Court Opinion

ID: 9627135
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:35:26.123066+00
Date Added: 2024-06-11T18:06:40.213677
License: Public Domain

KOZINSKI, Circuit Judge,
dissenting for the most part:1
Federal law gives copyright owners the exclusive right to “distribute copies [of their works] ... to the public by sale.” 17 U.S.C. § 106(3). Plaintiff alleges that certain third parties it refers to as the “Stolen Content Websites” unlawfully copy its protected images and sell them to the public, using defendants’ payment systems as financial intermediaries. According to plaintiff, the Stolen Content Websites “maintain no physical presence in the United States in order to evade criminal and civil liability for their illegal conduct.” First Am. Compl. at 8 ¶ 26. Plaintiff also claims that “Defendants do not enforce their own rules against [the] Stolen Content Websites because Defendants do not want to lose the substantial revenues and profits they receive from the websites.” Id. at 10 ¶ 35. Plaintiff has repeatedly notified defendants that they are abetting the sale of stolen merchandise by “knowingly providing crucial transactional support services for the sale of millions of stolen photos and film clips worth billions of dollars,” id. at 1 ¶ 5, but to no avail. Frustrated in its effort to protect the rights Congress has given it, plaintiff turns to the federal courts for redress. We should not slam the courthouse door in its face.
Accepting the truth of plaintiffs allegations, as we must on a motion to dismiss, the credit cards2 are easily liable for indirect copyright infringement: They knowingly provide a financial bridge between buyers and sellers of pirated works, enabling them to consummate infringing *811transactions, while making a profit on every sale. If such active participation in infringing conduct does not amount to indirect infringement, it’s hard to imagine what would.3 By straining to absolve defendants of liability, the majority leaves our law in disarray.
Contributory Infringement
We have long held that a defendant is liable for contributory infringement if it “materially contributes to the infringing conduct.” A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019 (9th Cir.2001) (internal quotations omitted) (citing Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.1971)). Our recent opinion in Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701 (9th Cir.2007), canvasses the caselaw in this area and concludes that 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.” Amazon, 487 F.3d at 729. Substitute “payment systems” for “search engine” in this sentence, and it describes defendants here: If a consumer wishes to buy an infringing image from one of the Stolen Content Websites, he can do so by using Visa or MasterCard, just as he can use Google to find the infringing images in the first place. My colleagues engage in wishful thinking when they claim that “Google’s search engine itself assists in the distribution of infringing content to Internet users, while Defendants’ payment systems do not” and that “[hjelping users to locate an image might substantially assist users to download infringing images, but processing payments does not.” Maj. op. at 797, 797.4
The majority struggles to distinguish Amazon by positing an “additional step in the causal chain” between defendants’ activities and the infringing conduct. Id. at 797. According to the majority, “Google may materially contribute to infringement by making it fast and easy for third parties to locate and distribute infringing material, whereas Defendants make it easier for infringement to be profitable, which tends to increase financial incentives to infringe, which in turn tends to increase infringement.” Id. The majority is mistaken; there is no “additional step.” Defendants 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. *812This is not just an economic incentive for infringement; it’s an essential step in the infringement process.
In any event, I don’t see why it matters whether there is an “additional step.” Materiality turns on how significantly the activity helps infringement, not on whether it’s characterized as one step or two steps removed from it. The majority recognizes that “Defendants make it easier for websites to profit from this infringing activity,” maj. op. at 796; that defendants’ conduct “tends to increase infringement,” id. at 797; that defendants “have the effect of increasing ... infringement,” id. at 798; that “Defendants have the power to undermine the commercial viability of’ the Stolen Content Websites and that they “make it easier for websites to profit from this infringing activity,” id. at 800; that “Defendants could likely take certain steps that may have the indirect effect of reducing infringing activity on the Internet,” id. at 803; and that defendants could “reduce the number of those [infringing] sales,” id. at 805. Taking the majority at its word, it sounds like defendants are providing very significant help to the direct infringers.
