Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-15-56026/USCOURTS-ca9-15-56026-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PERFECT 10, INC.,

Plaintiff-Appellant,

v.

GIGANEWS, INC.; LIVEWIRE

SERVICES, INC.,

Defendants-Appellees.

No. 15-55500

D.C. No.

2:11-cv-07098-AB-SH

PERFECT 10, INC., a

California corporation,

Plaintiff-Counter-DefendantAppellant,

v.

GIGANEWS, INC., a Texas

corporation; LIVEWIRE

SERVICES, INC., a Nevada

corporation,

Defendants-CounterClaimants-Appellees.

No. 15-55523

D.C. No.

2:11-cv-07098-AB-SH

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2 PERFECT 10 V. GIGANEWS

PERFECT 10, INC., a

California corporation,

Plaintiff-Counter-DefendantAppellee,

v.

DR. NORMAN ZADA,

Third Party-Appellee,

GIGANEWS, INC., a Texas

corporation; LIVEWIRE

SERVICES, INC., a Nevada

corporation,

Defendants-CounterClaimants-Appellants.

No. 15-56026

D.C. No.

2:11-cv-07098-AB-SH

OPINION

Appeal from the United States District Court

for the Central District of California

Andre Birotte, Jr., District Judge, Presiding

Argued and Submitted December 5, 2016

Pasadena, California

Filed January 23, 2017

Before: Harry Pregerson, Dorothy W. Nelson,

and John B. Owens, Circuit Judges.

Opinion by Judge D.W. Nelson

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PERFECT 10 V. GIGANEWS 3

SUMMARY*

Copyright

The panel affirmed the district court’s judgment in favor

of the defendants in a copyright case involving the Usenet, an

international collection of organizations and individuals

whose computers connect to one another and exchange

messages posted by Usenet users.

Defendant Giganews, Inc., owns and operates several

Usenet servers and provides its subscribers with fee-based

access to content stored on its own servers as well as content

stored on the servers of other Usenet providers. Defendant

Livewire Services, Inc., provides its subscribers with access

to the Usenet content stored on Giganews’s servers. Plaintiff

Perfect 10, Inc., owns the exclusive copyrights to tens of

thousands of adult images, many of which have been illegally

distributed over Giganews’s servers.

The panel affirmed the district court’s partial dismissal

and partial grant of summary judgment on Perfect 10’s direct

copyright infringement claim. The panel held that causation,

also referred to as “volitional conduct,” by the defendant is

one of the elements of a prima facie case of direct

infringement. The panel held that the volitional conduct

requirement was not met on Perfect 10’s theories that the

defendants directly infringed its display rights and

distribution rights. The panel concluded that the evidence

showed only that Giganews’s actions were akin to passively

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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4 PERFECT 10 V. GIGANEWS

storing material at the direction of users in order to make that

material available to other users upon request, or

automatically copying, storing, and transmitting materials

upon instigation by others. The volitional conduct

requirement also was not met as to the claim that Giganews

directly infringed on Perfect 10’s right to reproduce by

uploading infringing content onto the Usenet or Giganews’s

servers.

The panel held that Giganews was not liable for

contributorycopyright infringement because Perfect 10 failed

to raise a triable issue of fact as to whether Giganews

materially contributed to or induced infringement of Perfect

10’s copyrights. The panel held that there were no simple

measures available that Giganews failed to take to remove

Perfect 10’s works from its servers.

The panel affirmed the district court’s summary judgment

on Perfect 10’s vicarious infringement claim. The panel held

that Perfect 10 failed to demonstrate a causal link between the

infringing activities and a financial benefit to Giganews.

The panel affirmed the district court’s award of attorney’s

fees to the defendants under the Copyright Act and its denial

of defendants’ request for supplemental fees. The panel also

affirmed the district court’s denial of defendants’ request to

amend the judgment to add a judgment debtor as Perfect 10’s

alter ego.

COUNSEL

David N. Schultz (argued), Law Offices of David N. Schultz,

Los Angeles, California; Eric J. Benink, Krause Kalfayan

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PERFECT 10 V. GIGANEWS 5

Benink & Slavens LLP, San Diego, California; for PlaintiffCounter-Defendant-Appellant/Cross-Appellee and Third

Party-Appellee.

Andrew Phillip Bridges (argued),Jedediah Wakefield, Joseph

S. Belichick, and Todd R. Gregorian, Fenwick & West LLP,

San Francisco, California, for Defendants-Appellees/CrossAppellants.

Thomas G. Hentoff (argued) and Nicholas G. Gamse,

Williams & Connolly LLP, Washington, D.C.; George M.

Borkowski, Recording Industry Association of America Inc.,

Washington, D.C.; for Amicus Curiae Recording Industry

Association of America, Inc.

Kelly A. Woodruff, Deepak Gupta, and Anthony P.

Schoenberg, Farella Braun + Martel LLP, San Francisco,

California, for Amici Curiae Electronic Frontier Foundation,

Public Knowledge, American Library Association,

Association of College and Research Libraries, and

Association of Research Libraries.

Corynne McSherry, Electronic Frontier Foundation, San

Francisco, California, Of Counsel to Amicus Curiae

Electronic Frontier Foundation.

Jonathan Band, Policybandwidth, Washington, D.C., Of

Counsel to Amici Curiae American Library Association,

Association of College and Research Libraries, and

Association of Research Libraries.

Charles Duan, Public Knowledge, Washington, D.C., Of

Counsel to Amicus Curiae Public Knowledge.

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6 PERFECT 10 V. GIGANEWS

Seth D. Greenstein, Robert S. Schwartz, and Leigh O.

LaMartina, Constantine Cannon LLP, Washington, D.C., for

Amici Curiae i2Coalition, InternetAssociation and Computer

& Communications Industry Association.

OPINION

D.W. NELSON, Senior Circuit Judge:

Appellant Perfect 10, Inc. (“Perfect 10” or “P10”)

challenges the district court’s partial dismissal of its direct

copyright infringement claim and grant ofsummaryjudgment

in favor of Appellees Giganews, Inc. (“Giganews”) and

Livewire Services, Inc. (“Livewire”) as to all remaining

claims. Perfect 10 also appeals the district court’s award of

attorney’s fees and costs under the Copyright Act. On crossappeal, Giganews and Livewire contend the district court

erred by denying their request for supplemental fees and

failing to add Perfect 10’s sole shareholder and founder,

Norman Zada (“Zada”), to the judgment as Perfect 10’s alter

ego. For the reasons set forth below, we affirm the district

court.

BACKGROUND

1. The Usenet and Appellees’ Operations

The heart of this complex copyright dispute revolves

around the Usenet (or USENET), “an international collection

of organizations and individuals (known as ‘peers’) whose

computers connect to one another and exchange messages

posted by USENET users.” Ellison v. Robertson, 357 F.3d

1072, 1074, n.1 (9th Cir. 2004). “To obtain access to the

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PERFECT 10 V. GIGANEWS 7

USENET, a user must gain access through a commercial

USENET provider, such as Defendant [Giganews], or an

internet service provider.” Arista Records LLC v.

Usenet.com, Inc., 633 F. Supp. 2d 124, 130 (S.D.N.Y. 2009). 

