The U.S. Court of Appeals for the 9th Circuit on Thursday released a 26-page opinion (PDF) that upholds a number of lower-court findings against the adult-oriented Web site Perfect 10 in a lawsuit against a family of companies including Web hosting service CWIE and credit card processing firm CCBill.
The same appeals court is also preparing to release rulings in two other cases involving Perfect 10, whose online presence boasts "thousands of images of the most beautiful natural women in the world"--one againstand the other against MasterCard and Visa.
Perfect 10's suit against Arizona-based CWIE and CCBilland includes a wide array of allegations, including copyright and trademark infringement, unfair competition, false advertising, and violation of right of publicity--that is, protection against unauthorized commercial use of a person's image or name.
Attorneys for Perfect 10 and the Web hosts did not respond to requests for comment on Friday.
One of the most significant parts of the court's opinion is a brief section that appears to clarify questions about how a portion of a federal law called the Communications Decency Act (CDA) applies to state laws, lawyers following the case said.
The CDA's Section 230, which has proven to befor Internet service providers, , broadly immunizes providers of an "interactive computer service" from liability for content that others post.
In its ruling, the 9th Circuit essentially concluded that Section 230 can also shield service providers from liability when they are confronted with allegations that their users violated state laws, such as right of publicity and trademark statutes, which was not always clear. (Disputes involving federal copyright and criminal laws, however, continue to be exempt from such immunity.)
"This is a very important decision for anyone who runs an online business where you handle other peoples' content, whether it be people who create photos or artwork or anything or whether it's users who log in and upload stuff and comment on things," said Jason Schultz, a staff attorney for the Electronic Frontier Foundation, which has filed briefs supporting Google's arguments against Perfect 10.
The implications could have a broad impact on online service providers, particularly if some states decide to draft laws that would, for instance, require social-networking sites like MySpace.com to clean up their users' behavior.
"The reality is, the way that this 9th Circuit ruling reads, it now makes entirely clear that plaintiffs can't make any state-based claims against online service providers--they're all gone," said Eric Goldman, a professor at Santa Clara University School of Law in Santa Clara, Calif.
Companies wishing to bring suits alleging bad behavior by Internet users could still target the users themselves, but they may have a weaker case against the intermediaries that post their content.
Interpreting the DMCA
Much of the rest of the opinion centers on interpretations of a 1998 federal law called the Digital Millennium Copyright Act (DMCA). A provision in that law says Web hosts are generally not liable for the content their users post, as long as they take down the offending content promptly upon being notified by the copyright holder and meet a number of other standards, such as not receiving "direct financial benefit" from infringing content.
Some of the conclusions reached by the judges could aid content hosts making arguments in high-profile suits such as. "The court made it very clear that providers do not have to actively police their systems to look for infringement," EFF's Schultz said.
For instance, the DMCA requires the entity sending so-called takedown notices to include specific information in their requests to service providers, such as identifying the infringing content and certifying, under penalty of perjury, that the person sending the notice is "authorized to act on behalf of the owner of an exclusive right that is allegedly infringed."
The three-judge panel found that Perfect 10 fell short of meeting those standards, and because of that, the service providers were not obligated to comply with its requests. The judges said they worried about the First Amendment free-speech violations that could occur if a site removes content when it doesn't actually infringe on copyrights.
Perfect 10 had also argued that CWIE and CCBill should have been aware of infringing content on its services because they provided services to Web sites like "illegal.net" and "stolencelebritypics.com." Under the DMCA, Web hosts can be held liable for infringement if they're aware of infringement occurring on their servers and do nothing to stop it.
The judges disagreed with Perfect 10's logic, saying it should not be the burden of a service provider to determine whether photographs are "actually illegal."
"When a Web site traffics in pictures that are titillating by nature, describing photographs as 'illegal' or 'stolen' may be an attempt to increase their salacious appeal, rather than an admission that the photographs are actually illegal or stolen," the opinion said.
The judges left it up to a lower court to weigh a few unanswered questions important to the case, such as whether the nature of CCBill's operations qualifies it for the DMCA protections in the first place and whether Perfect 10 can use takedown notices to bolster its arguments that the companies don't do enough to stop copyright infringement.
Some attorneys following the cases said the first opinion may be overshadowed after rulings are issued in seemingly more high-stakes disputes involving Google and the credit card companies. The search giant has appealedfrom last February that found portions of Google's image search feature may violate copyright law by creating and displaying thumbnail copies of Perfect 10's photographs.