Perfect 10 Loses Once Again, Sets More Good Copyright Precedent

from the the-weird-gift-that-keeps-on-giving dept

As we’ve noted, sorta-porn company Perfect 10 really is the gift that keeps on giving. The company claims that it’s in the porn business, but in one of the many, many lawsuits it has filed, it was suggested that the company is little more than a pure copyright troll, just looking for companies to sue. This was in a filing made by one of the companies Perfect 10 sued back in 2010:

Perfect 10 is a copyright troll that does not operate a real business and instead seeks to foster the spread of infringing copies of works that it owns over the Internet in order to entrap and shakedown websites and services where copies of its images may randomly end up.

Perfect 10 does not have the employees or attributes of a legitimate business. Today, Perfect 10 is essentially a paralegal service masquerading as a porn company. It is run by its founder, Norm Zada, out of his Beverly Hills home with the help of full and part time employees who are paid primarily to troll the Internet looking for (but not removing) allegedly infringing copies of Perfect 10 images for use in existing or potential future litigation and to draft declarations and other papers.

One of the core elements of a Perfect 10 copyright trolling operation is that it rarely sends legitimate DMCA notices. Sometimes it just sends screenshots of images and basically says “take this down” without ever pointing to the actual location of the content. That’s yet another reason why many have argued it’s little more than a troll. Someone truly looking to protect its own content would actually follow the DMCA and tell service providers where the content was hosted, rather than tap dancing around such questions… and then filing lawsuits. I’m sure that some who Perfect 10 threatens just settle, but when cases go to court, Perfect 10 not only loses, but loses in impressive fashion, setting all sorts of useful and valuable precedents around the DMCA and how service providers should respond to takedowns. Among the useful cases:

And, then, in 2014, Perfect 10 lost yet again, this time to Usenet provider Giganews. The case there was so egregious that in 2015, Perfect 10 was ordered to pay $5.6 million in legal fees to Giganews for filing such a bogus claim.

Perfect 10 appealed (of course) and the 9th Circuit has now given us yet another smackdown of Perfect 10, affirming the lower court decision, and saying that Perfect 10’s theories about Usenet infringement are pretty crazy. One key point in the ruling, that Perfect 10 tried to argue, was that in light of the bizarre (and still nonsensical) Supreme Court Aereo (“looks like a duck”) test, Giganews should be found to have been a direct infringer due to its interpretation of “volitional conduct.” Specifically, Perfect 10 seemed to argue that Aereo wiped away the need to show “volitional conduct” by the parties accused of infringing. The court isn’t buying it:

Contrary to Perfect 10?s contention, this requirement of causation remains an element of a direct infringement claim. In Fox Broadcasting, we explained that ?[i]nfringement of the reproduction right requires copying by the defendant, which comprises a requirement that the defendant cause the copying.? … In using this language, we indicated that causation is an element of a direct infringement claim.

Furthermore, the court points out that Perfect 10’s interpretation of Aereo is just wrong:

The volitional-conduct requirement is consistent with the Aereo majority opinion, in which the Supreme Court held that Aereo, a service that streamed broadcast television programming to subscribers over the Internet, ?perform[ed] publicly? as defined by the Transmit Clause…. First, the Aereo Court did not expressly address the volitional-conduct requirement for direct liability under the Copyright Act, nor did it directly dispute or comment on Justice Scalia?s explanation of the doctrine. Thus, as one court in the Central District of California subsequently opined, because ?[t]he volitional conduct doctrine is a significant and long-standing rule, adopted by all Courts of Appeal to have considered it, . . . it would be folly to presume that Aereo categorically jettisoned it by implication.?

From there, the court makes quick work of each one of Perfect 10’s claims, pointing out how each one appears to be divorced from the reality of the law. Perfect 10 seems to be one of the perfectly ridiculous plaintiffs. A key part of this case, for example, is that Giganews regularly pointed out that in order to remove postings from its Usenet servers, it needs the proper Message-ID and, in the rare cases where Perfect 10 passed those along, they were quickly removed. But most of the time, Perfect 10 refused to actually pass along Message-IDs, and seemed to indicate Giganews should still block those images:

we hold that there were no simple measures available that Giganews failed to take to remove Perfect 10?s works from its servers. Giganews presented sufficient evidence that Perfect 10?s proposed method for locating infringing messages was onerous and unreasonably complicated. Indeed, Giganews spent more than 20 hours processing 565 Message-IDs from Perfect 10 because they were not machine-readable. Giganews calculates that Perfect 10?s method would therefore require 354,000 hours of manual work for every 10 million Message- IDs ? the number of Message-IDs that Giganews receives every month. Moreover, the record is clear that when Giganews did receive machine-readable Message-IDs, it immediately processed them and subsequently removed the messages from its servers.

