Cox Must Pay $8 Million to Cover BMG’s Legal Fees in Piracy Case

Internet provider Cox Communications must pay more than $8 million to compensate the legal fees of music group BMG. The Virginia federal court argues that the Internet provider crossed a line with its "deeply flawed DMCA defense" and sees the high fees as a proper incentive to improve its anti-piracy policies.

December 2015 a Virginia federal jury ruled that Internet provider Cox Communications was responsible for the copyright infringements of its subscribers.

The ISP was found guilty of willful contributory copyright infringement and ordered to pay music publisher BMG Rights Management $25 million in damages.

This week Cox received more bad news. While the case is currently under appeal, the District Court ordered the ISP to compensate the music group for the attorney’s fees and costs they incurred during the first round.

In its motion, BMG asked for more than $10 million in compensation and after applying a discount, Judge Liam O’Grady decided to award a total of $8,383,468 in fees and an additional $146,790 to cover the bill of costs.

In a detailed memorandum, Judge O’Grady notes that the objective reasonableness of a party’s position is a major factor in determining the fees question. In the current case, the Internet provider clearly crossed a line.

Among other things, evidence revealed that Cox appeared to be complying with the DMCA in public, while privately disparaging and intentionally circumventing the law’s requirements.

“In a hard-fought litigation battle such as this one, discovery disputes and fierce briefing are to be expected, and they should not be held too harshly against either party,” the Judge writes.

“Nonetheless, there are a few instances in which Cox’s advocacy crossed the line of objective reasonableness. In particular, both Cox’s attempts to obscure its practice of reinstating infringing customers, and its subsequent assertions of a deeply flawed DMCA defense evince a meritless litigation position that Cox vigorously defended.”

In addition, the court also awards the legal fees as a deterrent. The high legal costs should motivate the Internet provider to change its policies and appropriately respond to reported copyright infringements.

In practical terms, this could include a new and improved DMCA program as well as a more responsive approach to infringement notices from companies like Rightscorp, which were previously ignored.

“However Cox decides to address its users’ repeat infringement, it is clear that the company should be given a proper financial incentive to change its policies and procedures,” Judge O’Grady notes.

Another factor that weighs heavy in the decision to award legal fees, is the assuring message it sends to other copyright holders. Picking a legal battle against a company with billions in revenue is quite a risk when attorney’s fees are not compensated.

“In order to continue to promote the vindication of individuals’ copyrights, therefore, BMG (and others like it) should be rewarded for facing up against willful infringers with deep pockets,” the Judge writes.

Combining these and several other relevant factors, Judge O’Grady concludes that the $8.3 million in attorney’s fees is appropriate in this case. This brings Cox’s total costs to well over $33 million.

Adding insult to injury, the Judge also denied Cox’s request for legal fees against Round Hill Music, arguing that there can only be one prevailing party in a lawsuit. The full memorandum is available here (pdf).

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