`
`No. 17-320
`================================================================
`
`In the
`Supreme Court of the United States
`
`--------------------------------- ---------------------------------
`
`PERFECT 10, INC.,
`
`v.
`
`GIGANEWS, INC., et al.,
`
`Petitioner,
`
`Respondents.
`
`--------------------------------- ---------------------------------
`
`On Petition For A Writ Of Certiorari
`To The United States Court Of Appeals
`For The Ninth Circuit
`
`--------------------------------- ---------------------------------
`
`BRIEF IN OPPOSITION
`
`--------------------------------- ---------------------------------
`
`ANDREW P. BRIDGES
` Counsel of Record
`JEDEDIAH WAKEFIELD
`TODD R. GREGORIAN
`ARMEN N. NERCESSIAN
`FENWICK & WEST LLP
`555 California Street, 12th Floor
`San Francisco, CA 94104
`(415) 875-2300
`abridges@fenwick.com
`Counsel for Respondents
`
`================================================================
`
`
`
`
`
`i
`
`QUESTIONS PRESENTED
`
`
`The petition for certiorari prompts the following
`
`questions:
`
`1. Did the court below correctly rule, con-
`sistently with other courts, that Petitioner
`provided no evidence that Respondent Giga-
`news stood in any type of relationship of
`financial interest with persons alleged to
`infringe Petitioner’s copyrights that justifies
`vicarious liability without any culpable ac-
`tions by Giganews or knowledge by Giganews
`of the alleged infringements?
`
`2. Did the court below correctly rule, con-
`sistently with other courts, that the ordinary
`provision of general-purpose Usenet access
`services does not itself constitute direct copy-
`right infringement?
`
`
`
`
`
`
`
`ii
`
`RULE 29.6 STATEMENT
`
`
`Respondents Giganews, Inc., and Livewire Ser-
`
`vices, Inc. have no parent corporations, and no publicly
`held company owns 10% or more of their stock.
`
`
`
`
`
`
`
`iii
`
`TABLE OF CONTENTS
`
`Page
`QUESTIONS PRESENTED ................................
`i
`RULE 29.6 STATEMENT ....................................
`ii
`INTRODUCTION ................................................
`1
`STATEMENT OF THE CASE..............................
`1
`REASONS FOR DENYING THE WRIT .............. 10
`
`I. THE NINTH CIRCUIT’S VICARIOUS LI-
`ABILITY RULING IS BOTH CORRECT
`AND CONSISTENT WITH THE DECI-
`SIONS OF THIS COURT AND OTHER
`CIRCUITS ................................................. 11
`A. The Ruling Does Not Conflict with
`Grokster or Any Other Decision of This
`Court .................................................... 11
`B. The Ruling Is Also Consistent with
`Those of All Other Circuits That Have
`Addressed Vicarious Liability for Copy-
`right Infringement ............................... 16
`C. The Factual Record Makes This Case
`Unsuitable for Review ......................... 25
` II. THE NINTH CIRCUIT’S DIRECT IN-
`FRINGEMENT RULING IS BOTH COR-
`RECT AND CONSISTENT WITH THE
`DECISIONS OF THIS COURT AND
`OTHER CIRCUITS .................................... 27
`
`
`
`
`
`
`
`iv
`
`TABLE OF CONTENTS – Continued
`
`Page
`A. Courts of Appeals Have Universally
`Recognized Proximate Causation, Of-
`ten Calling It “Volitional Conduct,” as
`a Bedrock Requirement for Direct In-
`fringement Liability ............................ 27
`B. This Court’s Aereo Decision Did Not
`Eliminate or Modify the Requirement
`of Proximate Causation or Volitional
`Conduct ................................................ 30
`CONCLUSION ..................................................... 33
`
`
`
`
`
`
`v
`
`TABLE OF AUTHORITIES
`
`Page
`
`CASES
`Am. Broad. Companies, Inc. v. Aereo, Inc., 134
`S. Ct. 2498 (2014) ........................................ 30, 31, 32
`Boyer v. Louisiana, 569 U.S. 238 (2013) ..................... 26
`Bridgeport Music, Inc. v. Rhyme Syndicate Mu-
`sic, 376 F.3d 615 (6th Cir. 2004).............................. 22
`Broadcast Music, Inc. v. Meadowlake, Ltd., 754
`F.3d 353 (6th Cir. 2014) ........................................... 21
`BWP Media USA v. T&S Software Assocs., Inc.,
`852 F.3d 436 (5th Cir. 2017) .............................. 28, 31
`Cartoon Network LP, LLLP v. CSC Holdings,
`Inc., 536 F.3d 121 (2d Cir. 2008) ....................... 28, 29
`CoStar Grp., Inc. v. LoopNet, Inc., 373 F.3d 544
`(4th Cir. 2004) .................................................... 29, 30
`Dreamland Ball Room v. Shapiro, Bernstein &
`Co., 36 F.2d 354 (7th Cir. 1929) ............................... 22
`Ellison v. Robertson, 357 F.3d 1072 (9th Cir.
