On March 25th, in a unanimous opinion authored by Justice Thomas, the U.S. Supreme Court reversed a decision of the Fourth Circuit that had held Cox Communications contributorily liable for copyright infringement committed by its internet subscribers. The decision significantly clarifies—and narrows—the scope of secondary copyright liability for internet service providers (ISPs) and other technology intermediaries.
Cox Communications is one of the nation’s largest ISPs, serving approximately six million customers, each assigned a unique IP address. Sony Music Entertainment and other major copyright owners retained a monitoring company to identify online copyright infringement, primarily involving alleged illegal music file sharing. Over a two-year period, the copyright owners sent Cox approximately 163,148 infringement notices identifying IP addresses associated with infringing activity.
Cox employed a graduated response policy under which it issued warnings and, in some cases, temporarily suspended service to subscribers identified in the notices. However, Cox rarely terminated accounts entirely. Sony and the other copyright owners argued that Cox’s continued provision of internet service to repeat infringers rendered it secondarily liable for their misconduct.
Sony sued Cox in the U.S. District Court for the Eastern District of Virginia, asserting claims of contributory and vicarious copyright infringement. Sony alleged that Cox was contributorily liable because it knowingly continued to provide internet service to subscribers engaged in infringement, and vicariously liable because it profited directly from that infringing activity while retaining the right and ability to control it. A jury found in Sony’s favor and awarded $1 billion in statutory damages.
On appeal, the Fourth Circuit rejected Sony’s vicarious liability theory, concluding that Cox did not receive a direct financial benefit from its subscribers’ infringement. The court nevertheless affirmed the jury verdict on the theory of contributory infringement.
The Supreme Court unanimously reversed. Writing for the Court, Justice Thomas clarified that contributory copyright liability requires proof that the defendant intended its service to be used for infringement. That intent may be shown only if the provider either (1) actively induced infringement through specific affirmative acts, or (2) provided a service that is tailored to infringement and not capable of commercially significant noninfringing uses.
Although Cox was aware that some subscribers engaged in piracy, the Court held that mere knowledge of infringement, combined with the continued provision of a general-purpose internet service, does not establish the requisite intent for secondary liability. As Justice Thomas explained, Cox neither induced its users’ infringement nor offered a service designed or optimized for infringing use.
Because the lower courts permitted the case to proceed without requiring proof of purposeful encouragement or inducement of infringement, the Supreme Court vacated the judgment and remanded the case for further proceedings consistent with its opinion.
The decision represents a significant limitation on secondary copyright liability and makes clear that an ISP’s receipt of infringement notices—and its failure to terminate offending users’ subscriptions—standing alone, is insufficient to establish contributory copyright infringement.
This IP Advisory was prepared by Lando & Anastasi, LLP. The information provided in this Advisory does not, and is not intended to, constitute legal advice; instead, all information, content, and materials are for general informational purposes only. Readers should contact an attorney to obtain legal advice with respect to any particular legal matter.
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