from the keep-setting-good-precedents dept
As we've noted in the past,
Perfect 10 appears to be a company who's entire reason for being is to set good precedents in copyright law, by filing ridiculous lawsuits and losing. So many important copyright precedents have come out of Perfect 10 cases, including ones on fair use and secondary liability. Some have argued (with fairly detailed explanations) how Perfect 10 is not a porn publisher at all, but rather a pure
copyright troll that makes a living off of suing. While it seems to always lose in court, the problem is that some companies just pay up rather than fight. Back in 2011, we noted that Perfect 10 had
sued Usenet provider Giganews. Earlier this year, the court
smacked down Perfect 10 on a number of issues. And now, the court has done so again, handing a complete and total victory to Giganews.
First up, the claims of
direct copyright infringement. Since Giganews is an intermediary, no luck there. The judge, not surprisingly, relies heavily on the famous
Netcom case, which said that a bulletin board/usenet system isn't liable for "incidental copies" made automatically by the computers as part of an effort done by a third party. Here, the court notes that nothing in what Giganews does makes it directly liable. Furthermore, the judge notes that, as is all too typical of Perfect 10, even though its arguments had been rejected earlier in court, the company just repeated the same wrong argument again this time. Not surprisingly, it didn't work. The company then tried a new theory, and it didn't work either, because it just turned into Perfect 10 repeating the same already rejected arguments:
Turning to the undisputed evidence before the Court, Defendants have met their
burden to establish that Perfect 10 cannot prove causation for direct infringement as a
matter of law. Indeed, on identical facts (then presented as allegations, now with
evidence), Judge Matz and Judge Collins already so held....
[....]
Again, a claim for direct liability requires evidence that the Defendants directly or
actively caused the infringement. Perfect 10’s continued insistence that Defendants
allowed its subscribers to upload, download, and view infringing material is the stuff of
indirect or secondary liability, not direct liability.
Four months after Judge Matz rejected each of the arguments Perfect 10 advances
in opposition to this motion, Judge Collins reaffirmed that the evidence before the Court
does not support a claim for direct infringement as a matter of law....
Faced with the same allegations discussed above and now set forth in the evidence before
the Court, Judge Collins again held that such allegations were insufficient as a matter of
law to support a finding of direct infringement because such facts fail to support a finding
of direct causation.... However, Judge Collins permitted Perfect 10’s
claim for direct infringement against Giganews to proceed solely on the newly alleged
theory that Giganews “plac[ed] copies of copyrighted material from various internet
locations onto its own servers, and not at the request of customers ... .” ...Judge Collins expressly rejected each of Perfect 10’s other theories of direct
liability.
Although Perfect 10 repeats the arguments Judge Matz and Judge Collins already
rejected, the record is devoid of any evidence to support the only theory of direct liability
as to Giganews that survived the pleading stage. In the operative First Amended
Complaint, Plaintiff alleged on information and belief that Giganews itself, by way of its
employees, had uploaded infringing Perfect 10 images to the Usenet generally or
Giganews’ servers specifically.... Though Judge Collins noted
this was “not the strongest set of allegations,” Judge Collins held that it was at least
sufficiently plausible to pass the pleading stage in light of the fact that another website,
megaupload.com, had previously been found in criminal proceedings to have uploaded
massive quantities of copyrighted materials to its own servers. ...
After considerable discovery, there is simply no evidence to bear out that unlikely
allegation.
Rather than point to any evidence that Giganews’ employees or agents themselves
uploaded, downloaded, otherwise copied, displayed, or modified any work to which
Perfect 10 holds a copyright, Perfect 10 rehashes arguments already considered and
rejected. Namely, Perfect 10 once again argues that Giganews personally violated
Perfect 10’s copyrights by allowing users to upload content to its servers and by
obtaining and sending content to other Usenet servers through the peering process.
