrights. In that
circumstance, the seller knows that infringement is substantially certain to result from the
sale; consequently, the seller intends to cause infringement just as much as a seller who
provides a product that has exclusively unlawful uses. See Henry v. A.B. Dick Co., 224
U.S. 1 (1912), overruled on other grounds, Motion Picture Patents Co. v. Universal Film
Mfg. Co., 243 U.S. 502 (1917). Indeed, Henry, a hundred-year-old Supreme Court case
involving contributory patent infringement that the Supreme Court cited in Grokster, 545
U.S. at 932–33, 935, and Sony, 464 U.S. at 441–42, rests on this very reasoning. There,
the Court affirmed a judgment for contributory infringement based on the defendants’ sale
to a specific person with knowledge that the product would be used to infringe, even though
the product — ink — also had noninfringing uses. Henry, 224 U.S. at 48–49. The Court
reasoned that because the defendants sold the ink “with the expectation that it would be
used” to infringe, “the purpose and intent that it would be so used” could be presumed. Id.
at 49.
24
These principles apply equally in cases, like this one, that involve subscription
services or rentals rather than one-time sales. Consider a company that leases VCRs, learns
that specific customers use their VCRs to infringe, but nonetheless renews the lease to
those infringing customers. Given those facts, the company knows that its action —
renewing the lease of the VCR to these specific customers — is substantially certain to
result in infringement, and so an intent to cause infringement may be presumed. See
Amazon.com, 508 F.3d at 1172 (explaining that “intent may be imputed” based on “a
service provider’s knowing failure to prevent infringing actions.”)
It is well-established that one mental state slightly less demanding than actual
knowledge — willful blindness — can establish the requisite intent for contributory
copyright infringement. This is so because the law recognizes willful blindness as
equivalent to actual knowledge. See Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S.
754, 766 (2011) (“[P]ersons who know enough to blind themselves to direct proof of
critical facts in effect have actual knowledge of those facts.”); Aimster, 334 F.3d at 650
(“Willful blindness is knowledge, in copyright law . . . as it is in the law generally.”).
Whether other mental states — such as negligence (where a defendant “should have
known” of infringement) — can suffice to prove contributory copyright infringement
presents a more difficult question. 4 The notion that contributory liability could be imposed
based on something less than actual knowledge, or its equivalent, willful blindness, is not
4
The parties at times refer to this “should have known” standard as a “constructive
knowledge” standard. We will follow the Supreme Court and refer to it as a “negligence”
standard. See Global-Tech, 563 U.S. at 769–71 (“[A] negligent defendant is one who
should have known of a . . . risk [of wrongdoing] but, in fact, did not.”).
25
entirely without support. See Aimster, 334 F.3d at 650 (“[I]n copyright law . . . indeed it
may be enough that the defendant should have known of the direct infringement . . . .”)
Nonetheless, we believe for several reasons, that, as Cox contends, negligence does not
suffice to prove contributory infringement; rather, at least willful blindness is required.
First, Grokster’s recitation of the standard — that “[o]ne infringes contributorily by
intentionally inducing or encouraging direct infringement” — is on its face difficult to
reconcile with a negligence standard. See 545 U.S. at 930 (emphasis added). In addition,
it would have been unnecessary for the Court to discuss in detail the situations in which
intent may be presumed, and those situations, like Sony, in which it may not, if liability did
not require intent at all, but merely required negligence. See id. at 934.
Looking to patent law, as the Supreme Court did in Sony and Grokster, further
counsels against a negligence standard. The Supreme Court has long held that contributory
patent infringement requires knowledge of direct infringement. Aro Mfg. Co. v.
Convertible Top Replacement Co., 377 U.S. 476, 488 (1964). And in 2011, the Court held
that willful blindness satisfies this knowledge requirement, but recklessness (“one who
merely knows of a substantial and unjustified risk of . . . wrongdoing”) and negligence
(“one who should have known of a similar risk but, in fact, did not”) do not. Global-Tech,
563 U.S. at 769–71. The Court reaffirmed this holding in 2015, stating that contributory
patent infringement “requires proof the defendant knew the acts were infringing,” and that
Global-Tech “was clear in rejecting any lesser mental state as the standard.” Commil USA,
LLC v. Cisco Sys., Inc., 135 S. Ct. 1920, 1928 (2015). The Court expressly rejected the
possibility “that a person, or entity, could be liable even though he did not know the acts
26
were infringing.” Id. Thus, in the patent context, it is clear that contributory infringement
cannot be based on a finding that a defendant “should have known” of infringement.
