NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS JUL 17 2020

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALS SCAN, INC., a Maryland corporation, No. 18-55615

Plaintiff-Appellant, D.C. No. 2:16-cv-05051-GW-AFM v.

STEADFAST NETWORKS, LLC, a MEMORANDUM* Delaware limited liability company,

Defendant-Appellee.

ALS SCAN, INC., a Maryland corporation, No. 18-56173

Plaintiff-Appellee, D.C. No. 2:16-cv-05051-GW-AFM v.

STEADFAST NETWORKS, LLC, a Delaware limited liability company,

Defendant-Appellant.

Appeal from the United States District Court for the Central District of California George H. Wu, District Judge, Presiding

Argued and Submitted January 24, 2020 Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: CLIFTON and LEE, Circuit Judges, and BLOCK,** District Judge.

Dissent by Judge CLIFTON

The key issue on appeal is whether a data-center service provider has taken

adequate “simple measures” to avoid contributory copyright infringement if it

forwarded notices of such infringement to the hosting website — and every alleged

infringed material was taken down. We affirm the district court’s grant of summary

judgment in favor of Steadfast Networks, LLC, the data-center service provider,

because it has taken sufficient “simple measures” by forwarding the infringement

notices. We, however, reverse the district court’s denial of attorneys’ fees to

Steadfast and remand.

We have jurisdiction under 28 U.S.C. § 1291. We review de novo a grant of

summary judgment, Branch Banking & Tr. Co. v. D.M.S.I., LLC, 871 F.3d 751, 759

(9th Cir. 2017), and we review a denial of an award for attorneys’ fees for abuse of

discretion, Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1037–38 (9th Cir.

2018).

1. Background: At the center of these appeals is Imagebam.com, a

website that hosts user-uploaded content. That website has allegedly become an

unauthorized hub of copyrighted adult material, some of which was created by ALS

** The Honorable Frederic Block, United States District Judge for the Eastern District of New York, sitting by designation.

2 Scan, Inc, the plaintiff in this case. ALS sued Steadfast, a data-center service

provider that leases servers to its many customers, including Imagebam’s owner, so

that they can host data on the Internet. ALS sent multiple notices of copyright

infringement to Steadfast about the images on Imagebam. Whenever it received

such a notice, Steadfast forwarded it to the designated agent for Imagebam. Every

copyrighted image at issue was then removed by Imagebam.

2. Contributory copyright infringement: This court has held that a party may

avoid liability for contributory copyright infringement if it takes “simple measures”

to “prevent further damage to copyrighted works.” Perfect 10, Inc. v. Giganews,

Inc., 847 F.3d 657, 671 (9th Cir. 2017). In this case, Steadfast took those “simple

measures” by forwarding ALS’s notices of infringement to the owners of Imagebam.

There is no dispute that the owner of Imagebam took down all the infringed

materials.

ALS disputes whether Steadfast in fact took any actions in response to its

notices, but it fails to point to any evidence creating a genuine dispute of fact. ALS

asserts that Steadfast’s corporate representative testified during his deposition that

Steadfast did nothing in response to the notices. In reality, Steadfast’s representative

was asked whether Steadfast had followed up with the owner of Imagebam after

forwarding the notices. Whether Steadfast followed up or not is irrelevant because

it is undisputed that Steadfast forwarded the notices and the infringed images were

3 taken down.

ALS complains that it is not enough to forward the infringement notices to

Imagebam’s owner in light of the number of infringement notices that Steadfast has

received. But the number of notices is legally irrelevant. To be liable for contributory

copyright infringement, the knowledge required is “more than a generalized

knowledge by the Carriers of the possibility of infringement” because “contributory

liability [does] not automatically follow where the ‘system allows for the exchange

of copyrighted material.’” Luvdarts, LLC v. AT & T Mobility, LLC, 710 F.3d 1068,

1072 (9th Cir. 2013) (quoting A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004,

1021 (9th Cir. 2001)). This court has emphasized that “‘actual knowledge of specific

acts of infringement’ is required.” Id. (emphasis added) (quoting Napster, 239 F.3d

at 1021). The number of notices that Steadfast previously received gives at most a

general knowledge that infringement will likely occur again in the future; this does

not give notice of any specific acts of infringement that are actually occurring.

