Credit card firms not on hook for piracy

On Tuesday a federal appeals court stated that credit card companies that process payments for Internet pirates aren't liable for copyright infringement.

The other two appeals court judges, Stephen Reinhardt and Milan D. Smith Jr., said that although credit card companies could withhold payment, they didn't possess the tools to prevent the offending websites from reproducing, altering and distributing infringing copies of Perfect 10's photos.

In this situation, where there are a lot of potential infringers, Perfect 10 made public some of the most rich participants as defendants. But intellectual property lawyers said courts were trying to draw clear lines between infringers and the companies that support online commerce and advertising.

Neil J. Rosini, an intellectual property lawyer in New York, who didn't take part in the process, said that in this case only 2 out of 3 judges agreed that credit cards are on the right side of the line. He added that when somebody's involvement in a transaction is relatively peripheral, then legal duties aren't necessarily obvious.

The U.S. 9th Circuit Court of Appeals in San Francisco resolved that a San Jose judge was right in dismissing a lawsuit brought by a Beverly Hills-based publisher against Visa International, MasterCard Inc. and other financial companies.

The 2-1 decision found that Perfect 10 Inc., a publisher of adult magazines and websites, didn't manage to prove that credit card providers were liable as they played no role in helping people find or download the infringing images.

According to the decision, Perfect 10 can not impair the sites, selling access to its erotic photographs without permission. The company claimed about the readiness for a new hearing by a larger panel of appeals court judges.

A majority of the three-judge panel decided that third parties could not be liable for copyright infringement.

If credit card companies were found to contribute to infringement, so might computer makers, software companies and even utility companies.

Andrew P. Bridges, the San Francisco attorney who represented Visa and MasterCard, said that the electric companies should be liable far faster than Visa and MasterCard. He also joked that it took electrons to fire up computer servers to actually engage in the infringement.

In order to avoid the wholesale redistribution of what Perfect 10 described in court filings as "tasteful copyrighted images of the world's most beautiful natural models", the company has been assaulting some adversaries in its campaign.

Last year Perfect 10 obtained a temporary injunction forbidding Google Inc. to display tiny versions of images owned by Perfect 10 that other sites had improperly posted. Nevertheless in May the appeals court reversed the injunction and authorized the search giant to resume the practice. Among the defendants Inc. was also named as its A9 search engine points to Google's search results.

Daniel Cooper, Perfect 10's general counsel, announced that Perfect 10 sued credit card companies in hopes of removing the financial incentive for piracy.

According to Daniel Cooper, the credit card companies were in a "unique position" to prevent copyright infringement as their rules require member banks to investigate merchants suspected of participating in illegal activity.

Perfect 10 President Norm Zada said that banks and payments processors were allowed to knowingly profit from the massive theft of intellectual and potentially even tangible property. In a dissenting opinion, Judge Alex Kozinski agreed with Perfect 10's argument. He wrote that the credit card companies skilfully organize a financial bridge between buyers and sellers of pirated works, allowing th

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