Advanced Copyright Issues on the Internet - Fenwick & West LLP

The court noted that the financial services were not essential to the functioning of the allegedlyinfringing web sites because they could employ intermediate payment services if the defendantsterminated their merchant accounts. Furthermore, even if the defendants provided services thatmaterially contributed to the functioning of the web site businesses, there was no factual basisfor the allegation that they materially contributed to the alleged infringing activities of the websites. The defendants’ ability to process credit cards did not directly assist the allegedlyinfringing web sites in copying the plaintiffs’ works. Accordingly, the court ruled that Perfect10 had not adequately pled a claim for contributory infringement, although the court grantedPerfect 10 leave to amend its complaint to establish a relationship between the financial servicesprovided by the defendants and the alleged infringing activity. 1569On appeal, the Ninth Circuit affirmed. 1570 With respect to contributory infringement, thecourt noted that it need not address the knowledge prong because it found that Perfect 10 had notpled facts sufficient to establish that the defendants induced or materially contributed to theinfringing activity. 1571 With respect to material contribution, the court held that merelycontinuing to process credit card payments to the infringing web sites despite knowledge ofongoing infringement was insufficient contribution for contributory liability because suchpayment services had no direct connection to the actual infringing activities of reproduction ordistribution of the plaintiff’s copyrighted material. The defendants’ services did not assist usersin searching for infringing images, nor provide links to them, nor did infringing materials passthrough the defendants’ payment systems. Although the payment services made it easier for websites to profit from the infringing activities, this fact was insufficient for contributory liabilitybecause the services did not directly assist in the distribution of infringing content to Internetusers. The court noted that even if users couldn’t pay for images with credit cards, infringementcould still continue on a large scale because other viable funding mechanisms were available. 1572The court rejected Perfect 10’ argument that the defendants’ payment services were akinto provision of the site and facilities for infringement analogous to the Fonovisa case. The courtnoted that the web sites on which the infringing photographs resided were the “site” of theinfringement, not the defendants’ payment networks. If mere provision of a method of paymentcould be considered a “facility” of infringement, so too could the provision of computers, ofsoftware, and of electricity to the infringing web sites, and such a rule would simply reach toofar. 1573 With respect to inducement, Perfect 10 argued that the Grokster decision was analogousbecause the defendants induced customers to use their cards to purchase goods and services, andshould therefore be held guilty of specifically inducing infringement if the cards were used topurchase images from sites that had stolen content from Perfect 10. The court rejected this1569 Id.1570 Perfect 10, Inc. v. Visa International, 2007 U.S. App. LEXIS 15824 (9 th Cir. July 3, 2007), cert. denied, 2008U.S. LEXIS 4523 (June 2, 2008).1571 Id. at *10-11.1572 Id. at *13-16.1573 Id. at *21-24.- 344 -