Copyright Infringement Litigation: Secondary ISP Liability

Cox Comm v. Sony Music and The Future of ISP Liability

The U.S. Supreme Court’s decision to grant certiorari in Cox Communications, Inc. v. Sony Music Entertainment has set the stage for a transformative ruling in copyright infringement litigation. At the heart of this case is whether an internet service provider (ISP) can be held secondarily liable for copyright infringement committed by its users, and what conduct constitutes willful infringement by the ISP itself. The outcome will not only resolve a billion-dollar dispute but will also reshape the legal landscape for copyright infringement litigation in the digital age and may also alter the circumstances under which an indirect infringer may be held liable for contributory copyright infringement and what conduct constitutes willful infringement.

Factual and Procedural Background: The Billion-Dollar Dispute

 

The dispute goes back to a 2018 lawsuit filed by Sony Music and over 50 other record labels against Cox Communications, one of the nation’s largest ISPs. The plaintiffs alleged that Cox failed to terminate the accounts of repeat infringers, despite receiving more than 160,000 notices of copyright infringement from anti-piracy agent MarkMonitor. Cox’s internal policy, a so-called “thirteen-strike” system, resulted in warnings and temporary suspensions but rarely led to permanent terminations.

In 2019, a federal jury found Cox willfully liable for contributory and vicarious copyright infringement, awarding $1 billion in damages. The Fourth Circuit later vacated the vicarious liability verdict and the damages award, but affirmed Cox’s liability for contributory infringement, finding that Cox “materially contributed” to its users’ infringement by continuing to provide service to known repeat offenders

In 2019, a federal jury found Cox willfully liable for contributory and vicarious copyright infringement, awarding $1 billion in damages. Later the Fourth Circuit vacated the vicarious liability verdict and the damages award, but affirmed Cox’s liability for contributory infringement, finding that Cox “materially contributed” to its users’ infringement by continuing to provide service to known repeat offenders.

Record labels including Sony Music, Universal Music Group, and Warner Music Group alleged that Cox failed to terminate the accounts of repeat infringers, despite receiving thousands of infringement notices. Cox’s response system, designed to comply with the Digital Millennium Copyright Act (DMCA) safe harbor provisions, included warnings and temporary suspensions, but rarely resulted in termination. According to the plaintiffs, some subscribers received up to 13 or 14 warnings before any action was taken.

The Supreme Court has now agreed to hear the contributory liabilty infringement and willfullness findings while declining to revisit the vicarious liability issue.

The Legal Questions Before the Supreme Court

The Supreme Court will address two fundamental questions in this copyright infringement litigation:

1. What level of involvement constitutes a “material contribution” under contributory copyright infringement?
   The Court will decide whether an ISP is liable for continuing to provide internet access to subscribers after being notified of infringing activity, or whether more active encouragement or intent to foster infringement is necessary.

2. What is the standard for “willfulness” in contributory copyright infringement?
   The Court will determine if mere knowledge of another’s direct infringement is enough to support a finding of willfulness, or if the ISP must know its own conduct is unlawful.

Contributory Copyright Infringement: The Evolving Standard

Contributory copyright infringement is a central legal doctrine in copyright infringement litigation. Under established Supreme Court precedent, a party is liable for contributory infringement if, “with knowledge of the infringing activity, [it] induces, causes or materially contributes to the infringing conduct of another”.

Key Precedents

• Sony Corp. v. Universal City Studios (1984): The Supreme Court held that a manufacturer is not liable for contributory infringement merely for distributing a product capable of substantial noninfringing uses, even if it knows some users will infringe.

• MGM Studios Inc. v. Grokster, Ltd. (2005): The Court clarified that contributory liability requires “culpable intent” and active steps to foster infringement, not just knowledge that infringement may occur.

In Cox v. Sony, the Fourth Circuit affirmed liability based on Cox’s continued provision of service to subscribers after receiving infringement notices. The Solicitor General, in a detailed amicus brief, argued this standard is too broad and conflicts with Sony and Grokster, which require more than passive assistance.  The assistance must involve a conscious and culpable participation in the infringing activity.

Circuit Splits and the “Simple Measures” Test

The Supreme Court’s review is particularly significant given a split among the circuits regarding the standard for contributory liability in copyright infringement litigation. The Ninth and Fifth Circuits have adopted a “simple measures” test, holding that a defendant is liable if it has actual knowledge of specific infringing material and fails to take simple steps to prevent further harm. The Fourth Circuit, by contrast, affirmed liability even without a “simple measures” instruction, focusing instead on the ISP’s continued provision of service despite knowledge of infringement.

This divergence has profound implications for copyright infringement litigation, as it affects the threshold for ISP liability and the practical steps required to avoid it.

Willfulness in Copyright Infringement Litigation

Enhanced statutory damages in copyright infringement litigation are available only for “willful” violations. The standard for willfulness is crucial, as it determines when an ISP may face penalties up to $150,000 per work infringed.

