• by Wendy Davis , Staff Writer @wendyndavis, January 5, 2017

In November of 2014, in an apparent first, record company BMG sued Cox Communications for copyright infringement because Cox's subscribers were sharing pirated files online.

Cox defended itself by arguing that it was protected by the federal copyright law, which immunizes Internet service providers from liability for users' activity -- provided that the ISPs have policies for handling repeat offenders.

But BMG convinced a judge that those protections didn't apply in Cox's case. Specifically, BMG argued that it informed Cox that "thousands" of its customers were infringing copyright, and that Cox didn't take any action.

A jury ultimately sided with BMG and decided Cox should pay $25 million.

That decision marked the first time that a broadband carrier was found liable for piracy by its subscribers.

Cox recently appealed the verdict to the 4th Circuit. The company contends that many of the notices it received from BMG (through its partner, Rightscorp) weren't reliable. For example, Cox said, Rightscorp flagged an article about the Grateful Dead as a pirated song.

"If allowed to stand, that judgment would force ISPs to terminate subscribers’ Internet access -- and with it access to critical information, e-commerce, and entertainment -- based on the say-so of third parties," Cox argues in papers filed in November with the 4th Circuit Court of Appeals.

Late last week, BMG fired back at Cox. BMG contends that contrary to its stated policies, Cox didn't actually disconnect file-sharers.

Until September of 2012, "Cox pretended to terminate repeat infringers but actually reactivated those subscribers with a 'clean slate' so that they could continue to infringe," BMG contends in papers filed with the 4th Circuit.

Between September of 2012 and November of 2014, when BMG filed suit, Cox tweaked its policies, but still only terminated a total of 21 subscribers, according to BMG. Seventeen of those people used excessive bandwidth or failed to pay their bills, BMG says.

"Keeping repeat infringers online while terminating unprofitable subscribers is not a policy of terminating infringers," BMG argues. "Continuing to provide internet service to repeat infringers unless they exceed their bandwidth quotas or fail to pay their bills on time does not entitle Cox to protection."

BMG is urging the appellate court to uphold the $25 million verdict against Cox.

The battle has drawn much attention from consumer advocacy groups, who are afraid the verdict will give other ISPs an incentive to disconnect people without good reason.

The Electronic Frontier Foundation and Public Knowledge argue in a friend-of-the-court brief that broadband providers shouldn't be required to terminate users based solely on one-sided allegations. "It is simply unthinkable that a person could be deprived of a basic, vital service, practically essential to contemporary societal participation, based on nothing more than unadjudicated, unverified, unreliable allegations of civil wrongdoing," the advocacy groups argued.

Meanwhile, another Internet service provider -- RCN -- went on the offensive against BMG. Last summer, RCN asked a federal judge in Manhattan to issue a declaratory judgment that it didn't infringe copyright.

RCN alleged that it received "millions" of notices from Rightscorp about supposed piracy by subscribers. RCN said the notices were problematic for many reasons including that they don't show whether any copyrighted material was actually downloaded by users. BMG is expected to respond to that lawsuit later this month.