Perfect 10, Inc. v. CCBill LLC
Encyclopedia
Perfect 10
, Inc. v. CCBill
LLC, 488 F.3d 1102
(9th Cir.
2007), is a U.S. court case between a publisher of an adult entertainment magazine and the webhosting, connectivity, and payment service companies. The plaintiff
Perfect 10 asserted that defendants CCBill (payment service company) and CWIE (webhosting and connectivity service company) violated copyright
, trademark
, and state law violation of right of publicity laws, unfair competition
, false and misleading advertising
by providing services to websites that posted images stolen from Perfect 10’s magazine and website. Defendants sought for statutory safe harbor
s from copyright infringement
liability under the Digital Millennium Copyright Act
, 17 U.S.C. § 512, and from liability for state law unfair competition, false advertising claims and right of publicity based on Section 230 of the Communications Decency Act
, 47 U.S.C. § 230(c)(1).
The defendant CWIE provides webhosting and related Internet connectivity service to various websites. In particular, the company provides “ping, power and pipe” services by making sure that the server is on, power is provided to the server, and the clients are connected to the Internet via a data center connection.
The defendant CCBill provide payment services that let consumers use credit cards or checks to pay e-commerce venues.
On August 10, 2001, P10 sent letters and emails to Thomas A. Fisher, the Executive Vice-President and the designated agent to receive notices of infringement of CCBill and CWIE, claiming that the two companies’ clients were infringing P10 copyrights.
(RICO) claims, because the defendants provided services to websites that posted stolen images from P10’s magazine and website. In favor of CCBill and CWIE, based on the Digital Millennium Copyright Act (DMCA), the district court
found that CCBill and CWIE qualified for certain statutory safe harbors from copyright infringement liability, and they are also immune from liability for state law unfair competition and false advertising claims under the Communications Decency Act (CDA). In favor of P10, the court found the defendants violated P10’s publicity right, and requested defendants to pay for P10’s costs and attorney’s fees under the Copyright Act.
Both sides cross-appealed to the United States Court of Appeals for the Ninth Circuit
against the above holdings.
to “provide protection from liability for: transitory digital network communications; system caching; information residing on systems or networks at the direction of users; and information location tools.” (17 U.S.C §§ 512(a)-(d))
P10 alleged that CCBill and CWIE did not qualify for the safe harbors protection for various reasons.
In this case, the court further explained that a service provider implements a policy if it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue complaints. An implementation is reasonable if, under “appropriate circumstances,” the service provider terminates users who repeatedly or blatantly infringe copyright.
names in the spreadsheet
. P10 argues that CCBill and CWIE failed to keep track of repeatedly infringing webmasters, therefore preventing the implementation of their policies. However, the remainder of the log, which contains email addresses and/or names of webmasters and a chart included in the interrogatory responses (December 11, 2003), did indicate that CCBill and CWIE largely kept track of the webmaster for each website.
The Ninth Circuit supported the district court in turning down P10’s claim that CCBill and CWIE did not implement a repeat infringer policy.
P10 claims that CCBill and CWIE unreasonably implemented their repeat infringer policies by tolerating flagrant and blatant copyright infringement by its users despite notice of infringement from P10, notice of infringement from other copyright holders (not a party in this case) and “red flags” of copyright infringement.
The district court found that P10 did not provide notice that substantially complied with the notification requirements. Although P10 claimed that it met the requirements through a combination of sets of documents that it sent to CCBill and CWIE on three different occasions, both the district court and the Ninth Circuit found that to require action on the notified infringements would put substantial burden on the service providers to piece the separate information together. The DMCA specifically indicates that the burden of policing copyright infringement should be placed on the owners of the copyright. Both courts held that knowledge of infringement may not be imputed to CCBill or CWIE. P10’s claim that CCBill and CWIE failed to reasonably implement a repeat infringer policy is also not tenable.
A service provider may lose immunity if it fails to take action when it is aware of the infringing activity because the activity is apparent (§ 512(c)(1)(A)(ii)).
Perfect 10 alleged that CCBill and CWIE were aware of a number of “red flags” that signaled apparent infringement, claiming CWIE and CCBill provided services to websites with names (like illegal.net and stolencelebritypics.com) or disclaimers that suggest apparent infringement. In addition, CWIE also possibly committed contributory infringement by hosting password-hacking websites. In contrary, the court found neither the names nor the disclaimers clearly flagged apparent infringing activity. The court argued that there might be reasons other than announcing the infringement in choosing those names (for example, being appealing to a certain group of audience), and the disclaimer in question (illegal.net) did not make infringement apparent. In terms of the password-hacking websites, the court decided that the sites themselves did not present apparent infringement without further investigation, and service providers should not be imposed with the responsibility to determine whether the passwords enable infringement.
