Advanced Copyright Law on the Internet

misrepresentations were material in that they resulted in removal of the content

from websites and the initiation of the present lawsuit. The fact that Diebold

never actually brought suit against any alleged infringer suggests strongly that

Diebold sought to use the DMCA’s safe harbor provisions – which were designed

to protect ISPs, not copyright holders – as a sword to suppress publication of

embarrassing content rather than as a shield to protect its intellectual property.^2871

Two weeks after the court rendered its judgment, Diebold agreed to settle the lawsuit by
paying $125,000 in damages and fees to the plaintiffs.^2872

f. Perfect 10 v. CCBill

The facts of this case are set forth in Section III.C.6(b)(1)(i)d. above. In that case, the
defendant Internet Key, an age verification service for adult content websites, filed a motion for
summary judgment under the Section 512(d) safe harbor. Perfect 10 argued that Internet Key
was not entitled to the safe harbor because it was not an information location tool, it had actual
knowledge of infringements, and it was aware of facts or circumstances from which infringing
activity was apparent.^2873

With respect to the issue of whether Internet Key was an information location tool, the
court rejected Perfect 10’s argument that Section 512(d) is limited to OSPs like Google and
Yahoo! that provide links to millions of web sites and that do not have contractual relationships
with their affiliate web sites. Instead, Section 512(d) refers to OSPs who refer or link users to an
online location containing infringing material or activity by using a directory, index, reference,
point, hypertext link or the like. The court concluded that Internet Key’s sexkey.com web site
provided that function and was therefore covered by Section 512(d).^2874

With respect to the knowledge element, Perfect 10 argued that Internet Key should have
known that there were copyright infringements on its clients’ web sites because of the
disclaimers on some of those web sites, which generally claimed that the copyrighted images
were in the public domain or that the webmaster was posting the images for newsworthy
purposes. The court ruled that these disclaimers were not sufficient to raise a “red flag” of

(^2871) Id. at 1204-05. The court also held that the plaintiff’s claim that Diebold, through its inappropriate use of the
DMCA, had interfered with their contractual relations with their respective ISPs, was preempted. “Even if a
copyright holder does not intend to cause anything other than the removal of allegedly infringing material,
compliance with the DMCA’s procedures nonetheless may result in disruption of a contractual relationship: by
sending a letter, the copyright holder can effectuate the disruption of ISP service to clients. If adherence to the
DMCA’s provisions simultaneously subjects the copyright holder to state tort liability, there is an irreconcilable
conflict between state and federal law. Id. at 1205-06.
(^2872) “Diebold Settles Landmark DMCA Suit in Dispute Over Voting Machines,” IP Law Bulletin (Oct. 15, 2004),
available as of Oct. 18, 2004 at http://www.iplawbulletin.com/cgi-bin/absolutenm/anmviewer.asp?a=2381&z=18.
(^2873) Perfect 10, Inc. v. CCBill, 340 F. Supp. 2d 1077, 1097-98 (C.D. Cal. 2004).
(^2874) Id.