Giganews owns and operates several Usenet servers and

provides its subscribers with fee-based access to content that

Giganews stores on its own servers as well as content stored

on the servers of other Usenet providers. Unlike Giganews,

Livewire does not own any Usenet servers, but instead

provides its subscribers with access to the Usenet content

stored on Giganews’s servers.

The Usenet content offered through Giganews’s servers

is almost exclusively user-driven, in that USENET users

upload the majority of the content stored on a USENET

provider’s server. This content is posted via text-based

articles to online bulletin boards called newsgroups. Each

article is associated with a unique Message-ID. Giganews

and Livewire contend that the only way to accurately identify

a specific Usenet message is with that Message-ID. Although

these articles are posted as text files, other types of files such

as images, songs, and movies may be encoded into the bodies

of the articles as binary files. Through Giganews’s browser

application, known as “Mimo,” or “the Mimo Reader,” users

can open the binary files, which are then decoded and

displayed in their original format.

By using a “peering process,” messages posted on one

Usenet server can automatically propagate to other Usenet

servers, which then propagate the messages to another Usenet

server, and so on. More specifically,

when an individual user with access to a

USENET server posts a message to a

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8 PERFECT 10 V. GIGANEWS

newsgroup, the message is automatically

forwarded to all adjacent USENET servers

that furnish access to the newsgroup, and it is

then propagated to the servers adjacent to

those servers, etc. The messages are

temporarily stored on each receiving server,

where they are available for review and

response by individual users. The messages

are automatically and periodically purged

from each system after a time to make room

for new messages. Responses to messages,

like the original messages, are automatically

distributed to all other computers receiving

the newsgroup or forwarded to a moderator in

the case of a moderated newsgroup. The

dissemination of messages to USENET

servers around the world is an automated

process that does not require direct human

intervention or review.

Am. Civil Liberties Union v. Reno, 929 F. Supp. 824, 835

(E.D. Pa. 1996). This peering process only occurs after two

Usenet access providers enter into peering agreements to

accept materials from each other. The servers are then able

to synchronize their information so their content mirrors one

another’s. Thus, only after Giganews engages in a peering

agreement can its servers exercise any control over the

messages copied from other servers. However, this control

is minimal.

As the District Court explained, for example, Giganews

servers “compare[] the unique Message-IDs of messages on

peer servers to ensure that Giganews does not copy duplicate

articles to its servers.” Perfect 10, Inc. v. Giganews, Inc., No.

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PERFECT 10 V. GIGANEWS 9

CV-11-07098-AB(SHx), 2014 WL8628034, at *3 (C.D. Cal.

Nov. 14, 2014). Similarly, “if a peer server contains an

article with a Message-ID that Giganews has already deleted

from its servers,” the Giganews servers will not then copy

that article. Id. In addition, because Giganews is a member

of the Internet Watch Foundation, which tracks individual

articles by Message-ID or entire newsgroups that contain

child pornography, certain articles and newsgroups may

automatically be deleted or blocked from peering from

Giganews’s servers. Id.

“Other than setting those basic parameters, Giganews

does not select any of the content available on its servers.” 

Id. Indeed, “Giganews itself did not post any of the articles

at issue in this action . . . to any Usenet server, and all such

articles were posted by Usenet users. Nor does Giganews tell

any third parties what to upload to the Usenet, including

Giganews’[s] Usenet servers.” Id. (internal citations

omitted). Similarly, because Livewire “merelycontracts with

Giganews for access to [its] servers,” Livewire also has no

control over the uploaded, downloaded, transmitted, or stored

content on Giganews’s servers. Id. And Livewire itself has

neither uploaded material onto the Usenet nor directed

anyone else to do so.

2. Perfect 10 Images on the Usenet

Perfect 10 owns the exclusive copyrights to tens of

thousands of adult images, many of which have been illegally

distributed over Giganews’s servers. Upon locating

infringing materials on those servers, Perfect 10 sent

Giganews numerous letters fashioned as takedown notices

pursuant to the Digital Millennium Copyright Act

(“DMCA”), 17 U.S.C. § 512, et seq. While some of these

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10 PERFECT 10 V. GIGANEWS

notices merely instructed Giganews to “locate all of the

infringing messages and images . . . by doing [a] mimo

search” for a particular term, others attached screen shots of

the Mimo application that displayed posts in which Perfect

10’s copyrighted images were distributed. When Perfect 10

sent Giganews machine-readable Message-IDs, Giganews

quickly removed those messages from its servers. When

Perfect 10 faxed Giganews notices containing illegible

Message-IDs, Giganews responded with a letter asking

Perfect 10 to provide the Message-IDs in a legible, machinereadable format. Perfect 10 repeatedly declined to do so.

3. Procedural History

On April 28, 2011, Perfect 10 brought suit against

Giganews and Livewire in the U.S. District Court for the

Central District of California, alleging direct and indirect

copyright infringement claims as well as trademark and state

law claims. Only the copyright infringement claims are the

subject of this appeal.

On March 8, 2013, the district court denied DefendantsAppellees’ motion to dismiss Perfect 10’s indirect copyright

infringement claims against Giganews and granted their

motion to dismiss those claims against Livewire with leave to

amend. The district court also granted the motion to dismiss

the direct copyright infringement claims against both

Giganews and Livewire with leave to amend, explaining that

direct infringement requires “volitional conduct” and finding

that Perfect 10 had not alleged that Appellees “were the direct

cause of, or actively engaged in, [such] infringement.” 

Perfect 10 v. Giganews, Inc., No. CV11-07098 AHM (SHx),

2013 WL 2109963, at *7 (C.D. Cal. Mar. 8, 2013).

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PERFECT 10 V. GIGANEWS 11

On July 10, 2013, the district court granted in part and

denied in part Appellees’ motion to dismiss Perfect 10’s First

Amended Complaint (“FAC”). While the district court

allowed Perfect 10 to move forward on its direct infringement

claim against Livewire and on its direct infringement claim

against Giganews on the theory that Giganews violated

Perfect 10’s exclusive right to reproduce its copyrighted

works by itself uploading infringing content, the court

dismissed Perfect 10’s indirect infringement claims against

Livewire.

The parties filed eight separate motions for partial

summary judgment. In three separate orders, the district

court granted Appellees’ motions for summary judgment as

to the direct and indirect copyright infringement claims and

denied Perfect 10’s “mirror-image” motions as moot. In an

earlier order, the district court denied Perfect 10’s motion for

summary judgment in which it argued, among other things,

that its takedown notices complied with the DMCA and

Appellees were ineligible for safe harbor protection under the

DMCA.

On March 24, 2015, upon entering a judgment in favor of

Appellees, the district court ordered Perfect 10 to pay

$5,213,117.06 in attorney’s fees and $424,235.47 in nontaxable costs. Subsequently, the district court denied

Appellees’ motion to amend the judgment to add Zada as an

additional judgment debtor and for a supplemental award of

attorney’s fees. Perfect 10 timely appealed.

STANDARD OF REVIEW

We review a district court’s grant of summary judgment

and grant of a motion to dismiss de novo. Perfect 10, Inc. v.

