Secondary Liability for Copyright Infringement At the Supreme Court

In February 2024, the Fourth Circuit addressed a jury’s 2020 damages award of $1 billion finding Cox secondarily liable for its subscribers’ copyright infringement through illegal copying of copyrighted songs. Sony Music Ent. v. Cox Commc’ns, Inc., 93 F.4th 222 (4th Cir. 2024). The Fourth Circuit affirmed the jury’s finding that Cox was willfully contributorily liable for infringement, but reversed the jury’s finding of vicarious liability, vacating the damages award and remanding the case for a new trial on damages.
Both Cox and Sony filed petitions for certiorari in August 2024 — Cox asking the Supreme Court to review the Fourth Circuit’s holdings on willfulness and contributory liability, and Sony asking for review on vicarious liability. Key industry players filed amici supporting the respective petitions. In October 2024, both Sony and Cox filed briefs in opposition to the others’ petition.

Sony’s Petition

In Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 930 n.9 (2005), the Supreme Court held that to establish vicarious liability, plaintiffs must show that a defendant: 1) “profits directly from the infringement”; and 2) “has a right and ability to supervise the direct infringer.” The Fourth Circuit in Sony did not reach the issue of supervision. It reversed the district court on the first prong, holding that Cox did not profit directly from its subscribers’ infringement because: 1) it charged a flat monthly fee whether subscribers infringed copyright or not; and 2) subscribers were not drawn to Cox’s premium subscription offerings specifically for the purpose of infringing copyright. 93 F.4th at 230-33.
In its petition, Sony argues that profiting “from the larger operation in which the infringement occurred” constitutes direct profit. Petition for a Writ of Certiorari at 14-15, Sony Music Ent. v. Cox Commc’ns, Inc., No. 24-181 (Aug. 16, 2024). Sony says the Fourth Circuit’s decision is at odds with other circuits that adhere to the long line of “dance hall cases” following Dreamland Ball Room v. Shapiro, Bernstein & Co., 36 F.2d 354, 355 (7th Cir. 1929). Sony Pet. 13. In Dreamland, the operator of a dance hall was found vicariously liable for infringement where its hired orchestra played copyrighted music. Sony cites cases from the First, Second, Third, Seventh and Ninth Circuits following Dreamland. Id. 14-16.
As one example, Sony focuses on the Ninth Circuit case Fonovisa v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996), where the court held the defendants liable because some of their rental stall vendors sold counterfeit music recordings. The Ninth Circuit explained that while the defendants received the same rental payment from all vendors, they “reap substantial financial benefits from admission fees, concession stand sales and parking fees … from customers who want to buy the counterfeit recordings.” Id. at 263. Sony argues that Fonovisa demonstrates that vicarious liability does not “require a strict causal link … between the defendant’s profit and the act of infringement.” Sony Pet. 17.
Sony also cites a line of cases following Herbert v. Shanley Co., 242 U.S. 591 (1917), which held that a hotel restaurant profited from an orchestra that played infringing music because the music was “part of a total for which the public pays.” Sony Pet. 26. Sony also relies on the legislative history of Congress’ rejection of an amendment to the Copyright Act, and points to the “most efficient risk bearer” principle in tort law as further support. Id. 29-30.
In its opposition brief, Cox interprets the dance hall cases as requiring defendants to receive direct benefit from orchestras that played copyrighted works, even if difficult to quantify. Brief in Opposition at 15-18, Sony Music Ent. v. Cox Commc’ns, Inc., No. 24-181 (Oct. 21, 2024). Cox highlights Ellison v. Robertson, 357 F.3d 1072 (9th Cir. 2004), which directly addressed the issue of “whether an online service provider should be held vicariously liable for copyright infringement.” Cox Opp. 11. In Ellison, the Ninth Circuit held that AOL was not vicariously liable for its subscribers sharing copyrighted books on its forum because AOL did not receive “a direct financial benefit from providing access to the infringing material.” 357 F.3d at 1079.
Cox also stresses courts’ reluctance to expand vicarious liability too far beyond its original roots in agency law, and counters Sony’s invocation of legislative history as out of context and just one line in a House report. Cox Opp. 22-25, 27-28.