Perfect 10 v. CCBill opinion posted

The Ninth Circuit Court of Appeals has published the opinion in Perfect 10 v. CCBill, dealing with both the DMCA Safe Harbors and the protections of CDA 230.  Still reading, but it looks quite interesting so far!

Update: The opinion is fairly meaty, addressing a number of overall policy and statutory issues in the case.  Here are some highlights:

1. Background: Perfect 10 publishes adult entertainment magazines and websites.  Many third-party websites post Perfect 10 images without permission.  CCBill et al provide hosting and credit card services to those sites.  Perfect 10 sued CCBill et al. for assisting in the infringement of their copyrights and associated state claims, such as violating the rights of publicity of Perfect 10 models.  CCBill raised, among other defenses, the DMCA Safe Harbors and Section 230 of the CDA.


2. The Court found that implementing a "reasonable" DMCA policy requires three things: a working notification system, a procedure for dealing with DMCA complaints, and systems that allow copyright holders to collect the information needed to issue DMCA complaints.


3. The Court also found that providers who rely on the DMCA must keep some kind of records for which subscribers are allegedly repeat infringers but need not "actively police" its users for evidence of repeat infringement.


4. Perhaps most importantly, the Court found that copyright holders who send DMCA notices must "substantially comply" with all six requirements under Section 512(c)(3)(A) in order to trigger the take-down procedures under the Safe Harbors.  In other words, if a DMCA notice fails to substantially comply with the requirements, the ISP/Provider can ignore the notice.  This applies to each notice individually and cannot be satisfied by separate notices over time that cobble together all the relevant information.


5. A great quote for why #4 is important: Accusation of alleged infringement have drastic consequences: A user could have content removed, or may have his access terminated entirely.  If the content infringes, justice has been done.  But if it does not, speech protected under the First Amendment could be removed.


6. So-called "red flag" knowledge of infringement (a circumstance that can deprive one of the Safe Harbor protections) is not present if DMCA take-down notices do not comply with the 512(c)(3)(A) requirements.  Nor can indicia such as a domain name "illegal.net" or "stolencelebritypics.com" or the hosting of a "password" site trigger it.  Instead, the provider must have concrete and actual knowledge of the infringing material or conduct. The Court explicitly held that providers do not bear the burden of investigating the content or sites of their users to determine if infringement is occurring.


7. The DMCA Safe Harbors under Section 512(a) for "transient digital online communication" providers (such as an ISP) apply to all providers who send and receive online communications for their users, whether such communications include infringing content or not.  Thus, if payment information is sent over a network to enable infringing content to be downloaded, this can still be considered conduct protected by 512(a).


8. The Court held that a provider falls outside the protections of 512(c) if they receive "direct financial benefit" from infringing conduct, and that this term should be interpreted consistent with the "similarly-worded common law standard for vicarious copyright liability."  The Court then went on to state that the relevant inquiry was "whether the infringing activity constitutes a draw for subscribers, not just an added benefit."  Since CWIE (the hosting co-defendant) hosted sites for a fee unrelated to the amount of infringing material, the court found this did not qualify as a direct financial benefit.


9. Finally, the other big holding was regarding CDA 230. The Court held that while CDA does not protect against violations of "intellectual property," this term means only federal intellectual property and not state regimes like right of publicity.  Otherwise, the court argued, CDA 230 protection would vary from state to state and national providers would have trouble negotiating the level of intervention they were legally required to undertake.

Wow.. as I mentioned, quite an opinion.  There's lots here to digest, and a big part of this will influence the Viacom v. YouTube case for sure.  In addition, we are still waiting for the Perfect 10 v. Visa and Perfect 10 v. Google decisions to come out of the Ninth Circuit. Those should also have a similarly significant impact.