Mere Knowledge Doesn’t Cut It: Supreme Court Protects ISPs from Contributory Liability
Supreme Court Clarifies Copyright Act in Cox Communications, Inc. Et al. v. SONY Music Entertainment, et al.
On March 25, 2026, the Supreme Court released its decision in Cox Communications, Inc. et. al. v. Sony Music Entertainment, et. al. In a nine-to-zero decision, the Court reversed the decision of the 4th Circuit Court of Appeals. Justice Thomas wrote the ruling by the Court. Justice Sotomayor joined by Justice Johnson, filed a concurring opinion. Following his classic textual approach, Justice Thomas’s decision provides a strict reading of the Copyright Act, by implementing a narrowed application of the tests previously established in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), and MGM Studios, Inc. v. Grokster, Ltd, 545 U.S. 913 (2005).
In Sony, the Supreme Court decided that if a company manufactures a device that has substantial non-infringing uses, then a company cannot be held liable for the potential infringement users of their device may engage in. The Court created a test of whether a device has substantial non-infringing use(s), to analyze secondary liability, called the “Betamax Test.”
In Grokster, the Supreme Court decided that a company must actively, with intent, be promoting their device for the use of infringement to be found secondarily liable when users of their device engage in copyright infringement. The Grokster decision is important, as it created the Inducement Test. The Inducement Test standard holds that a company must be actively and with intent helping or encouraging its users to participate in copyright infringement for the benefit of profit to be found secondarily liable.
Sony and Grokster set important foundations for Cox because they create two standard evaluations of contributory liability. Justice Thomas’s opinion firmly establishes the line of contributory liability, narrowing previous interpretations of this precedent by making it so that only if a company fails one of the two tests can they be held secondarily liable. In establishing this new two-prong test for contributory liability, the Supreme Court narrows the way in which it is defined, limiting how copyright holders can attempt to hold ISPs liable for the infringement occurring on their networks.
Case Background
Sony, to limit the amount of copyright infringement of their protected works, used MarkMonitor, a 3rd party company, to collect data on incidents of copyright infringement occurring across the Internet, including from IP addresses connected to Cox subscriber accounts. To resolve infringement issues, Sony sent Cox any reported instances showing to be occurring on their networks. Cox, an Internet Service Provider (ISP), had a gradual consequential policy in place for accounts that are reported to be committing infringement via the Internet provided to them by Cox. Despite this policy, Cox only suspended memberships for 32 cases of infringement- far less than Sony considered sufficient to prove Cox was responsibly handling prevention and management of copyright infringement situations occurring on its networks.
A jury found Cox both vicariously and contributorily liable for willfully allowing infringement to occur on their networks and awarded Sony et. al billions of dollars in statutory damages. However, the Fourth Circuit found there was not sufficient evidence that Cox was vicariously liable, only that their knowledge of infringement and failure to prevent future infractions by those users was sufficient in making them contributorily liable.
In an American court’s evaluation of secondary liability, specifically regarding copyright law, there are two forms of liability that must be established to find the company liable. The first, vicarious liability, stems from employment law, and is the responsibility delved upon a party when its agent has acted in a wrongful or negligent way. Contributory liability, in its specific relation to intellectual property law, is the responsibility delved upon a party when that party has knowledge that they are providing access to infringement and “induce, cause, or materially contribute” to infringement.
Cox appealed to the Supreme Court, arguing that there was not sufficient evidence to determine them as contributorily liable for copyright infringement. Sony appealed, arguing that Cox should be found both contributorily liable and vicariously liable. The Supreme Court accepted Cox’s writ of certiorari and denied both of Sony’s. Thus, the Supreme Court opinion focuses on an evaluation of contributory liability and leaves behind vicarious liability as established by precedent in its affirmation of the District Court’s ruling by denying Sony’s writ.