The Ninth Circuit was unable to determine whether accessing websites is a standard technical measure. In addition, CCBill claimed it only blocked P10’s credit card because P10’s method of identifying infringement involved reversing previous charges for subscriptions, which imposed a substantial cost for CCBill to deal with the chargebacks. The court remanded to the district court for a determination of these claims.
. CCBill argued that it fell under this safe harbor because it displays a hyperlink to provide access to the user to access the client website at the end of the consumer transaction. The court disagreed with the claim by pointing out the majority of CCBill’s functions are outside providing information location services. In addition, P10 did not claim that CCBill infringed its copyrights by providing a hyperlink; rather, the alleged infringement was through other services provided by CCBill. Therefore, CCBill should not qualify for the § 512(d) safe harbor.
Perfect 10
Perfect 10 was a quarterly men's magazine featuring high resolution photographs of topless or nude women who have not had cosmetic surgery in pensive or artistic poses...
, Inc. v. CCBill
CCBill
CCBill is an Internet billing service. Established in 1998, the company provides third-party billing, or turn-key solutions, for e-Merchants requiring payments by way of credit card, debit card, or e-check, European Debit/Direct Pay, and telephone payment....
LLC, 488 F.3d 1102
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(9th Cir.
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...
2007), is a U.S. court case between a publisher of an adult entertainment magazine and the webhosting, connectivity, and payment service companies. The plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
Perfect 10 asserted that defendants CCBill (payment service company) and CWIE (webhosting and connectivity service company) violated copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
, trademark
Trademark
A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or...
, and state law violation of right of publicity laws, unfair competition
Unfair competition
Unfair competition in a sense means that the competitors compete on unequal terms, because favourable or disadvantageous conditions are applied to some competitors but not to others; or that the actions of some competitors actively harm the position of others with respect to their ability to...
, false and misleading advertising
False advertising
False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
by providing services to websites that posted images stolen from Perfect 10’s magazine and website. Defendants sought for statutory safe harbor
Safe harbor
The term safe harbor has several special usages, in an analogy with its literal meaning, that of a harbor or haven which provides safety from weather or attack.-Legal definition:...
s from copyright infringement
Copyright infringement
Copyright infringement is the unauthorized or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works.- "Piracy" :...
liability under the Digital Millennium Copyright Act
Digital Millennium Copyright Act
The Digital Millennium Copyright Act is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization . It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to...
, 17 U.S.C. § 512, and from liability for state law unfair competition, false advertising claims and right of publicity based on Section 230 of the Communications Decency Act
Communications Decency Act
The Communications Decency Act of 1996 was the first notable attempt by the United States Congress to regulate pornographic material on the Internet. In 1997, in the landmark cyberlaw case of Reno v. ACLU, the United States Supreme Court struck the anti-indecency provisions of the Act.The Act was...
, 47 U.S.C. § 230(c)(1).
Facts
The plaintiff, Perfect 10 (P10), is a publisher of an adult entertainment magazine and the owner of the subscription website perfect10.com. The website features around 5,000 images of models that are created by the company that are accessible to only registered paying members. P10 holds publicity rights on many of the models in these images. It also has the registered U.S. copyrights for images and owns several related registered trademarks and service marks.The defendant CWIE provides webhosting and related Internet connectivity service to various websites. In particular, the company provides “ping, power and pipe” services by making sure that the server is on, power is provided to the server, and the clients are connected to the Internet via a data center connection.
The defendant CCBill provide payment services that let consumers use credit cards or checks to pay e-commerce venues.
On August 10, 2001, P10 sent letters and emails to Thomas A. Fisher, the Executive Vice-President and the designated agent to receive notices of infringement of CCBill and CWIE, claiming that the two companies’ clients were infringing P10 copyrights.
Case history
On September 30, 2002, P10 filed law suit against the defendants alleging copyright and trademark violations, state law violation of right of publicity laws, unfair competition, false and misleading advertising, and Racketeer Influenced and Corrupt Organizations ActRacketeer Influenced and Corrupt Organizations Act
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization...
