IP Law Daily, COPYRIGHT—C.D. Cal.: Perfect 10 failed to establish that Usenet service provider did not qualify for DMCA safe harbor, (Jan 30, 2014)

By Cheryl Beise, J.D.

In a copyright infringement suit filed against Usenet service provider Gignews and a reseller of its services, adult publisher Perfect 10 failed to establish as a matter of law that the defendants were ineligible for the safe harbor protections provided by Section 512 of the Digital Millennium Copyright Act, the federal district court in Los Angeles has determined (Perfect 10, Inc. v. Giganews, Inc., January 29, 2014, Collins, A.).

Perfect 10 filed suit against Usenet service provider Giganews, Inc. and Livewire Services, Inc., a reseller of access to Giganews’ servers. Perfect 10 alleged that users of Giganews’ Usenet services posted messages containing thousands of Perfect 10’s copyrighted images. Perfect 10 sought to hold the defendants liable for hosting the infringing images on their servers and/or providing access to those images.

The court previously determined that Perfect 10 could pursue direct, contributory, and vicarious copyright infringement against Giganews and direct copyright infringement against Livewire. The defendants asserted that they were eligible for certain safe harbor protections established by Section 512 of the Digital Millennium Copyright Act (“DMCA”).

The DMCA establishes safe harbors that protect service providers from liability for (1) transitory digital network communications; (2) system caching; (3) information residing on systems or networks at the direction of users; and (4) information location tools. 17 U.S.C. §§ 512(a)-(d). A service provider must satisfy certain conditions to be eligible for any particular safe harbor.

Before the court was Perfect 10’s motion for partial summary judgment that (1) Giganews’ repeat infringer termination policy did not comply with § 512(i)(1)(A) of the DMCA; (2) five notices of infringement Perfect 10 sent to Giganews complied with § 512(c)(3)(A) of the DMCA; and (3) the defendants did not qualify for the DMCA safe harbor.

Perfect 10 failed to establish that it was entitled to summary judgment in its favor as to any of the three issues, the court determined.

Giganews’ repeat infringer policy. To be eligible for any of the § 512 safe harbors, a service provider must have “adopted and reasonably implemented” a policy that provides for the termination of repeat infringers. A service provider “implements” a policy if “it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and [] does not actively prevent notifications.” Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1109 (9th Cir. 2007).

Giganews’ adopted a “two-strike” repeat infringer policy: upon learning that a user had posted an infringing message, Giganews would freeze the user’s account and provide the user with a warning. If the user responded that he/she would not post any additional infringing material, the account would be “unfrozen.” If Giganews was informed that the user had posted any additional infringing material, that user’s account would be terminated.

Perfect 10 failed to show that Giganews’ policy was inadequate. The gravamen of Perfect 10’s challenge was to the “reasonableness” of Giganews’ implementation of its policy—namely, whether Giganews actually terminated users as its policy stated. Perfect 10 alleged that Giganews did not terminate all of the repeat infringers who posted messages identified by “Message-ID” in Perfect 10’s DMCA notices.

Perfect 10 also contended that Giganews was required to remove all of a repeat infringer’s content, not just the content a copyright holder had specifically identified as infringing. However, by its terms, § 512(i)(1)(A) requires “termination…of subscribers and account holders,” not the deletion of all messages, regardless of infringement. The court declined to read into the statute “a requirement that its plain language does not support and that goes far beyond stopping and deterring copyright infringement.”

Perfect 10 also pointed to the fact that Giganews had terminated only 46 repeat infringers since 2008, despite removing more than 531 million infringing messages over the past year, to demonstrate that Giganews does not properly implement its policy. This statistic could support, but did not compel, such a finding, the court noted.

The court also noted that if Giganews could not terminate accounts registered with other Usenet providers that used Giganews’ servers, then Giganews would not be able to apply its repeat infringer policy to such accounts even if it could identify them as repeat infringers.

On the record before it, the court could not determine whether Giganews reasonably implemented its repeat infringer termination policy.

Perfect 10’s infringement notices. Perfect 10 sought a ruling that five of the notices it sent to Giganews complied with § 512(c)(3)(A). Section 512(c)(3)(A)(iii) requires notices of infringement to provide identification of the material alleged to be infringing, and “information reasonably sufficient to permit the service provider to locate the material.”

The parties’ dispute centered on who must bear the burden of extracting the Message-IDs associated with the infringing messages, copyright holders or Usenet service providers, the court noted. Courts have held that the burden of identifying the potentially infringing material and adequately documenting infringement falls on the copyright holder. Furthermore, the notification should enable the service provider to expeditiously remove the offending material.

Giganews contended that Perfect 10’s notices were inadequate because they failed to include Message-IDs extracted from the message header, which were the only unique identifiers that a Usenet service provider could use to locate an allegedly infringing Usenet message.

Perfect 10’s notices instructed Giganews to use certain newsreaders to conduct searches of specific names within certain newsgroups. The notices also included pages of thumbnail images of the infringing materials and/or screen shots of the newsreader interface reflecting the search results.

The court observed that Perfect 10’s method of identification pointed to a list of search results, not to any material in particular. Even accepting Perfect 10’s assertion that searches performed at different times yielded the same results, variation would require a Usenet provider to compare its search results to Perfect 10’s search results in an onerous side-by-side, line-by-line manner, and distinguish between material that infringes Perfect 10’s copyrights and material that does not, the court said.

Perfect 10 failed to meet its burden of showing that, as a matter of law, its Notices complied with § 512(c)(3)(A)(iii).

Safe harbor eligibility. Section 512(c) provides that a service provider may be immune from infringement liability if it stores infringing material “at the direction of” a user.

Perfect 10 contended that Giganews was not eligible for the § 512(c) safe harbor because it copied infringing messages to its servers without the intervention of third-party users, and because it stored the images on its servers for as long it wanted to.

However, according to Giganews, the fact that messages were copied to Usenet servers in this way was simply an automatic function of the Usenet. Because the messages were propagated automatically once they were posted by the third-party user, that propagation itself arguably was “at the direction of” a user, the court noted.

With regard to Livewire, Perfect 10 only alleged that it “purchases infringing materials from Giganews and resells those infringing materials to third parties,” which was a disputed issue of fact.

The issue of whether the defendants were eligible for protection under § 512(c) could not be summarily adjudicated in Perfect 10’s favor.

The case is No. CV 11-7098 ABC (SHx).

Attorneys: Eric J. Benink (Krause Kalfayan Benink and Slavens LLP) for Perfect 10, Inc. Andrew P. Bridges (Fenwick & West LLP) for Giganews, Inc. and Livewire Services, Inc.

Companies: Perfect 10, Inc.; Giganews, Inc.; Livewire Services, Inc.

Cases: Copyright TechnologyInternet CaliforniaNews