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Perfect 10, Inc. v. Giganews, Inc.

United States Court of Appeals for the Ninth Circuit

December 5, 2016, Argued and Submitted Argued and Submitted; January 23, 2017, Filed

No. 15-55500, No. 15-55523, No. 15-56026

Opinion

 [*663]  D.W. NELSON, Senior Circuit Judge:

Appellant Perfect 10, Inc. ("Perfect 10" or "P10") challenges the district court's partial dismissal of its direct copyright infringement claim and grant of summary [**5]  judgment in favor of Appellees Giganews, Inc. ("Giganews") and Livewire Services, Inc. ("Livewire") as to all remaining claims. Perfect 10 also appeals the district court's award of attorney's fees and costs under the Copyright Act. On cross-appeal, Giganews and Livewire contend the district court erred by denying their request for supplemental fees and failing to add Perfect 10's sole shareholder and founder, Norman Zada ("Zada"), to the judgment as Perfect 10's alter ego. For the reasons set forth below, we affirm the district court.

BACKGROUND

1. The Usenet and Appellees' Operations

The heart of this complex copyright dispute revolves around the Usenet (or USENET), "an international collection of organizations and individuals (known as 'peers') whose computers connect to one another and exchange messages posted by USENET users." Ellison v. Robertson, 357 F.3d 1072, 1074, n.1 (9th Cir. 2004). "To obtain access to the USENET, a user must gain access through a commercial USENET provider, such as Defendant [Giganews], or an internet service provider." Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 130 (S.D.N.Y. 2009). Giganews owns and operates several Usenet servers and provides its subscribers with fee-based access to content that Giganews stores on its own servers as well as content stored on the servers of [**6]  other Usenet providers. Unlike Giganews, Livewire does not own any Usenet servers, but instead provides its subscribers with access to the Usenet content stored on Giganews's servers.

The Usenet content offered through Giganews's servers is almost exclusively user-driven, in that users upload the majority of the content stored on a provider's server. This content is posted via text-based articles to online bulletin boards called newsgroups. Each article is associated with a unique Message-ID. Giganews and Livewire contend that the only way to accurately identify a specific Usenet message is with that Message-ID. Although these articles are posted as text files, other types of files such as images, songs, and movies may be encoded into the bodies of the articles as binary files. Through Giganews's browser application, known as "Mimo," or "the Mimo Reader," users can open the binary files, which are then decoded and displayed in their original format.

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847 F.3d 657 *; 2017 U.S. App. LEXIS 1128 **; Copy. L. Rep. (CCH) P31,043; 96 Fed. R. Serv. 3d (Callaghan) 978; 2017 WL 279504

PERFECT 10, INC., Plaintiff-Appellant, v. GIGANEWS, INC.; LIVEWIRE SERVICES, INC., Defendants-Appellees.PERFECT 10, INC., a California corporation, Plaintiff-Counter-Defendant-Appellant, v. GIGANEWS, INC., a Texas corporation; LIVEWIRE SERVICES, INC., a Nevada corporation, Defendants-Counter-Claimants-Appellees.PERFECT 10, INC., a California corporation, Plaintiff-Counter-Defendant-Appellee, v. DR. NORMAN ZADA, Third Party-Appellee, GIGANEWS, INC., a Texas corporation; LIVEWIRE SERVICES, INC., a Nevada corporation, Defendants-Counter-Claimants-Appellants.

Subsequent History: US Supreme Court certiorari denied by Perfect 10, Inc. v. Giganews, Inc., 2017 U.S. LEXIS 7259 (U.S., Dec. 4, 2017)

Costs and fees proceeding at Perfect 10 v. Giganews, Inc., 2017 U.S. App. LEXIS 27064 (9th Cir. Cal., Dec. 29, 2017)

Prior History:  [**1] Appeal from the United States District Court for the Central District of California. D.C. No. 2:11-cv-07098-AB-SH. Andre Birotte, Jr., District Judge, Presiding.

Perfect 10, Inc. v. Giganews, Inc., 2013 U.S. Dist. LEXIS 98997 (C.D. Cal., July 10, 2013)Perfect 10, Inc. v. Giganews, Inc., 2014 U.S. Dist. LEXIS 183592 (C.D. Cal., Nov. 14, 2014)Perfect 10, Inc. v. Giganews, Inc., 2014 U.S. Dist. LEXIS 183590 (C.D. Cal., Nov. 14, 2014)Perfect 10, Inc. v. Giganews, Inc., 2015 U.S. Dist. LEXIS 54063 (C.D. Cal., Mar. 24, 2015)

Disposition: AFFIRMED.

CORE TERMS

infringement, district court, servers, infringement claim, images, users, messages, attorney's fees, display, copies, copyright infringement, volitional, vicarious, financial benefit, summary judgment, automatically, newsgroup, supplemental, uploaded, notices, Copyright Act, correctly, induced, argues, posted, Mimo, ego, volitional-conduct, subscribers, articles

Civil Procedure, Appeals, Standards of Review, Abuse of Discretion, Copyright Law, Damages, Types of Damages, Costs & Attorney Fees, Governments, Legislation, Interpretation, De Novo Review, Summary Judgment Review, Standards of Review, Business & Corporate Law, Piercing the Corporate Veil, Alter Ego, Fraud & Misrepresentation, Clearly Erroneous Review, Business & Corporate Compliance, Ownership Rights, Adaptations, Infringement, Reproductions, Displays, Civil Infringement Actions, Secondary Liability, Contributory Infringement Actions, Vicarious Liability Actions, Constitutional Law, Case or Controversy, Standing, Elements, Costs & Attorney Fees, Attorney Fees & Expenses, Reasonable Fees, Judgments, Enforcement & Execution, Writs of Execution, Inadequate Capitalization