Supreme Court Reverses Billion-Dollar Copyright Verdict, Holds Internet Service Provider Is Not Contributorily Liable for Subscribers’ Infringement

A unanimous Supreme Court ruled that Cox Communications, Inc. (“Cox”), an internet service provider (“ISP”), is not contributorily liable for copyright infringement merely because it provided Internet service with the knowledge that it could be used by some subscribers to infringe copyrights.

The Court held that the provider of a service is contributorily liable for a subscriber’s infringement only if it intended its service to be used for infringement. That intent can be established in only two ways: first, by showing that the provider affirmatively induced the infringement; or second, by showing that the provider sold a service that is tailored to infringement, meaning that it is not capable of substantial or commercially significant non-infringing uses.

Applying this framework, the Court found that Cox did not intend for its service to be used to commit copyright infringement, and it therefore could not be held contributorily liable for its subscribers’ infringement. As to inducement, the Court found that Cox did not encourage its subscribers to infringe in any manner; to the contrary, Cox repeatedly discouraged copyright infringement by sending warnings, suspending services, and terminating accounts. The Court further found that the Internet is used for many purposes other than copyright infringement, and is therefore not a service “tailored to” infringement.

The Court also rejected the lead argument of the copyright holder, Sony. Specifically, Sony argued that the Digital Millennium Copyright Act’s (“DMCA”) safe harbor provision, which shields ISPs from secondary liability if they implement policies for terminating repeat infringers in appropriate circumstances, would be rendered meaningless if ISPs are not liable for servicing known infringers. The Court disagreed, noting that the DMCA does not expressly impose liability on ISPs who serve known infringers, and in fact expressly provides that failure to qualify for the safe harbor does not weigh against a defense that the service provider’s conduct is not infringing.

Justice Sotomayor concurred in the judgment, and Justice Jackson joined. While agreeing that Cox is not liable on the facts of this case, Justice Sotomayor criticized the majority for unnecessarily limiting secondary liability to circumstances involving inducement or a service tailored to inducement. The Court’s precedents, in the concurrence’s view, left open the possibility that other common law theories such as aiding and abetting could apply in the copyright context. The concurrence opined that the majority’s rigid two-part framework renders the safe harbor provisions in the DCMA effectively obsolete, because ISPs no longer face any realistic probability of secondary liability regardless of whether they take steps to address infringement on their networks.

Nevertheless, Justice Sotomayor agreed that Sony could not prove that Cox had the requisite intent to aid copyright infringement. Among other things, Justice Sotomayor agreed that Cox could not have had the requisite intent to aid infringement because Cox could only identify the accounts used to commit infringement, not the specific individuals using the accounts to commit infringement. Plaintiffs had, at most, shown that Cox was “indifferent” to infringement on its network, which is insufficient for aiding-and-abetting liability.

The Court’s decision carries significant practical consequences for Internet service providers and copyright holders alike. For ISPs, the decision provides substantial insulation from secondary copyright liability. Under the majority’s framework, ISPs cannot be held contributorily liable for their subscribers’ infringement unless they actively induce that infringement or provide a service specifically tailored to facilitate it. Because Internet access is plainly capable of substantial non-infringing uses, ISPs should not face contributory liability based on their mere awareness that some subscribers use their service to infringe copyrights.

For copyright holders, however, the decision narrows the available avenues for combating large-scale online infringement. The strategy of pursuing ISPs as secondary infringers has been effectively foreclosed absent evidence of active inducement or a service designed for infringement. Copyright owners will need to consider alternative enforcement strategies, including direct actions against individual infringers.