## Facts

- Perfect 10, Inc. published an adult magazine and operated a subscription website hosting thousands of copyrighted images, and it asserted related trademark and model publicity rights.
- Third-party websites allegedly copied and displayed Perfect 10 images without authorization.
- CCBill provided payment processing services to subscription and membership websites, including some accused of hosting infringing material.
- CWIE provided web hosting and Internet connectivity services to various websites, including some accused of infringement.
- Perfect 10 sued CCBill and CWIE for copyright and trademark infringement and for state-law claims including right of publicity, unfair competition, and false advertising, asserting defendants facilitated and profited from infringing sites.
- The district court largely ruled that defendants qualified for DMCA safe harbors and that CDA § 230 barred the state-law claims to the extent they treated defendants as publishers of third-party content.
- Perfect 10 appealed; defendants cross-appealed; the Ninth Circuit affirmed in part, reversed in part, and remanded.

## Issues

1. Whether CCBill and CWIE “adopted and reasonably implemented” a repeat-infringer termination policy and maintained a workable DMCA notice process under 17 U.S.C. § 512(i).
2. Whether Perfect 10 provided DMCA-compliant takedown notices sufficient to remove defendants from § 512 safe-harbor protection.
3. Whether defendants had “red-flag” awareness of infringement or an obligation to investigate the legality of images based on site characteristics (including password-hacking sites and suggestive domain names).
4. Whether defendants failed to accommodate “standard technical measures” under § 512(i)(1)(B).
5. Whether CDA § 230(e)(2)’s “intellectual property” exception includes state-law intellectual-property-like claims (such as right of publicity and state unfair competition), or only federal intellectual property law.

## Decision

- The Ninth Circuit affirmed substantial DMCA safe-harbor protection for defendants where Perfect 10’s notices frequently failed to meet statutory notice requirements.
- The court held defendants could satisfy § 512(i) by maintaining a working notification system and procedures for DMCA-compliant notices, and by not obstructing rights holders’ ability to gather information for notices; imperfect internal recordkeeping alone did not show unreasonable implementation.
- The court rejected a rule requiring service providers to determine whether photographs were lawful in order to benefit from safe harbor.
- The court held hosting password-hacking websites was not, by itself, a “red flag” establishing disqualifying awareness of infringement.
- The court remanded for further proceedings on whether certain measures implicated “standard technical measures” that providers must accommodate under the DMCA.
- The court held CDA § 230’s “intellectual property” exception is defined by federal law; thus § 230 barred Perfect 10’s state-law right of publicity and related state claims that sought to treat defendants as publishers of third-party content.
- The court affirmed in part, reversed in part, and remanded for limited further proceedings consistent with these rulings.

## Legal Principles

- A service provider “implements” a repeat-infringer policy under 17 U.S.C. § 512(i) when it maintains a working DMCA notification system, processes DMCA-compliant notices, and does not actively interfere with a copyright owner’s ability to submit effective notices.
- Defective or noncompliant takedown notices under § 512(c)(3) generally do not create the knowledge or notice needed to defeat a provider’s DMCA safe-harbor protection.
- The DMCA safe-harbor framework does not impose a general duty on intermediaries to investigate whether hosted images are lawful absent statutory notice or clearly apparent infringement.
- “Red-flag” awareness requires more than generalized suspicion; certain site characteristics (including password-hacking content) are not automatically disqualifying.
- Whether a protection technology is a “standard technical measure” under § 512(i)(1)(B) may require record development on industry adoption and applicability.
- For CDA § 230(e)(2), “intellectual property” refers to federal intellectual property law; state-law publicity and similar state causes of action may be barred by § 230 when they treat an intermediary as the publisher or speaker of third-party content.

## Conclusion

The Ninth Circuit largely protected online intermediaries under the DMCA and CDA by enforcing strict statutory notice requirements, limiting “red-flag” and investigation duties, and interpreting CDA § 230’s intellectual-property exception as confined to federal law, while remanding for further consideration of possible “standard technical measures” and related implementation questions.


Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007)