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Don’t blame the middleman for pilfered Internet porn. A federal judge in San Jose has decided that credit card companies cannot be held liable for copyright infringements committed by their customers. The ruling by U.S. District Judge James Ware shut down a suit filed by Perfect 10, a Beverly Hills-based purveyor of online pornography. The outfit had sued several companies involved with payments over the Internet, including Visa and MasterCard, for completing transactions at sites that sold stolen Perfect 10 images. “The ability to process credit cards does not directly assist the allegedly infringing Web sites in copying plaintiff’s works,” Ware wrote in a ruling issued in August. “Defendants do not provide the means for distributing those works to others, nor do they provide bandwidth or storage space with which to transfer or store the works.” Perfect 10, which had sued under the theories of contributory and vicarious copyright infringement, wanted the credit card companies held liable for facilitating the buying and selling of the stolen images. But Ware rejected all of the plaintiff’s arguments. “From the beginning, we knew it would probably be decided by a higher court,” said Howard King, a partner at King, Holmes, Paterno & Berliner in Los Angeles who represented Perfect 10. “I didn’t see a lot of rays of hope in Judge Ware’s opinion.” Fred von Lohmann, senior intellectual property attorney at the Electronic Frontier Foundation, hailed the decision, calling it an important step in the fight against overzealous copyright holders. “It gives us a clear outer limit for � copyright infringement,” he said. The Perfect 10 case is one of two matters in the Northern District of California that tests the limits of copyright liability. The other case, which stems from litigation filed against investors in Napster, the online file-sharing system, is a descendant of the earlier copyright infringement dispute that originally embroiled Napster. Earlier this summer, Northern District Chief Judge Marilyn Hall Patel decided that the new Napster case, UMG Recordings v. Bertelsmann AG, could proceed. Record companies want investors held liable for infringement of copyrighted songs. Von Lohmann’s group, which opposes the suit, was disappointed by Patel’s decision because it doesn’t want courts to determine that “liability climbs the ladder,” he said. Michael Page, a partner at San Francisco’s Keker & Van Nest who represents First Data Corp. in the Perfect 10 litigation, agreed that the cases were creating important new law. “These cases � are all about trying to hold someone else who didn’t infringe on a copyright liable,” said Page, who also represents Hummer Winblad Venture Partners in the pending Napster case. In his Perfect 10 ruling, Ware said the legal issue comes down to what degree the credit card companies can control Internet businesses. It is not enough, the judge wrote, for “the defendants to merely have contributed to the general business of the infringer. To have materially contributed to copyright infringement, the � assistance must bear some direct relationship to the infringing acts.” Ware’s ruling cited the older Napster case, A&M Records v. Napster, 239 F.3d 1004, as an example of “substantial contributing conduct” because Napster provided an online index of copyright-protected songs available for free online trading. Jeff Chorney is a reporter at The Recorder, where he covers federal court news.

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