Lloyds Refuses to Insure Tens of Billions In Potential Cox Copyright Liabilities


Last week, a federal judge ruled that Cox Communications was no longer protected against copyright liability by the Digital Millennium Copyright Act (DMCA), a stunning blow not just to Cox, but the entire internet access industry.  The reason, according US District Court judge Liam O’Grady, is that Cox has simply refused to adopt a policy of terminating repeat infringers, a key qualification for receiving DMCA protection.

Now, in the wake of that ruling, Cox is getting sued by various underwriters at Lloyds of London, who are now refusing to insure Cox for potentially tens of billions of dollars in damages that could result.  The underwriters have now filed paperwork with the New York Supreme Court in hopes of nullifying any possible claim based on Cox’s intentional negligence, and avoid holding a very, very expensive bag.

The principle at play is pretty simple: insurers only insure when the terms are adhered to.  Crashing your car while drunk, forgetting to moor your boat, or failing to disclose a pre-existing medical condition are all actions that can render a policy moot.  In the world of corporate insurance, similar principles apply, and Lloyds is now asserting that Cox behaved against the terms of their liability insurance plan.  The only difference is that Lloyds is taking action in court, based on disagreements brewing.

“Cox did not change its policy and practice; it continued to intentionally ignore and not forward notices from Rightscorp…”

Enter Rightscorp, the controversial copyright enforcer (and DMN partner) that has been sending hundreds of thousands of notices of alleged copyright infringement to Cox over the years, with most flat-out ignored.  That paper trail, according to Lloyds unit Beazley, demonstrates intentional negligence, and grounds for nullifying any coverage.  “In October 2010, Cox made an intentional business decision not to forward certain infringement notices to its customers and not to terminate or block those customers’ accounts,” Lloyds argues.  “A year later, Cox intentionally decided to block receipt of and ignore those notices.”

“Cox did not change its policy and practice; it continued to intentionally ignore and not forward notices from Rightscorp on behalf of BMG and Round Hill and intentionally did not terminate or block the accounts of its customers allegedly infringing BMG’s and Round Hill’s copyrights.”

Attorneys at other mega-ISPs, including Comcast, Time Warner, and Verizon, may also be checking the terms of their policies in the wake of Cox’s dilemma.  That’s because if Cox ultimately loses its cases against content owners Round Hill Music and BMG Rights Management, a cavalcade of copycat suits are likely to follow, with massive changes roiling through the internet access industry – and, the internet as a result.


54 Responses

    • Paul Resnikoff
      Paul Resnikoff

      I’m estimating damages; it could take more than a year (or two) for the plaintiffs to (a) win the case even with the DMCA advantage, and (b) successfully calculate a large damages award. Lots of unknowns, including the possibility of a settlement out of court (then we’d lack a precedent).

      Who knows, maybe it’s a lot more than ‘tens of billions’. Whatever it ends up being, Lloyds doesn’t want to pay it.

      • Rick Shaw

        Reality check. Tens of billions isn’t going to happen. It didn’t happen with Napster and it isn’t going to happen with Cox.

  1. Jose Fritz

    Legally it’s difficult for one party to be responsible for the actions of another. It’s only possible under defined circumstances where liability is shared, one is proxy for another, or one is the custodian of the other. But in this case, Cox appears negligent and they appear to have some shared liability.

  2. Anonymous

    Incredible that these idiots thought they could let bad behavior go on indefinitely.

  3. Anonymos

    I agree, this will change the internet forever, every ISP, every search engine, every cloud-provider will have to rethink business, and the best of all…..it gives back value to content!

  4. Literati X

    Cox Communication has their hands full on the 13th horizon of the digital landscape. They were one of those giants that stripped me down to my drawers; sold me naked and afraid like a slave straight off the auction block on a very cold–brisk Wall Street winter time day . . .Somebody need to go meet and greet them with a blast from the past and blow the motherfucking caps off those bastards !

  5. Name2

    Uh-Huh. And are ISPs supposed to disconnect the repeat infringers or the repeatedly accused?