`2004) ................................................................ passim
`EMI Christian Music Group, Inc. v. MP3tunes,
`LLC, 844 F.3d 79 (2d Cir. 2016) ........................ 19, 20
`Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) ................ 5
`Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259
`(9th Cir. 1996) .......................................................... 16
`Fox Television Stations, Inc. v. FilmOn X LLC,
`150 F. Supp. 3d 1 (D.D.C. 2015) .............................. 32
`
`
`
`
`
`
`
`vi
`
`TABLE OF AUTHORITIES – Continued
`
`Page
`
`Gershwin Publ’g Corp. v. Columbia Artists
`Mgmt., Inc., 443 F.2d 1159 (2d Cir. 1971) ......... 20, 21
`In re Aimster Copyright Litig., 334 F.3d 643 (7th
`Cir. 2003) ................................................................. 23
`La Resolana Architects, PA v. Reno, Inc., 555 F.3d
`1171 (10th Cir. 2009) ............................................... 25
`Lujan v. Defenders of Wildlife, 504 U.S. 555
`(1992) ................................................................... 7, 12
`Luvdarts, LLC v. AT&T Mobility, LLC, 710 F.3d
`1068 (9th Cir. 2013) ................................................. 17
`Matthew Bender & Co. v. West Publishing Co.,
`158 F.3d 693 (2d Cir. 1998) ..................................... 19
`Metro-Goldwyn-Mayer Studios Inc. v. Grokster,
`Ltd., 545 U.S. 913 (2005) ................................. passim
`Mitchell v. Or. Frozen Foods Co., 361 U.S. 231
`(1960) ....................................................................... 26
`New York Times Co. v. Tasini, 533 U.S. 483
`(2001) ....................................................................... 32
`Parker v. Google, Inc., 242 F. App’x 833 (3d Cir.
`2007) .................................................................. 24, 29
`Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d
`1146 (9th Cir. 2007) ................................................. 17
`Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d
`788 (9th Cir. 2007) ................................................... 16
`Range Rd. Music, Inc. v. E. Coast Foods, Inc., 668
`F.3d 1148 (9th Cir. 2012) ......................................... 17
`
`
`
`
`
`vii
`
`TABLE OF AUTHORITIES – Continued
`
`Page
`
`RCA/Ariola Int’l, Inc. v. Thomas & Grayston Co.,
`845 F.2d 773 (8th Cir. 1988) .............................. 23, 24
`Religious Tech. Ctr. v. Netcom On-Line Commc’n
`Servs., Inc., 907 F. Supp. 1361 (N.D. Cal.
`1995) ...................................................... 27, 28, 29, 33
`Reno v. Am. Civil Liberties Union, 521 U.S. 844
`(1997) ......................................................................... 2
`Shapiro, Bernstein & Co. v. H.L. Green Co., 316
`F.2d 304 (2d Cir. 1963) .................................... passim
`Smith v. BarnesandNoble.com, LLC, 143 F. Supp.
