Back in August, we reported that the adult entertainment publisher ALS Scan filed a lawsuit against CDN provider CloudFlare and the advertising network Juicy Ads. Both companies were sued for contributory copyright infringement, vicarious copyright infringement, and contributory trademark infringement due to their business relations with pirate sites. Both companies filed a motion to dismiss the suit. District judge George Wu is still considering CloudFlare's motion, but he has tentatively granted the motion by JuicyAds.
In the ruling, Wu states that ALS Scan has failed to provide solid arguments for any of its claims against the advertising network. Contributory copyright infringement requires material contribution to infringing activity or inducement to commit infringement. Wu cites a ruling by the ninth circuit where Visa was sued for completing financial transactions for pirate sites. The precedent set by that case is that allowing an infringer to profit does not constitute material contribution to illegal copying. The copying itself could occur anyway, even if no profit was made. Only if someone was assisting in the actual act of copying would it be material contribution. Wu found that ALS has failed to link the display of advertisements by JuicyAds to the actual infringing acts, so it can't be considered material contribution.
Liability on the grounds of inducement can occur if there is a clear expression or action that encourages others to commit acts of infringement. Since the suit filed by ALS does not claim that JuicyAds is directly encouraging its customers to publish infringing content on their websites, there is no case for liability by inducement.
Vicarious infringement is a bit different than contributory infringement, and it requires "the right and ability to supervise the infringing conduct and a direct financial interest in the infringing activity." Again Wu cites the Visa case, which found that Visa was not vicariously infringing because it did not have control over what was posted on the pirate sites and had no way of stopping the distribution of infringing content. JuicyAds also has no control over the content of the sites it does business with, so it cannot be held liable either. The argument by ALS that JuciyAds can harm pirate sites by refusing to do business with them doesn't meet the standard set by precedent.
Contributory trademark infringement requires inducing another party to commit infringement or supplying a product with the knowledge that it is being mislabled by the infringer. The court found that no argument was made by ALS that any inducement occurred and in fact ALS "does not even allege facts establishing what the purported trademark infringement entailed." ALS also failed to make any argument that JuicyAds is supplying a product with the knowledge that it is being mislabeled.
For all of these reasons, the court has tentatively ruled in favor of dismissing all the claims against JuicyAds. A hearing has been scheduled giving ALS a final chance to persuade the judge before the dismissal is finalized. JuicyAds' legal team is already celebrating the decision. "The defense team views this decision as a victory for both JuicyAds and for the online advertising industry," JuicyAds' lawyer Lawrence Walters stated, "Unchecked efforts to hold distant online service providers responsible for indirect copyright infringement has the potential to stifle innovation."
Should advertisers be held liable for infringement if they do business with pirate sites? Leave your comments below.