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Luvdarts, LLC v. AT&T Mobility, LLC, 710 F.3d 1068, 106 U.S.P.Q.2d (BNA) 1324 (9th Cir. 2013) (full-text).
Factual Background Edit
Plaintiff produces and sells mobile messaging content (MMS) — namely, greeting card style messages with texts, graphics, video, and musical material. Defendant is a wireless carrier that created a system that allowed customers to share multimedia from mobile to mobile devices directly. Plaintiff brought suit alleging copyright infringement. It argued that AT&T encouraged direct infringement of plaintiff's copyrights.
District Court Proceedings Edit
Defendant moved to dismiss for failure to state a claim alleging insufficient particularity in the complaint indicating which works were infringed. Plaintiff argued that it listed a number of works that were distributed by defendant's MMS [[network]s in violation of Plaintiff's copyrights. The court found that plaintiff pleaded sufficient facts to make a plausible claim under U.S. copyright law.
Appellate Court Proceedings Edit
The court explained that plaintiff must allege culpable intent and an illegel objective to maintain a contributory infringement claim. Defendant argued that their action did not rise to the level of culpable intent to infringe, and further, intent cannot be inferred by an alleged failure to stop infringing activities by public. Plaintiff argued that MGM v. Grokster was controlling here, where the U.S. Supreme Court held that
|“||one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps take to foster infringement, is liable for the resulting acts of infringement by third partiess.||”|
The court held that the plaintiff showed no facts that defendant's networks were designed with the object of promoting infringement, nor did plaintiff alleged "clear expression," "other affirmative steps," or "specific facts." Furthermore, plaintiff alleged no facts showing the defendant taking any substantial promotional or advertising efforts to encourage infringement of plaintiff's copyrights.
The court held that because defendant wireless networks were capable of engaging in non-infringing uses, in the absence of other evidence of intent it could find no contributory liability for merely failing to take affirmative steps to avoid infringement. The court found no plausible claim that defendant induced infringement of plaintiffs copyrights.
Moreover, the court referred to Perfect 10 v. Amazon.com, and stated that for vicarious liability the plaintiff must allege that the defendant had the ability to control the infringing actions of third parties over its networks, and that the defendant received financial gain from the third parties' infringing activities. The court found no vicarious liability because plaintiffs did not allege sufficient evidencez showing the defendant's ability to monitor or control the content transmitted by zthird parties over defendant's wireless networks.
Also, the court found that plaintiff's system was created after defendant designed their MMS network, and defendant had no affirmative duty to redesign its networks to accommodate technology that was later developed. Further, the court found no financial gain as a result of third parties' alleged copyright infringement over its networks when defendant did not have any particular knowledge of these activities.