Perfect 10 strikes out over DMCA and CDA claims

In Perfect 10 Inc v CCBill LLC the US Court of Appeals for the Ninth Circuit has clarified the notice that a copyright claimant must give to an internet service provider (ISP) before it can be required to prove applicability of safe harbour limitations of liability under the Digital Millennium Copyright Act (DMCA). The court also held that the IP limitation on an interactive computer service's immunity under the Communications Decency Act (CDA) applies only to federal IP claims and not to state right of publicity and other claims sometimes characterized as IP claims.

Perfect 10 publishes an adult entertainment magazine and operates a subscription website that provides access to images of models. Perfect 10 owns copyright registrations for these images, and has also been assigned rights of publicity by many of the models shown in the images. One of the defendants provides webhosting and related internet connectivity services to the owners of other websites. Another defendant provides ways for consumers to pay for subscriptions or memberships to e-commerce venues.

Perfect 10 sued the defendants for federal claims of

• copyright infringement;
  
  
• trademark infringement;
  
  
• trademark disparagement;
  
  
• unfair competition; and
  
  
• Racketeer Influenced and Corrupt Organizations Act violations.
  

It also claimed, under California state law:

• violation of the right of publicity;
  
  
• wrongful use of a registered mark;
  
  
• false advertising; and
  
  
• unfair competition.
  

Based on application of DMCA safe harbours found at 17 USC §§512 (a) to (d), the district court granted the defendants' motions for summary judgment concerning the federal copyright claim. The district court also granted the defendants' summary judgment motions concerning the unfair competition and false advertising claims, finding that CDA immunity applied to those claims. However, the court refused to apply the immunity to Perfect 10's right of publicity and wrongful use of trademark claims.

The Ninth Circuit affirmed some aspects of the district court's rulings concerning the DMCA safe harbours, but remanded the case for further findings on other DMCA issues. The court noted that to be eligible for one of the four DMCA safe harbours, an ISP must show that it has adopted and reasonably implemented a policy that provides for termination of subscribers and account holders who are repeat copyright infringers (17 USC §512 (i)). Perfect 10 argued that the defendants did not reasonably implement these policies because they tolerated blatant infringements despite notices of infringement from Perfect 10, notices from copyright holders not party to the lawsuit, and so-called 'red flags' of copyright infringement.

The court held Perfect 10's notices insufficient because they were not made under penalty of perjury, as required by the DMCA.

The notices were also insufficiently specific. Perfect 10 sent the defendants a 22,000 page document that purported to show its models' images with the appropriate URLs (uniform recourse locators). The Ninth Circuit observed that the DMCA requires individual written communications concerning each alleged infringement, and held that it was insufficient for a copyright holder to "cobble together adequate notice from separately defective notices".

With respect to notices from other copyright holders, the district court had declined to consider whether these were sufficient. The Ninth Circuit held that third-party notices could be relevant and remanded to the district court to consider them.

Turning to the CDA immunity issue, the Ninth Circuit affirmed the district court's application of the immunity to state false advertising and unfair competition claims, but held that the immunity also applies to state claims that might be considered to involve intellectual property, in this case, claims based on right of publicity and wrongful use of a trademark. The CDA states that "[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider," and it pre-empts any state law to the contrary (47 USC §§ 230(c)(1), (e)(3)). This immunity is limited by §230(e)(2), which requires the court to construe the immunity in a manner that would not "limit or expand any law pertaining to intellectual property". The question for the Ninth Circuit was whether the state claims asserted by Perfect 10 - right of publicity, wrongful use of a trademark, unfair competition and false advertising - pertain to intellectual property. The court observed that there are many types of claims in both state and federal law "which may - or may not - be characterized as 'intellectual property' claims". The court also noted that state laws protecting intellectual property "are by no means uniform". The court recognized that material on a website may be viewed in more than one state, permitting the reach of any particular state's definition of intellectual property to dictate the contours of the federal CDA immunity. To avoid the possibility of inconsistent application of the immunity, the Ninth Circuit decided to construe the term 'intellectual property' to mean "federal intellectual property". On this basis, the court held that defendants were eligible for CDA immunity for all of Perfect 10's state claims.

David S Fleming, Brinks Hofer Gilson & Lione, Chicago