After yesterday’s news that the US Supreme Court has overturned the major record companies’ billion dollar copyright victory against internet service provider Cox Communications, the music industry and tech sector have responded to the ruling. Cox was accused by the majors of contributing to copyright infringement by turning a blind eye to its customers’ music piracy.
The Supreme Court’s ruling now makes it clear that internet companies like Cox can only be held legally liable for piracy committed by their customers if it can be shown they encouraged copyright infringement or provided a service tailored for piracy.
The majors wanted Cox to be held liable for what is known as ‘contributory copyright infringement’ on the basis that it didn’t do enough to deal with customers that it knew were pirating music over its network. That kind of legal liability would force ISPs to do more to combat piracy, including cutting off repeat infringers. However, Supreme Court judges have now ruled that mere knowledge of infringement is not enough.
Aside from the majors losing their billion dollars in mega-damages, yesterday’s ruling is a significant setback for the music industry’s long-running battle against online piracy.
Looking for a silver lining in the ruling, the Record Industry Association Of America is keen to stress that this restriction on copyright liabilities only helps ISPs that simply provide internet access to customers. It does not provide any get out for online services that actually host or distribute pirated music.
RIAA CEO Mitch Glazier says the Supreme Court’s decision is “narrow” and only applies to contributory infringement claims “involving defendants like Cox that do not themselves copy, host, distribute or publish infringing material or control or induce such activity”.
Nevertheless, the ruling is certain to be a big disappointment for the RIAA and its members, who have used the same legal arguments to take action against numerous other ISPs. Glazier adds that, “to be effective”, copyright law “must protect creators and markets from harmful infringement and policymakers should look closely at the impact of this ruling”.
Needless to say, Cox is very happy indeed with the ruling, which it describes as a “decisive victory for the broadband industry and for the American people who depend on reliable internet service”. The fact it doesn’t now need to fork out $1 billion in damages to Universal Music, Sony Music and Warner Music is presumably also making them feel pretty good about the result.
More importantly, it also means Cox won’t have to ramp up its systems for combatting music piracy on its networks by sending out warning letters to - and ultimately disconnecting - individuals that are accused of copyright infringement by the record companies.
Such escalation - Cox previously claimed in bombastic terms - would have been disastrous and deprived Americans of their basic right to internet access, and would have had the result that “Grandma will be thrown off the internet because Junior visited and illegally downloaded some songs”.
Welcoming the ruling, a Cox spokesperson says, “this opinion affirms that internet service providers are not copyright police and should not be held liable for the actions of their customers”. They add that, after years of legal wrangling, “we have definitively shut down the music industry’s aspirations of mass evictions from the internet”.
The ruling has also been welcomed by organisations representing the wider tech sector, including Re:Create Coalition, which brings together a number of organisations of that kind.
Its Executive Director Brandon Butler says the ruling “reaffirms a bedrock principle in American copyright law: liability for copyright infringement should fall on infringers and those who intentionally enable them, not on neutral technologies and platforms essential to our internet infrastructure”.
Had the Supreme Court endorsed previous rulings in this dispute in the district and appeals courts, the outcome would be “mass surveillance, censorship and a chilling effect on both innovation and creativity”, adds Butler, endorsing the narrative pushed by Cox and its supporters that holding the company liable for its users’ piracy would have forced a fundamental change to how ISPs operate.
Butler also reckons yesterday’s ruling will have a bigger impact, despite the RIAA insisting it’s a “narrow” judgement that’s only relevant to ISPs. “As AI and other technologies continue to grow and evolve”, the Re:Create boss says, “creators, innovators and consumers alike will benefit from the court’s ruling, which insulates lawful technologies from liability for third-party misuse”.
What is contributory infringement?
Most copyright systems recognise that a third party that helps another person to directly infringe copyright should sometimes be held liable for that infringement. The principle is variously known as secondary, authorising or contributory infringement.
In the US, secondary infringement is not specifically described in the Copyright Act, but over the years the US courts have recognised that secondary liability is indeed possible.
They have actually identified two kinds of secondary liability: ‘contributory infringement’ when a third party contributes to an infringement and ‘vicarious infringement’ when they profit from it. Cox was accused of both, although the Supreme Court only considered the contributory infringement claims.
The principle of contributory infringement is most useful for copyright owners where the person directly infringing copyright is hard to find or doesn’t have much money so isn’t really worth suing. Or where there are large numbers of direct infringers who are all being assisted by a single third party.
In the early days of online music piracy, the music industry accused the companies that provided peer-to-peer file-sharing software of contributory infringement. Those companies were not directly involved in the unlicensed copying and sharing of music files, but - it was argued - they facilitated it.
The music industry pushed that argument when it sued Napster, though it was the movie industry’s successful legal battle against Grokster that got all the way to the US Supreme Court.
But, could liability for contributory copyright infringement be extended to an ISP that provides an entirely legitimate service, and which never suggests that that service should be used for piracy, and which actually prohibits copyright infringement in the small print? The majors argued that it could, if that ISP was made aware that specific customers were pirating music and then did nothing about it.
What conduct counts as ‘contributing’ to infringement?
To assess the majors’ claim against Cox, the courts needed to identify what specific kind of conduct makes a company liable for contributory infringement. The Supreme Court has previously identified two main kinds of conduct. They are described in yesterday’s ruling as follows: first, if “a provided service is tailored to the infringement”, and second, “if the party induced the infringement”.