    Because those are two separate things.

    Oh, and Rightscorp has destroyed all copies of its software code dating before July 15, 2015. Judge O’Grady, of course, decided that that was no biggie.

    Careful what you wish for.

    • Anonymous

      Keep pretending that there aren’t gobs of repeat infringers that these ISPs ignore. Sounds like an excellent legal strategy to me 🙂

      • Name2

        People have been accused of repeat infringing. AFAIK, none of them have yet appeared before a judge or jury for even a first finding. Settle down, Beavis.

        • Carts and Horses

          Well, infringement is illegal in many countries, but this isn’t about criminally prosecuring individual customers.
          It IS about terminating accounts, and that is probably covered as a violation of the service contract TOS.

          • Name2

            November 2014:

            The anti-piracy company has stated on numerous occasions that its patent-pending technology enables it to accurately identify repeat infringers. According to the complaint there are “hundreds” of these at Cox, all of which should have been disconnected by the ISP.

            July 2015: “Yeah, we don’t have no copies of that software no more.”

          • Carts and Horses

            Are you saying that RIghtscorp never actually had any software? That they deleted it?

            They obviously do a lot of manual searching, kept a paper trail, and submitted that. Is that what you’re doubting? I don’t get how the software is particularly relevant.

            I think most here are more concerned about going forward. If Cox is found liable, it will change the way other ISPs do things in the future. No one said you had to like it. They’re not asking for your approval..

          • Name2

            They claim to have used foolproof and infallible repeat-infringer-sniffing technology.

            But we just have to take their word for it because their dog ate it 8 months after the suit was filed.

          • Anonymous

            Yes, Einstein, it’s called joining the swarm and collecting the grossest infringer’s IP addys. Yes Virginia, there’s a person behind those. This isn’t rocket science.

          • Name2

            You know, Stephen Hawking, that unless you’re paying premium $$ for business-class service, you’re unlikely to have a fixed IP address from your ISP akin to a Social Security number.

            For the MOST part, IP addresses are reallocated and individual subscribers get several over time. So the ability of an IP address to identify an ISP subscriber account depends on time-and-date coordinates. (Courts have already decided it’s useless at identifying actual infringers). The usefulness of a specific IP address to identify a REPEAT INFRINGER is nil unless (the ISP business model gives everybody fixed addresses or the subscriber has opted for one) AND (no downloader is using an address-cloaking VPN in 2015).

            In other words, a very narrow set of circumstances.

            It’d be neat – I’d say essential – to Cox to see if the Rightscorp software addressed those circumstances, but the code has been destroyed.

            But if in fact that Rightscorp code was bustin’ through all the consumer VPNs out there… well, that’d be a pretty valuable little piece of intellectual property they destroyed in July 2015. They could get out of the business of losing $3 on every dollar they collect for rich record companies, and license the shit out of that intellectual property to security firms, the NSA, ISIS, etc.

            But the code has been destroyed.

            Quel dommage.

          • Anonymous

            Accurately identifying the person responsible for infringement isn’t even a little bit important to these people – they just want SOMEBODY to get punished, whether it’s the right person or not.

            It’s a pretty horrifying facet of human nature on display here.

    • Anonymous

      Thanks for being the voice of reason here, Name2.

      This particular construction of the DMCA, if upheld, would in practice let companies like Rightscorp deny a person internet access simply by accusing them of infringement – yes, merely accusing, not proving.

      The ramifications of denying someone internet service can be tremendous – for example, there are many people who require internet access for their work.

      Further, this is based on IP address, which often doesn’t reliably indicate the specific person behind the action, especially in cases of families or roommates.

      In many places, internet access has been deemed a human right. I don’t happen to agree with that view, but it is – indisputably – incredibly important and there are in fact people who are dependent upon access to it for their livelihood (or even normal social existence).

      Depriving a person of internet access without due process – based purely on an accusation linked to the IP address and not to the specific person – is outrageous.

