Volitional Conduct Required for Direct Infringement of Display, Distribution, and Reproduction Rights: Ninth Circuit | Practical Law

Volitional Conduct Required for Direct Infringement of Display, Distribution, and Reproduction Rights: Ninth Circuit | Practical Law

In Perfect 10, Inc. v. Giganews, Inc., the US Court of Appeals for the Ninth Circuit held, among other things, that the volitional conduct requirement for direct copyright infringement requires the accused infringer to cause the infringement, not just supply equipment that allows others to engage in the infringement.

Volitional Conduct Required for Direct Infringement of Display, Distribution, and Reproduction Rights: Ninth Circuit

by Practical Law Intellectual Property & Technology
Published on 24 Jan 2017 • USA (National/Federal)
In Perfect 10, Inc. v. Giganews, Inc., the US Court of Appeals for the Ninth Circuit held, among other things, that the volitional conduct requirement for direct copyright infringement requires the accused infringer to cause the infringement, not just supply equipment that allows others to engage in the infringement.
On January 23, 2017, in Perfect 10, Inc. v. Giganews, Inc., the US Court of Appeals for the Ninth Circuit affirmed the US District Court for the Central District of California's ruling that, among other things, the volitional conduct requirement for direct copyright infringement requires the accused infringer to cause the infringement, not just supply equipment that allows others to engage in the infringement ( (9th Cir. Jan. 23, 2017)).
Defendant Giganews, Inc. owns and operates several Usenet servers, and provides subscribers with fee-based access to content stored on its own servers and the servers of other Usenet providers. The Usenet offered through Giganews's servers is almost exclusively user-driven, with the user uploading most of the content stored on a Usenet provider's server. Other than setting some basic parameters, Giganews:
  • Does not select any of the content available on its servers.
  • Did not post any of the articles at issue in the action.
  • Does not tell any third parties what to upload to the Usenet.
Defendant Livewire Services, Inc.:
  • Contracts with Giganews for access to its servers.
  • Has no control over the uploaded, downloaded, transmitted, or stored content on Giganews's servers.
  • Has neither uploaded material to the Usenet nor directed anyone else to do so.
Plaintiff Perfect 10, Inc. owns the exclusive copyrights to adult images, many of which have been illegally distributed over Giganews's services. When Perfect 10 sent Giganews takedown notices under the DMCA identifying the offending messages with machine-readable Message-IDs, Giganews quickly removed the offending messages. When Perfect 10 faxed Giganews illegible Message-IDs, Giganews responded by asking for the information in legible machine-readable format, which Perfect 10 failed to do.
Perfect 10 sued Giganews and Livewire ("Defendants") in the US District Court for the Central District of California, alleging direct and indirect copyright infringement claims. The district court on:
  • March 8, 2013:
    • denied Defendants' motion to dismiss the indirect copyright infringement claims against Giganews;
    • granted Defendants' motion to dismiss those claims against Livewire with leave to amend, and
    • granted Defendants' motion to dismiss the direct copyright infringement claims against both parties with leave to amend, explaining that direct infringement requires volitional conduct and finding that Perfect 10 had not alleged that the Defendants were the direct cause of, or actively engaged in, such infringement.
  • July 10, 2013, following Perfect 10's First Amended Complaint, allowed Perfect 10 to move forward on its direct infringement claims against Livewire and Giganews. The court dismissed Perfect 10's indirect infringement claims against Livewire.
  • March 24, 2015, entered judgment for Defendants.
Perfect 10 appealed to the Ninth Circuit, arguing that the district court erred in concluding that Defendants did not infringe Perfect 10's copyrights.
The Ninth Circuit affirmed the district court and noted that direct copyright infringement requires the accused infringer to engage in volitional conduct that caused the infringement, not just supply equipment that allows others to engage in the infringement. It emphasized that:
  • An accused infringer's volitional conduct remains an element of a prima facie case of direct infringement.
  • The volitional element must be premised on conduct that can reasonably be described as the direct cause of the infringement.
  • Despite Perfect 10's argument that the Supreme Court had implicitly rejected the volitional-conduct requirement, this standard is consistent with American Broadcasting Cos., Inc. v. Aereo, Inc., 134 S. Ct. 2498, 2513 (2014) because the Supreme Court:
    • did not expressly address the volitional-conduct requirement for direct liability for copyright infringement in Aereo; and
    • distinguished activities of entities that engage in passive participation in activities, such as equipment suppliers.
As a result, the Ninth Circuit affirmed the district court's dismissal of Perfect 10's direct infringement claim based on:
  • Display rights, because:
    • the fact that users may use Giganews's reader to display infringing images did not constitute volitional conduct by Giganews;
    • the evidence did not demonstrate that Giganews caused the images to be displayed as opposed to the user who called up the images; and
    • Giganews's actions were akin to passively storing material at the discretion of users to make that material available to other users on request, or automatically copying, storing, and transmitting materials on instigation by others.
  • Distribution rights, because:
    • Giganews did not engage in volitional conduct in which it actually caused the distribution;
    • Perfect 10 failed to show that the distribution did not happen automatically;
    • there was no evidence that Livewire had any direct role in any act of infringement; and
    • selling access to infringing images did not directly violate Perfect 10's distribution rights, unless the Defendants actually committed the distribution as opposed to third-party users.
  • Reproduction rights, because there was no evidence showing that Giganews:
    • exercised control;
    • selected any material for upload, download, transmission, or storage; or
    • instigated any copying, storage, or distribution.
The Ninth Circuit also held that Giganews was not liable for indirect infringement, noting that for:
  • Contributory copyright infringement, Perfect 10 failed to:
    • raise a triable issue of fact as to whether Giganews materially contributed to the infringement because there were no simple measures available for Giganews to take to remove Perfect 10's works from its servers noting that Giganews immediately removed the offending material when Perfect 10 provided machine-readable Message-IDs but Perfect 10's proposed method for locating infringing messages was onerous and unreasonably complicated; and
    • establish that Giganews itself (i) promoted its product with the object of infringing copyright, (ii) expressed an intent to promote infringement, or (iii) took affirmative steps to foster infringement.
  • Vicarious infringement, Perfect 10 did not demonstrate a causal link between the infringing activities and a direct financial benefit to Giganews, noting that there was no evidence indicating that anyone subscribed to Giganews because of infringing Perfect 10 material.
Finally, the Ninth Circuit affirmed the district court's:
  • Award of attorney' fees to the Defendants.
  • Denial of the Defendants' request for supplemental fees.
  • Denial of the Defendants' request to amend the judgment to add a judgment debtor as Perfect 10's alter ego.