But the conduct of third party Usenet subscribers does not
support a claim of direct liability as to Giganews. The conduct of third parties is
relevant, if at all, to a claim of secondary infringement (contributory or vicarious), not
direct infringement. And Perfect 10 fails to articulate any meaningful difference
between the evidence before the Court and its allegations that Giganews “program[s] [its]
servers to distribute and download infringing conduct” and that Giganews “control[s]
which materials are distributed to and copied from other third party servers,” which Judge
Matz held insufficient as a matter of law to support a claim of direct infringement.
Okay, moving on to the question of indirect infringement. Once again, Perfect 10's argument
is a complete and total flop. The court recognizes an important distinction that is almost always ignored by copyright maximalists looking to blame any platform that has some copyright infringement happening on its platforms: that you have to show that the platform is getting a benefit
from that specific infringement, not from "people using the service in general for infringement." Perfect 10, not surprisingly, fails to persuade the court here:
Although the scope “draw” need not be substantial, Perfect 10 must still prove a
direct causal link between the infringing activities at issue in this case and a direct
financial benefit to Giganews. This action is a specific lawsuit by a specific plaintiff
against a specific defendant about specific copyrighted images; it is not a lawsuit against
copyright infringement in general on the Usenet. That is to say, the “direct financial
benefit” requirement demands more than evidence that customers were “drawn” to
Giganews to obtain access to infringing material in general. Perfect 10 must prove with
competent evidence that at least some of Giganews’ customers were “drawn” to
Giganews’ services, in part, to obtain access to infringing Perfect 10 material. Despite
extensive discovery (which is now closed) the record lacks (and Perfect 10 does not
identify) a single piece of evidence to that effect. Even if the scope of causation is
expanded to the broader category of erotic images, there is no evidence that any customer
was ever “drawn” to Giganews’ Usenet offerings to obtain access to erotic images.
“There is no evidence that indicates that [Giganews’] customers either subscribed
because of the available infringing [Perfect 10] material or canceled subscriptions
because it was no longer available. While a causal relationship might exist between
[Giganews’] profits from subscriptions and the infringing activity taking place on its
USENET servers, [Perfect 10] has not offered enough evidence for a reasonable juror so
to conclude.”
Instead, Perfect 10 points to evidence that there is a lot of copyrighted material
on the Usenet and concludes that the availability of copyrighted material in general
constitutes a draw. If anything, however, Perfect 10’s evidence that the Usenet is awash
in copyrighted material only supports the conclusion no reasonable juror could find a
direct causal connection between infringing Perfect 10 content and Giganews’ profits.
For example, if as Perfect 10 asserts, “staggering amounts of copyrighted works owned
by move producers and television networks are available” on Giganews’ servers ..., what evidence is there that any Giganews subscriber purchased
Giganews’ services in part because of the relatively miniscule number of Perfect 10
images available on Giganews’ servers? In short, there is none. But if the universe of
infringing material on the Usenet is as broad and diverse as Perfect 10 suggests, any
conclusion that subscribers were “drawn” to Giganews’ services as a result of the
availability of Perfect 10 content would be pure speculation. Speculation is not
evidence of causation.
Also, here's a tip: don't misrepresent the rulings of other judges in your case. Courts don't fall for it, and they don't like it:
Perfect 10 also argues that Judge Matz and Judge Collins “have already ruled that
the monthly fee charged by Giganews to its users to access allegedly infringing material
constituted a direct financial benefit.” ... Neither Judge Matz nor Judge Collins so held. In his order on
Defendants’ first motion to dismiss, Judge Matz emphasized the importance of the
procedural posture of the in holding that Perfect 10 had adequately alleged a claim for
vicarious infringement.... Indeed, Judge Matz distinguished
the motion to dismiss from Ellison v. Robertson, supra, and Netcom, supra, both of
which involved summary judgment after an ample opportunity for discovery.... In fact, Judge Matz correctly observed that the operative question is
whether there is a “causal relationship” between Perfect 10’s infringing content and
Giganews’ subscription revenues.... Judge Collins adopted Judge
Matz’ analysis and found that the same allegations were sufficient to advance the action
past the pleadings stage. However, after full discovery, the evidence does not bear out
Perfect 10’s allegations that the availability of its copyrighted content is a draw for
Giganews’ customers, and summary judgment in Giganews’ favor is consistent with
Judge Matz’ and Judge Collins’ liberal assessment of the sufficiency of the pleadings.
