Before US internet service provider Cox Communications was in court fighting a copyright lawsuit filed by the major record companies it settled a similar legal battle with BMG. We now have one final bust up related to that, in that Cox is suing its insurers for refusing to cover the costs it incurred as a result of the BMG case.
In a legal filing last week, Cox said that it submitted to insurers Hiscox and ACE American Insurance a “timely” claim for “insurance cover for liabilities and costs incurred in connection with the BMG action”. Defendants “have denied coverage for the claim”, it added, and have not reimbursed the ISP for “any liabilities or costs” stemming from the BMG legal battle.
The BMG v Cox litigation was an important test case. BMG accused Cox of failing to deal with repeat infringers among its customer base, paying only lip service to its own copyright policies. As such, the argument went, Cox should not be able to rely on the copyright safe harbour and could therefore be held liable for its customers’ infringement.
BMG won the legal battle in 2015, being awarded $25 million in damages. The ruling was then overturned on appeal, but on a technicality relating to the way the judge had briefed the jury. Based on the actual judgement in the appeals court, it seemed likely BMG would win any second trial on the matter. An out of court settlement was then announced in 2018.
On the back of the precedent set in the BMG v Cox case, the majors started suing various ISPs for copyright infringement. That included Cox. The majors won that case in 2019, subsequently being awarded a billion dollars in damages. That said, an appeals court, while agreeing that Cox was liable for contributory copyright infringement, recently overturned the mega-damages, which now need to be reassessed by a lower court.
Back to the insurer dispute, Cox argues that its insurance policies with both Hiscox and ACE were meant to cover any claims arising from an intellectual property dispute relating to its “media activities”. The insurers actually declined to pay up all the way back in 2015 and 2016. Since then Cox says it has been seeking to reach an agreement with the insurance firms, but - having failed to do so - has now decided to go legal.