Ninth Circuit Won't Hold Giganews Liable for Volitional Copyright Infringement

The Ninth Circuit Court decides that “passive” storage of infringing content was not enough to find liability under the Copyright Act.

** LEGAL UPDATE **

Owners of Internet servers sometimes unknowingly store someone’s copyrighted content. To what extent should storing such content make the server’s owner liable for direct copyright infringement? This question, along with several related legal issues, was addressed by the U.S. Court of Appeals for the Ninth Circuit in Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657 (9th Cir. 2017). In this case, the Court decided that “passive” storage of infringing content was not enough to find liability under the Copyright Act.

Background Facts of Perfect 10 Case

Perfect 10, Inc., the plaintiff in this action, owns the exclusive copyright to thousands of pornographic images. Defendant Giganews, Inc., owns multiple “Usenet” servers, which are collections of organizations and individuals whose computers connect to one another and exchange information. Usenet data—which is almost entirely user-created and uploaded—can only be accessed through a service provider such as Giganews. Charging fees to its users, Giganews provides access to content stored on these servers.

Many of Perfect 10’s copyrighted adult photographs found their way onto Giganews’ servers through the Usenet platform. Giganews does not select any of the content available on its servers—nor did Giganews post any of the data that was the subject of this lawsuit (the adult photographs). Although Perfect 10 sent traditional takedown notices to Giganews upon discovering instances of infringement (as specified in the Digital Millennium Copyright Act), Giganews was unable to remove all instances of infringement.

In 2011, Perfect 10 sued for copyright infringement. The litigation in the trial court was extremely intense over multiple years, and involved multiple motions for dismissal and summary judgment. Ultimately, the U.S. District Court for the Central District of California entered a partial dismissal of Perfect 10’s direct copyright infringement claim and granted summary judgment in favor of the defendants on all other claims.

Perfect 10 appealed, arguing that the trial court had incorrectly applied the legal standards for direct and indirect copyright infringement.

Legal Analysis of the Perfect 10 Case

Under the Copyright Act of 1976 (17 U.S.C. § 101 et seq.), the owner of a copyright has certain exclusive rights. Those rights, as relevant here, include the rights to reproduce, distribute, and display the images. Essentially, Perfect 10 argued that Giganews had infringed directly and indirectly on its protected images. Giganews’ paying users could access Perfect 10’s photos without Perfect 10’s permission—and without Perfect 10 receiving any revenue.

In considering Perfect 10’s appeal, the U.S. Court of Appeals for the Ninth Circuit unanimously affirmed the decision of the district court in dismissing most of Perfect 10’s lawsuit.

First, in considering the cause of action for direct copyright infringement, the Ninth Circuit noted the various elements of an infringement claim. To establish a case of direct infringement, a plaintiff “must show ownership of the allegedly infringed material” and “demonstrate that the alleged infringers violated at least one exclusive right granted to copyright holders…. In addition, direct infringement requires the plaintiff to show causation by the defendant.” Causation in the copyright context is often called “volitional conduct”—essentially the notion that direct liability “must be premised on conduct that can reasonably be described as the direct cause of the infringement.”

Here, the Court found that Giganews did not meet that hurdle. Its role in owning and managing the Usenet servers was too tangential to the actual copyright infringement, which was perpetrated by end-users who uploaded the infringing images. The Court further held that any violation of Perfect 10’s reproduction or display rights was essentially automatic because of the configuration of the Usenet platform – not enough to meet the “volitional” requirement.

As for the claims of indirect copyright infringement, the Court similarly decided that Perfect 10 failed to show that Giganews “materially contributed to or induced infringement of [its] copyrights.” The court also noted that there were no easy methods available for Giganews to remove all infringing content, given that the Usenet servers contained user-generated information. Perfect 10 had not proven that Giganews had engaged in any conduct to induce further infringement.

Takeaways From the Perfect 10 Case

The Perfect 10 case is significant for copyright holders as well as those who maintain and manage websites. The Ninth Circuit seems to protect server owners and operators when infringement is the result of automation, like the unique Usenet system. The holding is likely to stand, at least for the foreseeable future. On December 4, 2017, the U.S. Supreme Court declined to review the Ninth Circuit’s decision.

Effective Date: December 4, 2017