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12 PERFECT 10 V. GIGANEWS

CCBill LLC, 488 F.3d 1102, 1109 (9th Cir. 2007);

Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522, 526

(9th Cir. 2008). “The district court’s interpretations of the

Copyright Act are also reviewed de novo.” CCBill LLC,

488 F.3d at 1109. “We review a district court’s decision to

grant or deny attorney’s fees under the Copyright Act for

abuse of discretion,” CCBill LLC, 488 F.3d at 1109, “but any

elements of legal analysis and statutory interpretation which

figure in the district court’s decision are reviewable de novo,”

Fantasy, Inc. v. Fogerty, 94 F.3d 553, 556 (9th Cir. 1996)

(“Fogerty II”) (citation and quotation marks omitted). 

Application of the alter ego doctrine is reviewed for clear

error. Towe Antique Ford Found. v. IRS, 999 F.2d 1387,

1391 (9th Cir. 1993).

DISCUSSION

1. Direct Infringement

Perfect 10 argues the district court erred in concluding

that neither Giganews nor Livewire directly infringed Perfect

10’s copyrights. We disagree.

a. Elements of a Direct Infringement Claim

To establish a prima facie case of direct infringement, a

plaintiff “must show ownership of the allegedly infringed

material” and “demonstrate that the alleged infringers

violated at least one exclusive right granted to copyright

holders under 17 U.S.C. § 106.” A&M Records, Inc. v.

Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). In

addition, direct infringement requires the plaintiff to show

causation (also referred to as “volitional conduct”) by the

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PERFECT 10 V. GIGANEWS 13

defendant. See Fox Broad. Co., Inc. v. Dish Network L.L.C.,

747 F.3d 1060, 1067 (9th Cir. 2013). 

We wish to emphasize that the word “volition” in this

context does not really mean an “act of willing or choosing”

or an “act of deciding,” which is how the dictionary defines

the term. Volition, Webster’s Third New International

Dictionary (1986). Rather, as used by the court in Religious

Tech. Ctr. v. Netcom On-Line Commc’n Servs., Inc., 907 F.

Supp. 1361, 1370 (N.D. Cal. 1995), it “simply stands for the

unremarkable proposition that proximate causation

historicallyunderlines copyright infringement liabilityno less

than other torts.” 4 Melville B. Nimmer & David Nimmer,

Nimmer on Copyright, § 13.08[C][1] (2016) (Matthew

Bender, Rev. Ed.); see also Dallas T. Bullard, Note, The

Revolution Was Not Televised: Examining Copyright

Doctrine After Aereo, 30 Berkeley Tech. L.J. 899, 922–23

(2015) (“While most courts have focused on the language of

‘volitional conduct,’ the key analytical weight is best derived

from ‘causation[,]’” because where it is clear that

infringement has occurred, courts must determine “who is

close enough to the [infringing] event to be considered the

most important cause.”). As the district court cogently

explained:

[T]he so-called “volition” element of direct

infringement is not a judicially-created

element of intent or knowledge; it is a basic

requirement of causation. As its name

suggests, direct liability must be premised on

conduct that can reasonably be described as

the direct cause of the infringement[.]

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14 PERFECT 10 V. GIGANEWS

Perfect 10, Inc., 2014 WL 8628034 at *7 (emphasis in

original).

Contrary to Perfect 10’s contention, this requirement of

causation remains an element of a direct infringement claim. 

In Fox Broadcasting, we explained that “[i]nfringement of

the reproduction right requires copying by the defendant,

which comprises a requirement that the defendant cause the

copying.” 747 F.3d at 1067 (internal citation and quotation

marks omitted). In using this language, we indicated that

causation is an element of a direct infringement claim.

In his dissent in American Broadcasting Cos., Inc. v.

Aereo, Inc., Justice Scalia construed our decision in Fox

Broadcasting as adopting the volitional-conduct requirement,

noting that the Supreme Court’s “cases are fully consistent

with” such a requirement. 134 S. Ct. 2498, 2513 (2014)

(Scalia, J., dissenting); id. at 2512 (Scalia, J., dissenting)

(“Every Court of Appeals to have considered an automatedservice provider’s direct liability for copyright infringement

has adopted [the volitional-conduct requirement.]” (citing

Fox Broad., 747 F.3d at 1066–68)). District courts

interpreting Fox Broadcasting have reached the same

conclusion. See Fox Broad. Co. v. Dish Network LLC, 160 F.

Supp. 3d 1139, 1160 (C.D. Cal. 2015); Gardner v. CafePress

Inc., No. 3:13-CV-1108-GPC-JLB, 2014 WL 6890934, at *3

(S.D. Cal. Dec. 4, 2014) (“There are three elements to a prima

facie case of direct infringement: (1) ownership of the

allegedly infringed material, (2) violation of at least one

exclusive right granted to copyright holders under 17 U.S.C.

§ 106, and (3) volitional conduct by the defendant.”

(emphasis added)). Other circuits have adopted the volitional

conduct requirement as well. See Cartoon Network LP v.

CSC Holdings, Inc., 536 F.3d 121, 131 (2d Cir. 2008)

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PERFECT 10 V. GIGANEWS 15

(“[V]olitional conduct is an important element of direct

liability . . . .”); CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d

544, 550 (4th Cir. 2004) (“[T]he Copyright Act . . . requires

conduct by a person who causes in some meaningful way an

infringement.” (emphasis in original)); Parker v. Google,

Inc., 242 F. App’x 833, 837 (3d Cir. 2007) (per curiam)

(“[T]o state a direct copyright infringement claim, a plaintiff

must allege volitional conduct on the part of the defendant.”).

The volitional-conduct requirement is consistent with the

Aereomajority opinion, in which the Supreme Court held that

Aereo, a service that streamed broadcast television

programming to subscribers over the Internet, “perform[ed]

publicly” as defined by the Transmit Clause. 134 S. Ct. at

2503, 2510. First, the Aereo Court did not expressly address

the volitional-conduct requirement for direct liability under

the Copyright Act, nor did it directly dispute or comment on

Justice Scalia’s explanation of the doctrine. Thus, as one

court in the Central District of California subsequently

opined, because “[t]he volitional conduct doctrine is a

significant and long-standing rule, adopted by all Courts of

Appeal to have considered it, . . . it would be folly to presume

that Aereo categorically jettisoned it by implication.” Fox

Broad., 160 F. Supp. 3d at 1160.

Second, the AereoCourt’s analysis can be reconciled with

the volitional-conduct requirement. Indeed, the Court

distinguished between an entity that “engages in activities

like Aereo’s,” and one that “merely supplies equipment that

allows others” to perform or transmit. Aereo, 134 S. Ct. at

2504. Further, although the Court held that Aereo was “not

just an equipment supplier and that Aereo ‘perform[s][,]’” it

also noted that “[i]n other cases involving different kinds of

service or technology providers, a user’s involvement in the

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16 PERFECT 10 V. GIGANEWS

operation of the provider’s equipment and selection of the

content transmitted may well bear on whether the provider

performs within the meaning of the Act.” Id. at 2507. Thus,

“the distinction between active and passive participation

remains a central part of the analysis of an alleged

infringement.” Fox Broad., 160 F. Supp. 3d at 1160. 

