The US Supreme Court has issued a ruling in the case of Cox Communications, Inc. v. Sony Music Entertainment, reversing the Fourth Circuit, which had held that Internet services provider (ISP) Cox Communications was contributorily liable for copyright infringement committed by subscribers who illegally uploaded or downloaded copyrighted music.

As the Court explained,

Cox Communications, Inc., is an Internet service provider that serves about 6 million subscribers. Each subscriber’s account is associated with a unique Internet Protocol, or “IP,” address. Many users can share a particular IP address. For example, a household, coffee shop, or college dormitory ordinarily has one IP address, but has multiple individual users.

Sony Music Entertainment and the other plaintiffs in the case are major music copyright owners.

Copyright owners can, and do, sue individuals who infringe their copyrights by uploading or downloading music without authorization.

However, noted the Court, “because online infringement is so widespread, pursuing each individual infringer does little to stem the tide.”

Sony used the services of an entity called MarkMonitor to track infringement of its copyrights across the Internet. The MarkMonitor software can detect when copyrighted works are illegally uploaded or downloaded and trace the infringing activity to a particular IP address. It can also identify the Internet service provider for the infringing IP address.

When MarkMonitor detects apparently infringing activity, it can send notices to the relevant ISP, identifying the IP address at which the infringement occurred.

In the roughly two-year period at issue in this case, MarkMonitor sent Cox 163,148 such notices identifying IP addresses of Cox subscribers associated with infringement.

Cox claimed that it took steps to limit copyright infringement by its users. The company said it created a system of responding to the notices that it received from MarkMonitor.

According to the Court,

After the second MarkMonitor notice for a subscriber’s account, Cox sent a warning to that subscriber. After additional notices, Cox terminated Internet access to that subscriber’s IP address until the subscriber responded to the warning. If it continued to receive notices for that IP address, Cox suspended service until the subscriber called and received a warning over the phone. After 13 notices, the subscriber was subject to termination of all Internet service. Cox also contractually prohibits its subscribers from using their connection “to post, copy, transmit, or disseminate any content that infringes the patents, copyrights . . . or proprietary rights of any party.”

Sony pointed out that Cox terminated only 32 subscribers for infringement during the claim period, even as it terminated hundreds of thousands of subscribers for nonpayment during the same period.

Sony sued Cox based on two theories of secondary copyright liability:

• First, Sony alleged that Cox was contributorily liable for its users’ infringement and contributed to its users’ infringement by continuing to provide Internet service to subscribers whose IP addresses it knew were associated with infringement.
  
• Second, Sony alleged that Cox was vicariously liable for its users’ infringement because it “profit[ed] directly from the infringement and ha[d] a right and ability to supervise the direct infringer[s].”

According to Sony, Cox was liable for willfully infringing 10,017 copyrighted works, subjecting it to up to $1.5 billion in statutory damages.

The jury ruled in favor of Sony and awarded $1 billion in damages.

Cox appealed. The Fourth Circuit affirmed in part and reversed in part.

In a 7-2 opinion, the Supreme Court ruled that the provider of a service is contributorily liable for a user’s copyright infringement only if it intended that the provided service be used for infringement, which can be shown only if the party induced the infringement or the provided service is tailored to that infringement.

The Court held that Cox neither induced its users’ infringement nor provided a service tailored to infringement. Accordingly, said the court, Cox was not contributorily liable for the infringement of Sony’s copyrights.

Just like the haiku above, we like to keep our posts short and sweet. Hopefully, you found this bite-sized information helpful. If you would like more information, please do not hesitate to contact us here: https://aeonlaw.com/contact-us/.