`3d 115 (S.D.N.Y. 2015) ............................................ 32
`Softel, Inc. v. Dragon Medical & Scientific Com-
`munications, Inc., 118 F.3d 955 (2d Cir. 1997) ....... 18
`Sony Corp. of Am. v. Universal City Studios, Inc.,
`464 U.S. 417 (1984) ..................................... 10, 14, 18
`Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) ........ 7, 12
`UMG Recordings, Inc. v. Shelter Capital Part-
`ners LLC, 718 F.3d 1006 (9th Cir. 2013) ................. 17
`
`
`STATUTES
`17 U.S.C. § 106 ............................................................ 13
`17 U.S.C. § 106(1) ........................................................ 13
`17 U.S.C. § 512 .............................................................. 4
`
`
`
`
`
`1
`
`INTRODUCTION
`This case does not deserve the Court’s review. The
`
`court of appeals applied long established principles of
`direct copyright infringement and vicarious liability.
`The decision below was consistent with the decisions
`of this Court and other circuits. Petitioner here, which
`has not sought review of the decision below on its con-
`tributory infringement claim, seeks to distort direct in-
`fringement and vicarious liability doctrines to make up
`for its loss on the contributory infringement claim be-
`low. Petitioner has shown no reason to alter those di-
`rect infringement and vicarious liability doctrines to
`create a mutant species of contributory infringement.
`Nor is this case a proper vehicle to reconsider those
`doctrines in light of the peculiar facts and record of this
`case. The Court should deny the petition.
`
`--------------------------------- ---------------------------------
`
`STATEMENT OF THE CASE
`Petitioner, operator of a website featuring soft-
`
`core pornographic images, sued Respondents, two com-
`panies that provide access to Usenet, because it found
`Petitioner’s images in Usenet newsgroups. Usenet is
`one of the oldest continuously operated parts of the In-
`ternet, going back to the early 1980s and predating the
`World Wide Web. Usenet, which uses a technical pro-
`tocol (“network news transfer protocol” or NNTP) sim-
`ilar to that of email (“simple mail transfer protocol” or
`SMTP), consists of numerous interconnected servers
`that numerous different providers operate. It allows
`
`
`
`
`
`2
`
`persons using that protocol to send messages to, or re-
`trieve messages from, particular “newsgroups” on
`those Usenet servers. As this Court previously recog-
`nized, “[n]ewsgroups also serve groups of regular par-
`ticipants, but these postings may be read by others as
`well. There are thousands of such groups, each serving
`to foster an exchange of information or opinion on a
`particular topic running the gamut from, say, the mu-
`sic of Wagner to Balkan politics to AIDS prevention to
`the Chicago Bulls.” Reno v. Am. Civil Liberties Union,
`521 U.S. 844, 851 (1997).
`
` Major Usenet service providers, through a “peer-
`ing” process, routinely and automatically connect with
`each other to forward and receive messages so that
`those on one provider’s Usenet servers reach the serv-
`ers of other Usenet service providers for consistent
`availability of messages across the entire Usenet. To
`facilitate the handling of messages across the entire
`Usenet, every Usenet message has a unique identifier,
`a “Message-ID.”
`
`Petitioner claims that persons have infringed its
`
`copyrights by posting messages that contain copy-
`righted images from its website to Usenet newsgroups.
`It complained to Respondent Giganews about alleged
`infringements. Giganews responded by asking Peti-
`tioner to identify messages with infringements by
`their Message-IDs. Giganews removed millions of mes-
`sages from its Usenet servers at the request of other
`copyright holders based upon the Message-IDs that
`those other holders and their agents consistently pro-
`vide to Giganews and other Usenet service providers.
`
`
`
`
`
`3
`
`Unlike other copyright holders, however, Peti-
`
`tioner refused to provide Message-IDs of offending
`messages to Respondent Giganews. Instead, Petitioner
`insisted on providing a variety of instructions for awk-
`ward, burdensome, and inaccurate ways by which Gi-
`ganews could search for the messages Petitioner had
`in mind. For example, Petitioner would suggest search
`query and review strategies to look for the allegedly
`infringing messages, and it would provide screen shots
`showing how it constructed search queries and inves-
`tigated the results. In doing so, Petitioner would occa-
`sionally and incidentally provide some Message-IDs to
`Giganews because they appeared in the screen shots.