In both Grokster and Sony, the Supreme Court adopted now-codified patent law
doctrines — the staple article doctrine and the inducement rule. The Court did so because
of “the historic kinship between patent law and copyright law,” Sony, 464 U.S. at 439–42,
and the similar need in both contexts to impose liability on “culpable expression and
conduct” without “discouraging the development of technologies with lawful and unlawful
potential,” Grokster, 545 U.S. at 936–37. We are persuaded that the Global-Tech rule
developed in the patent law context, which held that contributory liability can be based on
willful blindness but not on recklessness or negligence, is a sensible one in the copyright
context. It appropriately targets culpable conduct without unduly burdening technological
development. 5
The law of aiding and abetting, “the criminal counterpart to contributory
infringement,” Aimster, 334 F.3d at 651, similarly militates against adoption of a
negligence standard. A person “aids and abets a crime when . . . he intends to facilitate
that offense’s commission.” Rosemond v. United States, 134 S. Ct. 1240, 1248 (2014).
5
To be sure, in patent law, contributory infringement is codified, and the statute
requires that a contributory infringer sell a component “knowing the same to be especially
made or especially adapted for use in an infringement.” 35 U.S.C. § 271(c). But the Patent
Act does not define knowledge or indicate whether knowledge includes willful blindness
or something less, like recklessness or negligence. Nor was Global-Tech’s holding, that
willful blindness suffices but negligence does not, based on statutory interpretation. Thus,
Global-Tech’s rejection of any mental state lower than willful blindness cannot be limited
to patent law solely because contributory infringement is codified in patent law but not in
copyright law.
27
The necessary intent can be presumed only “when a person actively participates in a
criminal venture with full knowledge of the circumstances constituting the charged
offense.” Id. at 1248–49 (emphasis added).
Furthermore, “[t]he Restatement of Torts, under a concert of action principle,
accepts a doctrine with rough similarity to criminal aiding and abetting,” and therefore
provides another analog to contributory infringement. See Cent. Bank of Denver, N.A. v.
First Interstate Bank of Denver, N.A., 511 U.S. 164, 181 (1994). “An actor is liable for
harm resulting to a third person from the tortious conduct of another ‘if he knows that the
other’s conduct constitutes a breach of duty and gives substantial assistance or
encouragement to the other.’” Id. (quoting Restatement (Second) of Torts § 876(b) (1977))
(emphasis added). Because the Restatement here uses only the word “knows,” where in
other places it uses phrases like “knows or should know,” it is clear that “knows” here
refers to actual knowledge, not any lesser mental state. Compare Restatement (Second) of
Torts § 876(b) with § 336 (“knows or has reason to know”) and § 366 (“knows or should
know”). And the Second Circuit’s widely-cited Gershwin decision on contributory
infringement expressly drew on precisely this “common law doctrine that one who
knowingly participates or furthers a tortious act is jointly and severally liable with the prime
tortfeasor.” Gershwin Publ’g. Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162
(2d Cir. 1971) (internal quotation marks and citation omitted) (emphasis added).
We therefore hold that proving contributory infringement requires proof of at least
willful blindness; negligence is insufficient.
28
ii.
In arguing to the contrary, BMG relies on a pre-Grokster decision, Ellison v.
Robertson, in which the Ninth Circuit stated that some of its precedents had “interpreted
the knowledge requirement for contributory copyright infringement to include both those
with actual knowledge and those who have reason to know of direct infringement.”
357 F.3d 1072, 1076 (9th Cir. 2004). But the Ninth Circuit has since clarified, consistent
with our holding today, that contributory infringement requires “actual knowledge of
specific acts of infringement” or “[w]illful blindness of specific facts.” Ludvarts, LLC v.
AT&T Mobility, LLC, 710 F.3d 1068, 1072–73 (9th Cir. 2013) (internal quotation marks
and citation omitted).