Because Aereo did not expressly address the volitionalconduct requirement and the Court’s analysis can be

reconciled with it, we conclude that the requirement was left

intact and that the district court did not err in requiring

Perfect 10 to satisfy it.

b. Perfect 10’s Direct Infringement Claim

Only one theory of direct liability as to Giganews

survived the pleadings stage. In its July 10, 2013 order on

Appellees’ motion to dismiss the FAC, the district court

rejected Perfect 10’s theories that Giganews directlyinfringed

Perfect 10’s display rights and distribution rights, concluding

that the volitional-conduct requirement was not met. 

However, the district court denied Appellees’ motion as to the

claim that Giganews directly infringed on Perfect 10’s right

to reproduce by uploading infringing content onto the Usenet

or Giganews’s servers. Subsequently, the district court

granted summary judgment on the direct infringement claim,

concluding Perfect 10 failed to prove volitional conduct with

respect to either Giganews or Livewire. On appeal, Perfect

10 challenges the district court’s motion to dismiss and

summary judgment orders.

i. Display Rights

Under the Copyright Act, the owner of a copyright has the

exclusive right to display its work. 17 U.S.C. § 106(5). 

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PERFECT 10 V. GIGANEWS 17

“[D]isplay” means “to show a copy of [a work], either

directly or by means of a film, slide, television image, or any

other device or process[.]” Id. § 101. Relying primarily on

Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir.

2007), Perfect 10 claims Giganews is directly liable for

displaying Perfect 10’s images and thumbnails via the Mimo

reader. Specifically, Perfect 10 asserts its evidence showed

Giganews was not merely a passive host, but rather directly

caused the display of Perfect 10 images by making copies of

those images and displaying them using its Mimo reader.

As a preliminary matter, we note that the district court

concluded Perfect 10’s display rights-based direct

infringement claim failed at the pleadings stage. Thus,

Perfect 10’s argument on appeal that the district court

“ignored P10’s evidence” is irrelevant. Instead, the pertinent

question is whether the FAC alleged “enough facts to state a

claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). As the district court

correctly concluded, the allegation that Giganews directly

infringes Perfect 10’s display rights through the Giganews

Mimo reader does not state a claim because the fact that

“users may use Giganews’s reader to display infringing

images does not constitute volitional conduct by Giganews.” 

Perfect 10, Inc. v. Giganews, Inc., No. CV-11-7098 ABC

(SHx), 2013 WL 3610706, at *2 (C.D. Cal. July 10, 2013). 

This is because “Mimo is just a reader, a piece of software

that allows a user to view an image,” and therefore, “[t]o the

extent that Mimo is used to view infringing images, this is

done by the user.” Id.

Moreover, even if we were to consider Perfect 10’s

evidence, the claim would still fail. The sole evidence Perfect

10 points to in support of its argument that Giganews was not

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18 PERFECT 10 V. GIGANEWS

merely a passive host shows only that images and thumbnails

were accessed through the Giganews platform. The evidence

does not demonstrate that Giganews – as opposed to the user

who called up the images – caused the images to be

displayed.

Further, our decision in Amazon does not render

Giganews liable for direct infringement of Perfect 10’s

display rights. In Amazon, there was “no dispute that

Google’s computers store[d] thumbnail versions of Perfect

10’s copyrighted images and communicate[d] copies of those

thumbnails to Google’s users.” Amazon, 508 F.3d at 1160. 

We concluded Perfect 10 established “a prima facie case that

Google’s communication of its stored thumbnails directly

infringe[d] Perfect 10’s display right.” Id. However, citing

CoStar, we also noted that “[b]ecause Google initiates and

controls the storage and communication of these thumbnail

images, we do not address whether an entity that merely

passively owns and manages an Internet bulletin board or

similar system violates a copyright owner’s display and

distribution rights when the users of the bulletin board or

similar system post infringing works.” Id. at 1160 n.6.

This case falls into the category of cases we declined to

address in Amazon. The evidence before us shows only that

Giganews’s actions were akin to “passively storing material

at the direction of users in order to make that material

available to other users upon request,” or automatically

copying, storing, and transmitting materials upon instigation

by others. CoStar, 373 F.3d at 555.

Accordingly, we affirm the district court’s dismissal of

Perfect 10’s display rights-based direct infringement claim.

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PERFECT 10 V. GIGANEWS 19

ii. Distribution Rights

Perfect 10 also contends Giganews and Livewire directly

violated its exclusive distribution rights under 17 U.S.C.

§ 106(3), emphasizing that its evidence showed that, at the

request of their subscribers, Giganews and Livewire delivered

content to download, including copies of Perfect 10 images.

As with Perfect 10’s display rights-based theory of direct

liability, the district court concluded Perfect 10’s distribution

rights-based theory as to Giganews failed at the pleadings

stage. Again, the proper inquiry is whether Perfect 10’s

complaint alleged “enough facts to state a claim to relief that

is plausible on its face.” Twombly, 550 U.S. at 570. As the

district court correctly held, the allegation “that Giganews

directlydistributes [Perfect 10’s]images when a user requests

images from Giganews’s servers . . . does not state a claim,

because this distribution happens automatically,” meaning

that “Giganews has not engaged in volitional conduct by

which it ‘causes’ the distribution.” Perfect 10, Inc., 2013 WL

3610706, at *3.

However, even if we were to consider the evidence with

respect to Giganews, we would still conclude there was no

direct infringement of Perfect 10’s distribution rights because

Perfect 10 failed to show that the distribution does not happen

automatically. Indeed, an analysis of Perfect 10’s evidence

shows only that users uploaded infringing content onto

Giganews servers, not that Giganews played any sort of

active role in causing the distribution.

With respect to Livewire, we similarlyconclude there was

no evidence that Livewire had any direct role in any act of

infringement, “let alone any act of infringement relating to

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20 PERFECT 10 V. GIGANEWS

Perfect 10’s copyrighted works.” Perfect 10, Inc., 2014 WL

8628034, at *10. First, the evidence Perfect 10 cites – the

same evidence cited in support of its distribution rights-based

claim against Giganews – does not demonstrate any volitional

conduct by Livewire. Again, there is no indication that the

distribution does not happen automatically. Second, we are

unpersuaded by Perfect 10’s argument that Livewire engaged

in volitional conduct because it sold access to Giganews

servers, including infringing Perfect 10 images, for a monthly

fee. As the district court concluded, “the undisputed evidence

affirmatively shows Livewire sells access to all the content

available on Giganews’ servers. There is no evidence that

Livewire sells any of Perfect 10’s copyrighted material.” Id.

(emphasis in original).

Contrary to Perfect 10’s assertion, New York Times Co.,

Inc. v. Tasini, 533 U.S. 483 (2001), does not establish that

Giganews or Livewire directly violated Perfect 10’s

distribution rights by selling access to infringing images on

Giganews’s servers. As the district court noted, the question

“is not whether posting content online is a ‘distribution’ but

rather, even assuming there was a distribution, whether the

Defendants can be regarded as having committed the

distribution, as opposed to, or in addition to, the third party

users who actually uploaded the infringing content onto

USENET.” Perfect 10, Inc., 2013 WL 2109963, at *9 n.7;

see also Aereo, 134 S. Ct. at 2512 n.1 (Scalia, J., dissenting)

(“[Tasini] dealt with the question whether the defendants’

copyingwas permissible, not whether the defendants were the

ones who made the copies.”).