      Consider an example of the targeted action:
      Downloading 10 movies or music albums on separate occasions.
      Estimated value: $150.00

      Consider the desired punishment:
      Complete denial of internet access without first being given an opportunity to defend against the accusations.
      Potential cost: loss of communication and social interaction, loss of access to news and information, loss of access to tools that are critical (and potentially necessary) to work and/or school.

      This punishment does not fit the (alleged) crime.

      And what recourse is available in the case of a mother who loses her internet-based job because her teenage child downloaded some movies? Or worse, because a neighbor used her open wifi to download music?

      Considering the potential (and reasonably likely) ramifications of denying internet service to someone, what burden is there on Rightscorp to make sure that they are correctly identifying infringers? What is Rightscorp’s liability if they get it wrong, thereby wreaking havoc on someone’s life? How long is an accused infringer to be denied internet service?

      This is not a reasonably considered system. Account termination from a website like YouTube based on alleged infringement may be very reasonable and appropriate, but account termination from an ISP is not.

      Before a person may be punished for a crime, the crime must be proven with due process. This is a severe punishment, that Rightscorp – and many here, apparently – wants to impose without any due process or protections for the accused or liability on Rightscorp in the event of negligence or misconduct.

      Such extreme viewpoints don’t help your case with the rest of the world. Stopping piracy is important – but is it more important than making sure that a kid has internet access so he can get an education? Or that a person can earn a living? The punishment must be proportional to the crime, and imposed under a fair process that ensures that only the guilty are actually punished. The system that Rightscorp advocates is a terrible one by all reasonable measures.

      If you take a break from anti-piracy fanaticism to think about it rationally, you’ll likely agree that it’s undesirable to have a system in which a private company can, without oversight or verification or anything approaching due process, unilaterally force a third party to deprive a person of something as fundamental as internet access.

      I agree piracy should be stopped. This is not the way to do it, any more than imposing the death penalty for piracy would be – the negative precedent it sets for society and the legal system is horrifying.

      Fortunately, the odds that this gets overturned are pretty good.

      • Anonymous

        Is this the new scare tactic? “Grandma’s internet WILL BE TAKEN AWAY”. Wow, talk about desperate.

        The law says “REPEAT infringers”, i.e., PIRATES. The internet is not a natural right, it’s something you pay for and agree to its TOS, which always includes pointing out that you can’t use it for illegal uses.

        If you don’t respect the law, you’ll be punished. Grow up and realize that.

        • Name3

          “If you don’t respect the law, you’ll be punished”

          But… but that’s not fair! 🙁

      • Soumy Nona

        We can’t have sites blocked or the internet will break.
        We can’t have accounts closed, even if the IP associated is shown to continually violate the terms of service.
        We can’t have name servers controlled, the DNS gods will be angry.
        Oh, and did I mention that it’s all againt free speech.

        There are better ways of stopping piracy, like drinking unicorn blood.

        Bunch of fn babies. Grow up.

        • Name2

          People are risking their Internet access and ginormous liabilities for episodes of “Big Bang Theory”.

          Adele? Not so much.

    • Anonymous

      You’re lying again:

      “lloyds refuses” = 367 results.
      lloyds refuses [without the quotes] = 234,000 results. This number, however, turns into 374 actual results when you look at the last search page.

      • dont even

        bother with this poster. cant back up any statements and makes stuff up when its not what they want to hear.

      • Name2

        “About 238,000 results” is italicized because I copied it right off the Google search-result screen. That’s the number when I searched (without quotes). Not because I sat there and counted 238,000 results.

        If it’s down to 374, maybe Righrtscorp has been busy sending out takedown notices since I posted.

        • Anonymous

          “That’s the number when I searched (without quotes)”

          Then you shouldn’t use the quotes. Makes all the difference.

          “Not because I sat there and counted 238,000 results”

          You don’t have to, just skip ahead to the last page: 374 results.

          • Name2

            Then you shouldn’t use the quotes. Makes all the difference.