`Every time Giganews received Message-IDs, Giganews
`deleted from its Usenet servers the corresponding mes-
`sages. Giganews continued to ask Petitioner for notifi-
`cations with Message-IDs, but Petitioner persistently
`refused to provide Message-IDs.
`
`
`
`The district court observed that,
`
`even after Perfect 10 admittedly learned of a
`method to produce a takedown notice in “15
`minutes” that would result in almost immedi-
`ate removal of “90 percent of the Perfect 10
`content on Giganews’s servers,” Perfect 10 re-
`fused to do so. . . . Perfect 10 “[was] aware of
`and has used software that allows it to extract
`thousands of Message-IDs for messages it be-
`lieves to be infringing in about 10 seconds.”
`When pressed as to why [Petitioner] contin-
`ued to refuse to supply the sort of DMCA no-
`tice that Judge Collins had already concluded
`
`
`
`
`
`4
`
`was necessary in this action (i.e., one that in-
`cluded machine-readable Message-IDs), [Peti-
`tioner’s CEO] stated “that is simply helping
`[Respondents] actually remove the material.”
`
`Perfect 10, Inc. v. Giganews, Inc., No. CV 11-07098-AB,
`2015 WL 1746484, at *10 (C.D. Cal. Mar. 24, 2015)
`(emphasis in original) (citations omitted).
`
` When the parties reached a stalemate over Peti-
`tioner’s refusal to identify specific messages that it
`wanted removed, Petitioner sued Respondents for al-
`leged copyright infringement, trademark infringe-
`ment, trademark dilution, unfair competition, and
`violation of publicity rights it claimed to have acquired
`from the models in its images.
`
`The district court (acting through three different
`
`judges owing to retirements) issued numerous sub-
`stantive rulings against Petitioner. The district court
`first denied Petitioner’s motion for a preliminary in-
`junction. The district court then dismissed the public-
`ity and trademark claims and some of the copyright
`claims in the original complaint. Petitioner’s amended
`complaint asserted only copyright claims. The district
`court then dismissed the contributory infringement
`and vicarious liability claims against Respondent
`Livewire. It later denied Petitioner’s motion for sum-
`mary judgment against Respondents on the safe har-
`bor that limits remedies for infringement under 17
`U.S.C. § 512. At the close of discovery, the district
`court granted summary judgment to Respondents on
`claims of direct and indirect copyright infringement
`
`
`
`
`
`5
`
`and denied summary judgment to Petitioner. The
`district court denied Petitioner’s motion for recon-
`sideration on the indirect infringement (contributory
`infringement and vicarious liability) claims.
`
`The district court also awarded Respondents at-
`
`torney’s fees and costs of approximately $5.6 million,
`observing “[t]here is ample evidence . . . that [Peti-
`tioner] pursued this litigation for reasons inconsistent
`with the purpose of the Copyright Act.” 2015 WL
`1746484, at *11. The district court added: “[a]ll of the
`evidence before the Court demonstrates that [Peti-
`tioner] is in the business of litigation, not protecting
`its copyrights or ‘stimulat[ing] artistic creativity for
`the general public good.’ ” Id. at *9 (quoting Fogerty v.
`Fantasy, Inc., 510 U.S. 517, 527 (1994)). As that court
`further observed, “[Petitioner] has a long documented
`history of sending service providers
`inadequate
`takedown notices under the DMCA that fail to identify
`specific infringing material, and then bringing suit for
`the service providers’ failure to respond to deficient
`DMCA takedown notices.” Id. at *10. Petitioner “never
`attempted to submit a takedown notice in this action
`that Giganews could actually use.” Id. “In addition to
`[Petitioner’s] refusal to take any of the numerous steps
`available to it to protect its copyrights, [Petitioner] lit-
`igated this action in an unnecessarily litigious manner
`that was guaranteed (if not designed) to drive up the
`costs of litigation.” Id. at *11 n.4.1
`
`
`
`1 The district court also noted “extensive evidence show-
`ing [Petitioner’s] unjustified discovery noncompliance, numerous
`
`
`
`
`
`
`6
`
`Petitioner appealed the direct and indirect in-
`
`fringement summary judgment, reconsideration, and
`attorney’s fees rulings to the Ninth Circuit,2 which af-
`firmed the district court’s decisions. Petitioner did not
`appeal the dismissal of the contributory infringement
`and vicarious liability claims against Livewire or the
`decisions of the district court that excluded Petitioner’s
`inadmissible evidence regarding the prevalence of in-
`fringements on Usenet and user motivations for sub-
`scribing to Usenet services.
