Out-Law News | 07 Dec 2011 | 5:08 pm | 3 min. read
A district court judge in Massachusetts said that ad networks that have knowledge of infringing activity and provide an "essential" service that helps website operators enable that infringement on a "massive scale" can be found liable for that infringement if they are "intimately and causally involved in a vast number of infringing transactions".
The suggestion means that courts in the US could in the future treat ad networks differently to other commercial operators connected to infringing sites, a technology law expert said.
The judge was ruling in a case involving a textbook publisher, Elsevier, which had sued ad network Chitika claiming that it was liable for "contributory infringement" of its copyrights by displaying ads on a website that allowed users to download Elsevier's books for free, according to the ruling.
The judge said that established case law in the US had shown that in order to qualify as a contributory infringer parties must be shown to have had knowledge that infringement was taking place and to have materially assisted in that infringement.
Elsevier had claimed that because Saggi, the operator of pharmatext.org, received no money from users' downloads it was reliant on advertising as its "only source of income". The publisher argued that Chitika had "directly profited" from the alleged infringement on the site because it received a share of the payments for ads the site displayed. This made Chitika liable for contributory infringement, Elsevier argued.
The judge said that Chitika could not be found liable because Elsevier had not provided "plausible facts" to support its view that Chitika "must have had knowledge of the alleged infringement of [Elsevier's] books". It said it was not necessary to determine in this case whether Chitika had "materially" contributed to the alleged infringement on the pharmatext.org site, but suggested it would be possible for ad networks to be found liable for contributory infringement in some cases.
"While Chitika’s advertising payments might make it easier for Saggi’s infringement to be profitable, Chitika did not create, operate, advertise, or promote the infringing websites, and its advertisements were not the 'site' of the infringement." the judge said.
"[Elsevier] allege that Chitika 'enabled Pharmatext to stay in the infringement business by supplying it with income.' They make no allegations as to how much revenue Pharmatext received from Chitika, or how that revenue substantially assisted Pharmatext’s allegedly infringing activities. While the court believes that the materiality standard has not been met by plaintiffs, it need not definitively decide the issue, in light of [Elsevier's] failure to plausibly allege facts demonstrating knowledge on the part of Chitika," he said.
The judge had considered a number of previous rulings on the issue of liability for contributory infringement, including a case involving an adult photos publisher and payments provider Visa.
Perfect 10, which published pictures of naked women, had claimed that Visa and other credit card providers were liable for contributory infringement by knowingly providing "crucial transactional support services" to rival sites that pirated its photos and film clips and then charged users to access the material. Perfect 10 had valued the stolen assets at "billions of dollars".
The judge in that case rejected Perfect 10's claim and determined that to have materially contributed to copyright infringement, the assistance "must bear some direct relationship to the infringing acts."
"To have engaged in contributory copyright infringement, it is not sufficient for the [credit card companies] to merely have contributed to the general business of the infringer. The ability to process credit cards does not directly assist the allegedly infringing web sites in copying [Perfect 10's] works. [The credit card companies] 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," the judge had ruled.
"Though the court in this case found that Chitika was, like Visa, not responsible for contributory copyright infringement on the site it does potentially open the way for ad networks to be found responsible in some future cases, most notably in cases where rights holders directly notify ad networks that infringement is taking place," said Claire McCracken, a technology law expert with Pinsent Masons, the law firm behind Out-Law.com.
"This means that ad networks and other business support service companies must be very careful how they treat such warnings, Had Elsevier served a takedown notice on Chitika it is likely that the knowledge requirement would have been fulfilled. It would then have been for the court to determine whether the ad network had substantially assisted in the alleged infringement" she said.
Under controversial draft US legislation currently under consideration, payment providers and ad networks could both be forced to stop their cooperation with websites found to be infringing by a court.