Ninth Circuit affirms dismissal in Perfect 10 v. Visa

The Ninth Circuit has affirmed the dismissal of Perfect 10’s complaint against Visa and MasterCard for contributory and vicarious copyright infringement (opinion here).  The court’s opinion, though not perfect, laudably recognizes that a decision in Perfect 10’s favor would have opened potentially endless claims of liability against a wide range of potential defendants who simply do business with infringers.  Additionally, the court deals directly with Fonovisa v. Cherry Auction, a case that adopted broad definitions of third party liability that, in my opinion, have created more problems than they solved.  In particular, the 9th Circuit has rejected Fonovisa’s implication that any facilitation of infringement satisfies the material contribution prong of the contributory infringement test, and it also rejected Fonovisa’s implication that the mere ability to influence satisfies the control prong of vicarious liability.  I am hopeful that this opinion will help keep third party copyright liability in line with the tort principles from which it is derived, and not allow it to expand into unbridled enterprise liability.

Judge Kozinski’s dissent provides a good statement of Perfect 10’s view of the case.  Kozinski agrees that third party copyright liability should be limited, but he expresses confidence that courts can make the necessary distinctions between Visa and MasterCard on one hand, and the electric company on the other.  Personally, I don’t share Judge Kozinski’s confidence.  If anything, the history of third party copyright liability already shows a number of courts adopting athe wooden interpretation of the relevant doctrines that raise the spectre of unlimited liability.  Allowing Perfect 10’s claim to proceed would only encourage this type or reasoning.  Indeed, the Sony case shows the Supreme Court’s awareness of these issues, and that erring on the side of nonliability is the best way to prevent unwarranted expansion of third party copyright liability.