`
`The court of appeals held that, on the direct
`
`infringement claims, Petitioner had not alleged or
`shown evidence of actions by Respondents that proxi-
`mately caused infringements of Petitioner’s copyrights
`but had alleged and shown instead only the passive
`
`
`violations of this Court’s orders, and pervasive failures by [Peti-
`tioner], its attorneys, and the [Petitioner]-affiliated witnesses.”
`Perfect 10, Inc. v. Giganews, Inc., No. CV 11-07098-AB, 2015 WL
`12699460, at *27 (C.D. Cal. Feb. 4, 2015) (mooted by decision
`awarding Respondents attorney’s fees).
`
`2 Petitioner’s notices of appeal pertained to the district
`court’s summary judgment orders, Perfect 10, Inc. v. Giganews,
`Inc., No. CV 11-07098-AB, Dkt. 619, 620, 621 (Nov. 14, 2014); the
`order denying reconsideration, id. Dkt. 682 (March 6, 2015); and
`the order awarding attorney’s fees, id., Dkt. 686 (amended order
`March 24, 2015). See id., Dkt. 687 (Notice of Appeal March 30,
`2015), Dkt. 690 (Notice of Appeal April 6, 2015). The district court
`dismissed with prejudice claims of contributory infringement and
`vicarious liability against Respondent Livewire Services, Inc., see
`id., Dkt. 129, but Petitioner did not include that order in its no-
`tices of appeal to the Ninth Circuit. The Ninth Circuit noted that
`Petitioner did not mention Livewire in the context of its vicarious
`liability claim, but out of caution it ruled that the district court
`had correctly dismissed that claim. Pet. App. 34a.
`
`
`
`
`
`7
`
`provision of online services and technology. Pet. App.
`24a.
`
`The court below held that Petitioner’s contribu-
`
`tory infringement claim against Respondent Giganews
`failed because Petitioner had failed to show a triable
`issue of fact that Giganews had materially contributed
`to infringements of Petitioner’s copyrights or induced
`infringements under this Court’s standards in Metro-
`Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S.
`913 (2005). Pet. App. 26a.
`
`The court of appeals held that the vicarious
`
`liability claim failed because Petitioner failed to
`show a direct financial benefit to Giganews from
`the infringement of Petitioner’s copyrights. Quoting
`the district court, the court of appeals stated “[t]his
`action is a specific lawsuit by a specific plaintiff
`against a specific defendant about specific copy-
`righted images; it is not a lawsuit against copyright
`infringement in general on the Usenet.” Pet. App. 31a
`(quoting Perfect 10, Inc. v. Giganews, Inc., No. CV 11-
`07098-AB, 2014 WL 8628031, at *4 (C.D. Cal. Nov. 14,
`2014)). The court of appeals observed that Petitioner’s
`expansive view of vicarious liability, untethered to the
`specifics of its claim, was inconsistent with Spokeo,
`Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), and Lujan
`v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Pet.
`App. 32a-33a. Turning to the facts of the case, the
`court of appeals also noted “there was no evidence . . .
`that anyone subscribed to Giganews[’s Usenet service]
`because of infringing Perfect 10 material.” Pet. App.
`33a. The court of appeals did not reach the question
`
`
`
`
`
`8
`
`of the right and ability to supervise the allegedly in-
`fringing conduct, on which point the district court had
`ruled that Petitioner had failed to raise a triable issue
`of fact against Respondent Giganews. Pet. App. 34a.
`Petitioner sought rehearing and rehearing en banc be-
`fore the Ninth Circuit. The court of appeals panel
`unanimously denied the petition for panel rehearing
`and no judge requested a vote on an en banc rehearing.