My colleagues recognize, as they must, that helping consumers locate infringing content can constitute contributory infringement,5 but they consign the means of payment to secondary status. Maj. op. at 800 (“Defendants merely provide a method of payment .... ”); id. at 802 (“[A]ll parties involved simply use Defendants’ system to process payments for that infringing material.”); id. at 804 (“They can only take away the means the websites currently use to sell [the infringing images].”); id. at 805 (“Defendants can only refuse to process credit card payments to the offending merchant within their payment network.... ”). But why is locating infringing images more central to infringement than paying for them? If infringing images can’t be found, there can be no infringement; but if infringing images can’t be paid for, there can be no infringement either. Location services and payment services are equally central to infringement; the majority’s contrary assertion is supported largely by disparaging use of “merely,” “simply” and “only.” See also id. at 803 (“[M]ere ability to withdraw a financial ‘carrot’ does not create the ‘stick’ of ‘right and ability to control’....”).6
The majority dismisses the significance of credit cards by arguing that “infringement could continue on a large scale [without them] because other viable funding mechanisms are available.” Maj. op. at 797.7 Of course, the same could be said *813about Google. As the majority admits, if Google were unwilling or unable to serve up infringing images, consumers could use Yahoo!, Ask.com, Microsoft Live Search, A9.com or AltaVista instead. Id. at 797-98 n. 8. Even if none of these were available, consumers could still locate websites with infringing images through e-mails from friends, messages on discussion forums, tips via online chat, “typo-squatting,” peer-to-peer networking using BitTorrent or eDonkey, offline and online advertisements (see p. 820 infra), disreputable search engines hosted on servers in far-off jurisdictions or even old-fashioned word of mouth. The majority’s claim that search engines “could effectively cause a website to disappear by removing it from their search results,” maj. op. at 805, is quite a stretch.
If the test for contributory infringement really were whether “infringement could continue on a large scale[without the aid of the defendant] because other viable ... mechanisms are available,” Amazon should have absolved Google of liability because of the availability of such obvious alternatives. But Amazon held that Google could be liable for contributory infringement because it “substantially assists” users in finding infringing materials; the existence of other means of infringement was not even considered because no case has suggested this to be a relevant consideration. The majority’s “other viable ... mechanisms” test conflicts with Amazon, Napster, Grokster and every other material assistance case that I know of.
The majority does even worse when it tries to describe the “other viable funding mechanisms” that could serve as alternatives to credit cards: According to the majority, the Stolen Content Websites “might ... make [their] profits from advertising” or “might develop other payment mechanisms that do not depend on the credit card companies.” Maj. op. at 797 (emphasis added). This shows that my colleagues have a healthy imagination but contravenes our responsibilities, the most fundamental of which is that we must work with the facts the parties presented below, not invent new facts on appeal. Defendants have presented no evidence that the pirates could survive without credit cards, nor could they, as the case is still at the motion to dismiss stage. Even if speculation as to what the Stolen Content Websites “might” do were admissible evidence, which I seriously doubt, we must still wait for one of the parties to present it, not conjure it up ourselves.8 At the pleadings stage, we must accept plaintiffs allegations that credit cards are indispensable to the operation of the Stolen Content Websites, and that these websites would be forced out of business without them. See First Am. Compl. at 2 ¶ 7 (“Stolen Content Websites cannot exist without the knowledge and direct participation of [defendants].”); id. at 10 ¶ 35 (“[T]he Stolen Content Websites would be eradicated.”). If my colleagues can’t justify their result without contradicting plaintiffs allegations, this is a pretty good hint that they’re *814wrong. See also p. 812-13 n. 7 supra; pp. 818 n. 15, 819-20 infra.
The majority’s attempt to distinguish location services from payment services by trying to show that there are viable alternatives for the latter but not the former cuts entirely against them. As plaintiff alleges, and experience tells us, there are numerous ways of locating infringing images on the Internet, but there are no adequate substitutes for credit cards when it comes to paying for them. A few consumers might use checks or money orders to pay for infringing images, but this would be far more cumbersome, time-consuming and risky than using credit cards. See pp. 817-18 & n. 14 infra. If it mattered whether search engines or credit cards are more important to peddling infringing content on the Internet, the cards would win hands down.
But it doesn’t matter. Material assistance turns on whether the activity in question “substantially assists” infringement. Amazon, 487 F.3d at 729. It makes no difference whether the primary infringers might do without it by finding a workaround, which is why the majority can cite no case supporting its analysis. We presume that primary infringers have good reasons for selecting a particular means to infringe, and that other ways to do so will be more costly, more cumbersome and less efficient. Moreover, infringement can always be carried out by other means; if the existence of alternatives were a defense to contributory infringement then there could never be a case of contributory infringement based on material assistance. The majority makes some very new — and very bad — law here.
