Internet Service Providers Need Not Face the Music for Consumer Piracy: Cox Communications v. Sony Music Entertainment

The Copyright Act provides ways for copyright owners to sue direct infringers, and courts have traditionally recognized theories of secondary liability for copyright infringement as well.¹ But the recent Supreme Court decision in Cox Communications v. Sony Music Entertainment, while shielding internet service providers (“ISPs”) from secondary liability for copyright infringement in certain circumstances, may also have limited the scope of these theories.²

Cox Communications provides internet services to about 6 million subscribers, who each have a unique IP address.³ Each IP address could have multiple users, a coffee shop, for example, may have a Wi-Fi network that hosts many users, some of whom may even be using the internet to illegally download music.⁴ Trying to address the widespread copyright infringement from internet downloads, Sony Music sued Cox Communications in the Eastern District of Virginia, advancing theories of liability for contributory and vicarious copyright infringement.⁵

The jury returned a verdict holding Cox Communications liable for both contributory and vicarious infringement, and awarded $1 billion in statutory damages.⁶ As to the contributory liability finding, the Fourth Circuit affirmed, noting that, under Fourth Circuit precedent, “supplying a product with knowledge that the recipient will use it to infringe copyrights is . . . sufficient for contributory infringement.”⁷ The Fourth Circuit reversed the jury finding on vicarious infringement, and remanded to the jury to reassess damages.⁸ The Supreme Court granted Cox’s petition for certiorari to clarify the standards for contributory copyright infringement, but denied Sony’s petition for certiorari regarding vicarious infringement.⁹

The Supreme Court held that an internet service provider is contributorily liable for the copyright infringement of their internet subscribers “only if it intended that the provided service be used for infringement,” and that “[t]he intent required for contributory liability can be shown only if the party induced the infringement or the provided service is tailored to that infringement.”¹⁰ The Supreme Court held that the trial evidence was insufficient to permit a jury to find that Cox’s conduct met either of those standards.¹¹ Rather, it found that Cox’s internet services were capable of substantial noninfringing uses, and that Cox had taken steps to discourage infringement by users—both of which the Supreme Court found inconsistent with contributory liability.¹²

The majority pointed to the opinions in Sony v. Universal City Studios and Metro Goldwyn-Mayer Studios v. Grokster, as useful examples. In the Sony case, the Supreme Court held that the Sony Betamax, which could unlawfully reproduce copyrighted video, was also “capable of substantial noninfringing uses,” so selling the Betamax was not contributory infringement.¹³ In Grokster, the Supreme Court held that a jury could find peer-to-peer file sharing companies contributorily liable for inducement.¹⁴ To the Grokster court, contributory liability for copyright infringement was appropriate when someone “enticed or persuaded another to infringe” or if the service was “good for nothing else but infringement.”¹⁵ These two paths of contributory liability for copyright infringement also align with contributory liability for patent infringement, where inducement of infringement requires “an affirmative intent that the product be used to infringe,” or that the product is “especially adapted for use in an infringement.”¹⁶ Since Cox “neither induced its users’ infringement nor provided a service tailored to infringement,” the Supreme Court held that Cox is not contributorily liable for users’ infringement of Sony’s copyrights.¹⁷ The Supreme Court therefore reversed the judgment of the Fourth Circuit.¹⁸

In seeking affirmance of the Fourth Circuit’s judgment, Sony Music argued, among other things, that the Digital Millennium Copyright Act (“DMCA”), which includes a safe harbor provision protecting ISPs from liability for copyright infringement, would no longer have any effect, as ISPs are protected from contributory infringement absent inducement or tailoring the service for infringement.¹⁹ But the majority opinion noted that the DMCA safe harbor does not expressly impose liability for ISPs, but merely creates new defenses from liability for these providers.²⁰ The DMCA safe harbor is an additional defense available to ISPs, who would face liability for contributory infringement only when they affirmatively facilitate infringement or promote their services as infringement-friendly.²¹

Justice Sotomayor, joined by Justice Jackson, filed an opinion concurring in the judgment.²² Justice Sotomayor opined that the majority’s reasoning unduly curtails secondary liability for copyright infringement.²³ According to Justice Sotomayor, the majority’s insistence on only two theories of secondary liability shuts out additional theories of secondary liability based on common-law actions.²⁴ Justice Sotomayor notes that, properly read, Grokster and Sony were “never meant to foreclose rules of fault-based liability derived from the common law.”²⁵ Justice Sotomayor also regrets that the majority’s rule will “eviscerate” the DMCA safe harbor, as ISPs will not face secondary liability for copyright infringement even if they make no efforts to police the actions of their subscribers.²⁶

Nevertheless, the Supreme Court was unanimous in the conclusion that Cox Communications could not be liable for contributory liability for the mere knowledge of infringement and insufficient action to combat it.²⁷  ISPs have traditionally enjoyed broad protection from liability for the acts of their users, and the Supreme Court opinion in Cox Communications v. Sony Music Entertainment can be seen as also fitting that mold.²⁸