We are sympathetic to ALS’s “whack-a-mole problem,” but we are persuaded

by the specific facts of this case that Steadfast’s “simple measures” are enough.

Steadfast forwarded each notice to Imagebam’s owner, and every infringing work

was taken down. Nor is there evidence that Steadfast had any other simple measures

at its disposal. Steadfast did not operate, control, or manage any functions of

Imagebam.com. It could not supervise, access, locate, or delete Imagebam

4 accounts. It had no way of knowing, based on a URL hyperlink contained in the

notices of copyright infringement, where the infringing works or the Imagebam

accounts responsible for illegal uploads were located on Flixya’s servers. What

measures were available to prevent further damage to ALS’s copyrighted images,

Steadfast took. See Perfect 10, Inc., 847 F.3d at 671 (“Reviewing this issue de novo,

we hold that there were no simple measures available that Giganews failed to take

to remove Perfect 10’s works from its servers.”). Further, ALS apparently has not

pursued other options that may ameliorate the “whack-a-mole” problem (e.g., taking

action against Imagebam’s owner or the individuals uploading the unauthorized

images).

3. Contributory trademark infringement: Steadfast is also not liable for

contributory trademark infringement. Steadfast can only be liable for contributory

trademark infringement if it had “direct control and monitoring of the

instrumentality used by [the] third party to infringe” the marks at issue. Louis Vuitton

Malletier, S.A. v. Akanoc Sols., Inc., 658 F.3d 936, 942 (9th Cir. 2011) (internal

quotation marks and alterations omitted). Here, there is no dispute that Steadfast did

not operate or manage Imagebam or have access to individual users’ accounts or

content. Steadfast thus could not have been “monitoring” the instrumentality used

for trademark infringement.

3. Attorneys’ fees: This court explained in Historical Research v. Cabral that

5 “‘exceptional circumstances’ are not a prerequisite to an award of attorneys fees”

under the Copyright Act. 80 F.3d 377, 378–79 (9th Cir. 1996) (per curiam). The

district court accurately discussed the various factors for awarding attorneys’ fees

under the Copyright Act, but it also discussed whether there were “exceptional”

circumstances (which is required under the Lanham Act but not the Copyright Act).

In light of this ambiguity in the record, we reverse and remand on the issue of

attorneys’ fees.

This court therefore AFFIRMS the district court’s entry of summary

judgment in favor of Steadfast, but REVERSES AND REMANDS the district

court’s denial of attorneys’ fees.

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FILED

Nos. 18-55615 and 18-56173, ALS Scan, Inc. v. Steadfast Networks, LLC

JUL 17 2020

CLIFTON, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

I respectfully dissent. I would reverse the district court’s grant of summary

judgment on the contributory copyright infringement claim.

The majority disposition correctly identifies, at 2, the key issue as being

whether Steadfast Networks, LLC, took “adequate ‘simple measures’ to avoid

contributory copyright infringement.” It concludes that it did. But the copyright

infringement did not stop, so how could the measures taken be deemed

“adequate”?

The district court held that “a jury could reasonably conclude that Steadfast

was aware of the whack-a-mole problem that [ALS] faced.” It was necessarily

apparent to Steadfast that copyright infringements would almost certainly continue,

given the history alleged. Hundreds of repeat infringements were reported to

Steadfast. Steadfast did not contend (let alone present any evidence to support a

conclusion) that the “simple measures” it took did, in fact, “prevent future damage

to copyrighted works,” the standard purportedly applied by the majority, at 3

(quoting Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 671 (9th Cir. 2017)).