            I apologize. English is my first language.

  6. FarePlay

    At some point the overwhelming, absurdly overwhelming, number of ineffective take down notices had to command attention. It finally did and congress will not be able to ignore it in this round of copyright reform.

    While there’s nothing we can do about the past, we can create urgency for the future. We need to force the issue and get legislators to act sooner than later and stop the bleeding. One way you can help is sign the Take Down and Stay Down petition. When you sign, a letter will automatically be generated to key legislators.

    The time has come to put pressure on congress: http://www.takedownstaydown.org

    • Name2

      At some point the overwhelming, absurdly overwhelming, number of ineffective take down notices had to command attention.

      At some point, that crazy guy in the town square with the “The End is Nigh” sign is gonna be right.

      • Anonymous

        Y’know, (unless you’re Mike Masnick) there’s still time for you to do something worthwhile with your life besides try to convince people that piracy is good and will go unpunished forever.

          • FarePlay

            Sometimes I do feel like that guy waving a flag in the town square. It is beyond comprehension that piracy has gotten a free pass for S I X T E E N Y E A R S.

          • Name2

            Yeah, Allen Klein actually got convicted for selling Beatles records off the books, so really, one could say it’s been longer. [rolls eyes]

        • Anonymous

          there’s still time for you to do something worthwhile with your life besides try to convince people that piracy is good and will go unpunished forever”

          Not so sure — Name2 sounds like one of the crazy old Wired-hippies to me…

          • Name2

            What is a “Wired-hippy”? Is that a half-reference to that still-around dot-com magazine which survived by becoming an unreadable ADD paean to furious, buy-like-you’re-dying consumerism?

          • Anonymous

            “What is a “Wired-hippy”?”

            An old hippie like you — still thinking we need piracy, though we can stream everything we want for $9.99/month…

          • Name2

            Speaking for myself, I pay $45/mo to three different music streaming services.

            So, no.

            But if you care to spend a few minutes at the “Top 100” Pirate Bay thread, I think you’ll see pretty clearly that for the world at large, music isn’t “everything we want”. It’s not even one of the first 100 things “we want”.

  7. Ain't karma a bitch...

    There’s a flip-side to that coin: http:// http://www.musiclawupdates.com/?p=4941

    “The distinction taken by some writers on the subject of literary property, between the works which are publici juris, and of those which are subject to copyright, has no foundation, in fact, if the established doctrine of the cases be true, and the author’s property in a published book consists only in a right of copy. By the publication of Mrs. Stowe’s book, the creations of the genius and imagination of the author have become as much public property as those of Homer and Cervantes. . . . All her conceptions and inventions may be used and abused by imitators, play-rights and poetasters. [They are no longer her own–those who have purchased her book, may clothe them in English doggerel, in German or Chinese prose. Her absolute dominion and property in the creations of her genius and imagination have been voluntarily relinquished.] All that now remains is the copyright of her book; the exclusive right to print, reprint and vend it, and those only can be called infringers of her rights, or pirates of her property, who are guilty of printing, publishing, importing or vending without her license, “copies of her book.” A translation may, in loose phraseology, be called a transcript or copy of her thoughts or conceptions, but in no correct sense can it be called a copy of her book.” Stowe v. Thomas, 23 F.Cas. 201, at 208 (footnote omitted).

    See also: Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985).

  8. Anonymous

    Everyone is talking about going after the people who are doing the downloading but isn’t the point that the ISP could just block the site hosting the content?

    • Name2

      Not in Sweden, at least:

      No Pirate Bay Blockade in Sweden, Court Rules
      on November 27, 2015

      After deliberating for almost a month the Stockholm District Court has decided that copyright holders can not force a Swedish ISP to block the The Pirate Bay. The Court found that Bredbandsbolaget’s operations do not amount to participation in the copyright infringement offenses carried out by some of its ‘pirate’ subscribers.


      So, there’s more than one way things can be done.


Leave a Reply

Your email address will not be published.

Verify Your Humanity *