Legal Updates

Intellectual Property Law - Copyright Infringement – Vicarious Liability – Liability for Copyright Infringement

The case of Perfect 10 Inc v Visa International Service Association 83 U.S.P.Q.2d 1144 (9th Cir. 2007) involved a dispute over vicarious liability for copyright infringement. Perfect 10 operated a subscription website and published a magazine which features copyrighted images of models. The defendant in this case, Visa International Service Association, is a creditor that accepts credit card payments for the purchase of copyrighted images on competitor websites.

In 2006, Perfect 10 sued Visa for its acceptance of credit cards on websites that infringed Perfect 10’s copyrights. The 9th circuit found that Visa did not induce or materially contribute to the infringing activity of consumers. The infringement in question was as a result of the failure to obtain a license to distribute, not from processing payments. Visa was deemed to be not vicariously liable for infringement because they had no right or ability to control the infringing activity.

The court held that:

“…Contributory infringement is found when a defendant engages in conduct that encourages or assists the infringement”.

Here there were no affirmative acts by Visa that suggested that third parties should infringe Perfect 10’s copyrighted images. Accordingly, the court found that Visa did not facilitate the improper conduct at issue as they merely processed credit card payments. Visa neither caused copyrighted material to pass over any Visa computers nor distributed copyrighted material outside of their company. It was held that without evidence that a company directly controlled or encouraged the infringing activity, liability for copyright infringement will not be found.

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© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.