On March 29, 2007, the U.S. Court of Appeals for the Ninth Circuit (“9th Circuit”) interpreted the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”) to potentially provide broader protection for Internet service providers and others who provide links to and/or host third-party websites. Perfect 10, Inc. v. CCBill LLC1 involved allegations of copyright infringement against CCBill, a company that provides consumers with the ability to pay for online subscriptions using a credit card, and CWIE, a web-hosting company. Perfect 10, which operates a website by the same name with adult content, alleged that CCBill and CWIE infringed its copyrights by linking to and hosting websites that contained allegedly infringing content.

The DMCA provides service providers with certain safe harbors from claims of copyright infringement based upon the content of linked and/or hosted websites. The prerequisites for application of the safe harbors are set forth in 17 U.S.C. § 512(i) and include (1) the adoption and reasonable implementation of a policy for termination of repeat infringers and (2) accommodation and non-interference with copyright owners’ standard technical measures for identifying and protecting copyrighted works.

Although the DMCA does not define “reasonable implementation” of a policy for termination, the court held that a policy is implemented when there is a working notification system and a procedure for dealing with DMCA-compliant notifications, and the service provider does not actively prevent copyright owners from collecting information needed to issue these notifications. The implementation will be found reasonable when the service provider terminates users when appropriate. A service provider may be liable for activities of repeat infringers if it does not act expeditiously once it knows of the infringing activity. This knowledge may be imparted by actual knowledge of the infringement, awareness of facts or circumstances from which infringing activity is apparent, or receipt of notification of claimed infringement that meets the statutory requirements.2

The 9th Circuit made clear that there is no affirmative duty on service providers to search for potentially infringing material on customers’ websites. Further, infringement will not be “apparent” to the service provider unless the notification of claimed infringement substantially complies with each of the specific requirements in § 512(c)(3). A compilation of various communications cannot together constitute sufficient notice to a service provider of the claim of infringement. A court may also consider substantially compliant notices from third parties in its determination of whether the service provider’s policy is reasonably implemented. Here, the court found that CCBill had appropriately implemented its policy because it routinely recorded the webmasters associated with allegedly infringing sites, even though its records omitted a number of dates and names.

The court went on to discuss the application of the DMCA safe harbor provisions to website linking. The content displayed in Perfect 10 was not itself infringing, but linked to allegedly infringing material. The 9th Circuit held that the safe harbor contained in § 512(i) does not require the transmitted communications to be infringing to be eligible for immunity, rather “[s]ervice providers are immune for transmitting all digital online communications, not just those that directly infringe.” If the communication qualifies for immunity, the grant of immunity for transient connections (linking one website to another) with infringing material is available under § 512(a).

The court also reviewed the plaintiff’s state law claims in light of the Communications Decency Act, which establishes broad immunity for claims against service providers based upon content originating with third-party users of the service.3 The Communications Decency Act, however, does not provide immunity to service providers for claims based upon “intellectual property” rights, but the Act does not define “intellectual property.” 4 The 9th Circuit ruled that the Communications Decency Act’s immunity exception must be read to apply to federal intellectual property rights, and therefore the service providers were entitled to immunity from the plaintiff’s state law claims of unfair competition and violation of the right of publicity.