Advanced Copyright Issues on the Internet - Fenwick & West LLP

On appeal, the Seventh Circuit affirmed that Aimster was not entitled to any of the safeharbors of the DMCA, but based its conclusion solely on the ground that Aimster had notcomplied with the predicate conditions of Section 512(i). “Far from doing anything todiscourage repeat infringers of the plaintiffs’ copyrights, Aimster invited them to do so, showedthem how they could do so with ease using its system, and by teaching its users how to encrypttheir unlawful distribution of copyrighted materials disabled itself from doing anything toprevent infringement.” 1733 d. Perfect 10 v. CCBill. The plaintiff, Perfect10, ownerof the copyrights in an extensive collection of pornographic photos, brought a copyrightinfringement lawsuit against CWIE, an OSP hosting various sites that allegedly containedinfringing copies of Perfect10’s photos, as well as several related third parties providingancillary services to such sites: IBill, a company that processed payments for online merchants,Internet Key, an age verification service for adult content websites, and CCBill, a provider of afully automated Internet service that enabled consumers to use credit cards or checks to pay forsubscriptions or memberships to e-commerce venues created and offered by CCBill’s clients. 1734Each of the defendants raised various of the DMCA safe harbors as defenses, of which theSection 512(a) defenses will be discussed here (the remaining defenses are discussed in thesubsections below).Perfect 10 challenged the various defendants’ ability to rely on the safe harbors forfailure to comply with the predicate requirements of Section 512(i) as well as failure to meet thesubstantive criteria of the individual safe harbors. The court considered the factual posture ofeach of the defendants in turn, and the case is particularly interesting because it is the first tocomprehensively adjudicate the adequacy of specific language comprising a policy to terminaterepeat infringers. The court began its analysis with some general observations about the DMCA,and quoted from the Fourth Circuit’s decision in the ALS Scan case that the safe harborimmunity is afforded “only to ‘innocent’ service providers who can prove they do not haveactual or constructive knowledge of the infringement, as defined under any of the three prongs of17 U.S.C. § 512(c)(1). The DMCA’s protection of an innocent service provider disappears at themoment the service provider loses its innocence, i.e., at the moment it becomes aware that a thirdparty is using its system to infringe. At that point, the Act shifts responsibility to the serviceprovider to disable the infringing matter …” 1735The court then turned to the applicability of the safe harbors to each of the individualdefendants as follows:IBill. The court first considered the adequacy of IBill’s policy to terminate repeatinfringers under Section 512(i). Under IBill’s policy, when it received a notice of infringementthat substantially complied with the DMCA requirements, it suspended payment processingservices to that client. If IBill determined that it had received previous complaints about that1733 In re Aimster <strong>Copyright</strong> Litigation, 334 F.3d 643 (7th Cir. 2003), cert. denied, 124 S. Ct. 1069 (2004).1734 Perfect 10, Inc. v. CCBill, 340 F. Supp. 1077, 1082-84 (C.D. Cal. 2004).1735 Id. at 1086 (citations omitted).- 377 -