`
`Petitioner now seeks review of the Ninth Circuit’s
`
`rulings only on the direct infringement and vicarious
`liability copyright claims. Petitioner does not seek to
`disturb the rulings for Respondents on contributory
`copyright infringement.
`
`Petitioner’s statement of the case substitutes
`
`invective or rhetoric for facts in the record. The dis-
`trict court on several occasions rejected efforts by
`Petitioner’s CEO to cast himself as an expert on topics
`of infringement and Usenet, including the prevalence
`of infringing material on Usenet (Perfect 10, Inc. v.
`Giganews, Inc., No. CV 11-07098-AB (C.D. Cal. Oct.
`31, 2014) (order granting motion to exclude Zada ex-
`pert testimony), Dkt. 582); the district court also ex-
`cluded evidence that another witness had recycled
`from a different case involving different issues as well
`as many inadmissible assertions by Petitioner and its
`CEO (id. (order granting motion to exclude Waterman
`expert testimony), Dkt. 581). The “evidence” that Peti-
`tioner cites at the top of page 8 of the petition, regard-
`ing prevalence of infringement on Usenet from an
`anonymous poster, was part of the inadmissible “ex-
`pert” evidence that the district court excluded. See id.
`
`
`
`
`
`9
`
`(Nov. 14, 2014) (order granting motion for partial sum-
`mary judgment), Dkt. 620 at 9 (citing Dkt. 580-583).
`Petitioner has not sought review of the rulings cor-
`rectly excluding the evidence to which it now refers. In
`the statement Petitioner analogizes Usenet, which is
`an open network that provides a mere platform for a
`vast variety of communications, to the closed enter-
`tainment streaming services Hulu, Netflix, and
`Spotify. Usenet is in fact far more similar to email and
`uses protocols and message-based communications
`like those of email; it does not involve streaming. The
`fact that Usenet service providers, like other Internet
`service providers such as AT&T, Verizon, or Comcast,
`have a subscription model for access does not affect
`any proper analysis. If the Court were to review the
`decision below, the record support for a number of
`Petitioner’s extravagant assertions and recharacteri-
`zations of facts would prove illusory, and upon exami-
`nation the case would be a candidate for dismissal of
`certiorari as improvidently granted.
`
` Moreover, Petitioner’s statement of the case pro-
`vides a caricature of the decision below by reducing key
`analyses and discussions to isolated fragments. On the
`direct infringement claims, the court of appeals did not
`reduce the question purely to “automation”: it empha-
`sized the distinction between initiation of conduct and
`active conduct on the one hand and provision of tech-
`nology or a system and a passive role on the other
`hand. Pet. App. 18a-24a. On the vicarious liability
`claims, Petitioner omitted discussion of the Ninth
`Circuit’s focus on causation and standing to assert
`
`
`
`
`
`10
`
`copyright claims where a plaintiff must tie the ele-
`ments of the claim (including the direct financial inter-
`est element) to the infringement of the plaintiff ’s own
`copyrights rather than basing a claim upon unsup-
`ported assertions about non-parties’ copyrights.
`
`--------------------------------- ---------------------------------
`
`REASONS FOR DENYING THE WRIT
`Petitioner seeks review of the decision below with
`
`respect to only two of the three types of copyright
`claims it asserted. It omits from its petition the rul-
`ings below on contributory infringement. Under this
`Court’s decision in Grokster, 545 U.S. 913, contribu-
`tory infringement turns upon “purposeful, culpable ex-
`pression and conduct,” id. at 937, or other culpable
`behavior, id. at 942 (Ginsburg, J., concurring).
`
` While describing Respondents in a way that sug-
`gests culpable behavior and hinting at contributory in-
`fringement, Petitioner seeks by this petition to distort
`other doctrines into becoming substitutes for the doc-
`trine of contributory infringement. While the lines
`among direct infringement, contributory infringement,
`and vicarious liability may not always be clearly
`drawn, see Sony Corp. of Am. v. Universal City Studios,
`Inc., 464 U.S. 417, 435 n.17 (1984), a failure to respect
`the distinct bases and characteristics of the different
`doctrines may lead to errors and confusion in the ap-
`plication of the law. For that reason, and the other rea-
`sons Respondents explain below, the Court should
`deny the writ.
