IP Law Daily, COPYRIGHT NEWS: Cox asks High Court to clarify ‘knowledge’ standard for ISPs’ contributory liability, (Aug 19, 2024)

By Thomas Long, J.D.

In high-stakes dispute with music industry over users’ file-sharing, Cox seeks ruling that its mere knowledge was not enough, without “affirmative fostering” of misconduct.

Internet service provider Cox Communications, Inc., and its subsidiary CoxCom, LLC, are asking the U.S. Supreme Court to weigh in on the requisite “knowledge” a service provider must have to be contributorily liable for its customers’ acts of direct copyright infringement. For several years, Cox has been embroiled in high-stakes litigation with a large group of major recording labels and music publishers, including Sony, Arista, EMI, Atlantic, Elektra, and UMG. The music industry plaintiffs alleged that users of Cox’s broadband Internet service infringed the copyrights to thousands of songs illicit file-sharing. The music industry plaintiffs contended that Cox was secondarily liable for the users’ infringement. The key issue is whether Cox’s mere knowledge of the users’ infringement amounted to “materially contributing” to the infringement, or whether the plaintiffs would have to show that Cox somehow affirmatively fostered the infringement. Cox also challenges a determination that its contributory infringement was willful in nature (Cox Communications, Inc. v. Sony Music Entertainment, No. 24-171 (U.S. Aug. 15, 2024)).

Trial and post-trial motions. In November 2019, the district court determined on summary judgment that Cox knew of its users’ unlawful activity. The case proceeded to trial on theories of vicarious and contributory copyright infringement. The jury found Cox liable for willful contributory and vicarious infringement of 10,017 songs and awarded $1 billion in statutory damages.

In June 2020, the court rejected Cox’s motion for judgment as a matter of law notwithstanding the verdict. In March of 2022, the court denied Cox’s Rule 60 motion for relief from the judgment on the grounds of evidence ostensibly discovered in similar litigation then pending in another lawsuit.

Fourth Circuit decision. Cox appealed to the Fourth Circuit, which, on February 20, 2024, reversed the district court with respect to the music industry plaintiffs’ claim of vicarious infringement. However, the Fourth Circuit held that Cox had the requisite knowledge to be contributorily liable for its users’ direct infringement. The evidence showed that Cox had “knowledge that infringement [was] substantially certain to result from Cox’s continued provision of internet access to particular subscribers,” the court said.

Questions presented. Cox filed a petition for certiorari with the Supreme Court on August 15, presenting two questions:

1. Did the Fourth Circuit err in holding that a service provider can be held liable for “materially contributing” to copyright infringement merely because it knew that people were using certain accounts to infringe and did not terminate access, without proof that the service provider affirmatively fostered infringement or otherwise intended to promote it?

2. Did the Fourth Circuit err in holding that mere knowledge of another’s direct infringement suffices to find willfulness under 17 U.S.C. § 504(c)?

Knowledge. Cox argues that the Fourth Circuit’s “material-contribution” standard was “unprecedented” and in conflict with the holding in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). In that case, the Court held that a business commits contributory copyright infringement when it “distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps to foster infringement.” Cox also points to a circuit split, with the Second and Tenth Circuits holding that mere knowledge of direct infringement is not enough, without proof that the service provider took affirmative steps to foster infringement, and the Ninth Circuit taking a somewhat looser view that a service provider can be held liable if it knew of infringement and failed to take available, simple measures to stop it. “The Fourth Circuit alone holds that where a service provider is aware that a particular subscriber is likely to infringe, the service provider can be held liable merely for failing to terminate them,” the petition states.

Willful infringement. With respect to the issue of willfulness, Cox notes that proof is generally required that a defendant knew or recklessly disregarded a high risk that its own conduct was illegal. Splitting with the Eighth Circuit, the Fourth Circuit upheld a jury instruction allowing a finding of willfulness if Cox knew its subscribers’ conduct was illegal, without proof Cox knew its own conduct in not terminating them was illegal. Cox asks the Supreme Court to overturn this holding.

News release. In a news release, Cox asserted that it is seeking Supreme Court review in order to “protect users’ privacy and avoid unintended consequences that will harm innocent and non-infringing consumers.” Cox emphasized the negative effects the Fourth Circuit’s holding would have on Internet users. “This ruling, should it stand, would force ISPs to terminate internet service to households or businesses based on unproven allegations of infringing activity, and put them in a position of having to police their networks—contrary to customer expectations,” Cox said. “This would result in a fundamental change to how ISPs must manage their networks as many may feel that the only way to avoid liability is to monitor the activity of their subscribers to ensure no one is engaging in potentially unlawful conduct.”

The case is No. 24-171.

Attorneys: E. Joshua Rosenkranz (Orrick, Herrington & Sutcliffe LLP) for Cox Communications, Inc.

Companies: Cox Communications, Inc.; Sony Music Entertainment

News: Copyright TechnologyInternet