There’s also the question of “inducement” — the Supreme Court-invented legal concept that sunk Grokster a little over a decade ago. Once again, there’s nothing in what Giganews that comes even remotely close to inducing infringement:

Based on the record, no reasonable juror could conclude Giganews distributed its product ?with the object of promoting its use to infringe copyright.?…

Perfect 10 points to entirely inconclusive evidence of any such objective to infringe copyrights. For example, Perfect 10 identifies Giganews?s advertising materials, which state that its product ?has built-in MP3 and File Locators that search all Giganews newsgroups for music, pictures, and movies without having to download millions of messages.? Perfect 10 also points to a web page where a Giganews advertisement appears next to text written by another entity, which states that Giganews ?provide[s] an uncensored news feed with up to 20 ssl encrypted connection and over 460 days worth of retention. That is over a years [sic] worth of access to downloadable music, movies and games.? However, neither of these advertisements nor any other evidence in the record indicates that Giganews itself promoted its product ?with the object? of infringing copyright.

Perfect 10 further argues that Giganews has the object of promoting infringement because it: (1) ?offers 25,000 terabytes of copyrighted materials . . . without permission,? (2) ?continues to commercially exploit the content of known repeat infringers,? and (3) ?advertises that it does not keep track of subscriber downloads, effectively encouraging infringement.? Even if true, none of this conduct suggests that Giganews clearly expressed an intent to promote infringement or took ?affirmative steps . . . to foster infringement.?

The court also rejects the “vicarious” liability wackiness that Perfect 10 argues, noting that Perfect 10’s theory seems to violate the very basic concept of who has standing in court:

Here, Perfect 10 argues for a rule that would allow a court to hold Giganews liable under a theory of vicarious liability by showing only that Giganews benefits financially from the infringement of another?s works, regardless of whether Giganews received any financial benefit from the specific infringement alleged. Such a rule would allow cases to be built on the rights of owners and the actions of users not before the court. At the very least, Perfect 10?s proposed rule is in significant tension with Article III?s standing requirement. At most, Perfect 10?s view runs counter to the requirement that there be a ?causal connection between the injury and the conduct complained of[.]?

Finally, the court upheld the fee award for legal fees from Perfect 10, meaning that it may now be on the hook for many millions of dollars for bringing such a ridiculous lawsuit in the first place. Perfect 10 may, of course, ask the Supreme Court to hear a further appeal, but that seems unlikely to go anywhere. And, in the meantime, we’ve got another useful precedent sent by a wacky Perfect 10 case.

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Companies: giganews, perfect 10

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Comments on “Perfect 10 Loses Once Again, Sets More Good Copyright Precedent”

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That One Guy (profile) says:

Re: How are these guys still in business?

Because selling porn isn’t their business, shaking down others for ‘settlement’ money is.

Running a business selling a product, whether porn or anything else requires that you offer a product people want, in a way that’s convenient for the buyer, and at a price they find acceptable.

With ‘copyright’ shakedowns however you simply need to do a minuscule amount of work, send out a form letter to enough targets, rake in the cash from those that fold and drop or don’t file cases against those that fight back. Minimal risk and work for ludicrous amounts of money.

Anonymous Coward says:

Torrentfreak has more on this this morning…

“We took a stand for Usenet, for technology and online platforms, for the public, and for ultimate benefit of rational copyright law.  We were not just battling Perfect 10:  standing behind Perfect 10 – and even sharing in its oral argument at the court of appeals – was the Recording Industry Association of America(RIAA), which tried to argue that it was voicing the interests of small copyright holders.”


“With this decision, Perfect 10’s days as a copyright troll masquerading as a porn company are now finished,” Giganews said.

“The case now moves to its final stage to collect attorney’s fees from Perfect 10.  Giganews is seeking the appointment of a receiver to take charge of all of Perfect 10’s copyrights, trademarks, and domain names and to liquidate them in partial satisfaction of Giganews’ judgment against Perfect 10.”

Perfect 10 is done and their RIAA supporters lost a big one.

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