The majority appears to accept that copyright law is powerless to address the

whack-a-mole problem, but it should not be. The majority’s unstated premise

seems to be that Steadfast bears no responsibility for infringements that it is aware are likely to occur in the future. I do not view the law to be so feeble.

In Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996),

we addressed copyright infringement in the context of a swap meet or flea market.

We held that the operator of a swap meet could be held liable to the owner of

copyrights and trademarks to music recordings for contributory copyright

infringement for the sale of counterfeit recordings by vendors at the swap meet.

The operator was aware that vendors were selling counterfeit recordings. What

mattered was not the operator’s knowledge of an individual sale of a specific

counterfeit, but its awareness of the infringing practice. It had been informed by

the local sheriff of the practice and of the seizures on more than one occasion of

thousands of infringing recordings. Similarly, Steadfast could be found in this case

to have had knowledge of the infringing practice and of the near certainty of future

violations. The district court concluded as much.

The reason the majority appears willing to give Steadfast a free pass from

liability for contributory copyright infringement is its conclusion that Steadfast has

qualified for the protections provided in our cases for enterprises that provide

Internet services. Steadfast is a host for Internet sites. Specifically, we have held

that “a computer system operator can be held contributorily liable if it ‘has actual

knowledge that specific infringing material is available using its system,’ and can

2 ‘take simple measures to prevent further damage’ to copyrighted works, yet

continues to provide access to infringing works.” Perfect 10, Inc. v. Amazon.com,

Inc., 508 F.3d 1146, 1172 (9th Cir. 2007) (citations omitted), quoted in Perfect 10,

Inc. v. Giganews, Inc., 847 F.3d 657, 671 (9th Cir. 2017).

The majority appears to interpret that standard to require that an operator can

be held liable only if it “continues to provide access” to the very same infringing

works, but that is not what we said. To the contrary, the language used in our cases

has been broader: “continues to provide access to infringing works.” That fits

Steadfast. It continued to provide access to infringing works. They might have

been other infringing works, but they were no less infringing, and as noted above,

Steadfast could be found to have been aware that the future infringement would

happen.

This reading of our case law also comports with the scheme of federal

legislation. Even copyright statutes intended to immunize Internet service

providers expressly contemplate liability for failure to prevent repeat

infringements. The Digital Millennium Copyright Act (DMCA) shields from

liability only those service providers who have “adopted and reasonably

implemented . . . a policy that provides for the termination in appropriate

circumstances of subscribers and account holders of the service provider’s system

3 or network who are repeat infringers.” 17 U.S.C. § 512(i)(1)(A). See also Ventura

Content, Ltd. v. Motherless, Inc., 885 F.3d 597, 614 (9th Cir.), cert. denied, 139 S.

Ct. 419, 202 L. Ed. 2d 316 (2018) (“Even if a website deletes infringing material as

soon as it learns about it, the [DMCA] safe harbor is unavailable unless the site has

a policy of excluding repeat infringers.”); Viacom Int’l, Inc. v. YouTube, Inc., 676

F.3d 19, 27 (2d Cir. 2012) (“To qualify for protection under any of the safe harbors

[of the DMCA], a party must meet a set of threshold criteria . . . including the

adoption and reasonable implementation of a ‘repeat infringer’ policy that

‘provides for the termination in appropriate circumstances of subscribers and

account holders of the service provider’s system or network.’”). The DMCA safe

harbor is unavailing when, like the district judge held here, a triable issue of fact

exists about whether a defendant has reasonably implemented a repeat infringer

policy.

The majority expresses sympathy for the “whack-a-mole” problem faced by

ALS Scan, Inc., but that sympathy does not solve the problem. Where, as here,

there are allegations that the volume and magnitude of previous infringements

caused a defendant to know that such infringements would continue tomorrow, and

the next day, and the day after that, I would send this claim to the jury.

I respectfully dissent.

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