Perfect 10, Inc. v. CCBill LLC - 488 F.3d 1102 (9th Cir. 2007)

Rule:

To be eligible for any of the four safe harbors at 17 U.S.C.S. §§ 512(a)-(d), a service provider must first meet the threshold conditions set out in § 512(i), including the requirement that the service provider: Has adopted and reasonably implemented, and informs subscribers and account holders of the service provider's system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers. The statute does not define reasonably implemented. A service provider implements a policy if it has a working notification system, a procedure for dealing with Digital Millennium Copyright Act compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue such notifications. The statute permits service providers to implement a variety of procedures, but an implementation is reasonable if, under appropriate circumstances, the service provider terminates users who repeatedly or blatantly infringe copyright.

Facts:

Perfect 10 is the publisher of the eponymous adult entertainment magazine and the owner of the website, perfect10.com. Perfect10.com is a subscription site where consumers pay a membership fee in order to gain access to content on the website. Perfect 10 has created approximately 5,000 images of models for display in its website and magazine. Many of the models in these images have signed releases assigning their rights of publicity to Perfect 10. Perfect 10 also holds registered U.S. copyrights for these images and owns several related, registered trademark and service marks. CWIE provides webhosting and related Internet connectivity services to the owners of various websites. Beginning August 10, 2001, Perfect 10 sent letters and emails to CCBill and CWIE (“defendants”) stating that CCBill and CWIE clients were infringing Perfect 10 copyrights. Perfect 10 directed these communications to Thomas A. Fisher, the designated agent to receive notices of infringement. Representatives of celebrities who are not parties to this lawsuit also sent notices of infringement to CCBill and CWIE. On September 30, 2002, Perfect 10 filed the present action alleging copyright and trademark violations, state law claims of violation of right of publicity, unfair competition, false and misleading advertising, as well as RICO claims. The district court found that defendants were immune from liability for state law unfair competition and false advertising claims based on the Communications Decency Act (CDA), 47 U.S.C.S. § 230(c)(1).

Issue:

Are CCBill and CWIE eligible for any of the four safe habors in the Digital Millennium Copyright Act for reasonably implemented its policy that provides for termination in appropriate circumstances of subscribers and account holders who are repeat infringers?

Answer:

Yes.

Conclusion:

There is no issue on implementation by virtue of failing to keep track of repeatedly infringing webmasters. Based on previous cases, a substantial failure to record webmasters associated with allegedly infringing websites may raise a genuine issue of material fact as to the implementation of the service provider's repeat infringer policy. In this case, however, the record does not reflect such a failure. Perfect 10 references a single page from CCBill and CWIE's "DMCA Log." Although this page shows some empty fields in the spreadsheet column labeled "Webmasters [sic] Name," Perfect 10's conclusion that the DMCA Log thus "does not reflect any effort to track notices of infringements received by webmaster identity" is not supported by evidence in the record. The remainder of the DMCA Log indicates that the email address and/or name of the webmaster is routinely recorded in CCBill and CWIE's DMCA Log. CCBill's interrogatory responses dated December 11, 2003 also contain a chart indicating that CCBill and CWIE largely kept track of the webmaster for each website. Unlike Ellison and Aimster, where the changed email address and the encryption system ensured that no information about the repeat infringer was collected, it is undisputed that CCBill and CWIE recorded most webmasters. The district court properly concluded that the DMCA Log does not raise a triable issue of fact that CCBill and CWIE did not implement a repeat infringer policy.

There is also no issue on reasonableness of implementation through termination of users when appropriate. Taken individually, Perfect 10's communications do not substantially comply with the requirements of § 512(c)(3). Each communication contains more than mere technical errors; often one or more of the required elements are entirely absent. In order to substantially comply with § 512(c)(3)'s requirements, a notification must do more than identify infringing files. The DMCA requires a complainant to declare, under penalty of perjury, that he is authorized to represent the copyright holder, and that he has a good-faith belief that the use is infringing. The court does not require a service provider to start potentially invasive proceedings if the complainant is unwilling to state under penalty of perjury that he is an authorized representative of the copyright owner, and that he has a good-faith belief that the material is unlicensed. Permitting a copyright holder to cobble together adequate notice from separately defective notices also unduly burdens service providers. Indeed, the text of § 512(c)(3) requires that the notice be "a written communication." Again, this requirement is not a mere technicality. It would have taken Fisher substantial time to piece together the relevant information for each instance of claimed infringement. To do so, Fisher would have to first find the relevant line in the spreadsheet indicating ownership information, then comb the 22,185 pages provided by Perfect 10 in order to find the appropriate image, and finally copy into a browser the location printed at the top of the page -- a location which was, in some instances, truncated. The DMCA notification procedures place the burden of policing copyright infringement -- identifying the potentially infringing material and adequately documenting infringement -- squarely on the owners of the copyright. We decline to shift a substantial burden from the copyright owner to the provider; Perfect 10's separate communications are inadequate. Since Perfect 10 did not provide effective notice, knowledge of infringement may not be imputed to CCBill or CWIE based on Perfect 10's communications.