Following Fourth Circuit Decision in BMG v. Cox, Rightscorp Issues Warning to Every ISP in The U.S.

Rightscorp, Inc. has issued a press release commenting on the Fourth Circuit Court of Appeals’ decision in BMG v Cox Communications,[1] in which the Court affirmed a district court ruling that Cox is not entitled to a DMCA safe harbor defense but remanded the case for a new trial due to erroneous jury instructions. Rightscorp played an important part in the case, acting as BMG’s copyright enforcement agent and providing much of the evidence that doomed Cox. Rightscorp’s press release includes the following warning attributable to its President Christopher Sabec:

With the law now clear in the Fourth Circuit, ISPs subject to suit in that jurisdiction are at risk of being found liable for subscriber infringements.  While we remain prepared to assist ISPs that desire to work with the copyright community to reduce the massive infringements that occur on their networks, we have amassed a vast amount of data documenting infringements that have occurred over the past five years on the networks of essentially every ISP in the country. That data is available to any copyright holders that chooses to enforce their rights against ISPs that are not taking action against repeat infringers.[2]

Rightscorp provides data and analytic services to support owners of intellectual property. It primarily deploys a software system, on behalf of its clients, that monitors global Peer‐to‐Peer (P2P) file sharing networks, primarily BitTorrent, to detect and prevent illegal downloading of digital media.

When Rightscorp’s software determines a BitTorrent user is sharing Rightscorp client content, it records information about the activity, including, among other things, the date and time, the user’s IP address, the infringing content, and the suspected location of the host computer accessing BitTorrent networks.[3] Rightscorp also is able to acquire entire files from infringing P2P host computers.

After compiling the information, Rightscorp’s software generates and sends a DMCA infringement notice, on behalf of the content owner, to the ISP providing Internet access to the user’s IP address, to be sent to the BitTorrent user.

Accompanying each Rightscorp-generated DMCA notice is an offer of settlement. It first warns the recipient that the content owner is entitled to monetary damages for copyright infringement. Then it directs the recipient to access a website where $20 to $30 can be paid for a release from liability for the infringement recorded in the notice. Although these notices violate the spirit of the DMCA, as of yet, no court has determined that the attachment of a settlement offer to an otherwise valid DMCA notice renders the notice invalid.

The co-founder and President of Rightscorp, Inc, was previously an entertainment lawyer. He’s helped the Dave Mathews band negotiate a recording contract, and he’s managed the band Hanson. Rightscorp is a publicly traded company. According to a recent shareholder letter, Rightscorp’s primary revenue model is focused on a revenue share model from which Rightscorp retains a percentage of settlements obtained through the forwarding of DMCA notices.[4] It also makes money from providing litigation counseling services (over $1 million in 2016-2017). Rightscorp is currently trying to implement what it calls an “ISP good corporate citizen program.” The program is envisioned as a joint effort between Rightscorp and ISPs, in which Rightscorp encourages ISPs to suspend the service of infringing subscribers. When those subscribers attempt to access the Internet, they will be redirected to a Rightscorp payment screen.

Rightscorp Puts Every ISP in The U.S. On Notice

The statement from Rightscorp’s President is striking. He has basically put every U.S. ISP on notice that a copyright infringement lawsuit could be coming their way. If you are an ISP, the statement should at least make your ears perk up. The Fourth Circuit’s BMG decision was not favorable to ISPs, at least the part that confirmed Cox’s loss of a DMCA safe harbor defense was not good. Rightscorp is alleging in its statement that it has dirt on everyone – evidence that could strip every U.S. ISP of its DMCA safe harbor. Yikes. Although it seems that at least some of that infringing data relates to content owned by entities that have not hired Rightscorp – the data is available to any copyright holders that chooses to enforce their rights. If I was a content owner, I might give Rightscorp a call after seeing what happened in BMG v. Cox and what is about to happen in UMG v. Grande.

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[1] BMG Rights Management (US) LLC v. Cox Communications, Inc., No. 16-1972 (4th Cir. 2018) (Opinion).

[2] Rightscorp Inc., Rightscorp Comments on BMG v. Cox Fourth Circuit Ruling, Press Release, (Feb. 07, 2018).

[3] See UMG Recordings, Inc. v. Grande Communications Networks, LLC, 2018 WL 1096871, 6-7 (W.D. Tex. Feb. 28, 2018) (citing Complaint at ¶ 43).

[4] Rightscorp Shareholder Update Spring 2017, p. 3.