Even if a business does not directly infringe a trademark or copyright, courts seem more willing to hold companies vicariously liable for contributing to others’ infringement. Recent decisions by the Ninth Circuit indicate that determining when such liability may arise can be tricky.
In Perfect 10, Inc.. v. Visa Intern. Service Ass’n, 2007 WL 1892885 (9th Cir. 2007), the US Court of Appeals for the Ninth Circuit held that Visa couldn’t be held vicariously or contributorily liable for allowing the purchase of copyright protected, and violated, images. Perfect Ten sued Visa, Mastercard, and other affiliated banks for processing credit card payments to websites that infringe Perfect 10’s intellectual property rights. Perfect Ten also alleged that international websites stole its images, altered them, and then illegally offered them for sale online. Rather than suing the direct infringers, Plaintiffs sued the deeper pockets – the financial institutions. The Ninth Circuit held that, despite having knowledge of the on going infringement, the credit card processors could not be held liable for inducing, enabling, or contributing to the infringing activity in the same way defendants in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), and Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996), had been.
But in another case involving Perfect 10, the Ninth Circuit held that Google could be held contributorialy liable. In Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701 (9th Circ. 2007), the court concluded that Google could be liable for infringement if it had knowledge that the infringing images were available using its search engine and failed to take steps to prevent further damage to Perfect 10’s copyrighted work. The distinction drawn by the court was that Google’s search engine itself assists in the distribution of infringing content to the Internet users, while Visa and the financial institutions do not. The court in Perfect Ten v. Visa did acknowledge, however, that the financial institutions do make it more profitable for infringers to violate copyrights.