(RICO) claims, because the defendants provided services to websites that posted stolen images from P10’s magazine and website. In favor of CCBill and CWIE, based on the Digital Millennium Copyright Act (DMCA), the district court
United States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
found that CCBill and CWIE qualified for certain statutory safe harbors from copyright infringement liability, and they are also immune from liability for state law unfair competition and false advertising claims under the Communications Decency Act (CDA). In favor of P10, the court found the defendants violated P10’s publicity right, and requested defendants to pay for P10’s costs and attorney’s fees under the Copyright Act.
Both sides cross-appealed to the United States Court of Appeals for the Ninth Circuit
United States Court of Appeals for the Ninth Circuit
The United States Court of Appeals for the Ninth Circuit is a U.S. federal court with appellate jurisdiction over the district courts in the following districts:* District of Alaska* District of Arizona...
against the above holdings.
Safe harbors
The DMCA established certain safe harborsOnline Copyright Infringement Liability Limitation Act
The Online Copyright Infringement Liability Limitation Act is United States federal law that creates a conditional safe harbor for online service providers and other Internet intermediaries by shielding them for their own acts of direct copyright infringement as well as...
to “provide protection from liability for: transitory digital network communications; system caching; information residing on systems or networks at the direction of users; and information location tools.” (17 U.S.C §§ 512(a)-(d))
P10 alleged that CCBill and CWIE did not qualify for the safe harbors protection for various reasons.
Reasonably implemented policy
To be eligible for any of the four safe harbors, a service provider must satisfy a series of conditions (17 U.S.C § 512(i)). One such condition requires the service provider to adopt and reasonably implement a policy that will terminate users who are repeat infringers in appropriate circumstances.In this case, the court further explained that a service provider implements a policy if it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue complaints. An implementation is reasonable if, under “appropriate circumstances,” the service provider terminates users who repeatedly or blatantly infringe copyright.
"Implementation"
P10 referenced a single page from CCBill and CWIE’s “DMCA Log,” and showed some missing webmasterWebmaster
A webmaster , also called a web architect, web developer, site author, or website administrator is a person responsible for maintaining one or many websites...
names in the spreadsheet
Spreadsheet
A spreadsheet is a computer application that simulates a paper accounting worksheet. It displays multiple cells usually in a two-dimensional matrix or grid consisting of rows and columns. Each cell contains alphanumeric text, numeric values or formulas...
. P10 argues that CCBill and CWIE failed to keep track of repeatedly infringing webmasters, therefore preventing the implementation of their policies. However, the remainder of the log, which contains email addresses and/or names of webmasters and a chart included in the interrogatory responses (December 11, 2003), did indicate that CCBill and CWIE largely kept track of the webmaster for each website.
The Ninth Circuit supported the district court in turning down P10’s claim that CCBill and CWIE did not implement a repeat infringer policy.
"Reasonableness"
Section 512(c) protects service provider from being liable for monetary relief if it does not know of infringement, or if it acts “expeditiously to remove, or disable access to, the material” when it has actual knowledge, is aware of facts or circumstances from which infringing activity is apparent, or has received notification of claimed infringement meeting a list of requirements outlining the elements should be included in a notification (17 U.S.C § 512(c)(3)).P10 claims that CCBill and CWIE unreasonably implemented their repeat infringer policies by tolerating flagrant and blatant copyright infringement by its users despite notice of infringement from P10, notice of infringement from other copyright holders (not a party in this case) and “red flags” of copyright infringement.
Notification requirements
The district court found that P10 did not provide notice that substantially complied with the notification requirements. Although P10 claimed that it met the requirements through a combination of sets of documents that it sent to CCBill and CWIE on three different occasions, both the district court and the Ninth Circuit found that to require action on the notified infringements would put substantial burden on the service providers to piece the separate information together. The DMCA specifically indicates that the burden of policing copyright infringement should be placed on the owners of the copyright. Both courts held that knowledge of infringement may not be imputed to CCBill or CWIE. P10’s claim that CCBill and CWIE failed to reasonably implement a repeat infringer policy is also not tenable.
Red flag test
A service provider may lose immunity if it fails to take action when it is aware of the infringing activity because the activity is apparent (§ 512(c)(1)(A)(ii)).
Perfect 10 alleged that CCBill and CWIE were aware of a number of “red flags” that signaled apparent infringement, claiming CWIE and CCBill provided services to websites with names (like illegal.net and stolencelebritypics.com) or disclaimers that suggest apparent infringement. In addition, CWIE also possibly committed contributory infringement by hosting password-hacking websites. In contrary, the court found neither the names nor the disclaimers clearly flagged apparent infringing activity. The court argued that there might be reasons other than announcing the infringement in choosing those names (for example, being appealing to a certain group of audience), and the disclaimer in question (illegal.net) did not make infringement apparent. In terms of the password-hacking websites, the court decided that the sites themselves did not present apparent infringement without further investigation, and service providers should not be imposed with the responsibility to determine whether the passwords enable infringement.
