district court granted the defendants’ motion to dismiss the claim with leave to Perfect 10 to
amend.^2152
On appeal, the Ninth Circuit affirmed.^2153 The Ninth Circuit agreed with the district court
that the rules and regulations of the defendants prohibiting member banks from providing
services to merchants engaging in certain illegal activities and requiring member banks to
investigate merchants suspected of engaging in such illegal activities were insufficient to
establish the right and ability to control infringing activity for purposes of vicarious liability.
The court noted that the defendants did not have any ability to directly control the infringing
activity occurring on the web sites at issue, and the court held that the mere ability to withdraw a
financial carrot did not constitute the right and ability to control infringing activity that vicarious
infringement requires.^2154
The court rejected Perfect 10’s analogy to the Napster case on the ground that the
defendants, like Napster, had the ability to policy their systems and failed to exercise that right to
prevent the exchange of copyrighted material. The court noted that Napster’s policing power
was much more intimate and directly intertwined with the infringing activity than the
defendants’ payment systems. Napster could block users’ access to its system and thereby
deprive particular users of use of its location and distribution tools. By contrast, although the
defendants could block access to their payment system, they could not themselves block access
to the Internet, to any particular web sites, or to search engines enabling the location of such web
sites. Nor could the defendants take away the tools the offending web sites used to reproduce,
alter, and distribute the infringing images over the Internet.^2155
Finally, the court rejected Perfect 10’s argument that the defendants’ rules and
regulations imposed on merchant banks gave them contractual control over the content of their
merchants’ web sites sufficient for vicarious liability. The court held that the ability to exert
financial pressure did not give the defendants the right or ability to control the actual infringing
activity taking place on the web sites. The court found the defendants analogous to Google,
which was held not liable in the Perfect 10 v. Amazon case for vicarious infringement even
though search engines could effectively cause a web site to disappear by removing it from their
search results, and reserved the right to do so.^2156 In sum, although the infringing activities at
issue might not be profitable without access to the defendants’ credit card payment systems, the
court held that the “alleged infringement does not turn on the payment; it turns on the
reproduction, alteration and distribution of the images, which Defendants do not do, and which
occurs over networks Defendants do not control.”^2157 Accordingly, because Perfect 10 had failed
(^2152) Id.
(^2153) Perfect 10, Inc. v. Visa International, 494 F.3d 788 (9th Cir. 2007), cert. denied, 553 U.S. 1079 (2008).
(^2154) Id. at 802-03.
(^2155) Id. at 803-04.
(^2156) Id. at 804-05.
(^2157) Id. at 806.