BMG also argues that “Sony itself described a case where the defendant ‘knew or
should have known’ of the infringement as a “situation[] in which the imposition of
[contributory] liability is manifestly just.” Appellee Br. 44–45 (Appellee’s alterations)
(quoting Sony, 464 U.S. at 437–38, 437 n.18). BMG misreads Sony. The quoted sentence
refers to vicarious liability, stating that imposing liability is “manifestly just” where the
defendant can “control the use of copyrighted works by others,” Sony, 464 U.S. at 437–38
— which is an element of vicarious liability, but not of contributory infringement, see
Grokster, 545 U.S. at 930 n.9.
In a footnote to that sentence, Sony cited numerous lower court cases, including one
in which the district court held that an infringer’s advertising agency and similar defendants
could be held contributorily liable if they “knew or should have known that they were
dealing in illegal goods.” 464 U.S. at 437 n.18 (citing Screen Gems-Columbia Music, Inc.
29
v. Mark-Fi Records, Inc., 256 F. Supp. 399 (S.D.N.Y. 1966)). Although that district court
used the phrase “knew or should have known,” the allegation in that case was that the
defendants were dealing with counterfeit musical records priced “so suspiciously below
the usual market price” that the defendants must have known or “deliberately closed [their]
eyes” to the fact that the records were infringing. Screen Gems-Columbia Music, 256 F.
Supp. at 404. In such circumstances, liability could be imposed based on a theory of willful
blindness, making it unnecessary to permit the imposition of liability based on a lesser
negligence standard.
iii.
In sum, the district court erred in charging the jury that Cox could be found liable
for contributory infringement if it “knew or should have known of such infringing activity.”
The formulation “should have known” reflects negligence and is therefore too low a
standard. And because there is a reasonable probability that this erroneous instruction
affected the jury’s verdict, we remand for a new trial. See United States v. Wilson, 133
F.3d 251, 265 (4th Cir. 1997) (“[T]he instructions did not adequately impose . . . the burden
of proving knowledge . . . . For this reason, a new trial is required.”). 6
6
BMG’s suggestion that the jury in the case at hand found willful blindness when
it found willfulness is meritless. Under the willfulness instruction given by the court, the
jury could find willfulness based on recklessness, a lower standard than willful blindness.
Accordingly, we cannot conclude that the willfulness instruction provides a basis to hold
that the jury found knowledge or willful blindness.
30
C.
Cox asserts two further errors in the district court’s contributory infringement
instructions. Although Cox may not have adequately preserved these errors for review, we
address them in the interest of judicial economy to ensure the correctness of the
contributory infringement instructions on remand. See Polk v. Yellow Freight Sys., Inc.,
801 F.2d 190, 198 (6th Cir. 1986) (finding error in jury instructions and remanding for a
new trial, explaining that “[a]lthough it appears that defendant may not have adequately
preserved [the alleged errors in the jury instructions] for appeal, we nonetheless address
them to ensure that the proper instructions are given on remand”).
First, Cox contends that the district court erred in instructing the jury that Cox could
be held liable for contributory copyright infringement on the basis of proof of “direct
infringement of BMG’s copyrighted works by users of Cox’s Internet services” and that
Cox knew “of such activity.” See Appellants Br. at 24. Cox maintains that such
“generalized knowledge — that infringement was occurring somewhere on its network —
is exactly what falls short under Sony.” Id. at 27. We must agree.
Selling a product with both lawful and unlawful uses suggests an intent to cause
infringement only if the seller knows of specific instances of infringement, but not if the
seller only generally knows of infringement. See Ludvarts, 710 F.3d at 1072 (holding that
contributory copyright infringement “requires more than a generalized knowledge . . . of
the possibility of infringement”; it requires “specific knowledge of infringement”). A seller
who only generally knows of infringement is aware that “some of [his] products will be
misused” — but critically, not which products will be misused. See Grokster, 545 U.S. at
31
932–33. Thus, when that seller makes a sale to a specific customer, the seller knows only
that the customer may infringe, not that the customer is substantially certain to do so.