Accordingly, we affirm the district court’s rejection of

Perfect 10’s distribution rights-based direct infringement

claim.

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PERFECT 10 V. GIGANEWS 21

iii. Reproduction Rights

With respect to the final purported basis for direct

infringement, the district court correctly held that Giganews

did not infringe Perfect 10’s exclusive reproduction rights

under 17 U.S.C. § 106(1). As the Fourth Circuit held,

agreeing with the reasoning of Netcom, “automatic copying,

storage, and transmission of copyrighted materials, when

instigated by others, does not render an [Internet service

provider] strictly liable for copyright infringement[.]” 

CoStar, 373 F.3d at 555; see also Netcom, 907 F. Supp. at

1369 (“Netcom’s act of designing or implementing a system

that automatically and uniformly creates temporary copies of

all data sent through it is not unlike that of the owner of a

copying machine who lets the public make copies with it. 

Although some of the people using the machine may directly

infringe copyrights, courts analyze the machine owner’s

liability under the rubric of contributory infringement, not

direct infringement.”).

Here, Perfect 10 argues it satisfied the volitional-conduct

requirement because Giganews itself instigated the copying,

storage, and distribution of Perfect 10’s images. We disagree. 

The evidence Perfect 10 cites does not demonstrate “copying

by [Giganews].” Fox Broad., 747 F.3d at 1067; see also id.

(“[O]perating a system used to make copies at the user’s

command does not mean that the system operator, rather than

the user, caused copies to made.”). Perfect 10 provides no

evidence showing Giganews exercised control (other than by

general operation of a Usenet service); selected any material

for upload, download, transmission, or storage; or instigated

any copying, storage, or distribution. Accordingly, the

district court correctly held there was no triable issue of

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22 PERFECT 10 V. GIGANEWS

material fact as to Perfect 10’s claim that Giganews directly

infringed Perfect 10’s reproduction rights.

In sum, the district court correctly rejected Perfect 10’s

direct infringement claim because Giganews was not the

proximate cause of any infringement in this case. We affirm

the district court’s motion to dismiss and summary judgment

rulings in favor of Appellees as to the direct infringement

claim.

2. Contributory Infringement

Perfect 10 also claims Giganews is liable for contributory

copyright infringement, “a form of secondary liability with

roots in the tort-law concepts of enterprise liability and

imputed intent.” Perfect 10, Inc. v. Visa Int’l Serv., Ass’n,

494 F.3d 788, 794–95 (9th Cir. 2007). “[O]ne contributorily

infringes when he (1) has knowledge of another’s

infringement and (2) either (a) materially contributes to or

(b) induces that infringement.” Id. at 795. Because the

district court held that Giganews did not know of the alleged

infringement at issue in this case, it concluded that Giganews

was not liable for contributorily infringing Perfect 10’s

copyrights without addressing the second prong of the test.

We decline to reach the issue of whether the district court

erred in finding that Giganews lacked actual knowledge,

because we find that Perfect 10 failed to establish that

Giganews materially contributed to or induced infringement

of Perfect 10’s copyrights. See Summers v. A. Teichert &

Son, Inc., 127 F.3d 1150, 1152 (9th Cir. 1997) (“The district

court’s grant of summary judgment may be affirmed if it is

supported by any ground in the record, whether or not the

district court relied upon that ground.”).

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PERFECT 10 V. GIGANEWS 23

a. Material Contribution to or Inducement of

Infringing Activities

As the district court held that Giganews lacked actual

knowledge of infringement, it declined to address whether

Giganews materially contributed to or induced the

infringement at issue. Because we find the issues of material

contribution and inducement to be dispositive, it is

unnecessary to determine whether the district court correctly

found that Giganews lacked knowledge. Even assuming that

Perfect 10’s takedown notices were sufficient to confer actual

knowledge on Giganews, Perfect 10 failed to raise a triable

issue of fact as to whether Giganews materially contributed

to or induced infringement.

i. Material Contribution

In the online context, we have held that a “computer

system operator” is liable under a material contribution

theory of infringement “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, 508 F.3d at 1172 (internal

citations and quotation marks omitted).

According to Perfect 10, Giganews could have used

search terms that Perfect 10 recommended in several of its

takedown notices to extract machine-readable Message-IDs

“in mere seconds” and remove the infringing material. 

Perfect 10 also claims that other Usenet operators processed

Perfect 10 takedown notices that were essentially the same as

those sent to Giganews “in as little as one day.” According

to Giganews, however, absent machine-readable Message-

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24 PERFECT 10 V. GIGANEWS

IDs, there were no simple measures available to remove

infringing material. Giganews also disputes whether other

Usenet operators were able to take such simple measures

based on the takedown notices provided by Perfect 10, and

cites the district court’s conclusion that “the evidence . . . is

undisputed that the only method for consistently identifying

a specific Usenet message that Giganews could promptly

remove is the post’s Message-ID.” Perfect 10, Inc. v.

Giganews, Inc., No. CV-11-07098 AB SHX, 2014 WL

8628031, at *8 (C.D. Cal. Nov. 14, 2014).

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. Giganews

presented sufficient evidence that Perfect 10’s proposed

method for locating infringing messages was onerous and

unreasonably complicated. Indeed, Giganews spent more

than 20 hours processing 565 Message-IDs from Perfect 10

because they were not machine-readable. Giganews

calculates that Perfect 10’s method would therefore require

354,000 hours of manual work for every 10 million MessageIDs – the number of Message-IDs that Giganews receives

every month. Moreover, the record is clear that when

Giganews did receive machine-readable Message-IDs, it

immediately processed them and subsequently removed the

messages from its servers.

Perfect 10 asserts that its evidence demonstrates the

simplicity of its proposed method and that Perfect 10 only

learned of the automated Message-ID feature after sending its

takedown notices. Perfect 10 does not dispute, however, that

Giganews can easily remove infringing content if it is

provided with automated Message-IDs, and Perfect 10’s

evidence only appears to relate to its argument that, by

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PERFECT 10 V. GIGANEWS 25

providing search results and search terms, Giganews could

have searched for and found Message-IDs. Yet, as Giganews

argues and the district court agreed, this method is unreliable

and burdensome and therefore is not a “reasonable and

feasible means” of “prevent[ing] further damage to Perfect

10’s copyrighted works.” Amazon, 508 F.3d at 1172.

Accordingly, although the district court did not address

the issue, we conclude that Giganews was not able to take

simple measures to remove infringing materials from its

servers. We therefore reject Perfect 10’s first theory of

contributory infringement liability.

ii. Inducement

Perfect 10 has also failed to demonstrate that Giganews

induced any infringement of Perfect 10’s copyrighted works. 

With respect to this alternate theory of contributory

infringement liability, the Supreme Court has 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 taken to foster infringement, is liable for the

resulting acts of infringement by third parties.” MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913,

936–37 (2005). We have described the inducement theory as

having “four elements: (1) the distribution of a device or

product, (2) acts of infringement, (3) an object of promoting

its use to infringe copyright, and (4) causation.” Columbia

Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1032 (9th Cir.

