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Credit card companies aren’t liable when someone uses their charge card to buy purloined pornography, a federal court in San Jose, Calif., ruled Monday. Ruling from the bench, U.S. District Judge James Ware tossed out a copyright and trademark infringement suit brought against Visa International Service Association and MasterCard International Inc. by Perfect 10 Inc., which publishes an adult magazine and operates an adult Web site. Perfect 10 claims hundreds of Web site operators around the world are selling its trademarked images of women — and that the credit card companies that process these transactions are liable for contributory and vicarious copyright infringement. Andrew Bridges, a partner in Winston & Strawn’s San Francisco office representing MasterCard, said Perfect 10 was trying “to impose a commercial blockade on anyone accused of infringement.” Ware found the credit card companies “are not obliged to manage their merchants away from infringement,” Bridges added. Perfect 10′s attorney, Howard King, of Los Angeles’ King, Holmes, Paterno & Berliner, said his client would appeal to the 9th U.S. Circuit Court of Appeals. “It’s an area where the copyright law has not been directly applied, but it’s logical given the case law,” King said, citing suits against Napster and Grokster Ltd., whose software programs allow music file-sharing over the Internet. While the courts ruled against Napster — which subsequently sold its assets and is now a subscription service — the 9th Circuit found Grokster did not infringe copyrighted music since it did not have a centralized index it could police. King, who also represented Metallica and Dr. Dre in a suit against Napster, said Grokster had no direct contractual relationship with infringers and no ability to deny them access to copyrighted material. By contrast, he said, MasterCard and Visa have a direct contract with the Web site operators infringing Perfect 10′s images and have the ability to cancel that contract. The only way to stop the wholesale theft of copyrighted images “is going to the people who benefit financially from it,” King said. “A worldwide theft ring is being fenced by the processors.” Beverly Hills, Calif.-based Perfect 10 claims credit card companies have a “special relationship” with the infringing Web site operators since they have enhanced requirements for processing the transactions of such high-risk merchants and impose higher fees for disputed charges on them. The case, of course, could have ramifications for businesses in general. And King and Bridges said Ware was cautious about how broadly his decision may be applied to other industries and other plaintiffs. Bridges said the application of the Napster case in Perfect 10 v. Visa International, 04-0371, shows how law made in extreme cases can later be applied in different scenarios. “A lot of copyright [litigation] is being pushed by pornographers who are trying to take advantage of cases brought by more mainstream media,” Bridges said.

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