BMG does not dispute that the requisite mental state must be tied to specific
infringements; it contends, however, that the court’s instructions in fact “tied knowledge
to specific acts of direct infringement.” Appellee Br. at 50. BMG rests on the fact that the
instruction required that Cox knew “of such infringing activity,” and that such infringing
activity referred back to “direct infringement of BMG’s copyrighted works by users of
Cox’s Internet service.”
It does not follow, however, that a jury so instructed found that Cox had knowledge
of specific infringements. For example, the jury could have found that Cox knew of “direct
infringement of BMG’s copyrighted works” by its subscribers if Cox had data showing
that some number of its subscribers were infringing BMG’s copyrights, even if the data did
not show which ones were infringing. That level of generalized knowledge does not reflect
an intent to cause infringement, because it is not knowledge that infringement is
substantially certain to result from Cox’s continued provision of Internet access to
particular subscribers. Put another way, the proper standard requires a defendant to have
specific enough knowledge of infringement that the defendant could do something about
it. On remand, therefore, the contributory infringement instruction should require that Cox
knew of specific instances of infringement or was willfully blind to such instances.
Relatedly, Cox challenges the district court’s willful blindness instruction. The
court instructed the jury that Cox “acted with willful blindness if it was aware of a high
probability that Cox users were infringing BMG’s copyrights but consciously avoided
32
confirming that fact.” Since we have held that contributory infringement requires
knowledge of, or willful blindness to, specific instances of infringement, the court’s willful
blindness instruction should similarly require a conclusion that Cox consciously avoided
learning about specific instances of infringement, not merely that Cox avoided confirming
the fact that “Cox users were infringing BMG’s copyrights” in general.
D.
Although we have concluded that the district court incorrectly instructed the jury in
some instances, we reject Cox’s argument that with proper instructions, it is entitled to
judgment as a matter of law. The district court’s thoroughness and sure grasp of numerous
complex issues provide a model of fair administration of justice. At trial, BMG offered
powerful evidence from which a reasonable jury could find that Cox willfully blinded itself
to specific instances of infringement by its subscribers, such as evidence that Cox
prevented itself from receiving any of the more than one million notices Rightscorp sent
on BMG’s behalf. Indeed, that appears to be the primary theory for liability advanced by
BMG. See Appellee Br. at 21 (“Cox was put on notice of — and willfully blinded itself to
— millions of specific instances of unlawful sharing of BMG’s works by its
subscribers . . . .”). That determination, of course, must be made by a jury properly
instructed as to the law. But the trial record provides no basis for judgment as a matter of
law in Cox’s favor.
IV.
Cox advances several other claims of error. None have merit.
33
A.
Cox challenges the district court’s willfulness instruction, arguing that it incorrectly
required “the jury to analyze Cox’s knowledge of its subscribers’ actions,” rather than
Cox’s knowledge that “its actions constitute an infringement.” Appellants Br. at 59. 7
BMG contends that Cox failed to preserve this objection. We need not address whether
Cox waived the objection because we reject it on the merits. Cox does not dispute that
willfulness in copyright law is satisfied by recklessness, and the case law defines
recklessness broadly. For example, we have explained that copyright infringement is
willful if the defendant “recklessly disregards a copyright holder’s rights.” Lyons P’ship,
L.P. v. Morris Costumes, Inc., 243 F.3d 789, 799 (4th Cir. 2001). The Second Circuit has
similarly held that a finding of willfulness is appropriate if “the defendant’s actions were
the result of ‘reckless disregard’ for . . . the copyright holder’s rights.” Island Software &
Comput. Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 263 (2d Cir. 2005). Contributorily
(or vicariously) infringing with knowledge that one’s subscribers are infringing is
consistent with at least reckless disregard for the copyright holder’s rights.
Cox next argues that the court erred by declining to give an innocent infringer
instruction. Again, we disagree. Innocent infringer status (which may reduce damages) is
only available if the infringer can prove that he or she “had no reason to believe that his or
7
The court’s willfulness instruction reads in full:
Cox’s contributory or vicarious infringement is considered willful if
BMG proves by a preponderance of the evidence that Cox had knowledge
that its subscribers’ actions constituted infringement of BMG’s copyrights,
acted with reckless disregard for the infringement of BMG’s copyrights, or
was willfully blind to the infringement of BMG’s copyrights.”
