The U.S. Court of Appeals for the Fourth Circuit has set rules clarifying the eligibility of Internet access providers for limiting their liability for copyright infringements committed by their subscribers.

In 2014, BMG Rights Management, a music publisher, sued Cox Communications, an Internet access provider, on the theory that Cox had knowingly ignored requests to terminate the accounts of repeat infringers who unlawfully shared and downloaded BMG's songs. In 2015, a jury found Cox liable for willful contributory copyright infringement and awarded BMG $25 million in damages. Cox appealed to the Forth Circuit, which held in February that Cox is not entitled to the safe harbor protection under the U.S. Digital Millennium Copyright Act (DMCA), for the following reasons:

1. Cox did not adopt and reasonably implement a policy that provides for the termination of subscribers who are repeat infringers. It also did not reasonably enforce the policy and terminate repeat infringers in appropriate circumstances.
2. Cox illegitimately refrained from terminating repeat infringers on the grounds of loss of income from the terminated subscribers.
3. Contrary to Cox’s assertions, subscribers can be considered 'repeat infringers' under the DMCA, even if they were not found liable by court.
4. Cox did not implement an adequate procedure for handling and addressing copyright infringement complaints.

Importantly, the Court also held that an Internet access provider is liable for contributory infringement due to the conduct of its subscribers only if the Internet access provider had actual knowledge of infringing activity or was willfully blind to such activity. Mere negligence by the Internet access provider for failing to address subscriber misconduct – that is, if the Internet access provider had no actual knowledge of subscriber misconduct but should have known better – is insufficient for contributory infringement claims.