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Court Rejects Perfect 10’s DMCA Claims

By: Justin Bourne

Posted: 06/11/2007

SAN FRANCISCO - The 9th U.S. Circuit Court of Appeals, in deciding Perfect 10, Inc. vs. CCBill, LLC, has clarified the reach of both the Digital Millennium Copyright Act and Section 230 of the Communications Decency Act. Perfect 10, publisher of Perfect 10 magazine, sued CCBill and Cavecreek Wholesale Internet Exchange, alleging the two companies were secondarily liable for copyright infringement arising from the display of Perfect 10’s exclusive, copyrighted content on websites maintained by the defendants’ clients.

Perfect 10 owns thousands of models’ images, many of which are owned exclusively by Perfect 10 for publicity rights. CCBill works with websites like Perfect10.com to provide consumers with the necessary technology to make online credit card payments and subscription or membership purchases to the website, while CWIE provides Web hosting and connectivity services to website owners.

"Theft on the Internet is destroying copyright holders," said Perfect 10 President Norman Zada. "Unfortunately, whereas burglars and fences — when caught — typically end up in jail, nothing is happening to those who are profiting wildly from the greatest theft ever: hundreds of billions of dollars of intellectual property, consisting of virtually all major films, songs, and high-quality images. The victims are going broke while the thieves and those who profit with them are getting rich. The government is doing nothing, and the courts seem to be unfortunately siding with those who are knowingly profiting from massive theft."

The 9th Circuit widely rejected Perfect 10’s claims, maintaining that:

• For purposes of initial eligibility for the DCMA’s § 512 safe-harbor provisions, only DMCA-compliant notifications need be considered in assessing a service provider’s actual knowledge of alleged infringing activity.

• The safe harbor for transitory digital network communications, 17 U.S.C. § 512(a), applied to CCBill’s automated payment-processing transactions.

• The exception to CDA immunity for laws "pertaining to intellectual property" was limited to federal intellectual property laws, and thus the trial court erred in failing to apply CDA immunity to Perfect 10’s state law right of publicity claim.

CCBill declined to comment on the subject due to ongoing litigation. The district court ultimately granted summary judgment in favor of CCBill and CWIE on most claims. Perfect 10 claimed CCBill and CWIE failed to implement a DMCA policy by allegedly failing to keep track of repeatedly infringing webmasters. CCBill and CWIE maintained a "DMCA log" that, although less than perfect, recorded grievances surrounding infringing material and the outcome of those complaints. The 9th Circuit eventually found that CCBill and CWIE reasonably tracked the infringement claims engaged by the companies’ website clients.