Cybernet’s vicarious liability (see Section II.C.3(d) above),^2485 although it agreed with the
Hendrickson v. eBay and CoStar courts that the mere ability to exclude users from its system is
not of itself sufficient right and ability to control infringing activity to deny the safe harbors to a
service provider.^2486 The court expressed no opinion on the question whether the “directly
attributable” language in the safe harbor is narrower or equivalent to the general vicarious
infringement requirement of a direct financial benefit, but ruled that in any event the direct flow
of income to Cybernet based on the number of new subscribers signed up by its member sites at
which infringing activity was taking place was sufficient to establish a financial benefit “directly
attributable” to infringing activity.^2487
Finally, the court held that there was no evidence presented that Cybernet ever
“expeditiously” removed infringing material from its system, disabled links, or altered its search
engine under its DMCA policy. Accordingly, the court concluded that there was little likelihood
that Cybernet would qualify for the safe harbors.^2488 (An additional aspect of the court’s ruling
with respect to the Section 512(d) safe harbor is set forth in Section III.C.6(b)(1)(iv) below.)
Important Principles. The court’s interpretation of the obligations imposed on a service
provider by Section 512(i) are interesting. Specifically, Section 512(i) is directed toward
elimination of repeatedly infringing users, whereas Section 512(c) is directed to elimination of
infringing materials. Thus, under “appropriate circumstances,” a service provider must deny all
further service to a user who is repeatedly using the service to infringe, even if the service
provider has in every instance removed the particular infringing material that has been identified.
In the Perfect 10 v. Cybernet Ventures case, webmasters who had their sites taken down upon
notice of infringing material would often simply set up a new site and continue offering
infringing materials. The Perfect 10 v. Cybernet Ventures court ruled that in such circumstances,
the defendant should have ceased allowing those webmasters to be a part of its service entirely,
regardless of the site from which they were operating.
What constitutes an “appropriate circumstance” for denial of further services to a repeat
infringer is unclear from the case. The court speaks of “blatant, repeat infringement by particular
users, particularly infringement of a willful and commercial nature.”^2489 This suggests a fairly
high standard for an “appropriate circumstance.” However, the court also stated that these were
circumstances in which a service provider should “at a minimum” terminate services to an
infringer, so one cannot assume that blatant or willful infringements of a commercial nature are
the only circumstances under which it would be “appropriate” to terminate a user.
The court’s rulings with respect to the notice requirements of Section 512(c) are also
interesting. First, under those rulings, a service provider’s notification procedures must allow for
(^2485) Id. at 1181.
(^2486) Id.
(^2487) Id.
(^2488) Id. at 1182.
(^2489) Id. at 1177.