The Fourth Circuit upheld a jury instruction that allowed a finding of willfulness if Cox knew its subscribers were infringing, even if Cox reasonably believed its own conduct was lawful. The Solicitor General criticized this approach, arguing that willfulness requires knowledge or reckless disregard that one’s own conduct is unlawful, not merely awareness of another’s infringement.

A ruling clarifying the willfulness standard will bring much-needed consistency to copyright infringement litigation, ensuring that enhanced damages are reserved for the most culpable actors.

Vicarious Copyright Infringement: Control and Financial Benefit

Vicarious copyright infringement is another pillar of copyright infringement litigation. This doctrine imposes liability on parties who both profit directly from infringement and have the right and ability to supervise the infringing activity.

Key Precedents

• MGM v. Grokster (2005): The Court held that vicarious liability requires a direct financial benefit from the infringement and the right and ability to supervise the direct infringer.

• Sony (1984): The Court declined to impose vicarious liability on Sony, as it neither controlled users’ infringing conduct nor profited directly from infringement.

In the Cox litigation, the Fourth Circuit reversed the vicarious liability verdict, finding no evidence that Cox profited directly from its users’ infringement. Cox charged a flat fee for internet service, regardless of subscriber activity, and there was no evidence that infringement was a draw for customers. This approach is consistent across circuits and provides clarity for future copyright infringement litigation involving ISPs.

DMCA Safe Harbor: Shield or Illusion?

The DMCA provides a safe harbor for ISPs that adopt and reasonably implement a policy for terminating repeat infringers However, the DMCA does not define what constitutes “reasonable implementation,” and the courts have struggled to address what this means, especially for subscribers who may be institutions or businesses with multiple users. The Fourth Circuit found Cox ineligible for safe harbor protection, concluding that its termination policy was not meaningfully enforced. The Supreme Court’s ruling could clarify the relationship between DMCA compliance and secondary liability in copyright infringement litigation.

The Solicitor General’s Brief: Culpable Intent and the Limits of Liability

The Solicitor General’s amicus brief, which the Supreme Court followed in granting certiorari, argues that the Fourth Circuit’s expansive view of contributory liability departs from Supreme Court precedent. The brief emphasizes that, under Sony Corp. v. Universal City Studios and MGM Studios v. Grokster, contributory liability requires more than knowledge of infringement—it demands “culpable intent” or active encouragement. The Solicitor General warns that imposing liability on ISPs for failing to terminate service after receiving infringement notices would effectively make all communication providers liable for user wrongdoing, a result inconsistent with common law principles and recent Supreme Court guidance in Twitter, Inc. v. Taamneh.

The brief also challenges the Fourth Circuit’s approach to willfulness, noting that the Copyright Act reserves enhanced damages for the most culpable violators. The Solicitor General contends that a secondary infringer should not be deemed willful simply for knowing of direct infringement by others, especially if the ISP reasonably believes its own conduct is lawful.

Potential Impacts on Copyright Infringement Litigation

The outcome of Cox v. Sony will reverberate throughout the digital ecosystem:

• For ISPs: A broad standard for contributory liability could force ISPs to adopt aggressive termination policies, potentially cutting off internet access for entire households or organizations based on repeated infringement notices. This could raise due process concerns and impact millions of users.

• For Copyright Holders: A ruling affirming broad ISP liability would empower rights holders in copyright infringement litigation, incentivizing more aggressive enforcement and potentially increasing the volume of infringement notices and lawsuits.

• For Consumers: The risk of losing internet access due to the actions of a single user could have far-reaching consequences, especially as internet connectivity becomes essential for daily life.

Key Doctrines and Precedents in Copyright Infringement Litigation

What’s Next in Copyright Infringement Litigation?

The Supreme Court’s decision, expected in the 2025-26 term, will set a national standard for ISP liability in copyright infringement litigation. If the Court narrows the scope of contributory liability, ISPs may be insulated from broad accountability for user conduct, and the burden of enforcement will shift back to copyright holders. Conversely, if the Court affirms the Fourth Circuit, ISPs will likely implement stricter compliance regimes, and the threshold for terminating user access will drop dramatically.

Conclusion: The Future of Copyright Infringement Litigation

Cox v. Sony is poised to become a landmark in copyright infringement litigation, with the Supreme Court’s ruling likely to influence not only ISPs but also the broader digital economy. The case underscores the ongoing struggle to balance the rights of copyright holders with the need to preserve open internet access and protect due process for users. As the legal community awaits the Court’s decision, all stakeholders in copyright infringement litigation should closely monitor developments and be prepared to adapt their compliance strategies accordingly.

For further guidance on copyright infringement litigation, ISP liability, or to discuss how your organization can mitigate risk, contact one of our Copyright Infringement Attorneys.