Induced or Tailored to Infringe? Supreme Court Narrows Liability in Cox v. Sony

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Last month, the Supreme Court delivered its opinion on the case of Cox v. Sony. As discussed in our previous article, this case concerned whether the Fourth Circuit erred when it held that an Internet service provider (ISP) with knowledge of customers’ copyright infringement can be held secondarily liable because the ISP did not terminate access. Read on to learn about the impact of this decision on secondary copyright liability online.

Sony Music Entertainment sought to hold the Internet service provider Cox secondarily liable for infringement because Cox did not terminate its customers who infringed copyrighted works despite repeated notice from Sony about the copyright infringement occurring on its networks.

A two-part test for contributory liability

Rather than apply familiar common law principles like material contribution to Cox or expand secondary liability beyond its own precedent, the Court held that an ISP is contributorily liable for an Internet user’s infringement only if it intended that the service be used for infringement. The requisite intent is shown only if a party “induced” the infringing conduct or if the service was “tailored to infringement.” Mere knowledge that a service will be used to infringe is insufficient to establish intent.

Inducement involves actively encouraging infringement through specific acts. For example, in MGM v. Grokster, the Court found that the peer-to-peer file sharing site Grokster had promoted its ability to access popular copyrighted music without paying the owners and thereby induced infringement.

According to the majority, a service is tailored to infringe if it is not capable of substantial or commercially significant noninfringing uses. In articulating this standard, Justice Thomas cited the Grokster case and Sony Corp v. Universal City Studios (the Betamax case), where the Court held Sony was not liable for how customers used VCRs at home because VCRs were capable of commercially significant non-infringing uses.

Applying those standards, the majority held that Cox did not exhibit the required intent; Cox was not contributorily liable for the infringement of Sony’s copyrights because it did not induce its customers to use the Internet to infringe Sony’s music and the Internet service provided was not tailored to infringement.

Concurring in the judgment, not the reasoning

Justices Sotomayor and Jackson agreed with the majority that Cox neither induced its customers to infringe nor tailored its service to infringement but took issue with the narrower reading of Grokster and the Betamax case. The concurring justices instead applied the long-standing common law principle of aiding-and-abetting liability which requires proof that the defendant aided another with the intent of helping that other person succeed in committing wrongful conduct. Under this test, Cox would still not be liable since it had incomplete knowledge of which particular users were committing specific infringing acts and did not commit an affirmative act to facilitate the infringing activity.

Justice Sotomayor’s concurring opinion further critiqued the majority’s limiting of secondary liability for dismantling the incentive “safe harbor” that Congress created in the Digital Millenium Copyright Act (DMCA) which gives Internet service providers protection from secondary liability if they adopt and reasonably implement a termination policy for subscribers who repeatedly infringe copyrights using the ISP’s network. Now, ISPs no longer face any reasonable probability of secondary liability for copyright infringement regardless of if they take steps to curb infringement or whether they know of the user’s activity.

Takeaways

Internet service providers will likely rely on Cox v. Sony to try to avoid showing intent to commit secondary liability by limiting marketing language that borders on inducement and highlighting noninfringing features of the service. Copyright holders seeking to bring copyright infringement actions against large platforms or ISPs may focus more on vicarious liability and the separate doctrine of inducement liability under Grokster.

Feel free to contact us if you have questions about secondary copyright liability, would like to discuss these issues, or would like to join our mailing list.

Nancy J. Mertzel

Mertzel Law PLLC

1204 Broadway, 4th Floor, New York, NY, 10001

info@mertzel-law.com

(646) 965-6900