Advanced Copyright Law on the Internet

copyrighted song may establish “facts or circumstances” giving rise to “red flag”

knowledge of infringement.^2842

z. Perfect 10 v. Giganews

The facts of this case are set forth in Section III.C.2(n) above. After the court’s
preliminary rulings on Giganews’ motions to dismiss the claims of direct, contributory and
vicarious liability (see Sections II.A.4(v) and III.C.2(n) above), Perfect 10 sought summary
judgment on the defendants’ assertions of the Section 512(c) safe harbor. At issue were whether
five notices Perfect 10 sent to Giganews met the requirements of Section 512(c)(3)(A), whether
Giganews had reasonably implemented a repeat infringer termination policy, and whether
Giganews satisfied other requirements for safe harbor protection.^2843

Turning first to the adequacy of Giganews’ repeat infringer policy, the court noted that
Giganews had a “two-strike” policy – upon learning that a user had posted an infringing
message, Giganews froze the user’s account and provided a warning that another infringement
would result in termination of the account. If the user responded that he or she would not post
any additional infringing material, the account was unfrozen. If Giganews was informed that the
user had posted any additional infringing material, the user’s account would be terminated. The
court concluded that this was sufficient to establish that Giganews had established a repeat
infringer policy. It then turned to Perfect 10’s challenge concerning whether Giganews had
reasonably implemented its policy.^2844

Perfect 10 argued that Giganews was required to remove all of a repeat infringer’s
content, not just the content a copyright holder had specifically identified as infringing. The
court rejected this argument on the ground that Section 512(i)(a)(A) refers to termination of
subscribers and account holders, not the deletion of messages. In addition, Perfect 10’s reading
would require a service provider to take down all of a user’s messages, not just the infringing
ones, which would not serve any purpose of preventing infringement. The court therefore
rejected Perfect 10’s argument. Perfect 10 also argued that the fact that Giganews had
terminated only 46 repeat infringers since 2008 despite removing more than 531 million
infringing messages over the past year demonstrated that Giganews did not properly implement
its policy. The court rejected this argument, noting that the inference Perfect 10 sought to draw
from such facts was not compelled and therefore was an inadequate basis for summary
judgment.^2845

Next Perfect 10 argued that the fact that Giganews did not know the identity of all users
whose messages resided on its servers demonstrated that Giganews’ policy was inadequate,
because if Giganews could not identify a user, it could not reasonably implement a repeat
infringer termination policy. The court rejected this argument. Because all Usenet service

(^2842) Id. at 556.
(^2843) Perfect 10, Inc. v. Giganews, Inc., 993 F. Supp. 2d 1192, 1194 (C.D. Cal. 2014).
(^2844) Id. at 1197.
(^2845) Id. at 1197-98.