The Supreme Court Case that Could Raise Your Internet Bill or Let Piracy Run Amok

Ponder this question: You run a business that provides internet access to many people, such as a company, coffee shop, or hospital. Of course, some people use it to access pirated content, such as NFL games or movies. Are you at risk that your internet service provider (ISP) will cut off your business even though many users don’t break the law?

That’s what’s at stake in a case in which an ISP was hit with a judgment for $1 billion. The Supreme Court just heard oral argument in the case. The case could have a major impact on the price of Internet service.

A group of record labels, including Sony Music Entertainment, brought this case against Cox Communications, an ISP, in federal court in Alexandria, Virginia. The record labels repeatedly notified Cox of individuals using its Internet service to download pirated music.

Cox did practically nothing to stop it. Cox gave flagged accounts thirteen strikes before temporarily terminating them. It continued to rake in subscription fees from those accounts.

The record labels sent over 160,000 infringement notices to Cox, but Cox suspended only 32 subscribers. During that time, Cox terminated over 600,000 accounts for non-payment.

Technically speaking, terminating accounts that repeatedly traffic in pirated content would not entirely stop piracy. Sophisticated computer users know how to mask their computer’s IP addresses by using VPNs and how to avoid bans directed to particular IP addresses.

The record labels won in the trial court. They didn’t sue Cox for copyright infringement per se because Cox itself wasn’t making copies of the songs. Instead, the record labels prevailed on a theory of secondary copyright-infringement liability. There, sometimes a party can be held liable for the copyright infringement of others due to the nature of its relationship with them.

Cox appealed to the Fourth Circuit, which upheld one of the record labels’ theories of secondary liability.

You may be wondering why the Digital Millennium Copyright Act (DMCA) didn’t shield Cox from liability. The DMCA provides a liability shield to Internet service providers against copyright infringement occurring on their network only if they maintain an adequate program for terminating repeat infringers. In a previous case against Cox, the Fourth Circuit affirmed a holding that Cox failed to maintain such a program.

The Supreme Court took the case to address whether an ISP can be held secondarily liable for copyright infringement merely because it knows that people are using certain accounts to engage in piracy and did not terminate their accounts, when there is no proof that the ISP promoted such piracy or took affirmative steps to foster it.

It appears the justices are wrestling with two issues.

First, the standard is unclear for when a person or company can be held liable for the copyright infringement of someone else. The federal Copyright Act does not expressly provide for secondary liability. Courts created that law. It’s unlikely that the Supreme Court will eliminate secondary liability, but it likely will clarify the conduct threshold at which it kicks in.

Second, the justices expressed concern about practicality. ISP customers are often large organizations that, in turn, provide Internet access to a substantial number of people, such as universities, employers, hotels, and restaurants. If the copyright owner, such as a movie company, gives notice to a large organization that piracy is occurring, what must happen? Is the ISP required to terminate service for the whole organization, such as a university? If the organization can identify specific IP addresses (i.e., specific computers) used for piracy, would terminating those IP addresses be a pointless game of whack-a-mole?

There is a lot of money on the table. If a copyright-infringement plaintiff has registered its copyrights (as music labels always do), a successful plaintiff can recover between $750 and $30,000 per work infringed in statutory damages. If the plaintiff proves that the infringement was willful, the ceiling goes up to $150,000 per work infringed.

In this case, the jury found Cox was responsible for 10,017 pirated songs and acted willfully, so it awarded $99,830.29 per song in statutory damages, which led to the $1 billion damage award.

Ultimately, this decision will affect the price and availability of Internet service.

If the Court sets rules that make ISPs liable for failure to terminate repeat violators, that will drive up the cost of Internet service. Providers will need to invest in technology and personnel to process claims and terminate accounts, which will result in lower subscription revenue.

On the other hand, if the Court gives ISPs a pass as long as they don’t take affirmative steps to induce or facilitate piracy, that will let ISPs off the hook and lessen the financial return for creating intellectual property, such as music and movies.

Written on December 17, 2025

By John B. Farmer

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