`
`
`
`
`
`11
`
`I. THE NINTH CIRCUIT’S VICARIOUS LIA-
`BILITY RULING IS BOTH CORRECT AND
`CONSISTENT WITH THE DECISIONS OF
`THIS COURT AND OTHER CIRCUITS.
`A. The Ruling Does Not Conflict with Grok-
`ster or Any Other Decision of This Court.
`Petitioner argues that the Ninth Circuit’s vicari-
`
`ous liability ruling conflicts with this Court’s decision
`in Grokster. As a threshold matter, Grokster had no vi-
`carious liability holding: “Because we resolve the case
`based on an inducement theory, there is no need to an-
`alyze separately MGM’s vicarious liability theory.”
`Grokster, 545 U.S. at 930 n.9. In Grokster, the Court
`noted in passing that “[o]ne . . . infringes vicariously
`by profiting from direct infringement while declining
`to exercise a right to stop or limit it.” Id. at 930 (citing
`Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d
`304, 308 (2d Cir. 1963)). It further explained that vi-
`carious liability for copyright infringement “allows im-
`position of liability when the defendant profits directly
`from the infringement and has a right and ability to
`supervise the direct infringer, even if the defendant in-
`itially lacks knowledge of the infringement.” 545 U.S.
`at 930 n.9 (citing Shapiro, Bernstein).
`
`Petitioner is wrong that the Ninth Circuit’s deci-
`
`sion conflicts with the Court’s summary of vicarious li-
`ability in Grokster. There is no evidence in this case
`that Respondents “profit[ed] from direct infringement
`while declining to exercise a right to stop or limit it.”
`Id. at 930. As the courts below observed, there was no
`
`
`
`
`
`12
`
`evidence at all that customers were drawn to Respond-
`ent Giganews’s services, or that Giganews gained any
`customers, because of infringements of Petitioner’s
`copyrights. Pet. App. 33a. Nor was there any evidence
`that Giganews declined to exercise a right to stop or
`limit infringement of Petitioner’s works: to the con-
`trary, Petitioner neglects to mention that the core of
`the dispute is its own refusal to supply Giganews with
`information necessary to remove Petitioner’s materi-
`als from its services. As both of the courts below noted,
`Giganews sought the information necessary to identify
`the specific materials about which Petitioner com-
`plained, but Petitioner refused to provide it. Whenever
`Giganews happened to get Message-IDs for particular
`messages, it removed those messages from its servers.
`Pet. App. 11a, 27a.
`
`Petitioner reads into Grokster a free-floating, gen-
`
`eralized basis for vicarious liability claims by any
`copyright holder resulting from a defendant’s alleged
`financial interest in infringement of other holders’ cop-
`yrights. As the courts below observed, such a rule
`would be at odds with this Court’s decisions in Spokeo,
`136 S. Ct. 1540, and Lujan, 504 U.S. 555. Regardless
`of whether there is a standing issue, however, there is
`simply no basis for vicarious liability where a plaintiff
`has not tied both elements of vicarious liability to the
`alleged infringements of its own copyrights.
`
`Petitioner’s proposed rule would also set up
`
`service providers for liability, based solely upon al-
`leged infringements of non-parties’ copyrights, when
`plaintiffs refuse to cooperate with service providers in
`
`
`
`
`
`13
`
`helping stop or limit infringement of the plaintiffs’ own
`copyrights. The rule would incentivize three bad prac-
`tices, all present in this case: (1) noncooperation by
`copyright holders with regard to specifying infringe-
`ments; (2) proposed liabilities that may turn exclu-
`sively upon alleged infringements of non-parties’
`copyrights, with problems of accuracy and proof aris-
`ing from the absence of those parties from the lawsuit;
`and (3) unprincipled bounty hunting for statutory
`damages windfalls based on non-parties’ interests.3
`
`Petitioner’s view also ignores the literal sense of
`
`this Court’s brief articulation of vicarious liability:
`“one . . . infringes vicariously by profiting from direct
`infringement while declining to exercise a right to
`stop or limit it.” Grokster, 545 U.S. at 930 (emphasis
`added). Infringement is not an abstract activity: it in-
`volves violation of a specific right of a specific person.
