just specific allegations including allegations that in spite of repeated notices from perfect ten defendants have chosen to continue to fund and take a piece of the sale of virtually basically end the infringement action or end the infringement by third parties and that it would if the same process establishes vicarious liability how is that any different dell than say the electric company that provides the power for they computers to run or like in the garage and the grads are the napster of rights for cases that the advertisers that make it possible for them to find what ever well i think cause really times well it's too far removed somehow well i don't believe it's a tory concept but but i believe that there is a world of difference between the involvement of a benign utility of providing a service that everybody needs and a credit card process their rules and regulations require that they inspect the business of those margins the rules and regulations require that they continually monitor the websites of internet merchants to make sure they're not community in the illegal activity but what about credit card companies here who are taking who are in the virtual room every time a transaction takes place and are giving an approval it's like having johnny who wants to buy stolen goods saying to a credit card processor i'd like to borrow money to buy these stolen goods the credit card processor looking the transaction in saying will loan you the money we'll turn around and give the money to the person we know is infringing taking a nice fee for ourselves illuminates the problem we have here is we have alleged that indeed they are in the room now of course the transaction takes place in milliseconds so the benefits of modern technology have allowed credit card processors to greatly increase their their in their income and their efficiencies by doing it in a millisecond but the fact of the matter is that the plaintiffs have alleged that for every transaction there is an approval process by which the buyers request to borrow money goes through the chain of the various defendants the process there is a visa and an approval comes down before these are through its process or says ok we'll loan the money and turns to the merchant and says we'll give you the money minus our cut and part of that process is indeed knowing who their merchant is and what they're selling i mean if you do your position you say your le credit card companies for instance take steps to not fund sales of child pornography this is why they take steps to not fund gambling transactions i mean there is they're not utility company who gives selling you know shark and colombian sea bass and they know that you had a dining experience there but but counsel if you take if you take what you're proposing here the credit card world the commercial world as we now at now know it radically changes if that disappears i mean somebody's home depot may have all kinds of illegalities and products that they sell or the supermarket may have workers who are not properly documented or were hired after a strike or things like that and and what you're in essence saying is that the the that the credit card companies become police to in effect merge cover every transaction that is handled in milliseconds if they don't monitor those that they could somehow be jointly liable we're talking now in this context but could it not be in any other context if we materiality of the contribution could i come up with a hypothesis apoc this is where visa could be liable for home depot selling you know the fact of lumber i don't think so but that's not the situation again what we have alleged is a very specific prior knowledge again which is not being questioned for purposes of pleading prior knowledge that the transactions are going to specifically fund our infringing transactions and we've alleged that without their funding the transaction cannot go forward because there is no alternative in the internet as there might be a home depot where you can write a check or you can you know pay him in cash this is the medium of exchange in the internet it's the credit card processors and to find otherwise to sustain the lower court's ruling at this pleading stage grants the credit card companies absolute immunity for anything they would do going forward in the copyright area because i can't imagine that anyone could leave more specific facts than we have as far as the materiality of the contribution and the right and ability to control the transaction so you give blanket immunity to one well you know again we haven't had the opportunity to opportunity to develop the record but the ultimate question will be is how material is the contribution of the credit card companies to the infringements that are taking place we've alleged  to the things you want out of every five hundred under that hypothesis i would say that's probably not material that's probably an innocent there but that's not what we've alleged here i mean things i believe that if the if we go to the issue of knowledge materiality first how much knowledge of the credit card companies have that this particular margin is engaging in substantial copyright infringement materiality of the contribution we get the credit card companies have the right under their regulations to not process a fee and infringing transaction or terminate emergent losing gauging in substantial violations of to stop them from finding these rampant in strangers which would be exactly that providing them with unequivocal notice that's that's the bottom line really asking is what is it that the court can order and what is it what is infringers of my clients copyrights but you're you're not contending that you're that that the credit card companies have the right to remove specific infringing material are you the at it with actually it was actually alleged that they do have the right and terminate the credit card relationship but i'm asking about do they have the ability under the contract to actually monitor what's on the site not only do they have that ability they have a broader ability visa mastercard regulations require the processor's the other defendants in this case to affirmatively monitor the websites especially of the what they call the high risk merchants we're dealing with here and make sure that infringing materials and any other legal of these in providing a stall to sell goods and bringing in customers is far less than the level of contribution here where we have these defendants under the allegations specifically funding each illicit transaction and the only source of funding for those transactions with knowledge that their infringing transactions can i ask you something here and this is a i'm trying to understand the context of this lawsuit just in the cases that are before our court right now after i forget how many are involved with perfect ten is suing somebody based on some theory what what business is perfect and trying to be and here is in the lawsuit business what what are they are they trying to a chain around many