34
her acts constituted an infringement.” 17 U.S.C. § 504(c)(2). For example, the Second
Circuit upheld a district court’s conclusion as to innocent infringement where an infringing
music wholesaler reasonably believed that it had received the right to make copies of
copyrighted albums under an agreement with the copyright holder. See Bryant v. Media
Right Prods., Inc., 603 F.3d 135, 143 (2d Cir. 2010). Cox does not suggest such
circumstances were present here. The district court therefore correctly concluded that an
innocent infringer instruction was not available to Cox.
Cox also challenges the district court’s DMCA instruction. At trial, witnesses and
documents often referred to the DMCA and its safe harbor provisions. Because the court
held Cox not entitled to any DMCA safe harbor defense at summary judgment, it instructed
the jury that “the DMCA is not a defense in this case and must be disregarded.” Cox fails
to show that this instruction — which is not a misstatement of the law — constitutes an
abuse of discretion. Cox’s theory is that the instruction “suggested that Cox’s alleged
failure to qualify for the DMCA defense made it liable for infringement.” Appellants Br.
at 33. But the district court clearly instructed the jury that it alone would determine the
facts and weigh the evidence. And indeed, the jury found Cox not liable for vicarious
infringement, suggesting it was not so easily confused.
B.
We also reject Cox’s assertions that the district court erred in its evidentiary rulings,
which we review for abuse of discretion. See Gen. Elec. Co. v. Joiner, 522 U.S. 136, 141
(1997).
35
Cox unpersuasively argues that the court abused its discretion by admitting
Rightscorp’s notices because the notices were hearsay. The district court correctly
concluded that the information contained in the notices was not hearsay because it was
generated by a computer and thus was not a “statement.” See United States v. Washington,
498 F.3d 225, 231 (4th Cir. 2007) (“Only a person may be a declarant and make a
statement. Accordingly, ‘nothing “said” by a machine is hear-say’” (quoting 4 Mueller &
Kirkpatrick, Federal Evidence, § 380, at 65 (2d ed. 1994))). Contrary to Cox’s argument,
the fact that the machine-generated notices also contained the signature of Rightscorp’s
CEO and an oath under penalty of perjury does not transform them into statements, since
the information itself was not prepared or created by a human.
Nor were the notices excludable as more prejudicial than probative under Federal
Rule of Evidence 403. The notices were certainly probative, and although they disfavored
Cox’s position, Cox fails to demonstrate that they were “unfairly prejudicial.” See PBM
Prods., LLC v. Mead Johnson & Co., 639 F.3d 111, 124 (4th Cir. 2011). “The ‘mere fact
that the evidence will damage the defendant’s case is not enough’” to establish unfair
prejudice. Id. (quoting United States v. Williams, 445 F.3d 724, 730 (4th Cir. 2006)).
Cox next faults the district court for admitting two studies examining how much of
the content shared using BitTorrent is infringing. Cox argues that the court erred by
admitting these studies under Federal Rule of Evidence 803(17), the hearsay exception for
“compilations that are generally relied on . . . by persons in particular occupations.” Given
that BMG’s expert, Dr. William Lehr, testified that the two studies “were widely cited in
36
the industry” and were “the most substantial published publicly available studies” on the
issue, the court did not abuse its discretion.
Finally, Cox contends that the district court erroneously “allowed BMG’s witnesses
and attorneys to use the term ‘infringement’ pervasively when referring to Rightscorp’s
automated observations.” Appellants Br. at 32. But as we have explained above, the court
clearly and carefully instructed the jurors that they alone could determine infringement.
The court even interrupted BMG’s expert testimony to instruct the jury that BMG’s expert
was using the word infringement to describe “the contents in the notices,” but that the jury
would “be making the ultimate decision” on infringement. Accordingly, the court did not
abuse its discretion.
V.
For the reasons stated above, we affirm the district court’s grant of summary
judgment to BMG on the § 512(a) DMCA safe harbor defense, but reverse and remand for
a new trial. We also vacate the district court’s grant of attorney’s fees and costs to BMG
and its denial of fees and costs to Cox.
AFFIRMED IN PART, REVERSED IN PART,
VACATED IN PART, AND REMANDED
37