Supreme Court Overturns Ruling That Would Have Forced ISPs to Disconnect Pirates

The Supreme Court on Monday vacated the Fifth Circuit's ruling against internet service provider Grande Communications, clearing the way for a reconsideration of a case that had threatened to require ISPs to disconnect customers accused of copyright infringement — a standard the nation's highest court had already rejected in a landmark ruling just weeks earlier.

The Grande Communications case, Grande Communications Networks LLC v. UMG Recordings, Inc., et al., involved a suit by major record labels including UMG Recordings, Capitol Records, Capitol Christian Music Group, Fonovisa, and Sony Music, which accused Grande of failing to terminate the internet service of subscribers who had been flagged for illegal file-sharing. The Fifth Circuit had ruled in the labels' favor, finding Grande contributorily liable for its subscribers' infringement. The Supreme Court vacated that judgment without argument and remanded the case back to the Fifth Circuit for reconsideration under the new legal standard the court had just established.

That standard came from the court's 7-2 ruling in Cox Communications, Inc. v. Sony Music Entertainment, which established that an ISP cannot be held liable as a contributory copyright infringer merely because it provides internet service knowing that some users will use it to infringe copyrights. Justice Clarence Thomas, writing for the majority, held that liability requires proof that the provider "intended for its service to be used in that way" — meaning the ISP actively encouraged infringement or designed its service specifically to facilitate it. The Cox ruling also vacated a $1 billion verdict that had previously been entered against Cox Communications, one of the largest such copyright judgments in history.

"A company is not liable as a copyright infringer for merely providing a service to the general public with knowledge that it will be used by some to infringe copyrights," Justice Thomas wrote in the Cox decision. The two-justice dissent came from the court's most left-leaning members, who argued the ruling gave ISPs license to profit from infringement while avoiding responsibility for the consequences.

The music industry had pursued an aggressive strategy in recent years of suing large ISPs directly, arguing that their failure to enforce "repeat infringer" policies — terminating service for subscribers who received multiple copyright complaints — made them legally responsible for the content their networks carried. The Cox and Grande decisions represent a significant setback for that strategy. A separate lawsuit brought by Universal Music Group, Warner Music Group, and Sony Music against Verizon, alleging similar failures to police repeat infringers, remains pending and will now be evaluated under the Cox standard — a test the plaintiffs will find considerably harder to meet than the standard the Fifth Circuit had previously applied.