Source: http://volokh.com/posts/chain_1183485027.shtml
Timestamp: 2019-04-19 05:14:08+00:00

Document:
Are Credit Card Providers Liable for Knowingly Facilitating Sales of Infringing Material?
The Ninth Circuit says "no," in Perfect 10 v. Visa Int'l, in an opinion written by Judge Smith and joined by Judge Reinhardt; Judge Kozinski dissents. I think Judge Kozinski's opinion is more persuasive as a matter of current law (whatever one thinks the law ought to be), at least as to contributory liability.
As Judge Kozinski points out, "If this were a drug deal ... we would never say that the guy entrusted with delivery of the purchase money is less involved in the transaction than the guy who helps find the seller." And the Ninth Circuit had already held that "the guy who helps find the seller" in copyright infringement cases, knowing that the seller is infringing, is liable.
The quote comes in the vicarious liability section, but it seems fully applicable to contributory infringement, especially since the theory of contributory infringement is closely related to aiding-and-abetting liability. Knowing provision of material assistance to infringers is sufficient for contributory copyright infringement, and providing financial services surely qualifies as material assistance. The majority's attempts to distinguish such assistance from other assistance strike me as unpersuasive.
In any case, whoever is right, this is obviously an issue that bears further watching, in this litigation and in future cases.
A few weeks ago, I posted about whether credit card providers should be liable for knowingly facilitating sales of infringing materials. A Ninth Circuit decision said that this did not constitute contributory infringement; Judge Kozinski dissented, saying it did, and I generally endorsed his position, at least as a matter of current law.
Many commenters disagreed, making various arguments. Among other things, they argued that we shouldn't "in effect, force credit card companies to become copyright police ... who have an affirmative duty to expend massive resources surfing the web verifying complaints of copyright infringement"; that the law shouldn't take the view that "preventing infringement should be a primary concern for all unrelated businesses"; that such contributory liability shouldn't exist at least until there's a judicial finding that the recipient of the money is indeed an infringer; and that the credit card companies shouldn't be liable unless they know that the specific transaction they're facilitating is infringing (as opposed to just that the target site is engaged in massive infringement).
These are all plausible arguments, but I wanted to revisit the question by asking a broader question: When should someone be held legally liable for helping others commit crimes or torts? In criminal law, the question is when someone should be guilty of the crimes of "aiding and abetting" or (in some jurisdictions) "criminal facilitation." In tort law, the question is when someone should be liable as an accessory; contributory copyright infringement law is in large measure the application of this general tort law principle.
The theory is that at some point helping someone commit a wrong -- especially a wrong to an identifiable innocent third party -- is itself the commission of a wrong. By threatening to hold you liable we aren't asking you to become the "police," in the sense of someone who is expected to actively try to catch wrongdoers. Rather, we're asking you not to participate in others' wrongdoing. The question is when this is a reasonable demand.
1. Majority criminal law view: Oddly enough, the matter is not fully settled even as to criminal law. The dominant view seems to be that you are liable as an aider or abetter if you (here I quote the Model Penal Code, which isn't far from the majority rule on this point) solicit, aid, agree, or attempt to aid another in committing a crime, with the purpose -- the "conscious object" -- of promoting the crime. This means that if you give a gun, a knife, gasoline, a rope, or whatever else to a criminal with the purpose of helping him commit a crime with the gun, you're committing a crime. But if you simply know that he will likely commit a crime, but don't have the conscious object of helping him (perhaps, for instance, you're selling the goods just like you'd sell them to anyone else, with the sole object of making money from the sale), then you're not guilty.
2. Minority criminal law view: But quite a few jurisdictions do allow punishment even if you merely know that you're helping someone commit a crime, or even if you know that there's a high probability you're helping someone commit a crime. Some jurisdictions do this for all serious crimes, others just for some crimes; and some treat this as aiding and abetting, punishable the same way the aided crime is punished, while others impose a lower sentence. For instance, consider New York Penal Law § 115.00: "A person is guilty of criminal facilitation in the fourth degree [a class A misdemeanor] when, believing it probable that he is rendering aid ... to a person who intends to commit a crime, he engages in conduct which provides such person with means or opportunity for the commission thereof and which in fact aids such person to commit a felony." Or consider Indiana Code Ann. § 35-41-2-4: "A person who knowingly or intentionally aids ... another person to commit an offense commits that offense." Or see the dictum in People v. Lauria, 59 Cal. Rptr. 628, 633-35 (Ct. App. 1967), which suggests aiding and abetting liability based on mere knowledge that one is aiding a crime would be proper if the crime were serious enough.
Of course, if you have a credible claim that you were forced into this ("I had to sell the knife to the gangster, or else he'd have attacked me himself"), you'd have a duress defense. And this liability would not apply if you're selling a product to the public at large, and you merely know that some fraction of the population -- and you don't know who -- are misusing the product (whether the product is a gun, a knife, a bottle of vodka, a photocopier, or whatever else).
But as a general matter under this view you have an obligation not to help anyone commit a crime, if you know that your actions would help that criminal commit the crime (and knowledge of very high likelihood is probably enough), or maybe even if you just know that it's "probable" your actions would help the criminal.
3. Tort law: The tort law view, as best I can tell, mirrors what is reported by the Restatement (Second) of Torts § 876: "[O]ne is subject to liability if he ... knows that [an]other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other." That's the knowledge-is-enough view that's very close to what Judge Kozinski was urging as to aiding copyright infringement (which is after all itself a tort).
Now note that under all these doctrines, one can be liable even thought there's been no judicial finding that the person you're helping is committing a crime or tort. True, if you're genuinely not sure that the person you're helping will use your help for criminal or tortious purposes, then the "knowledge" requirement isn't satisfied. But you often will be pretty sure -- sure enough to qualify for knowledge. Note that even the criminal law, which is usually more demanding than tort law, tends to conclude that "knowledge is established if a person is aware of a high probability of [the] existence [of a fact], unless he actually believes that it does not exist," Model Penal Code § 2.02(7). "'[K]nowingly' in criminal statutes is not limited to positive knowledge, but includes the state of mind of one who does not possess positive knowledge only because he consciously [i.e., deliberately] avoided it." United States v. Heredia, 483 F.3d 913 (9th Cir. 2007) (en banc).
I also suspect that you wouldn't have to be certain that every single weapon you sell to a tortfeasor is going to be used for tortious purposes. (Maybe that one gun I sold is the one gun he'll keep for purely defensive purposes.) So long as you know that the person to whom you're constantly providing services is routinely using them for tortious or criminal purposes, I expect you'd be liable under either tort law (#3) or the minority criminal law rule (#2; for liability under #1 you'd have to have the purpose of helping commit the crime).
So that's the big picture, far outside the current debates about copyright infringement. You are generally required by the law not to knowingly helping others commit torts. You are even criminally punishable in some jurisdictions for knowingly helping others commit crimes.
You thus have a duty in all these jurisdictions to organize your affairs so that once you are aware that your conduct is helping particular criminals or tortfeasors, you stop. This imposes some burden on you, including some burden of checking things further once you become aware of a high probability that you're helping someone commit a crime or tort.
Let me then ask people, both at this big-picture level and in the context of financial intermediaries -- such as credit card companies -- who are given very solid evidence that their dealings with someone are helping that person commit a crime or tort. Should entities that help in the commission of such crimes and torts then be liable (civilly or criminally) for so helping? Should it vary materially depending on the crime and the tort? Or should the test turn on something else?

References: v. 
 § 115
 § 35
 v. 
 § 876
 § 2
 v.