Tag Archives: Perfect 10

Credit card companies get green light to profit from, enable Internet piracy

Originally posted 2007-07-04 23:59:37. Republished by Blog Post Promoter

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Reuters reports that in Perfect 10, Inc. v. Visa Intl. Serv. Assn., 494 F.3d 788, 793 (9th Cir. 2007) the Ninth Circuit has affirmed (opinion here), 2-1, a ruling that there is no third-party copyright or trademark liability for credit card companies such as Visa and MasterCard or the banks that process their transactions, arising from their central — essential, really — role in the sale of counterfeit merchandise (including, as in this case, unauthorized copies of dirty pictures) on the Internet:

Writing for the majority, Judge Milan Smith Jr. said credit card processors, unlike Web search providers, do not direct online traffic. “They in no way assist or enable Internet users to locate infringing material, and they do not distribute it,” Smith wrote.

“Here, the infringement rests on the reproduction, alteration, display and distribution of Perfect 10′s images over the Internet,” Smith wrote.

If you didn’t guess from the title, I disagree with this. Why do judges keep missing this? The credit card companies are very much in the profit chain of infringing websites — websites that do nothing but sell counterfeit goods — and they make no serious effort, even when notified, to prevent this activity from occurring.

I am not just shooting from the hip here. I researched this issue extensively for a Very Important Client, and came to the conclusion that, under the right circumstances, liability should, indeed, attach. I cannot understand, for example, why the Ninth Circuit spends so much time focusing on the fact that the credit card companies do not themselves operate the infringing websites the way flea market operators (who have been held contributorily liable) operate the markets where counterfeit items are sold. That is besides the point. I find this language particularly frustrating:

[T]he ability to exert financial pressure does not give Defendants the right or ability to control the actual infringing activity at issue in this case [as would be required to find liabilty]. . . Defendants can only refuse to process credit card payments to the offending merchant within their payment network, or they can threaten to do so if the merchant does not comply with a request to alter content. While either option would likely have some indirect effect on the infringing activity, as we discuss at greater length in our analysis of the Grokster “stop or limit” standard below, so might any number of actions by any number of actors.

Since when is the fact that other things would also work mean that the law will not require a party in a position to prevent illegality — and which is profiting from the transactions — to do what is in its power?

I’m not alone; not by a long shot. The dissenter? Read More…