The court also (as others have before) notes that Perfect 10 seems to prefer sending confusing and incomplete DMCA notices that are not valid under the law. In fact, they often appear to be designed on purpose to make it difficult to comply, thus giving the company a reason to file a lawsuit. In this case, this harms Perfect 10 because it takes away any claim of Giganews having actual knowledge of infringing files.
As Judge Collins already observed, however, Perfect 10’s practice of sending
Giganews screenshots of a newsreader window along with instructions “to conduct
searches of specific names within certain newsgroups” and instructing Giganews “that all
of the messages yielded by those searches on a certain date contained infringing material”
...
fails to substantially comply with the requirements for a DMCA
takedown notice. In order to comply with the DMCA (and therefore confer actual
knowledge on the recipient), a takedown notice must identify “the material that is
claimed to be infringing or to be the subject of infringing activity and that is to be
removed or access to which is to be disabled, and information reasonably sufficient to
permit the service provider to locate the material.”....
(emphasis added). “The goal of this provision is to provide the service provider with
adequate information to find and address the allegedly infringing material expeditiously.” ....
Perfect 10’s takedown notices, which “point[] to a list of search results, not to any
material in particular,” ... obstruct this goal. As Judge Collins
observed, “the material accessible through the Usenet is in a constant state of flux. As
such, there is no certainty that any particular search will yield the exact same results at
different times. Searches moments apart could yield different results.” .... But even
if the results of such searches were consistent, Perfect 10’s search-screenshot takedown
notices “requires a Usenet provider to compare its search results to Plaintiff’s search
results in an onerous side-by-side, line-by-line manner” ... defeating
the service provider’s ability to “find and address the allegedly infringing material
expeditiously.” Viacom Int’l, Inc. v. YouTube, Inc., 940 F.Supp.2d at 115. This is
particularly true where, as here, Perfect 10’s voluminous takedown notices would require
a manual, line-by-line comparison of countless individual search results for each notice.
And even Perfect 10’s evidence revealed that their own search-criteria method “yielded
some messages that were non-infringing.” ... These aspects of
Perfect 10’s takedown notices are particularly problematic because a takedown notice
under the DMCA must also include “a statement that the complaining party has a good
faith belief that the use of the material in the manner complaint of is not authorized by the
copyright owner, its agent, or the law.”... But in the
absence of any assurance that Giganews’ search results would yield results consistent
with Perfect 10’s search, or that Perfect 10’s search results were limited to infringing
material, it would be impossible to make that necessary representation in good faith.
In fact, the court highlights that Perfect 10's CEO Norman Zada more or less admits that he
could provide Giganews with actual details of infringing content very easily, but has chosen not to.
In fact, Perfect 10’s CEO, Norma Zada recently declared under oath that, using
the Message-ID extraction feature, he was able to extract the Message-IDs for 19 pages
of search results.... Using that same method, Zada estimated it
would take less than 15 minutes to extract the Message-ID’s for “more than 90% of the
infringing Perfect 10 content that Perfect 10 is aware of on Defendant’s servers.” ...
And in deposition, Zada testified it is “actually very easy for Perfect 10 to collect
message IDs to put into a DMCA notice” and that Perfect 10 has now extracted Message
IDs for “approximately 54,000 Perfect 10 messages,” but Perfect 10 refuses to submit a
DMCA takedown notice using that information
Rather, the court notes that whenever Giganews does get Message IDs, it does, in fact, remove that content quickly, as is required. In fact, this becomes clear from Perfect 10's
own evidence in the case.
So we get another Perfect 10 loss in court, and another good ruling for intermediaries not responsible for either direct or indirect infringement. I doubt it will get Perfect 10 to stop suing others, but hopefully others won't be so quick to settle when they see how frequently the company loses.
Filed Under: copyright, direct infringement, indirect infringement, nathan zada, secondary liability
Companies: giganews, perfect 10
