Cox Wins Supreme Court Ruling Curbing Music Copyright Suits (3)

The US Supreme Court threw out a copyright-infringement verdict against Cox Communications Inc., dealing a major blow to music industry efforts to hold internet providers responsible for piracy by their customers.

Voting unanimously, the justices said Cox couldn’t be held liable for failing to shut down the accounts of people who repeatedly downloaded and distributed songs without permission. A federal appeals court had upheld a jury finding that Cox contributed to infringement by its subscribers.

“Cox neither induced its users’ infringement nor provided a service tailored to infringement,” Justice Clarence Thomas wrote for the court.

The ruling is likely to affect a similar music industry suit that seeks as much as $2.6 billion from Verizon Communications Inc. The Cox case at one point involved a $1 billion award.

The music companies that sued Cox — including units of Sony Group Corp., Warner Music Group Corp. and Universal Music Group NV — said they found more than 160,000 instances of infringement in 2013 and 2014 through monitoring peer-to-peer platforms. The recording companies said Cox went out of its way not to terminate those customers, giving users 14 chances before they were disconnected and then developing an informal policy of immediately reactivating accounts.

“We are disappointed in the court’s decision vacating a jury’s determination that Cox Communications contributed to mass scale copyright infringement, based on overwhelming evidence that the company knowingly facilitated theft,” Mitch Glazier, chairman of the Recording Industry Association of America, said in a statement.

Cox had argued that a ruling for the music industry would force carriers to terminate service for millions of people to avoid the risk of massive damage awards.

“The Supreme Court’s unanimous opinion is a decisive victory for the broadband industry and for the American people who depend on reliable internet service,” Cox said in a statement. “After years of battling in the trial and appellate courts, we have definitively shut down the music industry’s aspirations of mass evictions from the internet.”

Atlanta-based Cox, one of the biggest cable TV providers in the US, is also a major consumer internet provider. The storied family-owned business agreed last year to combine with Charter Communications Inc. to create the largest broadband company in the country.

Reasoning Criticized

Although the decision to reject the suit was unanimous, Justices Sonia Sotomayor and Ketanji Brown Jackson said the court went too far in insulating internet service providers. Sotomayor said the court should have left open the possibility of suits against companies that intentionally assist specific instances of infringement.

The court’s reasoning “permits ISPs to sell an internet connection to every single infringer who wants one without fear of liability and without lifting a finger to prevent infringement,” Sotomayor wrote for the pair.

Thomas said the US Copyright Act allows suits for contributory infringement only if a company affirmatively induces piracy or designs its service in a way that makes infringement the only commercially significant use.

“Under our precedents, a company is not liable as a copyright infringer for merely providing a service to the general public with knowledge that it will be used by some to infringe copyrights,” Thomas wrote.

The court “drew a pretty clear line,” said US Telecom Inc. Senior Vice President Josh Bercu, who leads the ISP-backed Common Sense Copyright Coalition. “ISPs are not liable for the actions of their users” unless they do something out of the ordinary, like advertising they have the best speeds for downloading peer-to-peer music, he said.

Under the Digital Millennium Copyright Act, copyright owners can flag online content for removal. In shooting down the music industry, the justices affirmed that the existing system is sufficient, said Shubha Ghosh, director of the Syracuse Intellectual Property Law Institute.

“What the copyright owners were trying to do was to push the law, probably in a direction that could be justified,” Ghosh said. “The court said, no, we’re going to stick to our guns.”

The justices accepted Cox’s argument that the music industry isn’t entitled to an automatic kill switch for internet connections that were used for illegal downloads, said Harvard Law School Professor Rebecca Tushnet, partly because it’s too hard to avoid punishing innocent bystanders. Cox had argued that many service locations associated with illegal download notices were actually coffee shops, schools and barracks that didn’t deserve to be cut off.

“Even for homes, you don’t know who is doing it. Maybe they have a guest,” Tushnet said.

A federal jury in Alexandria, Virginia, found in 2019 that Cox willfully enabled subscribers to copy more than 10,000 works using peer-to-peer networks. The jury awarded $1 billion, or almost $100,000 per instance of infringement.

The 4th US Circuit Court of Appeals upheld a jury’s finding of contributory infringement, though the three-judge panel tossed out the $1 billion damage award along with a different part of the verdict.

The case is Cox Communications v. Sony Music Entertainment, 24-171.

(Updates with reaction starting in sixth paragraph. An earlier version corrected Sotomayor’s quote.)

--With assistance from Ashley Carman.

To contact the reporters on this story:
Greg Stohr in Washington at gstohr@bloomberg.net;
Kelcee Griffis in Washington at kgriffis4@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Steve Stroth

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