Ninth Circuit: Wireless Carriers Not Liable For Infringing Messages of Their Subscribers

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By David McAuley  

Wireless carriers AT&T, Verizon, Sprint Nextel, and T-Mobile were not liable for vicarious or contributory copyright infringement based on their subscribers' alleged unauthorized sharing of copyrighted content on the carriers' multimedia messaging services, the U.S. Court of Appeals for the Ninth Circuit ruled March 25 (Luvdarts LLC v. AT&T Mobility LLC, 9th Cir., No. 11-55497, 3/25/13).

The carriers did not have the technical capacity to supervise and prevent the infringing activity, nor did they have an obligation to come up with that capability, the court said in an opinion by Judge Diarmuid F. O'Scannlain.

And even if they had had a duty to develop the technical savvy to police this kind of infringement, there was no showing here that the carriers could plausibly come up with an effective system at an acceptable cost, the court said.

Carriers Mobile Networks Being Used to Infringe

The defendants-appellees are all mobile wireless carriers who own networks that enable mobile devices to send and receive messages that include multimedia content. They were sued for copyright infringement by Luvdarts LLC and Davis-Reuss Inc., two companies that produce commercial multimedia-messaging content for mobile devices, such as Luvdarts' greeting-card like messages. Each of their messages contained a notice that it may be shared only once.

However, there were no technical barriers to prevent subscribers from sharing the messages more than once, and Luvdarts claimed that subscribers were ignoring the limit. It argued that the carriers were liable for vicarious and contributory infringement. The district court dismissed the action, Luvdarts LLC v. AT&T Mobility LLC, No. 10-05442, (C.D. Cal. Mar. 17, 2011).

Vicarious Liability Requires Right to Supervise

The Ninth Circuit was no more sympathetic to the argument that the carriers were indirectly liable for the subscribers' infringement. To begin with, the court said, vicarious liability would require a showing, first, that the carriers had the right and ability to supervise the infringing conduct, and, second, that they had a direct financial interest in the activity, A&M Records Inc. v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001).

It was clear that the carriers could not supervise the infringers' acts, the court said. And Luvdart failed to cite any authority for the idea that if the carriers could come up with a system to supervise infringing activity then they should. In fact, the court said, the Napster decision was to the contrary, holding that a party's “right and ability to supervise” should be evaluated in the context of the system's “current architecture.”

In addition, the court continued, to hold the carriers to a duty to change their systems under a theory of vicarious liability would blur the line between that concept and contributory liability. It quoted from the decision in Perfect 10 Inc. v. Inc., 508 F.3d 1146, at 1175 (9th Cir. 2007): “[I]n general, contributory liability is based on the defendant's failure to stop its actions which facilitate third-party infringement, while vicarious liability is based on the defendant's failure to cause a third party to stop its directly infringing activities.”

Under a theory of vicarious liability, an allegation that the defendant failed to implement a change to its system cannot substitute for the required allegation of failure to supervise, the court concluded.

Contributory Liability Requires Actual Knowledge

Turning to the argument concerning contributory liability, the court said that Luvdarts would have to show that the carriers knew of the infringement, and that they induced, caused, or materially contributed to it.

In Napster, the court said, it emphasized that actual knowledge of infringement was required under this theory of liability. The knowledge of potentially infringing uses of a product that comes with “substantial lawful as well as unlawful uses,” is not enough, it said, quoting from MGM v. Grokster, 545 U.S. 913, 932-33 (2005).

Here, the court said, a 150-page list of “notices” Luvdarts sent to the carriers was inadequate to create actual knowledge on the carriers' parts. They were just general lists of titles, there was nothing about which titles were infringed, who infringed them, or when the infringement took place, the court said. These were too vague to comply with the Digital Millennium Copyright Act's more particularized notice requirement, 17 U.S.C. § 512, it said.

Finally, the court dismissed Luvdart's argument that the carriers were engaging in “willful blindness” regarding gaining actual knowledge of infringement. Luvdarts would have to show that the carriers subjectively believe infringement was occurring on their networks, and they took deliberate steps to avoid learning about it, Global-Tech Appliances Inc. v. SEB S.A., 131 S.Ct. 2060, 2070 (2011). It made no such showing, the court said.

It ruled that the district court properly dismissed the action.

Bruce G. Joseph, of Wiley Rein LLP, Washington, argued for the wireless carriers. Perrin Disner, Los Angeles, argued for Luvdarts and Davis-Reuss.

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