2013). Based on the record, no reasonable juror could

conclude Giganews distributed its product “with the object of

promoting its use to infringe copyright.” Cf. Grokster,

545 U.S. at 936.

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26 PERFECT 10 V. GIGANEWS

Perfect 10 points to entirely inconclusive evidence of any

such objective to infringe copyrights. For example, Perfect

10 identifies Giganews’s advertising materials, which state

that its product “has built-in MP3 and File Locators that

search all Giganews newsgroups for music, pictures, and

movies without having to download millions of messages.”

Perfect 10 also points to a web page where a Giganews

advertisement appears next to text written by another entity,

which states that Giganews “provide[s] an uncensored news

feed with up to 20 ssl encrypted connection and over 460

days worth of retention. That is over a years [sic] worth of

access to downloadable music, movies and games.” 

However, neither of these advertisements nor any other

evidence in the record indicates that Giganews itself

promoted its product “with the object” of infringing

copyright.

Perfect 10 further argues that Giganews has the object of

promoting infringement because it: (1) “offers 25,000

terabytes of copyrighted materials . . . without permission,”

(2) “continues to commercially exploit the content of known

repeat infringers,” and (3) “advertises that it does not keep

track of subscriber downloads, effectively encouraging

infringement.” Even if true, none of this conduct suggests

that Giganews clearly expressed an intent to promote

infringement or took “affirmative steps . . . to foster

infringement.” Cf. Grokster, 545 U.S. at 936–37.

For the foregoing reasons, we affirm the district court’s

grant of summary judgment in favor of Giganews as to

Perfect 10’s contributory infringement claim.

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PERFECT 10 V. GIGANEWS 27

3. Vicarious Infringement

Perfect 10 also argues that the district court erred in

granting summary judgment to Giganews on Perfect 10’s

vicarious infringement claim by (1) applying an incorrect

legal standard as to financial benefit, and (2) concluding there

was insufficient evidence to find Giganews vicariously liable. 

We hold that the district court applied the correct legal

standard and properly granted summary judgment on the

vicarious infringement claim in favor of Giganews.

To prevail on a claim for vicarious infringement, a

plaintiff must prove “the defendant has (1) the right and

ability to supervise the infringing conduct and (2) a direct

financial interest in the infringing activity.” Visa, 494 F.3d

at 802 (footnote omitted). With respect to the second element

– the only element the district court addressed – we have

explained that a “[f]inancial benefit exists where the

availability of infringing material acts as a draw for

customers.” Ellison, 357 F.3d at 1078 (citation and internal

quotation marks omitted). Further, as the district court

correctly stated, “[t]he size of the ‘draw’ relative to a

defendant’s overall business is immaterial.” Perfect 10, Inc.,

2014 WL 8628031, at *3. Indeed, “[t]he essential aspect of

the ‘direct financial benefit’ inquiry is whether there is a

causal relationship between the infringing activity and any

financial benefit a defendant reaps, regardless of how

substantial the benefit is in proportion to a defendant’s

overall profits.” Ellison, 357 F.3d at 1079.

Therefore, Perfect 10 must demonstrate a causal link

between the infringing activities and a financial benefit to

Giganews. As the district court noted, “[t]his action is a

specific lawsuit by a specific plaintiff against a specific

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28 PERFECT 10 V. GIGANEWS

defendant about specific copyrighted images; it is not a

lawsuit against copyright infringement in general on the

Usenet.” Perfect 10, Inc., 2014 WL 8628031, at *4. Thus,

the direct financial benefit prong of the vicarious

infringement test “demands more than evidence that

customers were ‘drawn’ to Giganews to obtain access to

infringing material in general.” Id.

In Ellison, we rejected a plaintiff’s vicarious copyright

infringement claim based on the uploading of copyrighted

material to a Usenet newsgroup because the plaintiff failed to

show the defendant “received a direct financial benefit from

the infringement in this case.” Ellison, 357 F.3d at 1079 n.10. 

The district court correctly interpreted the references to “the

infringing activity” and “the infringement in this case,” id.

(emphasis added), to mean infringement of the plaintiff’s

copyrighted material, rather than general infringement. This

interpretation is supported not only by our repeated use of the

definite article (“the infringing activity”) in Ellison, but also

by our analysis in that decision. In Ellison, after receiving the

plaintiff’s complaint, AOL blocked access to the specific

newsgroup that contained the infringing material at issue in

the complaint. Id. at 1075. In our discussion of the “direct

financial benefit” prong, we concluded “[t]he record lacks

evidence thatAOLattracted or retained subscriptions because

of the infringement or lost subscriptions because of AOL’s

eventual obstruction of the infringement.” Id. at 1079. 

Particularly given AOL’s actions upon receipt of the

plaintiff’s complaint – blocking access to the newsgroup at

issue – the phrase “AOL’s eventual obstruction of the

infringement” logically refers to the infringement of the

plaintiff’s material, rather than to general copyright

infringement. Therefore, contrary to Perfect 10’s suggestion,

Ellison does not compel the Court to hold a defendant

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PERFECT 10 V. GIGANEWS 29

vicariously liable regardless of whether there is any causal

link between the infringement of the plaintiff’s own

copyrighted works and any profit to the service provider.

Perfect 10’s view of vicarious infringement is not only

inconsistent with Ellison, but also difficult to reconcile with

Article III’s standing requirements. Standing under Article

III requires that a plaintiff have “(1) suffered an injury in fact,

(2) that is fairly traceable to the challenged conduct of the

defendant, and (3) that is likely to be redressed by a favorable

judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540,

1547 (2016).

Here, Perfect 10 argues for a rule that would allow a court

to hold Giganews liable under a theory of vicarious liability

by showing only that Giganews benefits financially from the

infringement of another’s works, regardless of whether

Giganews received any financial benefit from the specific

infringement alleged. Such a rule would allow cases to be

built on the rights of owners and the actions of users not

before the court. At the very least, Perfect 10’s proposed rule

is in significant tension with Article III’s standing

requirement. At most, Perfect 10’s view runs counter to the

requirement that there be a “causal connection between the

injury and the conduct complained of[.]” Lujan v. Defs. of

Wildlife, 504 U.S. 555, 560 (1992).

Accordingly, we reject Perfect 10’s formulation of the

direct financial benefit inquiry and hold that Perfect 10 was

required to provide evidence that customers were drawn to

Giganews’s services because of the infringing Perfect 10

material at issue. We also conclude that there was no

evidence indicating that anyone subscribed to Giganews

because of infringing Perfect 10 material. See Ellison,

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30 PERFECT 10 V. GIGANEWS

357 F.3d at 1079. Indeed, Perfect 10 provides evidence that

suggests only that some subscribers joined Giganews to

access infringing material generally; Perfect 10 does not

proffer evidence showing that Giganews attracted

subscriptions because of the infringing Perfect 10 material. 

As the district court noted, “[t]hat a Giganews customer may

have posted or accessed copyrighted Perfect 10 material as

‘an added benefit’ to a subscription is insufficient.” Perfect

10, Inc., 2014 WL 8628031, at *4; see Ellison, 357 F.3d at

1079 (“There are . . . cases in which customers value a

service that does not ‘act as a draw.’ . . . [T]he central

question of the ‘direct’ financial benefit’ inquiry . . . is

whether the infringing activity constitutes a draw for

subscribers, not just an added benefit.”).

