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Service Provider Qualifies for Liability Protection from its Subscribers Copyright Infringement
The U.S. Court of Appeals for the Ninth Circuit recently ruled on a case concerning a service provider’s liability for infringing material found on websites hosted by its customers. The case was initiated by Perfect 10, a publisher of an adult entertainment magazine and the owner of the website perfect10.com. The company claimed that CCBill LLC and CWIE LLC had violated various intellectual property laws including copyright, trademark, unfair competition and right of publicity regulations. Reference was made to section 512 of the Digital Millennium Copyright Act (DMCA) and section 230 of the Communications Decency Act (CDA), both of which offer protection from copyright infringement liability under certain circumstances. While the Court ruled in favour of CCBill and CWIE on the majority of issues, some were remanded to the district court due to a lack of evidence.
The ruling came after the Court considered CCBill and CWIE’s infringement policies and procedures. In interpreting section 512(i) of the DMCA, the Court stated that service providers must implement a working notification system for subscribers who are repeat copyright infringers. Service providers must also have a procedure for dealing with DMCA-compliant notifications from copyright holders while not actively preventing the owners from collecting information needed to issue such notifications. It was decided that CCBill and CWIE had met their obligations while Perfect 10 had not satisfied the required level of “substantial compliance” with required notification guidelines found in section 512(c)(3) of the DMCA. The Court noted that a notification must be more than simple identification of infringing files but rather, the complaining party should specify that it has the authority to act on behalf of the copyright owner and the potential infringing activities should be clearly identified and adequately documented.
The Court also considered the red flag test offered by section 512, which removes immunity for service providers who are aware of “facts or circumstances from which infringing activities is apparent.” In the case of CCBill and CWIE, their use of striking website domains such as “illegal.net” and “stolencelebritys.com” were not necessarily indications of such knowledge; neither was their use of a disclaimer clause on their website. More contentious was whether their hosting of password hacking sites qualified as a red flag type of infringement. On this issue, the Court stated that, “It would need to be apparent that the website instructed or enabled users to infringe another’s copyright.”
For a copy of the decision (Court of Appeal), visit: