Introduction

The pirating of copyrighted music, videos, images, and other works on the internet frequently occurs in foreign venues outside the reach of U.S. law, and on a massive scale by numerous users, all of which makes it impractical, if not impossible, for copyright owners to identify and pursue all potential infringers. As a result, copyright owners often direct their infringement claims against companies that are not the direct infringer, but against those entities that provide “services or products that facilitate access to websites throughout the world [that] can significantly magnify the effects of otherwise immaterial infringing activities,” Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1172 (9^th Cir. 2007) (amending and superseding on rehearing, 487 F.3d 701 (2007)), i.e., those who assist direct infringers to infringe.  These suits are generally brought on theories of contributory copyright infringement.

Many of the decisions arising from suits including theories of contributory copyright infringement have come out of the Ninth Circuit Court of Appeals, as that court has held that a party may be liable when it “(1) has knowledge of another's infringement and (2) either (a) materially contributes to or (b) induces that infringement.”  Erickson Prods., Inc. v. Kast, 921 F.3d 822, 831 (9th Cir. 2019) (citation omitted). 

This article focuses on the Ninth Circuit’s  decisions pertaining to the “materially contributes” standard in the context of internet-based infringement claims.  These decisions have spawned a number of rules and tests resulting in some confusion as to the applicable legal standards.  Indeed, in two Ninth Circuit district court cases (from different districts) involving contributory copyright infringement claims against Cloudflare, Inc. (“Cloudflare”), an internet service provider, the court employed different standards,  reaching inconsistent conclusions based on ostensibly similar conduct.

We start by looking at the common law origins of the material contribution theory of contributory copyright infringement liability, then review significant Ninth Circuit precedents resulting in the various “tests” that have emerged, and finally propose a recommendation on how to alleviate the confusion that has surrounded this area.

The Common Law and Origins of the Material Contribution Theory

Contributory copyright infringement liability is rooted in the common law doctrine that “one who knowingly participates in or furthers a tortious act is jointly and severally liable with the prime tortfeasor . . .”  Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971) (citing Screen Gems-Columbia Music, Inc. v. Mark Fi Records, Inc., 256 F.Supp. 399, 403 (S.D.N.Y. 1966) (Weinfeld, J.)). 

In Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 435, 104 S.Ct. 774, 785 (1983), the Supreme Court noted that “the concept of contributory infringement is merely a species of the broader problem of identifying the circumstances in which it is just to hold one individual accountable for the actions of another.” Put in another way, one court defined the issue as “[s]imply put, that quantum of participation necessary to impart liability to third parties, . . .” Demetriades v. Kaufmann, 690 F.Supp. 289, 294 (S.D.N.Y. 1988).

In Gershwin, the Second Circuit set out a general rule for holding an individual liable as a contributory infringer: “one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another . . .” 443 F.2d at 1162; See also Restatement (Second) of Torts § 876(b) (1977) (establishing third-party, enterprise liability when one knows of another's tortious conduct and substantially aids or encourages that endeavor); Id. at comment d (“The assistance of or participation by the defendant may be so slight that he is not liable for the act of the other.”). Thus, the touchstones of contributory copyright infringement can be seen as knowledge and participation.

The Ninth Circuit’s Development of the “Material Contribution” Theory

We turn to the Ninth Circuit, where over the years several “tests” or rules have emerged concerning the participation touchstone, which is the “material contribution” theory of contributory infringement.  These include the “site and facilities,” “simple measures,” “substantial assistance,” and “direct connection” tests, as well as other variations stemming from district court cases.

“Site and Facilities”

In 1996, the Ninth Circuit adopted the Gershwin material contribution test, calling it the “classic statement of the doctrine,” to evaluate a claim for contributory copyright infringement against the operator of a “swap meet” market where vendors sold counterfeit goods.  Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996). 

The Fonovisa court found that the defendant swap meet operator “materially contributed” to the infringement, stating that “it would be difficult for the infringing activity to take place in the massive quantities alleged without the support services provided by the swap meet” including “the provision of space, utilities, parking, advertising, plumbing, and customers.”  It held that “providing the site and facilities for known infringing activity is sufficient to establish contributory liability.” Id. (emphasis supplied).

Thereafter the Ninth Circuit applied the material contribution and “site and facilities” standard in the case of the music sharing platform Napster.  Napster allowed users to share copies of MP3 files via the internet.  A&M Recs., Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001), as amended (Apr. 3, 2001), aff'd sub nom. A&M Recs., Inc. v. Napster, Inc., 284 F.3d 1091 (9th Cir. 2002).  Napster was found to materially contribute to the infringement because it “provides ‘the site and facilities’ for direct infringement,” the court noting that “[w]ithout the support services defendant provides, Napster users could not find and download the music they want with the ease of which defendant boasts.”  Id. (citing A & M Recs., Inc. v. Napster, Inc., 114 F. Supp.2d 896, 919–20 (N.D. Cal. 2000)

The “site and facilities” standard was revisited by the Ninth Circuit in the context of contributory infringement claims against distributors of software that allowed users to share files through peer-to-peer networks.  In Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 380 F.3d 1154 (9th Cir. 2004), the court determined that the software distributors did not provide the “site and facilities for infringement” because the distributors “are not access providers, and they do not provide file storage and index maintenance” and that, “[r]ather, it is the users of the software who, by connecting to each other over the internet, create the network and provide the access.”  Id. at 1163.¹

“Simple Measures”

In 2007, the Ninth Circuit adopted another contributory infringement test, holding 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 ‘take simple measures to prevent further damage’ to copyrighted works, . . . yet continues to provide access to infringing works.”  Amazon.com, Inc. 508 F.3d at 1172 (citing Religious Technology Center v. Netcom On–Line Communication Services, Inc., 907 F.Supp. 1361, 1375 (N.D. Cal. 1995)).

The “simple measures” test has its origins in the 1995 district court Netcom case, 907 F.Supp. at 1365-66.  In that case, a former Scientology minister posted allegedly infringing copies of the works of L. Ron Hubbard, the founder of the Church of Scientology, on an electronic bulletin board service, which were then automatically copied onto the systems of Netcom, a large internet provider, and then onto other computers. Id. at 1366–67 & n.4 (internal quotation omitted).  Noting that a claim for contributory infringement requires that the defendant’s “participation must be substantial,” the district court held that, “it is fair, assuming Netcom is able to take simple measures to prevent further damage to plaintiffs’ copyrighted works, to hold Netcom liable for contributory infringement where Netcom has knowledge of [the minister’s] infringing postings yet continues to aid in the accomplishment of [the minister’s] purpose of publicly distributing the postings.”  Netcom, 907 F. Supp. at 1375.

In Amazon.com, Inc. the plaintiff asserted contributory infringement claims against Google, asserting that Google’s search engine assisted websites in distributing infringing content worldwide.  The Ninth Circuit acknowledged that “there is no dispute that Google substantially assists websites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials.”  Amazon.com, Inc., 508 F.3d at 1172 (emphasis supplied).  Notwithstanding that it was undisputed that Google substantially assisted the infringement, the Ninth Circuit imposed an additional hurdle for the plaintiff, remanding for a determination as to whether the plaintiff could satisfy the “simple measures” test.  The court said, “[a]pplying our test, Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10's copyrighted works, and failed to take such steps.”  Id. at 1172.

In two recent cases involving contributory infringement claims against internet companies, the Ninth Circuit dismissed claims for contributory copyright infringement based on findings that no simple measures were available to stop the alleged infringement, without any discussion of whether the defendants had substantially assisted the infringement.  See Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 671 (9th Cir. 2017) (rejecting a claim for contributory infringement against Giganews, an operator of a peer-to-peer Usenet server, because “there were no simple measures available that Giganews failed to take to remove Perfect 10's works from its servers.”);  VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 745 (9th Cir. 2019) (finding that the online real estate marketplace Zillow “did not have appropriately ‘specific’ information necessary to take ‘simple measures’ to remedy the violation.”).

The Visa Case

Shortly after handing down the decision in Amazon.com, Inc. the Ninth Circuit issued its opinion in Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494 F.3d 788 (9th Cir. 2007).  In Visa, the Ninth Circuit rejected claims that credit card companies materially contributed to infringing activity by processing credit card payments to infringing websites, holding that “[t]he credit card companies cannot be said to materially contribute to the infringement . . . because they have no direct connection to that infringement.”  Id. at 795. The court emphasized that there was no allegations that “any infringing material passes over Defendants’ payment networks or through their payment processing systems, or that Defendants’ systems are used to alter or display the infringing images.”  Id. 

In a vigorous dissent, Judge Kozinski argued that “[m]ateriality turns on how significantly the activity helps infringement, not on whether it's characterized as one step or two steps removed from it.”  Visa, 494 F.3d at 812.  Judge Kozinski stated that the credit card companies were essential to the infringement, noting that the “[d]efendants participate in every credit card sale of pirated images; the images are delivered to the buyer only after defendants approve the transaction and process the payment.”  Visa, 494 F.3d at 811. 

Judge Kozinski further took issue with the majority’s argument that “infringement could continue on a large scale [without credit cards] because other viable funding mechanisms are available,”  Id. at 812 (citing Maj. Op. at 797), asserting that “[i]t makes no difference whether the primary infringers might do without it by finding a workaround.”  Id.  The judge also questioned the majority’s attempt to distinguish Fonovisa on the grounds that the swap meet operator there provided “centralized place” for the infringement to take place, while the defendants had “no direct connection” to the infringement, stating “[m]aterial assistance turns on whether the conduct assists infringement in a significant way, not on pedantic factual distinctions unrelated to how much the activity facilitates infringement.”  Id. at 815. 

Further addressing the majority’s concern that imposing liability on the credit card companies would implicate “peripherally-involved third parties,” (Id. at 800), Judge Kozinski noted that “[c]ontributory infringement requires material assistance to the infringing activity, and those the majority worries about would doubtless be absolved of liability because their contribution to the infringing activity is insufficiently material.”  Id. at 815.  He further added, “[w]ere we to rule for plaintiff, as we should, I have every confidence that future courts would be able to distinguish this case when and if they are confronted with lawsuits against utility companies, software vendors and others who provide incidental services to infringers.”  Id. at 816.

The Cloudflare Cases

The unsettled state of the Ninth Circuit’s jurisprudence on contributory copyright infringement is discernible when one compares two cases involving contributory copyright infringement claims against Cloudflare, where two district courts not only reached differing conclusions, but applied different standards in evaluating seemingly similar claims. 

Cloudflare’s services “optimize and protect websites, including by increasing the speed at which website content is delivered to end users, making such delivery considerably more bandwidth efficient, and by adding security services to prevent malicious attacks.”  ALS Scan, Inc. v. Cloudflare, Inc., 2018 WL 11350606, at *4 (C.D. Cal. 2018). “Cloudflare does not host websites, directly provide website hosting services, or offer permanent storage for websites.”  Id at *5.  Rather, it “offers, among other services, a managed domain name system (‘DNS’) and a content delivery network (‘CDN’)” which are intended to “make websites perform better and make the internet safer for website visitors and operators.”  Id. 

In its decision, the district court cited the Amazon.com, Inc. “simple measures” test, but recognized that satisfaction of that test might not be required under Ninth Circuit law. Id. (citing Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc., 658 F.3d 936, 943 (9th Cir. 2011), (holding that offering server space may constitute “material contribution”)).  The court explained that “material contribution” can be established where “participation in the infringing conduct of the primary infringer is ‘substantial.’”  Id. at *11 (citing Netcom, 907 F.Supp. at 1375).  It found that “Cloudflare, by its own estimate seeks to provide its customers, with a faster, safer, and more efficient means by which they can deliver their content, i.e. to infringe” and concluded that this conduct was “well within the confines of the Ninth Circuit's substantial assistance framework.”  Id. at *12 (citing Louis Vuitton, 658 F.3d at 943; Amazon.com, Inc., 508 F.3d at 1172).  The court further found that Cloudflare could take “simple measures” to end the infringing activity, because “Cloudflare can, but does not, end its business relationship with websites that it knows (or arguably knows) are serial infringers.”  Id. at *13.  On these grounds, the district court ruled against Cloudflare resolving dueling motions for summary judgment on the contributory infringement claims.

