Sony and other major record labels have suffered a significant setback at the Supreme Court after their attempt to make internet service providers (ISPs) pay huge financial penalties for their customers’ copyright infringement was rejected. The case, Cox Communications v Sony Music Entertainment, saw the Supreme Court rule that Cox is not liable under the Digital Millennium Copyright Act when its customers use broadband connections to download or upload pirated materials.

Music copyright holders argued that once Cox was informed of specific users’ repeated infringements, it should have terminated their accounts. However, a jury supported Sony in 2019 and awarded them $1 billion; this verdict was later overturned by an appeals court, which found Cox guilty of contributory copyright infringement.

Despite the partial loss, Cox faced no further damages trial after the Supreme Court ruled unanimously on March 25th. The ruling stated that Cox is not liable for its customers’ actions as it did not induce them to infringe copyrights nor tailor the broadband service specifically for infringement. This decision has significant implications beyond the broadband industry and may affect how other tech companies, including Google, Meta, Elon Musk’s X social network, and Nvidia, handle contributory infringement claims.

The impact of this ruling is already being felt in lower courts, with several defendants citing the Cox precedent to defend against similar lawsuits. One such company is Yout, a smaller entity that operates a website converting YouTube videos into downloadable audio files, now using the Supreme Court’s decision for its defense.