Advanced Copyright Issues on the Internet - Fenwick & West LLP

district court that possibilities for upgrading software located on another person’scomputer are irrelevant to determining whether vicarious liability exists. 1629Accordingly, the court affirmed summary judgment for the defendants on the vicarious liabilityclaim. 1630(g) Perfect 10 v. Visa InternationalIn Perfect 10, Inc. v. Visa International Service Ass’n, 1631 Perfect 10, owner of thecopyrights in pornographic materials, sought to hold various credit card and banking institutionsliable for contributory and vicarious infringement for providing financial services to various websites that Perfect 10 alleged contained infringing copies of its copyrighted materials. The districtcourt granted the defendants’ motion to dismiss.Perfect 10 argued that the defendants had the right and ability to control the infringingactivities because (i) provision of financial services was essential to the survival of the allegedlyinfringing web sites, and the defendants could therefore dictate content by threatening to revoketheir services if the web sites did not comply with their standards, and (ii) the defendants had inplace internal regulations governing the provision of service to high-risk merchants, includingadult entertainment web sites. The district court rejected both arguments. As to the first, thecourt noted that the record established the allegedly infringing web sites would be able tocontinue their alleged infringing conduct regardless of whether the defendants blacklisted them.As to the second, even if the defendants had internal regulations requiring monitoring of websites, the web sites were not bound by such regulations and the defendants had no contractualright to dictate the web sites’ content or to take action against them in the event of infringingactivity. And unlike the Fonovisa swap meet case, the defendants could not “eject” the web sitesfrom the Internet. Accordingly, the district court ruled that the defendants had no way to controlthe infringing conduct of the web sites. 1632The court noted that the complaint included facts that might indicate a financial benefit tothe defendants as a result of the draw from the alleged infringing images, but because of theabsence of a right or ability to exercise control over the alleged infringing activity, the existenceof a financial benefit would not be sufficient to establish vicarious liability. Accordingly, the1629 Id. at 1166. The plaintiffs also argued that Grokster and StreamCast should not be able to escape vicariousliability by turning a “blind eye” to the detectable infringement of their users. The Ninth Circuit rejected thisargument, stating that there is no separate “blind eye” theory or element of vicarious liability that existsindependently of the traditional elements of liability. Id.1630 Id. at 1167. On appeal, the Supreme Court did not reach the issue of vicarious liability in view of its resolutionof the case under the doctrine of inducement.1631 71 U.S.P.Q.2d 1914 (N.D. Cal. 2004), aff’d, 2007 U.S. App. LEXIS 15824 (9 th Cir. July 3, 2007), cert. denied,2008 U.S. LEXIS 4523 (June 2, 2008).1632 Id. at 1918.- 356 -