By contrast, in Mon Cheri Bridals, LLC v. Cloudflare, Inc., 2021 WL 4572015 (N.D. Cal. Oct. 6, 2021), the district court dismissed contributory infringement claims against Cloudflare based on its performance-improvement and security services, holding that “no reasonable jury could find that Cloudflare ‘significantly magnif[ies]’ the underlying infringement,” Id. at *2 (quoting Amazon.com, Inc., 508 F.3d at 1172), and that Cloudflare’s services were not, in language of  Louis Vuitton, 658 F.3d at 944, an “essential step in the infringement process.” Id.  The basis for the court’s holding appears to be that that a “material contribution” must either (i) “significantly magnify” the infringement, or (ii) be an “essential step in the infringement process.”  However, Ninth Circuit law is not so limited to such paths to find material contribution.  While the district court recognized that “analysis of contributory copyright infringement must . . . be cognizant of the facts in the key cases in which liability has been found,” it failed to analyze whether Cloudflare substantially assisted in the infringement.  One possible reason is, as the court noted, “[t]he Plaintiffs’ only evidence of the effects of these services is promotional material from Cloudflare's website touting the benefits of its services,” which evidence the court found to be insufficient.  2021 WL 4572015, at *2.

Thus, in two cases involving the same defendant ostensibly performing the same complained of activities, the ALS (C.D. Cal.) and Mon Cheri (N.D. Cal.) courts applied different standards, and reached different conclusions as to the whether Cloudflare materially contributed to its customer’s infringement. 

Claims Under the “Substantial Assistance” Standard

Should Be Evaluated On a Case-by-Case Basis

The inconsistent Cloudflare rulings can be explained, at least in part, by the fact that the Ninth Circuit has provided an inconsistent framework involving multiple “tests” without guidance as to when such tests are to be applied. 

As Judge Kozinski’s dissenting opinion aptly observed, material contribution turns on whether the participation in the infringement is “substantial.”  While the availability of “simple measures” and failure to take such measures to stop infringement may inform an analysis of whether participation is material, Plaintiffs should not be required to demonstrate the absence of “simple measures” available to stop the infringement.  Indeed, if the absence of simple measures allows an internet service provider to escape liability while substantially assisting infringers, then the Ninth Circuit’s “simple measures” test perversely incentivizes such companies to avoid creating simple measures to stop or reduce infringement. 

Similarly, while activity that “significantly magnifies” infringement or that is an “essential step” in the infringement may well constitute “material contribution,” plaintiffs should not be required to prove that the activity in question falls into either of these categories, as the Mon Cheri court seemed to hold.

Rather, the facts in each case should be evaluated and courts should simply analyze whether the alleged conduct reaches the level of “substantial assistance.” Indeed, even after its adoption of the “simple measures” test, the Ninth Circuit had no difficulty applying the “substantial assistance” standard without resorting to the “simple measures” test or any of the other “tests” that have developed over the years.  In Louis Vuitton, which involved claims against hosts of websites selling counterfeit goods, the court stated that “[m]aterial contribution turns on whether the activity in question ‘substantially assists’ direct infringement” and held that “providing direct infringers with server space satisfies that standard.”  Id. at 943. 

Accordingly, courts addressing claims for contributory copyright infringement should focus on whether the alleged conduct rises to the level of a “material” contribution to the infringement by making factual findings on a case-by-case basis in order to ascertain whether the level of involvement in the infringement is “substantial.”  As cited in Demetriades v. Kaufmann above, the issue is “[s]imply [the] quantum of participation necessary to impart liability to third parties, . . .”