Perfect 10, Inc. v. Ccbill LLC

• Decision Date: 29 March 2007
• Docket Number: No. 04-57143.,No. 04-57207.,04-57143.,04-57207.
• Citation: 488 F.3d 1102
• Parties: PERFECT 10, INC., a California corporation, Plaintiff-Appellant, v. CCBILL LLC, a corporation; Cavecreek Wholesale Internet Exchange, a corporation d/b/a CWIE LLC, Defendants-Appellees, and Netpass Systems Inc., a corporation, Defendant. Perfect 10, Inc., a California corporation, Plaintiff-Appellee, v. CCBill LLC, a corporation; Cavecreek Wholesale Internet Exchange, a corporation d/b/a CWIE LLC, Defendants-Appellants, and Netpass Systems Inc., a corporation, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

488 F.3d 1102

PERFECT 10, INC., a California corporation, Plaintiff-Appellant, v. CCBILL LLC, a corporation; Cavecreek Wholesale Internet Exchange, a corporation d/b/a CWIE LLC, Defendants-Appellees, and Netpass Systems Inc., a corporation, Defendant.

Perfect 10, Inc., a California corporation, Plaintiff-Appellee, v. CCBill LLC, a corporation; Cavecreek Wholesale Internet Exchange, a corporation d/b/a CWIE LLC, Defendants-Appellants, and Netpass Systems Inc., a corporation, Defendant.

No. 04-57143.

No. 04-57207.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 4, 2006.

Filed March 29, 2007.

Amended May 31, 2007.

Daniel J. Cooper, General Counsel, Perfect 10, Inc., Beverly Hills, CA, and Jeffrey N. Mausner, Berman, Mausner & Resser, A Law Corporation, Los Angeles, CA, for the plaintiff-appellant/cross-appellee.

Jay M. Spillane, Fox & Spillane, LLP, Los Angeles, CA, and John P. Flynn, Tiffany & Bosco, P.A., Phoenix, AR, for the defendants-appellees/cross-appellants.

Appeal from the United States District Court for the Central District of California; Lourdes G. Baird, District Judge, Presiding. D.C. Nos. CV-02-07624-LGB, CV-02-07624-LGB.

Before: STEPHEN REINHARDT, ALEX KOZINSKI, MILAN D. SMITH, JR., Circuit Judges.

ORDER

The opinion filed on March 29, 2007, , is amended as follows:

On slip opinion page 3577, line 33, after "federal intellectual property." insert the following footnote:

In its petition for rehearing, Perfect 10 claims that our decision on this point conflicts with Universal Communication Systems, Inc. v. Lycos, Inc., 478 F.3d 413 (1st Cir.2007). But neither party in that case raised the question of whether state law counts as "intellectual property" for purposes of § 230 and the court seems to simply have assumed that it does. We thus create no conflict with Universal Communication.

We note that Universal Communication demonstrates the difficulties inherent in allowing state laws to count as intellectual property for CDA purposes. In that case, the district court struggled with the question of whether the "trademark dilution" claim brought under Florida Law counted as intellectual property for purposes of the CDA, and concluded that it was more like a defamation claim than a trademark claim. Id. at 423 n. 7. Rather than decide how to draw the line between defamation and trademark, the First Circuit held that "because of the serious First Amendment issues that would be raised" if Lycos were found liable, defendant had not violated the Florida statute. Id. at 423.

The First Circuit was able to sidestep the question of what counted as intellectual property on First Amendment grounds. But we cannot do so here. States have any number of laws that could be characterized as intellectual property laws: trademark, unfair competition, dilution, right of publicity and trade defamation, to name just a few. Because such laws vary widely from state to state, no litigant will know if he is entitled to immunity for a state claim until a court decides the legal issue. And, of course, defendants that are otherwise entitled to CDA immunity will usually be subject to the law of numerous states. An entity otherwise entitled to § 230 immunity would thus be forced to bear the costs of litigation under a wide variety of state statutes that could arguably be classified as "intellectual property." As a practical matter, inclusion of rights protected by state law within the "intellectual property" exemption would fatally undermine the broad grant of immunity provided by the CDA.

With this amendment, the panel has voted to deny the petition for rehearing and petition for rehearing en banc.

The full court has been advised of the petition for rehearing en banc, and no judge of the court has requested a vote on it. The petition for rehearing and petition for rehearing en banc are DENIED. No further petitions for rehearing may be filed.

AMENDED OPINION

MILAN D. SMITH, JR., Circuit Judge.

