The key litigated issue in Luvdarts, LLC v. AT&T Mobility, LLC was whether Luvdarts, a seller of mobile messaging "greeting card style messages," stated a viable claim for vicarious or contributory copyright infringement against the defendant mobile network carriers based on alleged infringements of Luvdarts's copyrights by third-party users of the carriers' networks.

The plaintiff, Luvdarts, sells commercial multimedia-messaging content, like greeting card style messages and games, that are transmittable over Multimedia Messaging Service networks (MMS networks). Most of Luvdarts's business involves selling greeting cards to users who can forward the cards to other people. The defendants, AT&T Mobility and other mobile wireless carriers, own MMS networks. Mobile phones use MMS networks to send and receive messages with multimedia content.

Luvdarts attaches a notice to its content that it may only be shared once. However, neither Luvdarts nor any of the carriers use any rights management, blocking or other technical measures to prevent users from forwarding Luvdarts's messages to multiple users. Luvdarts claimed that users of the carriers' networks ignore the notice and re-share Luvdarts's content without permission in violation of its copyrights. Luvdarts alleged that it demanded that the carriers provide "accountability" for these infringing activities, but the carriers failed to take any meaningful remedial action.

Luvdarts sued the carriers for copyright infringement under vicarious and contributory liability theories and for violation of California's unfair competition laws. The carriers filed a Federal Rules of Civil Procedure Rule 12(b)(6) motion to dismiss for failure to state a claim on which relief can be granted. Luvdarts waived the state law claim and the US District Court for the Central District of California granted the carriers' motion dismissing with prejudice the remaining copyright infringement claims. Luvdarts appealed.

In its March 25, 2013 decision, the US Court of Appeals for the Ninth Circuit affirmed the district court's dismissal, concluding that Luvdarts did not sufficiently allege copyright infringement under a theory of either vicarious or contributory copyright liability.

The Ninth Circuit noted that, under the rule of the Supreme Court's Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. decision, a defendant is vicariously liable for copyright infringement if the defendant has both:

The court held that Luvdarts failed to adequately allege that the carriers were vicariously liable because Luvdarts did not sufficiently allege that the carriers had the right and ability to supervise the infringing activity. Luvdarts conceded that the carriers currently have no way of supervising their networks for copyright infringement, but alleged that they had the ability to implement a system for this purpose. The court rejected this argument, noting that an allegation of a capacity to supervise is an inadequate substitute for the right and ability to supervise. Without meeting this first required element for vicarious liability, the court held Luvdarts could not prevail on a claim of vicarious copyright infringement.

The Ninth Circuit also held that Luvdarts failed to adequately allege that the carriers were contributorily liable. The court noted that a defendant is contributorily liable if the defendant both:

The first prong requires more than a generalized knowledge of the possibility of infringement. Luvdarts failed to allege that the carriers had the necessary specific knowledge of infringement. Luvdarts argued that the carriers had the requisite knowledge because:

The Ninth Circuit rejected both of these arguments. The court rejected Luvdarts's argument that the carriers had knowledge from the notices because these vague and generalized notices did not identify which titles were infringed, who infringed them or when the infringement occurred. The court observed that, to invoke the protections of the Digital Millennium Copyright Act, 17 U.S.C. Section 512 (DMCA), under the DMCA's takedown notice provisions, Luvdarts was required to provide information reasonably sufficient to permit the carriers to locate the infringing material.

The court also rejected the willful blindness argument because in order to allege willful blindness, Luvdarts must allege that the carriers both:

The Ninth Circuit concluded that Luvdarts's allegations fell far short of alleging either of these essential elements of willful blindness. The court further held that, having failed to establish the first element of willful blindness ― knowledge of the direct infringement ― Luvdarts could not prevail on a claim of contributory copyright infringement.

Luvdarts, LLC v. AT&T Mobility, LLC is noteworthy for showing the high bar that the copyright plaintiff must clear to plead and prove claims of internet service provider contributory or vicarious copyright infringement.