of the looking for money what are you looking for a perfect ten met perfect ten and is a zealot advocate for the owners of copyrighted materials they have spent millions of dollars legally acquiring developing intellectual property which they are prevented from selling at a profit because there are hundreds of websites operating out of nonexistent locations giving away their merchandise or selling it for pennies on the dollars is it representing just itself or is it representing a consortium of other people whose rights are likewise being infringed this is a one trick pony this is someone who firmly believes in intellectual property and is spending the money that's right but that's just one planet perfect ten does indeed propose a dangerous rule here it applies in the context of commerce as a whole not just online commerce would make every stanford university is liable as a contributory or vicarious infringer because every mall in the country these days takes a percentage of retail of the retailers there are many participants in congress who have relationships that are based on percentage of sales this is a transaction fee because money is being moved this is not exactly the our government is using t principle that we would endorse god helps those who helps themselves who help themselves are it would then be incumbent upon the claimant to take action against the wrongdoer rather than enlisting a stopped as a legal matter yes you're on whether it is marley the right thing to do or from a business standpoint right thing to do is different but under existing standards of contributory and very rationally that what's what's the utility in having one having accusation by a happy right holder to have to undertake a vast amount of investigation to turn into investigator prosecutor judge jury and executioner in a commercial context of the sound master card my particular part has two options the option is to create an entirely new business to investigate these allegations mere accusations or the other option is to cut somebody off to say we can't get into the business of investigating because we handle millions of transactions per day for millions of merchants sounds like a business isn't for me and pretty good choice for you to make we either want to get into the business or we don't want to get   they're there the rules first of all the master card and visa networks have rules apply requiring their banks and hand processors to have certain underwriting standards to accept certain merchants most of those have to deal with the integrity of the financial network itself the terms may be allow terminations for illegal  a traditional form of liability that was being applied to copyright law the supreme court was cautious in establishing and announcing the standards for that type of life building and then the supreme court wants anything more to expand the scope of copyright law is up to congress not the courts and congress heard that because over fifty times since that decision congress has amended the copyright act to cover new challenges and limit ridges the just if you mention the supreme court a little connect with the vicarious copyright liability the allegation in mr king's complaint is that by cutting off credit card transactions he would inevitably put these other folks out of business in the in the grokster case the supreme court's formulation for vicarious infringement was one i'm quoting that infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it how is this case distinguishable from that then when first your honor the grokster decision did not extend to vicarious liability it was decided on the basis of contributory liability decision or the but the the it came back on glide it came back on the contributory decision and it was not over ruled on the vicarious decision but the but the point i take your point the but the supreme court in that that might have a secondary effect you but you've indicated in your responses to judge kozinski internet reinhard that you do in fact in the case of child pornography and other criminal activities you do have that ability you are in that sad pictures of your daughter at the one hour photo ten dollars pictures from stolen romanian websites priceless or something like that that would be a did not just provide rental space it actively strived to provide the environment and the market for counterfeit recording sales to thrive and the court said in two sixty it organized and promoted organized and promoted and controlled customer access to the swap meet the organization and promotion are critical  here and that's because if one steps back contributory and vicarious liability are two different approaches to answering the same question which is when is person a responsible for the wrongs of person b in contributory infringement is when there is some sort of special conduct directed at causing infringement that creates contributory infringement liability and vicarious liability it is some particular relationship originally it was respond superior and the second circuit addressed its respondent superior maybe principal agents but it doesn't reach other relationships like landlord tenant and in every case in this court the relationship has been very very close back in the shapiro bernstein case or maybe was the gershwin case second circuit the court there which was followed by this horton foote of these and other vicarious cases talked about an economic intertwining of interests that related to the infringement itself and those facts just don't exist for your honor and short what happens under a regime proposed by the plaintiffs here is that if the defendants are notified by the holder of the patent who sued blackberry that every cingular wireless store every team mobile store in the united states is selling black berries and they infringe upon the plaintiffs patent and therefore the defendants must do indicate and you know the counsel on both sides have answers to some of them we don't have the answers to some of the others it highlights their worth pleading stage in this case where the pointers are so much worse to make allegations which they legitimately believe to be true but without the benefit to even understand the level of the investigation department the diesel master card is the kind of stuff congress to take up a very pretty good case and i'm sure th listening to the questions on the phone a visa case you know reminds me that we're talking about a situation where somebody invites customers whether it's a parking water or a building and the the the auction company i'm sorry the swami company there had zero involvement with the infringing transactions compared to the allegations here where you have the credit card companies sitting there and there are allegations looking at each transaction approving transactions those transactions and providing the funds for those transactions and more importantly if the credit card companies exercise the rights they already have to control contact and activity they can effectively throw that emergent out from the