Because the district court did not err in finding that

Giganews did not receive a direct financial benefit from the

infringement in this case, “we need not address whether

[Giganews] had the right and ability to supervise the

infringing conduct.” Ellison, 357 F.3d at 1079 n.10.

Perfect 10 apparently does not appeal the dismissal of its

vicarious infringement claim against Livewire at the

pleadings stage. Indeed, Perfect 10 does not mention

Livewire in the sections of its brief devoted to its vicarious

infringement claim. Nonetheless, to the extent Perfect 10

appeals this dismissal and its argument is not waived, we hold

that the district court correctly dismissed the vicarious

infringement claim against Livewire because Perfect 10 failed

to adequately plead that Livewire exercised the requisite

control over the infringing activity of its clients.

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PERFECT 10 V. GIGANEWS 31

4. Fee Award

In its fee award order, the district court concluded that

Giganews and Livewire were the prevailing parties and found

that an award of attorney’s fees would serve the purposes of

the Copyright Act. The district court also awarded attorney’s

fees pursuant to California Civil Code § 3344(a) because

Appellees successfully defended against Perfect 10’s

common right of publicity claim. Ultimately, the district

court awarded Giganews and Livewire a total of

$5,213,117.06 in attorney’s fees and $424,235.47 in nontaxable costs. Perfect 10 argues the district court abused its

discretion in awarding attorney’s fees under the Copyright

Act because (1) the fee award was contrary to the purposes of

the Act, (2) the district court made erroneous findings of fact

regarding the factors outlined in Fogerty v. Fantasy, Inc.,

510 U.S. 517 (1994) (“Fogerty I”), and (3) the total award

was not reasonable. We reject these arguments and affirm the

fee award.

The Copyright Act provides that, in a copyright action,

“the court in its discretion may allow the recovery of full

costs by or against any party other than the United States,”

including “a reasonable attorney’s fee to the prevailing party

as part of the costs.” 17 U.S.C. § 505.

“The Supreme Court [has] identified the following nonexclusive list of factors to guide the award or denial of

attorney’s fees: ‘frivolousness, motivation, objective

unreasonableness (both in the factual and in the legal

components of the case), and the need in particular

circumstancesto advance considerations of compensation and

deterrence.’” Ets-Hokin v. Skyy Spirits, Inc., 323 F.3d 763,

766 (9th Cir. 2003) (quoting Fogerty I, 510 U.S. at 534 n.19). 

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32 PERFECT 10 V. GIGANEWS

We have “added as additional considerations: the degree of

success obtained, the purposes of the Copyright Act, and

whether the chilling effect of attorney’s fees may be too great

or impose an inequitable burden on an impecunious plaintiff.” 

Id. (citing Fogerty II, 94 F.3d at 559–60). These factors

“may be considered but are not exclusive and need not all be

met.” Fogerty II, 94 F.3d at 558.

We conclude that the district court did not abuse its

discretion in awarding fees to Appellees because “the reasons

given by the district court . . . are well-founded in the record

and are in keeping with the purposes of the Copyright Act.” 

Id. at 560. The district court’s decision appropriately

recognized “the important role played by copyright

defendants.” Fogerty I, 510 U.S. at 532 n.18; see also Perfect

10, Inc. v. Giganews, Inc., No. CV 11-07098-AB(SHx), 2015

WL 1746484, at *3 (C.D. Cal. Mar. 24, 2015). In this vein,

[b]ecause copyright law ultimately serves the

purpose of enriching the general public

through access to creative works, it is

peculiarly important that the boundaries of

copyright law be demarcated as clearly as

possible. To that end, defendants who seek to

advance a variety of meritorious copyright

defenses should be encouraged to litigate

them . . . . Thus a successful defense of a

copyright infringement action may further the

policies of the Copyright Act every bit as

much as a successful prosecution of an

infringement claim by the holder of a

copyright.

Fogerty I, 510 U.S. at 527.

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PERFECT 10 V. GIGANEWS 33

Further, we are unpersuaded by Perfect 10’s arguments

that the district court made clearly erroneous findings of fact

regarding the Fogerty factors and the other factors articulated

by this circuit. The district court did not give undue weight

to the degree of success Appellees obtained. Nor did the

district court abuse its discretion in finding that Perfect 10

had an improper motivation, that the “objective

unreasonableness” factor weighed slightly in Appellees’

favor, that considerations of compensation and deterrence

weighed in favor of a fee award, and that it would not be

inequitable to award attorney’s fees to Appellees.

Finally, we conclude that the district court did not abuse

its discretion in awarding fees and costs in the total amount

of $5,637,352.53. “Although opposing counsel’s billing

records may be relevant to determining whether the

prevailing party spent a reasonable number of hours on the

case, those records are not dispositive,” and “[a court] has the

discretion not to rely on them.” Gonzalez v. City of

Maywood, 729 F.3d 1196, 1202 (9th Cir. 2013). The district

court did not abuse its discretion in concluding that the hours

Perfect 10 spent litigating the case were not a good barometer

of whether Appellees’ billed hours were reasonable, nor did

it abuse its discretion by finding that there was no basis to

impose a 50 percent across-the-board cut.

For the foregoing reasons, we affirm the district court’s

fee award.

5. Supplemental Fee Request

On cross-appeal, Appellees argue that the district court

erred in denying their request for supplemental fees. We

disagree.

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34 PERFECT 10 V. GIGANEWS

Federal Rule of Civil Procedure 54 provides that a request

for attorney’s fees “must be made by motion[,] . . . [and]

[u]nless a statute or court order provides otherwise, the

motion must[] . . . be filed no later than 14 days after the

entry of judgment.” Fed. R. Civ. P. 54(d)(2)(A)–(B)(i). 

“Although the 14-day period is not jurisdictional, the failure

to comply [with Rule 54] should be sufficient reason to deny

the fee motion, absent some compelling showing of good

cause.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877,

889–90 (9th Cir. 2000) (citation and internal quotation marks

omitted) (alteration in original). Further, under Rule 54,

motions for attorney’s fees must “state the amount sought or

provide a fair estimate of it,” Fed. R. Civ. P. 54(d)(2)(B)(iii);

however, the fee motion need not “be supported at the time of

filing with the evidentiarymaterial bearing on the fees.” Fed.

R. Civ. P. 54, 1993 Advisory Comm. Notes.

Here, the parties do not dispute that the request for

supplemental fees was filed after the deadline for motions for

attorney’s fees set by the court. Instead, Appellees contend

their supplemental fee request was timely because, in their

original (timely) fee motion, they asked the district court “to

set a date for [Appellees] to supplement their request with

‘later fees and costs’ for inclusion in a final award.” We

agree with the district court that this amorphous request is

inadequate under Rule 54(d)(2)(B)(iii), which at minimum

requires a party to “provide a fair estimate” of the amount of

fees sought. See Johnson v. Leading Edge Recovery Sols.,

L.L.C., No. 12-CV-03103-CMA-CBS, 2013 WL 5313255, at

*2 (D. Colo. Sept. 23, 2013) (“[T]he Court declines to grant

attorney fees because Plaintiff did not include a fair estimate

of fees in his initial motion, making the instant motion

untimely.”); King v. Midland Credit Mgmt., Inc., No. 11-CV02808-CMA-BNB, 2013 WL 2236934, at *2 (D. Colo. May

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PERFECT 10 V. GIGANEWS 35

21, 2013), aff’d, 549 F. App’x 791 (10th Cir. Dec. 10, 2013)

(“Although Plaintiff’s motion requested ‘any additional

amounts as determined by the Court’, this language is

insufficient as it specifies neither the impetus for, nor any

calculation of, such ‘additional amounts.’” (internal citation

omitted)).

