Business and Legal Insights

On March 25, 2026, the Supreme Court issued a decision in Cox Communications v. Sony, addressing matters related to the Digital Millennium Copyright Act. The Court determined that Cox did not encourage or induce its users to violate the copyrights of songwriters, performers, bands, or singers. Sony, which had previously prevailed in the 1984 Betamax case by arguing that video recorders were not inherently infringing, sought to hold Cox contributorily liable for copyright violations committed by its users. However, the Supreme Court rejected Sony's arguments and ruled in favor of Cox.

In assessing Cox’s effort to stem the infringing conduct, Justice Thomas, writing for the Court, explicitly noted that Cox “contractually prohibits its subscribers from using their [internet] connection ‘to post, copy, transmit, or disseminate any content that infringes the patents, copyrights . . . or proprietary rights of any party.’”  In the record below, the 4^th Circuit cited the Acceptable Use Policy as providing the basis for this contractual prohibition. 

This statement by the Supreme Court supports the position that policies that manage, control and guide how users use a website, social media network, or online service (including Terms of Use, Privacy Policies, Acceptable Use Policies, and Accessibility Statements) are binding contracts between the site and the user. Were it otherwise, the Court could not characterize Cox’s Acceptable Use Policy as a contractual prohibition. 

District and circuit courts have been split on whether such policies bind users; courts in Florida and New York have generally found they do, while Minnesota courts have implied they may not.

What does this mean for companies that have websites, social media accounts, YouTube or TikTok channels, and other content distribution processes?

• It’s time to update the site’s Terms of Use, Privacy Policy, Acceptable Use Policy and other public-facing policies like warranties and Accessibility Statements.
• Companies benefit when back-end users (including employees, contractors and third party service providers) policies and user policies match up, so companies should plan to update those documents, manuals and agreements.
• Site operators should ensure that if they use chatbots to communicate with visitors (whether users chat with humans or AI), all users have a chance to read and acknowledge the Terms of Use and Privacy Policy, especially if the company or its users are located in states with two-party consent to record conversations, like Florida.
• Terms, agreements and policies can also include choice of law provisions, limits on class actions, and waivers of bonds; Cox vs. Sony makes it more likely that courts will see these agreements as binding on users, which gives companies more control over how they will respond to disputes from customers, consumers and plaintiff law firms.

Because an updated policy constitutes a contract, a well-crafted policy can protect against accusations of contributory infringement and mitigate class action risks.

Shutts & Bowen Intellectual Property and Technology attorney, Heidi Howard Tandy, is available to discuss these issues with Shutts clients and companies doing business in Florida. She brings nearly thirty years of experience with online policies and user agreements to Shutts’ Intellectual Property practice.