Perfect 10, the publisher of an adult entertainment magazine and the owner of the subscription website perfect10.com, alleges that CCBill and CWIE violated copyright, trademark, and state unfair competition, false advertising and right of publicity laws by providing services to websites that posted images stolen from Perfect 10's magazine and website. Perfect 10 appeals the district court's finding that CCBill and CWIE qualified for certain statutory safe harbors from copyright infringement liability under the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 512, and that CCBill and CWIE were immune from liability for state law unfair competition and false advertising claims based on the Communications Decency Act ("CDA"), 47 U.S.C. § 230(c)(1). CCBill and CWIE cross-appeal, arguing that the district court erred in holding that the CDA does not provide immunity against Perfect 10's right of publicity claims and in denying their requests for costs and attorney's fees under the Copyright Act.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm in part, reverse in part, and remand.

BACKGROUND

Perfect 10 is the publisher of the eponymous adult entertainment magazine and the owner of the website, perfect10.com. Perfect10.com is a subscription site where consumers pay a membership fee in order to gain access to content on the website. Perfect 10 has created approximately 5,000 images of models for display in its website and magazine. Many of the models in these images have signed releases assigning their rights of publicity to Perfect 10. Perfect 10 also holds registered U.S. copyrights for these images and owns several related, registered trademark and service marks.

CWIE provides webhosting and related Internet connectivity services to the owners of various websites. For a fee, CWIE provides "ping, power, and pipe," services to their clients by ensuring the "box" or server is on, ensuring power is provided to the server and connecting the client's service or website to the Internet via a data center connection. CCBill allows consumers to use credit cards or checks to pay for subscriptions or memberships to e-commerce venues.

Beginning August 10, 2001, Perfect 10 sent letters and emails to CCBill and CWIE stating that CCBill and CWIE clients were infringing Perfect 10 copyrights. Perfect 10 directed these communications to Thomas A. Fisher, the designated agent to receive notices of infringement. Fisher is also the Executive Vice-President of both CCBill and CWIE. Representatives of celebrities who are not parties to this lawsuit also sent notices of infringement to CCBill and CWIE. On September 30, 2002, Perfect 10 filed the present action alleging copyright and trademark violations, state law claims of violation of right of publicity, unfair competition, false and misleading advertising, as well as RICO claims.

STANDARDS OF REVIEW

We review a district court's grant of summary judgment de novo. Rossi v. Motion Picture Ass'n of Am. Inc., 391 F.3d 1000, 1002 (9th Cir.2004). "Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Leever v. Carson City, 360 F.3d 1014, 1017 (9th Cir.2004). The district court's interpretations of the Copyright Act are also reviewed de novo. Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir.2004).

We review a district court's decision to grant or deny attorney's fees under the Copyright Act for abuse of discretion. Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1197 (9th Cir.2001).

DISCUSSION

I. SECTION 512 SAFE HARBORS

The DMCA established certain safe harbors to "provide protection 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." Ellison, 357 F.3d at 1076-77 (citing 17 U.S.C. §§ 512(a)-(d)) (footnotes omitted). These safe harbors limit liability but "do not affect the question of ultimate liability under the various doctrines of direct, vicarious, and contributory liability," Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146, 1174 (C.D.Cal.2002) (citing H.R. Rep. 105-551(II), at 50 (1998) ("H.R. Rep.")),¹ and "nothing in the language of § 512 indicates that the limitation on liability described therein is exclusive." CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 552 (4th Cir.2004).

A. Reasonably Implemented Policy: § 512(i)(1)(A)

To be eligible for any of the four safe harbors at §§ 512(a)-(d), a service provider must first meet the threshold conditions set out in § 512(i), including the requirement that the service provider:

[H]as adopted and reasonably implemented, and informs subscribers and account holders of the service provider's system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers.

Section 512(i)(1)(A); Ellison, 357 F.3d at 1080. The statute does not define "reasonably implemented." We hold that a service provider "implements" a policy if it has a working notification system, a procedure for dealing with DMCA-compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue such notifications. Ellison, 357 F.3d at 1080 (working notification system required); Corbis Corp. v. Amazon.com, Inc., 351 F.Supp.2d 1090, 1102-03 (W.D.Wash.2004) (must adopt procedure for dealing with notifications); In re Aimster Copyright Litig., 252 F.Supp.2d 634, 659 (N.D.Ill.2002) (policy not implemented if service provider actively blocks collection of information). The statute permits service providers to implement a variety of procedures, but an implementation is reasonable if, under ...