Supreme Court Tackles $1 Billion Case Over Internet Music Piracy, Warns of ‘Extreme’ Outcomes

The U.S. Supreme Court on Monday (Dec. 1) wrestled with a billion-dollar music piracy lawsuit filed by the major labels against telecom giant Cox Communications, grilling lawyers for both sides over the “extremes” of their arguments.

During a hearing at the nation’s highest court, justices sharply questioned Cox’s lawyer over whether a victory would give the internet service provider (ISP) carte blanche to ignore illegal conduct by its subscribers: “What incentive would you have to do anything if you won?” asked Justice Amy Coney Barrett.

But the justices also interrogated an attorney representing Sony Music Entertainment, Warner Music Group (WMG) and Universal Music Group (UMG), echoing concerns from Cox and free speech advocates that the case could force ISPs to terminate service en masse. “I don’t see how it’s workable at all,” Justice Samuel Alito said.

“We are being put to two extremes here,” said Justice Sonia Sotomayor. “How do we announce a rule that deals with those two extremes?”

UMG, Sony and WMG teamed up to sue Cox in 2018, claiming the internet provider itself should be held legally responsible for enabling the sins of its users. The labels claimed Cox had received hundreds of thousands of notices about piracy, but had never permanently terminated a single subscriber accused of stealing music.

In December 2019, a jury issued a verdict holding Cox liable for helping users infringe more than 10,000 songs, awarding the labels more than $99,000 per song — adding up to a whopping $1 billion fine.

With that case now before the Supreme Court, Cox has argued that a victory for the labels “jeopardizes internet access for millions of users” because ISPs will be forced to terminate users rather than risk billions in legal damages. The labels say such warnings are overblown and designed to distract from the facts of the case: “Cox made a deliberate and egregious decision to elevate its own profits over compliance with the law.”

Arguing for Cox at Monday’s hearing, attorney Joshua Rosencranz said a ruling for the labels would have “cataclysmic” consequences for the internet, and could “wreak havoc with the essential medium through which modern public engages in commerce and speech.”

“There is no surefire way for an ISP to avoid liability,” Rosencranz warned. “The only way it can is to cut off the internet, not just for the accused infringer but for anyone else who happens to use the same connection.”

Rosencranz repeatedly cited recent Supreme Court rulings to support that hands-off approach. One said Twitter did not aid a terrorist attack simply because ISIS used the social media site; another said a foreign government could not sue American gun makers for aiding drug cartels that had used their weapons.

But several justices seemed troubled by that argument. Justice Elena Kagan suggested Cox’s knowledge about specific users was likely more detailed than in the Twitter case. Justice Barrett asked if an ISP would be required to act if it was alerted to child trafficking by its subscribers. Justice Sotomayor repeatedly asked what motive ISPs would have to tackle infringement if the court sides with Cox.

“You know that a particular location is infringing, and most of the time you’re doing nothing,” Sotomayor said. “Why aren’t you contributing to that infringement?”

Representing the labels, attorney Paul D. Clement told the justices that Cox had held copyright law “in contempt. He said it was “beyond dispute” that Cox had provided continued internet access to subscribers that it knew would continue to steal music.

“That reality … is what requires Cox to insist on the extreme position that they can continue to provide service to habitual abusers in perpetuity without consequences,” Clement said. “Why bother cooperating with copyright holders?”

But that argument, too, faced strong scrutiny. Justice Kagan said the labels’ argument “fails” under the recent Twitter and guns rulings. Justice Samuel Alito echoed Cox’s fears about mass terminations, asking Clement how to deal with a college that provides internet to tens of thousands of students. “I really don’t see how your position works in that context,” Alito said.

Though both sides faced difficult questioning, Cox had a powerful ally at Monday’s hearing in the form of the U.S. Solicitor General’s Office, which has urged the justices to overturn the ruling against Cox. At the arguments, Deputy Solicitor General Malcolm Stewart said the labels had simply not met the standard to hold Cox liable — and that the stakes of the case were huge.

“Terminating all access to the internet based on infringement seems extremely overbroad given he centrality of the internet to modern life and given the First Amendment,” Stewart told the justices near the end of his argument.

Following Monday’s hearing, the case is fully ready for a ruling by the Supreme Court. The justices will now deliberate and issue a written ruling in the next few months.