The majority also makes a slightly different argument: “While Perfect 10 has alleged that Defendants make it easier for websites to profit from this infringing activity, the issue here is reproduction, alteration, display and distribution, which can occur without payment. Even if infringing images were not paid for, there would still be infringement.” Maj. op. at 796. What the majority seems to be arguing here is that helping an infringer get paid cannot materially assist infringement because the actual process of infringement — “reproduction, alteration, display and distribution”— does not include payment. There are two problems with this argument. The first is that the Stolen Content Websites are alleged to infringe plaintiffs right of distribution “by sale.” 17 U.S.C. § 106(3). It’s not possible to distribute by sale without receiving compensation, so payment is in fact part of the infringement process. Second, this argument runs head-on into Amazon, where we held that helping to find infringing images materially assists infringement, even though locating infringing images also isn’t “reproduction, alteration, display [or] distribution.” To be sure, locating images, like paying for them, makes it a lot easier to infringe, but neither is intrinsic to the infringement process, as the majority conceives it.
Nor can today’s opinion be squared with Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir.1996). In Fonovisa, defendant allowed known infringers to sell pirated works from stalls at its swap meet. We found material assistance based on the fact that “it would [have been] difficult for the infringing activity to take place in the massive quantities alleged without the support services provided by the swap meet.” 76 F.3d at 264. The pivotal role played by the swap meet in Fonovisa is played by the credit cards in cyberspace, in that they make “massive quantities” of infringement possible that would otherwise be impossible. Indeed, the assistance provided here is far more material than in Fonovisa. A pirate kicked out of a swap meet could still peddle his illicit wares through newspaper *815ads or by word of mouth, but you can’t do business at all on the Internet without credit cards. Plaintiff thus plausibly alleges that the “Stolen Content Websites would be eradicated” if defendants withdrew their support. First Am. Compl. at 10 ¶ 35.
The majority rejects Fonovisa by pointing out that the swap meet there provided a “centralized place” for the infringement to take place, maj. op. at 799, whereas defendants here “have no direct connection to [the] infringement,” id. at 796.9 But material assistance does not depend on physical contact with the infringing activity. If you lend money to a drug dealer knowing he will use it to finance a drug deal, you materially assist the transaction, even if you never see the drugs. Or, if you knowingly drive a principal to the scene of the crime, you provide material assistance, even if nothing happens during the ride. See United States v. Lopez, 482 F.3d 1067, 1076-79 (9th Cir.2007). Material 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.
Sure, a marketplace for pirated works (as in Fonovisa) or an index for such works (as in Napster and Grokster) is important to infringement, but so is a means of getting paid. Defendants are directly involved in every infringing transaction where payment is made by credit card, which (according to plaintiff) amounts to virtually every sale of pirated works. First Am. Compl. at 9 ¶ 35. Credit cards don’t provide some tangential service that marginally affects sales; they are the financial lifeblood of the Stolen Content Websites.
The majority’s concern that imposing liability oh defendants here would implicate vast numbers of other actors who provide incidental services to infringers, maj. op. at 800, is unfounded. Line-drawing is always a bit tricky, but courts have shown themselves adept at dealing with it from time out of mind, in resolving such issues as proximate causation and reasonable suspicion. Contributory 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.
Courts have, in fact, had no difficulty in distinguishing those who are materially involved in copyright infringement from those who are not. As Fonovisa explains, two lines of cases developed in the first part of the last century: the absentee landlord cases and the dance hall cases. The first line involved landlords who “lacked knowledge of the infringing acts of [their] tenant[s] and who exercised no control over the leased premises.” Fonovisa, 76 F.3d at 262. These were held not liable for the infringement committed by tenants on the premises. See, e.g., Deutsch v. Arnold, 98 F.2d 686, 688 (2d Cir.1938). In the second line of cases, “the operator of an entertainment venue was held liable for infringing performances when the operator (1) could control the premises and (2) obtained a direct financial benefit from the audience, who paid to enjoy the infringing performance.” 76 F.3d at 262 (citing Buck *816v. Jewell-LaSalle Realty Co., 283 U.S. 191, 51 S.Ct. 410, 75 L.Ed. 971 (1931), and Dreamland Ball Room, Inc. v. Shapiro, Bernstein & Co., 36 F.2d 854 (7th Cir.1929)).10
These cases show that courts are able to forestall the majority’s parade of horribles. But our case does not present a close or difficult question: Defendants here are alleged to provide an essential service to infringers, a service that enables infringement on a massive scale. Defendants know about the infringements; they profit from them; they are intimately and causally involved in a vast number of infringing transactions that could not be consummated if they refused to process the payments; they have ready means to stop the infringements. Were 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.