The Opinion
Justice Thomas’s opinion reversed the decision made by the Fourth Circuit. In the opinion, the Court offers an updated, stricter test for the evaluation of whether a company can be held secondarily liable for copyright infringement. The majority used preceding standards from MGM Studios, Inc. v. Grokster, Ltd and Sony Corp. of America v. Universal City Studios, Inc.
In its factual analysis, the court creates a two-part framework for determining whether Cox may be held secondarily liable for infringement occurring on its network.
The first part applies the Betamax test. The court concludes that Cox’s internet service has many lawful uses, and that those substantial non-infringing uses are enough to prevent liability based solely on the possibility that some subscribers may use the service to infringe.
The second part applies the inducement test. Looking at Cox’s conduct, the court emphasizes that Cox maintained a graduated response system for subscribers accused of infringement. That system-imposed consequences and could ultimately result in termination of subscriptions for repeat infringers. In the court’s view, those facts debased the argument that Cox actively encouraged, assisted, or profited from infringement. Cox risking losing paid subscribers to uphold their infringement policy complicates proving them to be a company whose purpose is to profit from that infringement.
In evaluating contributory liability, the court made a specific part of the inducement test strictly clear. Preceding opinions from Sony and Grokster hold that mere knowledge that a service will be used to infringe is insufficient to establish the required intent to infringe. In this opinion, the Majority went a step further to say that if, so long as those two tests are passed, a lack of action based off the knowledge that infringement could be or is occurring upon their networks is not considered enough to establish contributory liability.
This narrower understanding matters for Cox. Even though Cox knew that some infringement was occurring on its network, its response did not amount to encouragement, assistance, or intent to promote infringement by its users.
In addition to narrowing contributory liability, the court takes an even stricter view of the Copyright Act. The court briefly turns to the statute itself and notes that the Act does not clearly address liability based on knowledge combined with inaction. In fact, the Act says very little about secondary liability at all. From that silence, the court reads Congress’s decision not to write broader secondary liability rules into the Copyright Act as intentional.
As a result, the court rejects any interpretation of the statute that would expand liability beyond the two-part framework it applies. By limiting liability to cases involving more than knowledge and inaction, the court leaves fewer paths for holding secondary parties accountable when infringement occurs through their services.
It is with this two-part test and narrowed read of what is necessary to establish contributory liability that the court provides reverses the District Court’s decision.
Concurring Opinion
Justice Sotomayor concurred in judgment only, joined by Justice Jackson. While ultimately agreeing with Thomas in result, Justice Sotomayor disapproved of the methodology used by the Majority to arrive at their judgment. Sotomayor departs from the majority opinion in a couple profound ways. First, she argues that the use of the two-prong test of secondary liability as the sole measure of whether a party is contributorily liable for copyright infringement is a narrower read than precedent has set, leaving out common law principles such as aiding and abetting. Defying this previous read on copyright law goes against the decision in Kimble v. Marvel Entertainment, LLC 576 U.S. 446 (2015) as it removes important parts of Sony and Grokster from future copyright decision-making. Secondly, she argues that the narrowing to a sole measure of secondary liability also inhibits the statutory openness left by Congress via the DMCA (Digital Millenium Copyright Act).
While she disagreed with the Thomas opinion on two highly important points, she did agree with their finding, both by the two-prong test performed by the majority and by her aiding and abetting test, that mere knowledge of infringement and lack of action in response to that knowledge, do not provide sufficient evidence of secondary liability.
In her analysis to determine whether Cox could be held secondarily liable, Sotomayor establishes that in addition to the two-prong test performed by the majority, use of common law strategy should be applied here. She emphasizes the failures of the Thomas opinion in adhering to their own cited precedent by noting that Grokster made no attempt to limit the use of common law in evaluating copyrights, but instead adamantly held the door open for it. She then goes on to apply a common law standard, the ‘aiding and abetting’ test, to Cox’s actions to establish whether they can be held secondarily liable. In the respect of “aiding,” she considers whether Cox actively partook in infringement, and in the respect of “abetting,” she considers whether Cox provided support or encouragement to users engaging in infringement.
