February 2, 2017 | By Kerry Sheehan

Another Loss for Perfect 10, Another Good Day for Copyright Law

Perfect 10 just can’t seem to help itself.

In case you missed it, the U.S. Court of Appeals for the Ninth Circuit handed (yet another) crushing defeat to the adult website and serial copyright litigant Perfect 10, this time in its lawsuit against Usenet access provider Giganews. The Ninth Circuit soundly rejected each of Perfect 10’s claims – clarifying that yes, direct copyright infringement still requires some volitional conduct on the part of the defendant, and no, Giganews could not be held liable for contributory or vicarious copyright infringement either. We filed a brief arguing as much, and we’re happy the court agreed.

Back in 2011, Perfect 10 sued Giganews for copyright infringement, claiming that users of the service had uploaded copies of images in which Perfect 10 held the copyright. In the district court, Perfect 10 argued that Giganews had not responded sufficiently to its notices of copyright infringement, and that Giganews was directly liable for its users' alleged infringement. Fortunately, in 2014, that court sided with Giganews. The district court noted that many of Perfect 10’s notices didn’t conform to the standards required under the Digital Millennium Copyright Act. Many of the notices, for example, failed even to identify the allegedly infringing content, providing only a set of search terms Perfect 10 suggested Gigagnews could use to find it. The district court also noted that when Perfect 10 sent Giganews a takedown notice that did sufficiently identify the allegedly infringing material, using a machine readable Message-ID, Giganews acted promptly to take down the targeted content.

In 2016, Perfect 10 appealed that district court decision to the United States Court of Appeals for the Ninth Circuit.  As we said at the time, Perfect 10, this time backed by the Recording Industry Association of America as an amicus, raised a potentially dangerous new argument on appeal. Seeking to overturn a key doctrine in copyright law, the volitional conduct rule, Perfect 10 argued that Giganews could be held directly liable for copyright infringement by its users, simply for providing and operating a Usenet access point. Usenet is a decentralized system that allows people to carry on conversations (and share files) in “newsgroups.”

The volitional conduct rule provides an important protection for service providers (or anyone really). It means that a defendant in a copyright infringement lawsuit can only be directly liable for copyright infringement if they themselves are responsible for the decision to copy the infringed work. If a defendant merely provides the tools or services that others use to make copies, they can still be liable for copyright infringement under indirect liability doctrines. But indirect liability is harder for copyright holders to prove, and it allows more defenses for service providers. If the defendant is not the one who did the copying, the copyright holder has to show that the defendant knew of the infringement and contributed to it, that the defendant intentionally induced the infringement, or that the defendant profited from the infringement while having the ability to supervise it.

These extra requirements are vital legal protections for all kinds of Internet intermediaries, from Usenet providers to social networks to hosting providers to email services. Without the volitional conduct rule, many of these service providers could be treated as direct infringers based on their users’ actions. That would create serious liability risks that could threaten Internet services’ ability to do business, and users’ ability to communicate through those services.

Fortunately, the Ninth Circuit made it clear that it meant what it said back in 2013—direct infringement only applies to the one who does the copying:

Contrary to Perfect 10’s contention, this requirement of causation remains an element of a direct infringement claim. In Fox Broadcasting, we explained that”[i]nfringement of the reproduction right requires copying by the defendant, which comprises a requirement that the defendant cause the copying.” In using this language, we indicated that causation is an element of a direct infringement claim.

While Perfect 10 attempted to argue that the Supreme Court’s 2014 decision in Aereo repealed that rule by implication, the Ninth Circuit rejected that argument, noting that the Supreme Court never addressed the issue. The TV-streaming service that was challenged in Aereo was quite different from Giganews, and may have engaged in volitional conduct of its own.

In rejecting Perfect 10’s argument, the Ninth Circuit preserved an important protection for innovation and free speech online: if any service provider could be held directly liable anytime a user uploaded an infringing item, those providers would have no incentive to continue to support user-generated content.

Perfect 10 also raised two indirect liability arguments against Giganews: "contributory liability" and "vicarious liability" theories.

The Ninth Circuit shot down these arguments as well. The court found that Perfect 10 was unable to show that Giganews either contributed to users' infringement, induced users to infringe, or that Giganews received a direct financial benefit from specific acts of infringement. Allegations that some users might use the service to infringe were not enough.

That’s an important point: plaintiffs alleging vicarious liability must show that Giganews derived a financial benefit from infringement of the plaintiff’s works, not the opportunity for infringement generally. As the court explained, “[s]uch a rule would allow cases to be built on the rights of owners and actions not before the court,” and would conflict with the Supreme Court’s rules about who can bring a lawsuit in federal court.

This case was the latest in a decade-long run of cases where Perfect 10 (inadvertently) created some good copyright law.  The company has filed numerous copyright infringement lawsuits against service providers, seeking harsher rules that would force those providers to actively police their users’ activities online.  Fortunately, Perfect 10 has lost most of those lawsuits, and in the process, made some good law for the rest of us. Thanks, Perfect 10! And thank you, Giganews, for standing up and fighting for Internet users.

Let’s hope with this last one, and the millions of dollars the company must pay Giganews in attorney’s fees and costs, Perfect 10 has learned its lesson, and won’t be trying to shake down service providers in the future.

 

 

 

 

 

 

 


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