Tuesday, January 24, 2017
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Ninth Circuit Upholds Rejection of Claims by Alleged ‘Copyright Troll’
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday upheld a judgment rejecting claims of copyright infringement, raised by a company that owns thousands of pornographic images, along with an award of more than $5.6 million in fees and costs to the prevailing defendants.
The plaintiff, Perfect 10, Inc., has been described by its critics as a “copyright troll” and a “lawsuit factory,” a company whose primary business is suing for copyright infringement, rather than acquiring or creating content. The company’s targets have included major content providers, such as Google and Microsoft.
Yesterday’s ruling concerns an action against Giganews, Inc., a Texas-based company that provides content over the Usenet, a collection of groups and individuals whose computers share information with each other, and Livewire Services, Inc.
Giganews owns and operates Usenet servers and provides subscribers, for a fee, with information stored on those servers, as well as other Usenet servers. Livewire owns no servers, but provides access to Usenet data stored on Giganews servers.
Perfect 10 sued in April 2011, alleging both indirect and direct copyright infringement by Giganews employees. Among other things, Perfect 10 claimed the defendants failed to take down copyrighted images despite service of proper notice.
Giganews co-founder Ron Yokubaitis commented at the time of the district court ruling that his company had always followed federal law, and called Perfect 10 “a serial litigator who was hoping for an easy pay day.”
U.S. District Judge Andre Birotte Jr. of the Central District of California rejected the infringement claims. He ruled, among other things, that the plaintiff failed to plead the “volitional conduct” required for a claim of direct infringement, and that the defendants qualified for “safe harbor” protection under the Digital Millennium Copyright Act by complying with plaintiff’s takedown notices when they were properly served.
Giganews, and other targets of Perfect 10, have long accused the company of deliberately serving takedown notices that are deliberately designed to make it difficult to find the offending material.
Birotte also concluded that a fee award would be consistent with the purposes of copyright law, including helping to define the boundaries of protection and discouraging objectively unreasonable claims. He awarded the defendants 85 percent of the fees they sought, rather than the 50 percent the defendants argued would be the limits of reasonableness.
Senior Judge Dorothy W. Nelson, writing for the Ninth Circuit, explained that what courts have described as volitional conduct, in this context, is actually an element of causation; there cannot be direct infringement unless the defendant’s conduct is the direct cause of infringement. Perfect 10, which argued against adoption by the Ninth Circuit of the volitional-conduct requirement, failed to prove any such conduct, Nelson said.
“The sole evidence Perfect 10 points to in support of its argument that Giganews was not merely a passive host shows only that images and thumbnails were accessed through the Giganews platform,” Nelson explained. The evidence does not demonstrate that Giganews – as opposed to the user who called up the images – caused the images to be displayed.”
With respect to the fee award, Nelson said it was well within the district judge’s discretion.
“The district court did not give undue weight to the degree of success Appellees obtained,” she wrote. “Nor did the district court abuse its discretion in finding that Perfect 10 had an improper motivation, that the ‘objective unreasonableness’ factor weighed slightly in Appellees’ favor, that considerations of compensation and deterrence weighed in favor of a fee award, and that it would not be inequitable to award attorney’s fees to Appellees.”
Nor, the judge said, was the award excessive, since Birotte was entitled to conclude that the number of hours billed by the plaintiffs’ lawyers did not necessarily reflect the number of hours reasonably expended by defense counsel.
Nelson was joined by Senior Judge Harry Pregerson and Judge John B. Owens.
The case was argued in the Ninth Circuit by Los Angeles practitioner David N. Schultz for the plaintiff, Andrew Phillip Bridges of Fenwick & West LLP in San Francisco for the defendants, and Thomas G. Hentoff of Williams & Connolly LLP for the plaintiff’s amicus, the Recording Industry Association of America Inc.
The Electronic Frontier Foundation, joined by Public Knowledge and three library associations, filed an amicus brief supporting the defendants.
The case is Perfect 10, Inc. v. Giganews, Inc., 15-55500.
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