There have been two significant decisions from the US this week - and both constitute bad news for Perfect 10.
In the first, the US Supreme Court turned down Perfect 10's
appeal of a decision holding that credit card companies were immune
from liability for users' violations of state intellectual property
laws. From Media Post:
The Court let stand a ruling by the 9th Circuit which held that the
federal Communications Decency Act shielded Web companies for users'
violations of laws in California and other states. If that expansive
opinion is followed by other federal courts, Web companies will be
shielded from liability in a wide array of lawsuits stemming from state
intellectual property laws, says Eric Goldman, an assistant professor
at Santa Clara University School of Law and director of the High Tech
Law Institute.
"This leaves on the books a very important 9th circuit ruling," Goldman says. "It wipes out a bunch of claims."
Perfect 10, which sells images of models to paid subscribers, sued
credit card company CC Bill and Web hosting company CWIE for enabling
piracy by doing business with sites that sold pirated images. Perfect
10's theory was that CC Bill and CWIE violated trademark law in
California and other states by providing services to the infringing
companies.
CC Bill and CWIE claimed immunity under the federal Communications
Decency Act, which gives Web companies immunity from liability for
information published by other content providers. That statute contains
an exception for intellectual property claims, but the 9th Circuit held
that the exception applies only to federal claims and not those brought
under state law.
If other courts follow the 9th Circuit ruling, many state intellectual
property laws could effectively be gutted, including Utah's recent
Trademark Protection Act. Enacted earlier this year, that law attempts
to ban marketers from bidding to appear as sponsored links when people
conduct searches for the names of rival companies. Although that law
was quietly passed in March, it hasn't yet gone into effect.
Read it here.
In the second, the 9th Circuit held that Google can display tiny photos in search results, even when the images are copyrighted, under the fair use doctrine. From the Los Angeles Times:
The U.S. 9th Circuit Court of Appeals on Monday reaffirmed its earlier
support for the socially redeeming value of searching the Internet for
nudie pictures.
The
San Francisco court, in reviewing a case it initially considered in
May, reiterated its finding that Google could display tiny versions of
photographs by Perfect 10 Inc., a Beverly Hills-based adult publisher,
in search results, even when those images were copyrighted.
The
court focused on the legal question of which party holds the burden of
proving whether Google's use of Perfect 10's images constituted a "fair
use" under copyright law. Fair use is a defense that allows the use of
copyrighted works, under certain circumstances, without the owner's
consent.
The
appeals court initially said Perfect 10 had the burden of proving that
Google couldn't make its case. It corrected itself Monday, saying it
was up to Google to articulate its defense, even in a case such as this
one, which dealt with whether the courts could issue a preliminary
injunction.
Nevertheless, the court said, Google met that
test. The justices ruled that a larger public interest in searching for
information -- or, in this case, images of partially clad women --
amounted to a "transformative use" that trumped Perfect 10's copyright
claims.
The small legal tweak did not change the appeals court's original May decision.
The
court overturned part of a ruling by the U.S. District Court in Los
Angeles, which had found that Google's thumbnail-sized images of
Perfect 10's nude models constituted infringement. The lower court
imposed an injunction barring the use of the images, but the appeals
court invalidated that decision.
It also asked the district
court to reconsider the question of whether Google or Amazon .com Inc.,
which also was named in the suit, could be held liable for damages
because they linked to websites that displayed Perfect 10's copyrighted
images without permission. The 9th Circuit judges wrote that the lower
court erred and needed to consider whether the search engines knew of
the infringement but failed to take simple steps to stop it.
Read more here.
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