Usenet Server Owners, Operators Are Not Directly or Secondarily Liable for Copyright Infringement
Tuesday, February 28, 2017

Addressing copyright infringement issues, the US Court of Appeals for the Ninth Circuit affirmed the district court’s summary judgment in defendants’ favor on direct, vicarious and contributory infringement claims. Perfect 10, Inc. v. Giganews, Inc., et al., Case Nos. 15-55500; -55523; -56026 (9th Cir., Jan. 23, 2017) (Nelson, J).

Giganews owns and operates several Usenet servers. “Usenet” is a collection of people and organizations whose computers are connected to one another and can therefore exchange messages. Giganews provides its subscribers access to content that Giganews stores on its own servers, as well as content stored on other Usenet providers’ servers. The content offered through the Giganews servers is almost entirely provided by Usenet users. Livewire Services (together with Giganews, the defendants) provides its subscribers with access to the Usenet content stored on Giganews’ servers but does not own any Usenet servers.

Perfect 10 owns thousands of adult images, many of which have been illegally distributed over Giganews’ servers. Perfect 10 sent Giganews numerous “takedown” notices in connection with these images. When Perfect 10’s takedown notices included machine-readable Message-IDs (the identification number for each item), Giganews responded by taking down the infringing images. When Perfect 10’s notices included illegible Message-IDs, Giganews asked Perfect 10 for the Message-IDs in a legible, machine-readable format, which Giganews claims Perfect 10 failed to provide.

Under the Copyright Act, the copyright owner exclusively owns the right to display, distribute and reproduce its work. Perfect 10 sued defendants for direct, contributory and vicarious copyright infringement of these rights. The defendants successfully moved to dismiss the right to display claim on the pleadings. As to other counts, the district court found in favor of the defendants. Perfect 10 appealed.

On appeal, the Ninth Circuit agreed with the district court that Perfect 10 failed to plead infringement of its display rights. According to the Court, the fact “that users may use Giganews’ reader to display infringing images does not constitute volitional conduct by Giganews.” Distinguishing its earlier panel decision in Perfect 10 v., where the Court held that Google controlled the storage and communication of the thumbnails, the Court here found that Giganews had a passive role and did not control the images.

The Ninth Circuit further agreed with the district court that defendants did not directly infringe Perfect 10’s distribution and reproduction rights because these acts occurred automatically when the users viewed the images. The Court found that Giganews did not contributorily infringe Perfect 10’s copyrights because it did not “materially contribute[] to or induce[] infringement” of the copyrights. Finally, the Court found that Perfect 10’s vicarious copyright infringement allegations were deficient because Perfect 10 failed to establish that defendants received a direct financial benefit from the infringing activity.

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