The court noted that the financial services were not essential to the functioning of the allegedly
infringing web sites because they could employ intermediate payment services if the defendants
terminated their merchant accounts. Furthermore, even if the defendants provided services that
materially contributed to the functioning of the web site businesses, there was no factual basis for
the allegation that they materially contributed to the alleged infringing activities of the web sites.
The defendants’ ability to process credit cards did not directly assist the allegedly infringing web
sites in copying the plaintiffs’ works. Accordingly, the court ruled that Perfect 10 had not
adequately pled a claim for contributory infringement, although the court granted Perfect 10
leave to amend its complaint to establish a relationship between the financial services provided
by the defendants and the alleged infringing activity.^2027
On appeal, the Ninth Circuit affirmed.^2028 With respect to contributory infringement, the
court noted that it need not address the knowledge prong because it found that Perfect 10 had not
pled facts sufficient to establish that the defendants induced or materially contributed to the
infringing activity.^2029 With respect to material contribution, the court held that merely
continuing to process credit card payments to the infringing web sites despite knowledge of
ongoing infringement was insufficient contribution for contributory liability because such
payment services had no direct connection to the actual infringing activities of reproduction or
distribution of the plaintiff’s copyrighted material. The defendants’ services did not assist users
in searching for infringing images, nor provide links to them, nor did infringing materials pass
through the defendants’ payment systems. Although the payment services made it easier for web
sites to profit from the infringing activities, this fact was insufficient for contributory liability
because the services did not directly assist in the distribution of infringing content to Internet
users. The court noted that even if users couldn’t pay for images with credit cards, infringement
could still continue on a large scale because other viable funding mechanisms were available.^2030
The court rejected Perfect 10’ argument that the defendants’ payment services were akin
to provision of the site and facilities for infringement analogous to the Fonovisa case. The court
noted that the web sites on which the infringing photographs resided were the “site” of the
infringement, not the defendants’ payment networks. If mere provision of a method of payment
could be considered a “facility” of infringement, so too could the provision of computers, of
software, and of electricity to the infringing web sites, and such a rule would simply reach too
far.^2031
With respect to inducement, Perfect 10 argued that the Grokster decision was analogous
because the defendants induced customers to use their cards to purchase goods and services, and
should therefore be held guilty of specifically inducing infringement if the cards were used to
purchase images from sites that had stolen content from Perfect 10. The court rejected this
(^2027) Id.
(^2028) Perfect 10, Inc. v. Visa International, 494 F.3d 788 (9th Cir. 2007), cert. denied, 553 U.S. 1079 (2008).
(^2029) Id. at 795.
(^2030) Id. at 796-797.
(^2031) Id. at 798-800.