A service is tailored to infringement if it is “not capable of ‘substantial’ or ‘commercially significant’ non-infringing uses”, yesterday’s ruling continues. Meanwhile, “a provider induces infringement if it actively encourages infringement through specific acts”.
The latter was relevant in the Grokster case, as yesterday’s ruling notes. “In Grokster, we held that a jury could find two file-sharing software companies liable for inducement” because they “promoted and marketed their software as a tool to infringe copyrights”.
Cox didn’t do either of these things and, on that basis, seven of the nine judges in the Supreme Court concluded that the ISP was not liable for contributory infringement.
“Cox provided internet service to its subscribers, but it did not intend for that service to be used to commit copyright infringement”, the judgement states. “Holding Cox liable merely for failing to terminate internet service to infringing accounts would expand secondary copyright liability beyond our precedents”.
A different viewpoint in court
Two judges in the Supreme Court did not agree with this conclusion. Judges Sonia Sotomayor and Ketanji Brown Jackson said that while Cox did not induce infringement, or tailor its service for infringement, there could be other grounds for holding the ISP liable for contributory infringement.
“The majority is wrong that those are or should be the only two forms of secondary liability for copyright infringement”, they write. And therefore the majority, “without any meaningful explanation”, has “unnecessarily” limited the principle of contributory infringement, even though the Supreme Court has previously “left open the possibility” that other kinds of conduct could result in copyright liabilities.
This minority position is obviously better for the music industry. Though ultimately it wouldn’t have helped even if it was the majority position, because Sotomayor and Jackson considered another kind of conduct that could constitute contributory infringement, but then concluded it also didn’t apply to Cox.
Sotomayor and Jackson’s extra consideration related to whether or not Cox ‘aided and abetted’ its users’ music piracy. That’s where the major labels’ primary beef - that they made the ISP aware of copyright infringing users and the ISP didn’t properly deal with them - becomes relevant.
Summarising, Sotomayor writes that the majors “point out that Cox, having received copyright-violation notices, knew that specific connections it services have been, and will continue to be, used to infringe
copyrights”. Because Cox “nonetheless continued to service those connections”, the majors “argue that the jury could have found that Cox intended to facilitate infringement committed using those connections”.
However, Sotomayor continues, that is not enough to prove Cox ‘aided and abetted’ music piracy, mainly because the majors are not able to show “Cox intended to aid specific instances of infringement”.
That’s the result of logistical issues. The majors and their piracy monitoring services can identify copyright infringement being undertaken on a specific IP address, but they don’t know the specific individual who is accessing the internet from the account associated with that IP address. Even in a household there will be multiple users, and the problem is more acute if the IP address is connected to a cafe, college or hotel.
“When Cox receives a copyright violation notice”, Sotomayor writes, “the notice specifies only which connection was used to infringe, not who used it to commit infringement”. Ramping up the drama, the judge adds that that “informational gap” is “fatal” for the major labels’ copyright claim.
Legal precedent says that “aiding-and-abetting liability most commonly attaches where the defendant aided a specific instance of unlawful conduct”, the judge continues, which would require the majors to show that Cox “at a minimum, knew who the ‘principals’ in the alleged unlawful acts were”. But the majors have “not shown that Cox had specific knowledge of who committed the infringing conduct”.
Annoyingly for the majors, that means a logistical problem - that you can only connect piracy to an IP address not a specific user - causes their copyright infringement claim to fail, even if all the Supreme Court judges had been willing to consider that ‘aiding and abetting’ piracy was grounds for liability.
What about the DMCA safe harbour?
Yesterday’s judgement also deals with one other argument put forward by the majors. In the early days of mainstream use of the internet, the US Digital Millennium Copyright Act provided internet companies with a ‘safe harbour’ to avoid liability for copyright infringement if they inadvertently helped customers to access, copy or distribute unlicensed copyright-protected content.
To qualify for safe harbour protection, an internet company must have systems in place to deal with infringing content on its platforms and repeat infringers among its user-base. A key allegation against Cox was that, while in theory it had policies to deal with repeat infringers, it only paid lip service to those policies, and therefore could not qualify for safe harbour protection.
But why have a safe harbour in the DMCA if ISPs aren’t liable for contributory copyright infringement to start with? Yesterday’s judgement notes that the majors have argued that “the DMCA safe harbour would
have no effect if ISPs are not liable for providing Internet service to known infringers” and that Congress
“must have enacted the DMCA on the presumption that ISPs could be held liable in cases such as these”.
The judges do not agree, however. “The DMCA merely creates new defences from liability”, they write, and also “made it clear” that failure to comply with the safe-harbour rules “shall not bear adversely upon … a defence by the service provider that the service provider’s conduct is not infringing”.
Sotomayor took a different position on this too. “The majority’s new rule consigns the safe harbour provision to obsolescence”, she writes. That’s because “ISPs no longer face any realistic probability of secondary liability for copyright infringement, regardless of whether they take steps to address infringement on their networks and regardless of what they know about their users’ activity”.
Of course, as RIAA boss Mitch Glazier pointed out, this case does only impact on internet services that do not actually “copy, host, distribute or publish” possibly infringing content. Internet platforms that do any of those things would still need to comply with safe harbour obligations to avoid liability.
However, yesterday’s ruling does potentially mean that ISPs that have in the past sought to meet safe harbour obligations around repeat infringers - even if they did so in a somewhat slap-dash way - may not be inclined to do so at all in the future.