Intermediary liability—when a company should be liable for users’ misuse of its product by users—has been a long-standing issue in tech policy. Two years ago, the Supreme Court dismissed a case alleging Twitter aided and abetted terrorism by allowing ISIS to recruit on its platform. This week, the Court weighed in again, hearing argument in a case involving a billion-dollar judgment against broadband provider Cox Communications for failing to terminate accounts suspected of copyright infringement. The case raises significant questions about copyright enforceability, broadband providers’ role as gateways to the internet, and digital equity concerns. The justices seemed doubtful that notification of user misuse was sufficient to trigger liability, although they struggled to find an alternative that balanced the equities of the case.
The case originated in 2018, when Sony and other music companies sued Cox for contributory and vicarious liability based on the infringement of over 10,000 copyrighted works by Cox subscribers. The Digital Millennium Copyright Act (DMCA) provides a safe harbor for intermediary liability for broadband providers that reasonably implement an anti-piracy program, but a prior case found that Cox did not qualify for the safe harbor because it rarely took the final step of terminating accounts for repeat offenders. Stripped of this statutory defense, Cox suffered a $1 billion jury verdict based on statutory damages of up to $150,000 per violation. The Fourth Circuit affirmed in part, reversing the vicarious liability claim but affirming the contributory liability finding, and remanding for a new damages trial. The Supreme Court then granted review.
The key question before the Court is the proper standard for contributory infringement. Borrowing from the trademark context, Sony argued that it is sufficient to show that Cox served a user knowing that this specific user was substantially likely to use its service to infringe on plaintiff’s copyrights. But the Justices were dubious that this accorded with their precedents in this area, which hint toward a “purpose” standard. Justice Kagan in particular noted that Twitter and other cases suggested the defendant’s actions must suggest it wanted the conduct to occur, that they distinguished between nonfeasance and malfeasance, and that they distinguished between an entity that treated the infringer like everyone else, and an entity that gave special assistance to the infringer. None of these factors would favor Sony here.
Cox argued that the plaintiff must show that the defendant induced the customer to infringe, provided affirmative assistance to the infringing activity, or offered a product whose only use case was infringement. Several justices paused at Cox’s admission that this test would effectively render the DMCA safe harbor meaningless. But as Cox argued, this is not a typical case of interpreting a statute so as to give meaning to all of its terms. The Copyright Act does not contain a contributory liability cause of action. Instead, it’s drawn from the common law. Congress adopted the DMCA in 1998 against the backdrop of still-evolving liability rules created by courts, to provide broadband providers some certainty against the possibility of liability. By adopting a statutory defense, Congress was not endorsing the common law cause of action, but limiting its potential.
The case is difficult because the two parties represent extreme positions. Cox faces liability for failing to terminate infringing user accounts. But this “internet death penalty” is a drastic step, especially if Cox is the only local provider. Many accounts flagged by plaintiffs were large multi-user clients like universities. Should thousands of university students lose internet access because a handful of students engaged in infringing activity? And would Sony’s rule lead to similar claims against universities, hospitals, and other intermediaries? On the other hand, it seems problematic to let Cox turn a blind eye to clear illegal activity by its users. Sony repeatedly highlighted a Cox employee email stating “F the DMCA.” The Justices asked whether the same standard should apply in other aiding and abetting cases, such as if Cox knew its customer used the service to engage in sex trafficking.
The Justices seemed concerned that without litigation risk, providers like Cox lacked incentives to work with intellectual property holders to curb copyright abuse. But this isn’t necessarily true. Nothing prevents Sony and other labels from contracting with broadband providers to partner in copyright enforcement (and share the attendant costs). And of course, Sony can always sue infringers directly. Litigation costs often make this infeasible, especially when chasing judgment-proof defendants. But that’s all the more reason to make intermediaries partners rather than adversaries. Ultimately, the law should seek to place liability primarily on actual tortfeasors whenever possible, rather than the deep pockets somewhere in the supply chain.
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