`It specifically involves the violation of Section 106 of
`the Copyright Act, 17 U.S.C. § 106, which defines the
`rights of a copyright holder. The salient provision is
`Section 106(1), which identifies the exclusive right of
`an owner of copyright “to reproduce the copyrighted
`work in copies or phonorecords.” 17 U.S.C. § 106(1)
`(emphasis added). Combining this Court’s exposition
`with the statute, the question then becomes, “was
`there evidence that Respondent Giganews profited
`
`3 While Petitioner is justifiably shy in making explicit its
`
`monetary demands, its claim for maximum statutory damages of
`$150,000 per work, together with its claim of an ever-rising num-
`ber of allegedly infringed images (including images Petitioner has
`purchased) now totaling 61,000 images, means that Petitioner ef-
`fectively claims damages of over nine billion dollars.
`
`
`
`
`
`14
`
`from direct infringement of Petitioner’s copyrighted
`works while declining to exercise a right to stop or
`limit infringement of Petitioner’s copyrighted works?”
`The clear answer in the record, as the courts below rec-
`ognized, is “no.” The evidence before the district court
`amply showed Giganews’s diligence in weeding out
`messages from its Usenet servers, and its ready will-
`ingness to do so, whenever it received specific notifica-
`tions of claimed infringement.
`
`Finally, Petitioner’s view ignores, and strays far
`
`from, the fundamental principles of vicarious liability
`that underlay the Court’s summary in Grokster and
`the discussion of vicarious liability principles and
`cases in Sony, 464 U.S. at 435.
`
`In Sony, this Court explained that “vicarious lia-
`
`bility is imposed in virtually all areas of the law” and
`addresses the “problem of identifying the circum-
`stances in which it is just to hold one individual ac-
`countable for the actions of another.” Id. As examples,
`the Court identified a series of cases, several of which
`involved dance halls, in which courts imposed vicari-
`ous liability upon the defendants for the acts of others.
`In every one of those cases finding liability, the defend-
`ants either retained the direct infringers to engage in
`infringements or managed the infringing perfor-
`mances of others. See id. at 437 n.18.
`
`The Court in Sony focused especially upon the Sec-
`
`ond Circuit’s decision in Shapiro, Bernstein, a case in
`which the owner of 23 chain stores retained the direct
`infringer to run its record departments and structured
`the relationship as a licensing arrangement. Sony, 464
`
`
`
`
`
`15
`
`U.S. at 437 n.18. The Second Circuit had articulated
`the characteristics of an employer-employee relation-
`ship, in the traditional respondeat superior model, in
`order to analyze when a different relationship may
`equally justify vicarious liability. In that case, the re-
`lationship between the department store owner and
`the employees of a concessionaire operating a depart-
`ment within the store justified vicarious liability of the
`store owner. The court of appeals stated:
`
`When the right and ability to supervise
`coalesce with an obvious and direct financial
`interest in the exploitation of copyrighted ma-
`terials—even in the absence of actual knowl-
`edge that the copyright monopoly is being
`impaired—the purposes of copyright law may
`be best effectuated by the imposition of liabil-
`ity upon the beneficiary of that exploitation.
`
`See Shapiro, Bernstein, 316 F.2d at 307 (citations omit-
`ted).
`
`In Shapiro, Bernstein and other cases involving vi-
`
`carious liability, courts focus upon the nature of the re-
`lationship between a defendant and the alleged direct
`infringer. Simply put, the correct question here is
`whether the relationship between Respondent Giga-
`news and any supposed direct infringers in this case is
`a type of relationship that justifies imposition of vicar-
`ious liability. That answer is “no.” There has been no
`evidence in this case that any supposed direct infringer
`acted as an agent, or anything like an agent, of Gi-
`ganews. In fact, there
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