A recent lawsuit seems to have put a big wrinkle in Internet copyright law in this country. It’s hard to tell if it’s a good thing or not, but expect some well-funded corporate lobbying efforts to pass Comprehensive Copyright Reform.

Buckle up.

Under the landmark Digital Millennium Copyright Act, Internet companies were given legal room to flourish. They could easily have been strangled in the crib by lawsuits from big media companies, when individual Internet users used the Internet to infringe on various copyrights.

The so-called Safe Harbor provision gives Internet firms rules to follow. If they obey, they won’t be liable for the copyright infringement of their users. It’s a great rule, and at the time the MPAA celebrated it as a huge win. If someone’s infringing, what the DMCA has the copyright holders do, is notify the ISP about it. The ISP basically acts as a go-between. If there’s no legitimate defense to the infringing material, then the ISP takes it down.

BMG, an RIAA member, tried a twist. They sent along with the takedown notices an offer to settle. Cox Communications refused to pass these offers along to the customers who were illegally redistributing BMG’s music. BMG sued Cox. BMG won, and Cox lost to the tune of $25 million.

Wired and others are portraying this as a terrible threat to the Internet, but I’m not so sure. These were people known to be engaged in conspiracies to spread BMG-controlled works without permission. BMG had every right to come after them, and these freeloading infringers were using Cox’s network to do it. Cox decided to obstruct.

That said, I’m not sure if Cox was in the wrong here. If they followed the letter of the law on DMCA, taking down things that were supposed to be taken down, then what more is there for them to do?

What scares me though, is firms like Google are likely to use this to scare up support for Comprehensive Copyright Reform. That process is already under way, seeing for example this letter from Virginia Librarians doing their own lobbying on a copyright bill. The problem is that the big corporations on both sides here aren’t doing this with open letters. Both sides here are going to spend big bucks for rents, carve-outs, and favors. We’ll have to pass the bill to find out what’s in it. What a disaster.