Advanced Copyright Issues on the Internet - Fenwick & West LLP

district court granted the defendants’ motion to dismiss the claim with leave to Perfect 10 toamend. 1633On appeal, the Ninth Circuit affirmed. 1634 The Ninth Circuit agreed with the districtcourt that the rules and regulations of the defendants prohibiting member banks from providingservices to merchants engaging in certain illegal activities and requiring member banks toinvestigate merchants suspected of engaging in such illegal activities were insufficient toestablish the right and ability to control infringing activity for purposes of vicarious liability.The court noted that the defendants did not have any ability to directly control the infringingactivity occurring on the web sites at issue, and the court held that the mere ability to withdraw afinancial carrot did not constitute the right and ability to control infringing activity that vicariousinfringement requires. 1635The court rejected Perfect 10’s analogy to the Napster case on the ground that thedefendants, like Napster, had the ability to policy their systems and failed to exercise that right toprevent the exchange of copyrighted material. The court noted that Napster’s policing powerwas much more intimate and directly intertwined with the infringing activity than thedefendants’ payment systems. Napster could block users’ access to its system and therebydeprive particular users of use of its location and distribution tools. By contrast, although thedefendants could block access to their payment system, they could not themselves block accessto the Internet, to any particular web sites, or to search engines enabling the location of such websites. Nor could the defendants take away the tools the offending web sites used to reproduce,alter, and distribute the infringing images over the Internet. 1636Finally, the court rejected Perfect 10’s argument that the defendants’ rules andregulations imposed on merchant banks gave them contractual control over the content of theirmerchants’ web sites sufficient for vicarious liability. The court held that the ability to exertfinancial pressure did not give the defendants the right or ability to control the actual infringingactivity taking place on the web sites. The court found the defendants analogous to Google,which was held not liable in the Perfect 10 v. Amazon case for vicarious infringement eventhough search engines could effectively cause a web site to disappear by removing it from theirsearch results, and reserved the right to do so. 1637 In sum, although the infringing activities atissue might not be profitable without access to the defendants’ credit card payment systems, thecourt held that the “alleged infringement does not turn on the payment; it turns on thereproduction, alteration and distribution of the images, which Defendants do not do, and whichoccurs over networks Defendants do not control.” 1638 Accordingly, because Perfect 10 had1633 Id.1634 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).1635 Id. at *33-35.1636 Id. at *35-37.1637 Id. at *38-39.1638 Id. at *43.- 357 -