She determined neither to be the case. To have found Cox to be aiding in infringement, their actions would need to have been “pervasive, systemic, and culpable assistance,” (Twitter, Inc. v. Taamneh, 598 U.S. 471, 2008) of which a general air of indifference, she argues, does not check the box. Additionally, merely supplying Internet service to infringers given that Cox could not identify individual abusers but instead the IP address they were using, because Cox only received notification of which subscriber was participating in copyright infringement, did not sufficiently prove Cox’s lack of action against infringing parties to be abetting. This conclusion, in addition to her agreement with the analysis of secondary liability via vicarious and contributory liability performed by the Majority, resulted in her concurrence in judgment. However, she alludes at the end of her opinion that should this decision too narrowly test copyright infringement liability to adequately defend copyrights, aiding and abetting may be a sufficient subsequent test to bring about resolution.
Secondly, she finds the Majority’s narrow idea of copyright infringement liability to be in defiance of the statutory structure provided by Congress in the DMCA. The DMCA is outfitted with a “safe harbor” for ISPs (Digital Millenium Copyright Act, Title 17§512) which states that they cannot be held secondarily liable if they take proper protocols to avoid and punish infringement incidents occurring on their networks. This safe harbor exists in response to the inclusion of decisions such as Sony in deliberation of copyright matters, which could lead to accusations of secondary liability for ISPs. However, the narrowed reading of copyright precedent performed by the Majority effectively removes the chance of secondary liability being directed at ISPs, making the safe harbor an ineffective motivator for companies to hold their users accountable for infringement occurring on their networks. Sotomayor hints to Congress in her concurrence her hope that they will revisit legislation in the DMCA to provide an opportunity for copyright holders in which the legislation still provides them some safety of their work in the ever-expansive Internet space.
Implications
This decision and its concurring opinion are important in the way they change the relationship between Copyright Law and ISP responsibility.
For ISPs, the way in which the Majority narrowed contributory liability has created a sense of immunity such that they need not continue to put any effort into regulating infringement incidents within their networks. While some companies may continue to uphold their current policies against infringement as a courtesy to copyright holders, there is some evidence this may not be the industry standard. During Oral Arguments, representation for Cox Communications affirmed to Justice Barrett’s questioning that the reasoning for monitoring and responding to infringement within its networks prior to the decision of the case was to avoid liability. In the same response, he confirmed that following a winning decision for Cox, the company would no longer have any liability concerns regarding infringement and therefore would lose any reason other than being a “good corporate citizen.”
For Copyright holders, this increases the difficulty in identifying and rectifying instances of infringement. For individual copyright owners and large companies alike, by no longer upholding an industry standard of accountability for infringement regulation and prevention by ISPs, the responsibility of finding and confronting infringement is placed back onto the copyright holder.
Without the risk of liability, this might mean that agreements that existed before- such as how MarkMonitor was given access by Cox to network data to demonstrate infringement regulation- will end. Without checks on the rate at which ISPs are upholding their agreement to limit infringement on their networks, copyright holders lose the sense of security from knowing that ISPs are holding their network users accountable. It also removes an essential source of information on infringement that may have been providing evidence for copyright holders seeking relief against those stealing and abusing their works.
Overall, the decision gives ISPs the opportunity to cease regulation of infringement with little consequence; but leaves copyright holders in a tight spot as they must find new ways to identify, regulate, and rectify infringement incidents across the Internet.
This publication is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal or financial advice, nor do they necessarily reflect the views of Lido Law Group, APC, or any of its attorneys other than the author(s). This publication is not intended to create an attorney-client relationship between you and Lido Law Group, APC. Substantive changes in the law subsequent to the date of this publication might affect the analysis or commentary. Similarly, the analysis may differ depending on the jurisdiction or circumstances. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.
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