We are unpersuaded byAppellees’ argument that because

“[p]redicting future fees in litigation is notoriously difficult,”

Appellees could not have provided a “fair estimate” of their

future fees in their initial motion. As the district court

emphasized, at the time of their original fee motion,

Appellees “could have reasonablyanticipated that theywould

file a reply to the fees motion, continue litigating the

sanctions motion which was already pending before

Magistrate Judge Hillman at the time, seek to add [Norman]

Zada to the judgment, and respond to various post-judgment

proposals.” Perfect 10, Inc. v. Giganews, Inc., No. 734 CV

11-07098-AB SHX, slip op. at 11 (C.D. Cal. June 3, 2015). 

“Simply put, [Appellees] did not face an insurmountable

obstacle in providing an estimate in [their]first [fee]motion.” 

King v. Midland Credit Mgmt., Inc., 549 F. App’x 791, 794

(10th Cir. Dec. 10, 2013).

We also note that, as the district court explained, the vast

majority of Appellees’ “supplemental fees and expenses . . .

were incurred, and therefore known to [Appellees], prior to

the district court’s” March 24, 2015 order granting in part

Appellees’ original motion for attorney’s fees. United States

v. Eleven Vehicles, Their Equip. & Accessories, 200 F.3d

203, 210 (3d Cir. 2000). Thus, to the extent that Appellees

incurred fees that were unforeseeable or impossible to

estimate when they filed their original fee request, they

“could and should have supplemented their fee request prior

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36 PERFECT 10 V. GIGANEWS

to the court’s decision [on the original fee motion].” Id.

Appellees did not do so.

In sum, we conclude that the supplemental fee request

was untimely and that Appellees failed to make a

“compelling showing of good cause” to excuse this

untimeliness. Kona Enters., 229 F.3d at 889–90. We affirm

the district court’s denial of Appellees’ supplemental fee

request.

6. Alter Ego Liability

Lastly, Appellees argue that the district court erred in

denying Appellees’ request to amend the judgment to add

Norman Zada as Perfect 10’s alter ego. We affirm the district

court’s decision not to add Zada as an additional judgment

debtor.

Under Federal Rule of Civil Procedure 69, district courts

enforce money judgments in accordance with the procedures

of the states where they are located. Fed. R. Civ. P. 69(a)(1). 

In California, a judgment can be amended to add a nonparty

as a judgment debtor if the new party (1) is the alter ego of

the old party, and (2) controlled the litigation. In re

Levander, 180 F.3d 1114, 1121 (9th Cir. 1999). An alter ego

relationship is established under California law when

“(1) there is such a unity of interest and ownership that the

individuality, or separateness, of the said person and

corporation has ceased, and (2) an adherence to the fiction of

the separate existence of the corporation . . . would sanction

a fraud or promote injustice.” S.E.C. v. Hickey, 322 F.3d

1123, 1128 (9th Cir. 2003) (internal quotation marks and

emphasis omitted).

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PERFECT 10 V. GIGANEWS 37

However, mere “[d]ifficulty in enforcing a judgment or

collecting a debt does not satisfy” the injustice standard for

alter ego liability. Sonora Diamond Corp. v. Superior Court,

83 Cal. App. 4th 523, 539 (2000). “The alter ego doctrine . . .

instead affords protection where some conduct amounting to

bad faith makes it inequitable for the corporate owner to hide

behind the corporate form.” Id. (emphasis added). 

Insolvency or inadequate capitalization may satisfy this

standard “when a corporation is so undercapitalized that it is

unable to meet debts that may reasonably be expected to arise

in the normal course of business.” Laborers Clean-Up

Contract Admin. Trust Fund v. Uriarte Clean-Up Serv., Inc.,

736 F.2d 516, 525 (9th Cir. 1984) (internal quotation marks

omitted); see also Automotriz del Golfo de California S. A. de

C. V. v. Resnick, 47 Cal. 2d 792, 797 (1957) (“If the capital is

illusory or trifling compared with the business to be done and

the risks of loss, this is a ground for denying the separate

entity privilege.”).

Here, Giganews has not demonstrated that an injustice

would result if Zada is not added to the judgment. As the

district court explained, in its nearly 20 years of operations,

Perfect 10 has always been able to satisfy judgments against

it, and the corporation maintained approximately$1.7 million

in net assets and equity when it sued Giganews and Livewire

in 2011. The district court further noted that Perfect 10’s

ability to sell some or all of its intellectual property could also

help the corporation satisfy any judgment against it. 

Attempting to undermine these findings, Giganews

essentially argues that Perfect 10’s admission that it could not

currently pay the judgment against it, combined with Zada’s

history of removing capital from Perfect 10 and the fact that

Perfect 10 operates under a risky business model, should have

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38 PERFECT 10 V. GIGANEWS

resulted in alter ego liability for Zada. But Giganews misses

the point.

Nothing in the record suggests that Perfect 10 was so

undercapitalized that it could not meet its reasonably

expected debts, and particularly in light of Perfect 10’s ability

to satisfy past judgments against it, there is no evidence of

bad faith. Indeed, this is not a case where a sole shareholder

operated a company with little or no assets, nor is this a case

where a company was stripped of its assets to shield its sole

shareholder from adverse judgments. And finally, although

Giganews argues that the district court erred in referring to

the value of Perfect 10’s intellectual property as evidence of

potential assets with which Perfect 10 could satisfy a

judgment against it, the fact remains that Perfect 10 has

regularly maintained enough capital to consistently pay its

debts for almost 20 years. Therefore, regardless of the

alleged illiquidity of some of Perfect 10’s assets, the district

court did not clearly err in holding that Perfect 10 is not the

“empty corporate shell” that Appellees argue it is. 

Accordingly, we affirm the district court’s order declining to

add Zada to the judgment against Perfect 10.

We decline to take judicial notice of certain postjudgment debtor examination transcripts in this case that

occurred after the district court ruled on the motion to amend

the judgment and after this appeal was filed. However, even

if we were to grant Appellees’ request, those transcripts

would not alter our conclusion that the district court did not

clearly err.

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PERFECT 10 V. GIGANEWS 39

CONCLUSION

In sum, we conclude the district did not err in dismissing

much of Perfect 10’s direct infringement claim at the

pleadings stage, nor did it err in granting summary judgment

in favor of Giganews and Livewire on the direct, vicarious,

and contributory infringement claims. We further conclude

that the district court did not abuse its discretion in awarding

fees to Appellees and denying Appellees’ supplemental fee

request. Finally, we hold that the district court did not clearly

err in refusing to add Zada to the judgment against Perfect 10.

AFFIRMED.

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