Touro Law Review BLOG

The Issues Before the Supreme Court and How It May Rule

By Howard Leib

On December 1, the Supreme Court will hear oral argument in Cox Communications, Inc. v. Sony Music Entertainment (Cox v. Sony). At issue is what showing a rights holder like Sony must make to prevail on a claim of copyright infringement against an internet service provider (ISP) like Cox.

This article will summarize the procedural history of Cox v. Sony, describe the legal issues before the Supreme Court, and offer a prediction on how the Court will rule. Of course, predicting how the Court will rule is a speculative exercise, especially in advance of oral argument. My best guess is that the Court will rule in favor of Cox.

Cox v. Sony in the Lower Courts

In 2019, numerous content creators, led by Sony, sued Cox in federal district court, alleging that numerous Cox subscribers repeatedly shared copyrighted songs, infringing on the rights of the copyright holders. The plaintiffs, through their agent MarkMonitor, provided Cox with more than 160,000 notices of infringement, with sufficient information for Cox to identify who these infringers were. Out of all those identified infringers, Cox terminated only 32 subscribers, however, allowing the rest to continue receiving internet services (and infringing).

Cox’s failure to take further action in response to the notices of infringement prompted plaintiffs to sue. The Digital Millennial Copyright Act (DMCA) includes a “safe harbor” provision that is intended to promote an ISP’s ability to provide services with minimal policing of its customers, so long as the ISP is responsive when notified of infringement. Before the trial, the district court ruled that Cox could not assert a defense based upon the Act’s safe harbor provisions.

Subsequently, plaintiffs presented their claims of vicarious and contributory infringement to a jury at trial. Cox was found liable for both vicarious and contributory copyright infringement for over 10,000 works, and plaintiffs were awarded $1 billion in statutory damages for willful infringement.

Cox appealed to the United States Court of Appeals for the Fourth Circuit, which reversed the vicarious liability verdict on the grounds that Cox did not directly profit from its subscribers’ infringing activities but upheld the contributory liability finding. Cox had adopted a thirteen- strike policy, with sanctions ranging from an email warning to a temporary suspension of a user’s account. The Fourth Circuit viewed Cox’s response as willful blindness to its subscribers’ infringing activities, constituting a material contribution to the subscribers’ infringement. Thus, the Fourth Circuit held that Cox was a contributory infringer.

The Fourth Circuit also vacated the damages award because the jury had not distinguished between which damages were for vicarious infringement and which for contributory infringement. Accordingly, the Fourth Circuit remanded the case back to the district court for a new trial on damages.

The Questions Before the Supreme Court

Though Cox obtained some relief from the Fourth Circuit, it nevertheless filed a petition for certiorari with the Supreme Court, which granted review on the following two questions:

The Court’s ruling in this case could drastically alter the statutory balance between ISP protection and ISP liability and with it the balance between ISPs and rights holders. Were the Court to rule in favor of Sony and the other plaintiffs, some or all of the following could occur:

(1) ISPs, in order to avoid potentially huge damages, as seen in this case, would likely adopt aggressive termination policies for users accused of repeated infringement. Such policies could have unintended consequences as entire households could find themselves without internet access due to infringing acts by a child. Businesses could be cut off from the internet for the unauthorized infringing activities of an employee. Further, ISPs would, at least at the outset, experience business uncertainty as the courts decide which policies regarding repeated infringers were legally sufficient and which were lacking.

(2) A ruling for either party could lead to pressure on Congress to revisit or clarify safe harbor rules generally. Such reconsideration could have implications beyond the DMCA. Section 230 of the Communications Act of 1934, see 47 USC § 230, which has been referred to as the “twenty-six words that created the internet,” provides limited federal immunity to providers of interactive computer services. This statute provides service providers such as X, Facebook, Instagram, and others protection against liability for its users’ postings. Section 230 has been a frequent target of the current President (although his Truth Social benefits greatly from this safe harbor); he has repeatedly called for its repeal.

(3) The second question approved for review addresses the definition of “willfulness” in the context of copyright damages. The Fourth Circuit’s definition of “willfulness” would allow for such a finding if an ISP knows that specific users are infringing and does not terminate their service. A finding of willfulness triggers the possibility of much higher statutory damages under the Copyright Act, potentially up to $150,000 per infringement. This amount contrasts with the maximum of $30,000 per non-willful infringement. Acceptance of the Fourth Circuit’s standard would certainly make ISPs more likely to implement stricter policing policies regarding their subscribers.

(4) In addition to repercussions regarding infringement, a decision upholding the Fourth Circuit’s ruling could have economic effects on both the ISP industry and even on non-infringing users. Requiring an ISP to more stringently police its customers could increase the company’s costs, which likely would be passed on to customers in the form of higher prices for internet access.

On the investor side, greater potential liability for ISPs would add more risk and uncertainty to the market, potentially driving down ISP stock prices. This could well be exacerbated by a ruling in favor of Sony. Furthermore, a decision in favor of rights holders could encourage them to become more aggressive in litigating infringement
claims.

A (Speculative) Prediction

This Supreme Court has been notoriously business friendly. In this case they are presented with two large and powerful business interests. This makes predicting an outcome more difficult. Indeed, predicting how the Court will rule in such a case may be a fool’s errand, especially in advance of a sense as to which way the wind is blowing at oral argument. Nonetheless, I will be brave.

I think it is likely that the Court will reject the Fourth Circuit’s ruling that actual knowledge coupled with a failure to cut off service is sufficient to find contributory liability. It is possible, however, that given the specific facts of this case, the Court could find that Cox’s “thirteen strikes and you’re out” approach here is beyond acceptable limits; the Court could uphold the jury’s verdict on this issue without articulating a general rule as to how many “strikes” would be acceptable.

If the Court does address the issue of the finding necessary for “willfulness,” I believe it likely to require something additional, perhaps a specific act facilitating infringement, or possibly willful indifference, but only in a way that goes beyond mere failure to deny service.

If I turn out to be right regarding these points, it is unlikely that the Court will allow mere knowledge of another’s direct infringement to suffice for a finding of willfulness under 17 U.S.C. § 504(c).

It will be months before I can celebrate my predictive abilities or must eat crow for the lack of them. In either case, I will be listening to the oral arguments and, like any good lawyer, reserve the right to change my mind thereafter.

Howard Leib is an intellectual property and entertainment attorney, an educator who has
taught as an adjunct professor at Touro Law Center, and a consultant with his own practice in both New York City and Ithaca, NY.