Remanded issues
The Ninth Circuit disagreed with the district court in declining to consider evidence of notices and “red flags” raised by third parties other than P10. The Ninth Circuit found they are relevant and remanded to the district court the determination of whether CCBill and/or CWIE responded to notices appropriately and implemented its repeat infringer policy in an unreasonable manner in other cases.Standard technical measures
P10 argued that CCBill interfered with “standard technical measures” by blocking P10’s access to CCBill affiliated websites to prevent P10 from discovering copyright infringement. P10 claimed that CCBill does not qualify for the safe harbor protection because the law states a service provider that interferes with “standard technical measures” that are used to identify or protect copyrighted works is not entitled to the safe harbor (§ 512(i)(1)(B)).The Ninth Circuit was unable to determine whether accessing websites is a standard technical measure. In addition, CCBill claimed it only blocked P10’s credit card because P10’s method of identifying infringement involved reversing previous charges for subscriptions, which imposed a substantial cost for CCBill to deal with the chargebacks. The court remanded to the district court for a determination of these claims.
Transitory digital network communications: § 512(a)
Section 512(a) provides safe harbor for service providers who offer “the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.” The court agrees that the credit card information and proof of payment transmitted by CCBill are “digital online communications.” However, the court could not conclude whether CCBill is a service provider under § 512(a), due to the lack of knowledge on how CCBill sends the payment it receives to its account holders. The Ninth Circuit therefore remanded to the district court for further consideration on this issue.Information location tools: § 512(d)
Section 512(d) provides service providers protection against copyright infringement by reason of referring or linking users to an online location containing infringing material or infringing activity by using information location tools, including hypertext linkHyperlink
In computing, a hyperlink is a reference to data that the reader can directly follow, or that is followed automatically. A hyperlink points to a whole document or to a specific element within a document. Hypertext is text with hyperlinks...
. CCBill argued that it fell under this safe harbor because it displays a hyperlink to provide access to the user to access the client website at the end of the consumer transaction. The court disagreed with the claim by pointing out the majority of CCBill’s functions are outside providing information location services. In addition, P10 did not claim that CCBill infringed its copyrights by providing a hyperlink; rather, the alleged infringement was through other services provided by CCBill. Therefore, CCBill should not qualify for the § 512(d) safe harbor.
Information residing on systems or networks at the direction of users: § 512(c)
The court disagreed with P10 and its claim about CWIE receiving direct financial benefit from the infringing activity. The fact that CWIE hosted sites for a fee unrelated to the amount of infringing material, and P10 failed to provide sound evidence about such benefit, which led the court to decide CWIE did meet the requirements of § 512(c), which limits liability for claims of infringement for storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider. The court finds that CWIE is entitled to safe harbor under § 512(c) if the district court determines CWIE meets the threshold requirements stated in § 512(i).Communications Decency Act (CDA)
CDA gives federal immunity to the providers of interactive computer services and prevents them from being treated as the publishers or speakers of any information provided by another information content providers (§§ 230(c)). However, CDA does not protect against violations of "intellectual property," and the court held that the term means only federal intellectual property, not state regimes, in this case, like right of publicity. The court argued that, otherwise, this protection would have to vary from state to state, and national providers would have trouble determining the appropriate interventions required in different circumstance. In this case, the court found CCBill and CWIE are eligible for CDA immunity for all the claims raised by P10.Direct copyright infringement
P10 alleged that CCBill and CWIE directly infringed its copyright through its website, hornybees.com. hornybees.com has posted pictures of a P10 model’s body without P10’s authorization with the head of a celebrity. However, it was unclear about the relationship between CCBill/CWIE and the site. CWIE stated that the site is operated by CCBucks, and CCBill and CWIE have no interest in hornybees.com. However, some evidence has implied that the two companies might be involved more deeply. The Ninth Circuit remanded the issue for determination by the district count.See also
- Digital Millennium Copyright ActDigital Millennium Copyright ActThe Digital Millennium Copyright Act is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization . It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to...
- Online Copyright Infringement Liability Limitation ActOnline Copyright Infringement Liability Limitation ActThe Online Copyright Infringement Liability Limitation Act is United States federal law that creates a conditional safe harbor for online service providers and other Internet intermediaries by shielding them for their own acts of direct copyright infringement as well as...
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