Ninth Circuit shields credit card companies from secondary copyright liability

On Tuesday, the Ninth Circuit Court of Appeals refused to extend liability for copyright infringement to credit card companies that process payments made to web sites selling infringing photographs.  Perfect 10, Inc., a subscription service that features copyrighted photographs of models, contended that Visa International and other major financial institutions could be held liable under a theory of contributory copyright infringement for processing payments to websites that infringe on Perfect 10's copyrights.  The Ninth Circuit held that Perfect 10 failed to state a claim against the credit card companies, even if the companies knew of the infringing conduct, because the mere act of processing payments neither materially contributed to nor induced the infringement. 

Unlike the recent case against Napster, the infringing images did not pass through the servers of the credit card companies, and unlike Perfect 10's earlier case against Amazon in which Perfect 10 prevailed, the credit card companies did not substantially assist websites to distribute the infringing material.  Moreover, the credit card companies did not induce the infringement, unlike the Grokster case that involved distribution of a file sharing program to enable infringement, because they took no affirmative steps to foster infringement.  Accordingly, while Amazon may be held liable for assisting sales of infringing material on the Internet, credit card companies remain immune, at least in the Ninth Circuit.