System design alone not enough for copyright liability

Luvdarts, LLC v. AT&T Mobility, LLC, No. 11-55497 (9^th Cir. Mar. 25, 2013)

Luvdarts sued mobile multimedia messaging networks (MMS networks) based on copyright infringement over those networks. Luvdarts sells commercial MMS content, such as “greeting card style” messages, news, coupons, ad campaigns, and games.  Mostly it sells “greeting cards” for users to forward to friends.  Luvdarts includes a notice saying that its content may be shared only once, but there’s no technical impediment to recipients forwarding a message to many people, and Luvdarts alleged that users were ignoring the notices and resharing the content, infringing Luvdarts’ copyrights.  When Luvdarts demanded “accountability” from the carriers, they took no action, and Luvdarts sued for vicarious infringement and inducement.

Vicarious liability requires the right and ability to supervise infringing activity and a direct financial interest in the activity. But Luvdarts conceded that the carriers presently had no way of supervising the use of their networks for infringement, instead arguing that they could develop a system that would give them the right and ability to supervise.  But right and ability should be evaluated in the context of current architecture, and to do otherwise would blur the distinction between contributory and vicarious liability.  Under contributory liability, failure to implement a digital rights management system could be circumstantial evidence of an intent to induce infringement (ugh), but it couldn’t substitute for a capacity to supervise for purposes of vicarious liability.  In any event, Luvdarts failed to allege facts plausibly showing that the carriers could implement an effective system—it didn’t explain what that system would be, how it would function, or how much it would cost.

Turning to contributory liability, that requires knowledge plus inducement, causation, or material contribution.  Liability requires more than generalized knowledge of the possibility of infringement, since the services have substantial lawful uses.  Luvdarts failed to allege the requisite specific knowledge of infringement.  Its “notices” to the carriers “failed to notify the Carriers of any meaningful fact. The notices were 150-page-long lists of titles, apparently just a transcription of every title copyrighted by Luvdarts, which indicated that they wanted ‘accountability’ for the unauthorized distribution of those titles for the period from May 2008 to November 2009.”  The DMCA “clearly precludes notices as vague as the notices here,” which were “indistinguishable from a generalized notification that infringement is occurring.”

Luvdarts also argued willful blindness, but willful blindness must also go to specific facts.  Luvdarts didn’t allege that the carriers took active steps to avoid acquiring knowledge. At most, the carriers were allegedly indifferent to the risk of infringement.  That’s not the standard, which requires subjective belief that infringement is likely occurring plus deliberate actions to avoid learning about it.  Luvdarts failed to state a claim on which relief could be granted.