Imagine that there is a house on your block where you’ve observed drug dealing and prostitution. You’ve taken pictures, and there’s even been some arrests. The cops say they’re too busy to arrest every person coming in and out of there. Finally you complain to the landlord, who says “I don’t endorse drug dealing and prostitution, but they pay their rent on time so I don’t really want to do anything about it.” Eventually the city decides to crack down and take away the property from the landlord, who then cries about how “it’s so unfair.”
That’s basically what happened in BMG v. Cox. In this case, a jury held an internet service provider liable for turning a willful eye towards its’ subscribers’ repeated copyright infringements. BMG had retained Rightscorp, who sent thousands of notices to the most notorious individuals illegally pirating content via their Cox internet accounts. Cox basically said “Oh. We’ll look into that. Maybe.”
Why is piracy Cox’s problem? Because the Digital Millennium Copyright Act offers ISPs a safe harbor for the actions of its subscribers, but the ISP must adhere to and qualify for certain prescribed safe harbor guidelines and promptly block access to alleged infringing material (or remove such material from their systems) when they receive notification of an infringement claim from a copyright holder or the copyright holder’s agent.
In other words, federal law shields ISPs from liability, provided they do things like shut off the internet for subscribers who engage in piracy. Just like a landlord can get busted for renting to tenants who deal drugs.