Last month we welcomed the result in Cox v. Sony as a firewall against surveillance, censorship, mass evictions, and unfair competition online. Other observers (including the Register of Copyrights and a prominent treatise author) were…less excited about the outcome, albeit for different reasons. One refrain among critics has been that the opinion upsets lower court precedent. That complaint is both misconceived and overblown.
The “upends precedent” critique is misconceived because it’s not clear why the Supreme Court should defer to ambiguous or already-superseded lower court rulings on this issue rather than reaffirming its own clear holdings in Sony v. Universal and MGM v. Grokster. In Cox, a unanimous court held that mere knowledge that particular IP addresses were associated with alleged infringement was not enough to hold internet service provider Cox liable (to the tune of $1 billion, according to one jury panel) for those alleged infringements. In so doing, the majority reiterated its holding in Grokster that “One infringes contributorily by intentionally inducing or encouraging direct infringement” (emphasis added) and thus “mere knowledge of infringing potential or of actual infringing uses would not be enough” for liability. Pining for a contributory liability standard that would find liability based on mere knowledge is nostalgia for a standard that was rejected by the Supreme Court more than 20 years ago.
Critics of the opinion frequently cite the Second Circuit’s description of contributory liability from its 1971 opinion in Gershwin Publishing Corp. v. Columbia Artists Management Inc.: “one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a ‘contributory’ infringer.” But again, the idea that mere knowledge plus material contribution was sufficient for secondary liability was unambiguously rejected in Grokster in 2005. By the time Cox reached the Supremes, there was nothing left of that overbroad Gershwin formula to upend.
The Gershwin critique is also overblown; the standards embodied in Sony, Grokster, and Cox are plenty broad enough to accommodate activity where secondary liability seems appropriate. For example, if you look at the facts in Gershwin, it seems clear the defendants would still be liable under the Grokster-Cox rule. In a nutshell, Columbia Artist Management’s business was managing music performers, and part of its model was to dispatch a CAM employee to small towns that lacked a well-organized concert venue to help local music fans organize concert series, where CAM artists would perform (and earn fees they shared with CAM). CAM employees provided promotional materials, budget advice, and other forms of support to facilitate these small town concerts. Self-evidently, the locals relied on CAM to walk them through this process, and would have little reason to suspect that performance rights clearance was a thing unless CAM told them. CAM was, in essence, offering a service that walked these local music fans step-by-step through the process of organizing bootleg concerts, actively encouraging and profiting from infringement just as surely as Grokster did.
In sum, the secondary liability regime post-Cox is neither as novel nor as disruptive as critics suggest. It shields ISPs from liability in appropriate circumstances and places the responsibility for infringement where it belongs – on infringers. Accordingly, using the opinion as a pretext for site-blocking legislation, as some Senators have proposed, would be a serious mistake.