United States: Veteran Loser Perfect 10's Latest Ninth Circuit Defeat

In the 1940s, Jehovah's Witnesses, tenaciously litigious in defense of free expression, generated a half-dozen Supreme Court decisions that came to define First Amendment rights in the 20th century. With comparable persistence, but in the service of less lofty interests, erotic-photo publisher Perfect 10 has fought—and nearly always lost—a series of reported cases that have, in significant part, come to define the contours of the law of copyright infringement in the online realm. The company's latest Ninth Circuit loss, however, in Perfect 10 v. Giganews, does not so much resolve unsettled questions of copyright law as confirm established standards.

(Disclosure: Fenwick & West represents Giganews in this litigation.)

Perfect 10's copyrighted images of naked women are found across the internet, and Perfect 10 has devoted considerable energy to trying to hold third parties responsible for alleged infringements, meeting many defeats.

In Perfect 10 v. CCBill, the court rejected Perfect 10's claim that CCBill was liable for providing web hosting and online credit card services to internet enterprises that allegedly infringed Perfect 10's copyrights. In Perfect 10 v. Amazon, Inc. (involving Google), the Ninth Circuit held that the copying of images by Google's visual search engine, in order to display thumbnail search results, represented fair use. The court further held that Google did not itself publicly display images (and hence did not directly infringe) when its search engine employed "frames" to facilitate end users' viewing of allegedly infringing content stored on other websites. And in Perfect 10 v. Visa, the court held Visa and MasterCard were not secondarily liable for processing payments for merchants Perfect 10 had accused of infringement.

Perfect 10 remained undaunted by losses, perhaps because the company is not so much in the business of publishing as in the business of extracting revenue from litigation settlements—largely, it appears, against parties not in a position to fully litigate. As the district court observed in Giganews, across the lifetime of Perfect 10, most of its revenues have been derived not from publication but from litigation and, more specifically, from settlements and defaults because "Perfect 10 has never obtained a judgment in a contested proceeding."

In its latest foray, Perfect 10 tilted against two USENET service providers, Giganews and Livewire, which respectively host or provide access to USENET newsgroups and messages. USENET users upload and download materials through the defendants' automated systems, and Perfect 10 alleged that its images were featured. Asserting that Giganews and Livewire had failed to remove them, Perfect 10 claimed direct, contributory and vicarious copyright infringement.

Key Holdings on Summary Judgment

Volition/Causation and Direct Infringement

The Ninth Circuit shot down the direct infringement claims by applying the by-now-familiar principle, endorsed by four federal courts of appeal, that direct infringement requires "volitional conduct." Passively providing an automated system that others may use to infringe does not mean the system provider has engaged in the act of infringement. The Ninth Circuit panel referred to this requirement as "causation," but the different terminology appears to be of little importance.

The main legal issue on the direct infringement claim in Giganews was whether the U.S. Supreme Court's 2014 decision in ABC v. Aereo had sub silentio overruled the unbroken line of cases requiring volition or causation. The Ninth Circuit's answer: No. Neither providing automated access services to USENET users, nor providing a binary file reader, nor a technical facility allowing for automated posting and availability constitute volitional acts supporting a direct infringement claim when they occur as a result of automated processes.

Contributory Infringement

For liability to attach, a defendant, with knowledge of an infringing activity, must materially contribute to the infringement or induce it. The court in Giganews found that in an internet context, a defendant can be deemed to have "materially contributed" if they could have taken "simple measures to prevent further damage to copyrighted works, yet continue[d] to provide access to infringing works." In this case, the issue turned on Giganews' process for taking down infringing works in response to notices from Perfect 10.

"Giganews presented sufficient evidence that Perfect 10's proposed method for locating infringing messages," using search terms rather than readily available machine-readable Message–ID codes, "was onerous and unreasonably complicated." Since Perfect 10's method was "unreliable and burdensome," it was not a "reasonable and feasible means" of removing infringing matter, so Giganews's failure to use that method cannot be deemed to have materially contributed to the infringement.

As for the inducement branch, Perfect 10 offered no meaningful evidence that the defendants had a purpose of promoting infringement, disposing of that part of its claim.

Vicarious Infringement and the Plaintiff's Copyrighted Matter

Vicarious liability requires that the defendant has (1) the right and ability to supervise the infringing conduct and (2) a direct financial interest in the infringing activity.

In internet cases, the Ninth Circuit has held the financial element may be satisfied when infringing matter acts as a draw to a website. The draw need not be substantial, but it is not enough to allege that infringing matter in general draws users to a defendant's service. Rather, as the court held in Giganews, a plaintiff must show that "there is [a] causal link between the infringement of plaintiff's own copyrighted works and any profit to the service provider" (emphasis added). Perfect 10 offered no such evidence; hence, summary judgment was appropriate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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