Supreme Court reverses $1B verdict

The Supreme Court on March 25 unanimously threw out a $1 billion copyright verdict against Cox Communications, ruling that an internet provider is not automatically liable because some customers used its network to pirate music. (supremecourt.gov) The case was Cox Communications v. Sony Music Entertainment, No. 24-171. Sony and other record companies had won a 2019 jury verdict in Virginia after arguing that Cox kept serving subscribers tied to repeated infringement notices. (supremecourt.gov) The United States Court of Appeals for the Fourth Circuit had already wiped out the damages award in 2024 and the separate vicarious-liability finding, but it left standing a finding that Cox was liable for willful contributory infringement. The Supreme Court reversed that remaining part and sent the case back. (news.bloomberglaw.com) (supremecourt.gov) Copyright law punishes the person who copies or distributes a song without permission. This case asked when a second company, here an internet service provider, can also be blamed for helping that infringement happen. (supremecourt.gov) Justice Clarence Thomas wrote that “mere knowledge” that customers will misuse a general service is not enough. The Court said Sony had to show Cox induced infringement or provided a service designed around infringement, not just ordinary internet access. (supremecourt.gov) (law.cornell.edu) That standard pulls copyright cases closer to the Supreme Court’s 2005 Grokster decision, which focused on companies that actively promoted piracy. The justices said selling a broadly useful service to the public is different from building or marketing a product to encourage infringement. (supremecourt.gov) The ruling narrows one of the music industry’s most aggressive legal theories against broadband companies. Reuters-style coverage from Bloomberg Law said the Recording Industry Association of America called the decision a setback after jurors had found Cox “knowingly facilitated” large-scale theft. (news.bloomberglaw.com) Cox had warned that a broad rule for Sony would pressure internet providers to disconnect households to avoid crushing verdicts. That argument had support from the United States, which told the Court that failing to terminate subscribers, by itself, should not create contributory liability. (supremecourt.gov) (news.bloomberglaw.com) The decision is already reshaping related cases. On April 8, the Supreme Court vacated a separate $47 million verdict against Grande Communications and told the Fifth Circuit to reconsider it in light of Cox v. Sony. (musicbusinessworldwide.com) Sony’s lawsuit helped define how far copyright owners could push internet providers to police users. The Court’s answer was narrower: running a general internet service, even with notice that some customers infringe, is not enough by itself to support a billion-dollar copyright judgment. (supremecourt.gov)