Usenet Provider Giganews Wins Landmark Copyright Battle

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Giganews is celebrating a hard-fought legal battle against adult publisher and serial copyright litigant Perfect 10. The Court of Appeals for the Ninth Circuit handed the Usenet giant a comprehensive victory in the long-running case, one that will prove so financially damaging to Perfect 10 that the company will go into liquidation.

Over the years, adult image publisher Perfect 10 developed a reputation for making a business out of suing Internet services for alleged copyright infringement.

The company targeted Google, Amazon, MasterCard and Visa, even hosting providers such as LeaseWeb and OVH. After securing several private settlements in earlier actions, the company sued Usenet provider Giganews after Perfect 10 images appeared on Giganews servers. Things didn’t go well.

In November 2014, the U.S. District Court for the Central District of California found that Giganews was not liable for the infringing activities of its users. Perfect 10 was subsequently ordered to pay Giganews $5.6m in attorney’s fees and costs.

With Perfect 10 not quite done the case went to appeal, but in an opinion just handed down by the Court of Appeals for the Ninth Circuit, the adult publisher has received a crushing defeat. The panel held that to be held liable for direct copyright infringement, Giganews must have committed some voluntary act that caused the infringement to occur. The requirements for such “volitional conduct” were not met.

“The panel concluded that the evidence showed only that Giganews’ actions were akin to passively storing material at the direction of users in order to make that material available to other users upon request, or automatically copying, storing, and transmitting materials upon instigation by others,” the ruling reads.

The panel also found that Giganews was not liable for contributory infringement after Perfect 10 failed to show that Giganews “materially contributed to or induced infringement.”

On Perfect 10’s claim for vicarious infringement, the panel upheld the district court’s summary judgment in Giganews’ favor, noting that Perfect 10 failed to show a “causal link between the infringing activities and a financial benefit to Giganews.”

Ron Yokubaitis, Co-CEO of Giganews, said that his company’s decision not to give in to Perfect 10 had resulted in a long and hard-fought battle, but the end result meant it had been worth it.

“We decided that it would be important to stand up to Perfect 10 and not be bullied by its abusive litigation tactics.  We were not going to settle this case just to avoid the risk of potentially catastrophic statutory damages in today’s crazy copyright world, a threat that unscrupulous plaintiffs like Perfect 10 use to extract unjust settlements from more timid companies,” he said.

“We took a stand for Usenet, for technology and online platforms, for the public, and for ultimate benefit of rational copyright law.  We were not just battling Perfect 10:  standing behind Perfect 10 – and even sharing in its oral argument at the court of appeals – was the Recording Industry Association of America(RIAA), which tried to argue that it was voicing the interests of small copyright holders.”

Giganews went on to thank several groups that gave it support during its battle with Perfect 10, including the Internet Infrastructure Coalition, EFF, and Public Knowledge. While Giganews will continue in the Usenet business, Perfect 10’s efforts to extract billions in damages from the provider have essentially developed into a suicide mission.

“With this decision, Perfect 10’s days as a copyright troll masquerading as a porn company are now finished,” Giganews said.

“The case now moves to its final stage to collect attorney’s fees from Perfect 10.  Giganews is seeking the appointment of a receiver to take charge of all of Perfect 10’s copyrights, trademarks, and domain names and to liquidate them in partial satisfaction of Giganews’ judgment against Perfect 10.”

The only area where Giganews failed to convince the court was in its request to add Perfect 10 founder Norman Zada to the verdict. The district court already denied that request and the panel at the court of appeal upheld that decision.

The full ruling is available here


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