United States

For some years, a number of ISPs and universities in the United States have voluntarily implemented Graduated Response schemes of varying types. These systems are essentially founded on contract. In June 2011, however, a comprehensive, voluntary scheme was created under the auspices of the Center for Copyright Information to institute a uniform GR system for the leading US ISPs.

The legal context is provided by section 512 of the US Copyright Act, which sets out the legal exemptions of ISPs from the infringement liability that might arise from the provision of certain online services, including Internet access. In principle, an ISP providing Internet access is not liable for damages for copyright infringement (assuming a basis of claim under the general law), provided that it complies with the conditions set out in section 512. Those conditions include, as set out in section 512(i), the ISP’s adopting, reasonably implementing and publicising “a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers”. ISPs in the US may therefore feel themselves vulnerable to legal liability if they do not apply some kind of acceptable use policy to prevent infringement following notification of infringement by a right holder in respect of a particular subscriber account.

By way of example, Suddenlink Communications, a Missouri-based cable company with some 1.3 million subscribers across 6 States, sets out its Graduated Response policy on a FAQ page dedicated to DMCA issues. Like all ISPs, Suddenlink by its Acceptable Use Policy requires its subscribers to agree not to use their Internet access for purposes of copyright infringement. Under Suddenlink’s Residential Services Agreement (the basic contract between it and its subscriber), the subscriber agrees to comply with Suddenlink’s Acceptable Use Policy. Suddenlink reserves to itself under that contract the right to terminate Internet access if it reasonably believes that the Acceptable Use Policy has been violated. Subscribers may find themselves referred to the MPAA web site www.respectcopyrights.org for further information.

Such contractual solutions are more complicated to adopt in some EU countries. Many civil law jurisdictions restrict the freedom of consumers to enter into such contracts or seek to restrict the activities of online businesses through Data Protection law.

Center for Copyright Information

On 22 June 2011, it was reported that leading US ISPs were on the brink of agreeing a voluntary Graduated Response scheme with the RIAA and MPAA. On 6 July 2011 the reports were vindicated with the announcement that leading US ISPs had agreed with the film and record industries on a voluntary Graduated Response system. Under the scheme, users would be sent a maximum of six “alerts” with an increasing degree of seriousness. In general, there were to be two “Educational Alerts”, two “Acknowledgement Alerts” that required a response from the subscriber, and two “Mitigation Alerts” that “imposed minor consequences to emphasize the seriousness of the problem”.

The Center for Copyright Information (CCI) was set up to administer the system. (See further the GR Blog). The American Arbitration Association was to provide a dispute resolution mechanism for dissatisfied subscribers. In May 2014, the CCI published its first report on the operation of the scheme. This did not seek to quantify the effectiveness of the system.

The parties agreed a series of extensions to the agreement, the most recent on 20 October 2016, providing for an expiration date of 22 November 2016. It would appear that the parties were engaged in a negotiation as to the continuation of the scheme. On 27 January 2017, however, the CCI announced that the copyright alert system would be wound up.

BMG Rights Management (US) LLC v Cox Communications, Inc

On 1 December 2015, District Judge O’Grady, sitting in the Fourth Circuit (Eastern District Virginia) gave judgment on cross-applications for summary judgment in a copyright infringement claim brought by BMG against ISP Cox Communications. The judgment gives considerable insight into the operation of the “repeat infringers” policy applied by Cox. The claim was, among other things, that Cox was contributorily liable for the infringing file-sharing activities of its customers, on the grounds that it provided the necessary internet access to them, could terminate their accounts on grounds of infringement and had actual or constructive knowledge of the infringements.

In order to benefit from the “safe harbour” provided by §512(a) of the Copyright Act, Cox had to have in place a “a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers”. From internal documents disclosed in discovery it was apparent that although Cox purported to operate a form of graduated response, with termination as the final sanction, in practice it bent over backwards to avoid terminating infringing subscribers, so as to preserve its revenues. It had blocked notification emails from the plaintiff’s agent, on the pretext that they contained demands for payment. Even if the plaintiff had not made the ISP aware of the infringements by other means, this refusal was held to be evidence on which the jury could find wilful blindness of the customers’ infringements.

On 17 December 2015, a jury found contributory infringement proved and awarded BMG $25m in statutory damages. Final judgment was entered on 9 August 2016, and Cox filed an appeal to the US Court of Appeals on 19 August 2016 (appeal brief). Oral argument took place on 25 October 2017 (recording).