Vicarious Infringement
A party “infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” Amazon, 487 F.3d at 729 (quoting Grokster, 545 U.S. at 930, 125 S.Ct. 2764) (internal quotation marks omitted).11 There is no doubt that defendants profit from the infringing activity of the Stolen Content Websites; after all, they take a cut of virtually every sale of pirated material. First Am. Compl. at 4 ¶ 13, 7 ¶ 25. The majority does not dispute this point so I need not belabor it. Maj. op. at 806.
Defendants here also have a right to stop or limit the infringing activity, a right they have refused to exercise. As the majority recognizes, “Perfect 10 ... claims that Defendants’ rules and regulations permit them to require member merchants to cease illegal activity — presumably including copyright infringement — as a condition to their continuing right to receive credit card payments from the relevant Defendant entities.” Maj. op. at 804.12 Assum*817ing the truth of this allegation,13 the cards have the authority, given to them by contract, to force the Stolen Content Websites to remove infringing images from their inventory as a condition for using defendants’ payment systems. If the merchants comply, their websites stop peddling stolen content and so infringement is stopped or limited. If they don’t comply, defendants have the right — and under copyright law the duty — to kick the pirates off their payment networks, forcing them to find other means of getting paid or go out of business. In that case, too, infringement is stopped or limited. The swap meet in Fonovisa was held vicariously liable precisely because it did not force the pirates to stop infringing or leave; there is no reason to treat defendants here differently-
That the pirates might find some other way of doing business is of no consequence; our cases make this perfectly clear. It didn’t matter in Fonovisa that the infringers there could have continued their illegal sales by mail order or by hawking their unlawful merchandise on street corners. Nor did it matter in Napster or Grokster that the direct infringers might find some other means of illegally sharing their protected content with others. Indeed, there is no case involving secondary infringement, going back to the dance hall cases of the last century, where the secondary infringer’s refusal to do business with the direct infringer could have stopped infringement altogether and forever. Yet, courts have presumed that removing the particular means of infringement challenged in each case would make direct infringement more difficult and thereby diminish the scale of infringing activity.
Here, the Stolen Content Websites have chosen credit cards as a form of payment, and for good reason. Credit cards are ubiquitous and permit the transfer of funds electronically in a matter of seconds. Consumers need not wait days or weeks for a check to reach its destination and clear before gaining access to the salacious pictures they crave. Consumers also know that, if goods bought by credit card are not delivered, the cards will likely reverse the transaction.14 Credit cards thus act as informal escrow agents, effectively guaranteeing that their merchants will deliver the goods. Blocking the ability to accept credit cards would be a heavy blow to the Stolen Content Websites because cards are “overwhelmingly the primary way by which customers pay to view Stolen Content Websites.” First Am. Compl. at 9 ¶ 35. Even if the pirates could find an alternative way of plying their illegal trade, being denied their preferred means of doing business *818would sharply curtail their unlawful activities.
The majority toils to resist this obvious conclusion but its arguments are not persuasive. For example, it makes no difference that defendants control only the means of payment, not the mechanics of transferring the material. Maj. op. at 802, 805, 806. In a commercial environment, distribution and payment are (to use a quaint anachronism) like love and marriage — you can’t have one without the other. If cards don’t process payment, pirates don’t deliver booty. The credit cards, in fact, control distribution of the infringing material.
The majority also disparages defendants’ ability to control the Stolen Content Websites as just “financial pressure” which doesn’t give them an “absolute right to stop [the infringing] activity — they cannot stop websites from reproducing, altering, or distributing infringing images.” Id. at 804-05 (footnote omitted).15 But we have never required an “absolute right to stop [the infringing] activity” as a predicate for vicarious liability; it’s enough if defendants have the “practical ability” to do so. Amazon, 487 F.3d at 729, 731. While proclaiming its fidelity to Amazon, maj. op. at 796, 803, the majority jettisons Amazon’s “practical ability” standard and substitutes its own “absolute right to stop” standard. Id. at 804.16
It’s perfectly clear that the cards do have the “practical ability” to force websites that display their logos and use their payment systems to remove unlawful merchandise. As the majority admits, “Defendants can ... refuse to process credit card payments to the offending merchant within their payment network, or they can threaten to do so if the merchant does not comply with a request to alter content.” Maj. op. at 805 (disparaging “only” omitted). Commercial websites are dependent on credit cards as a form of payment, and the Stolen Content Websites are uniquely so, as virtually all of their illicit sales are paid for by card. First Am. Compl. at 9 ¶ 35. A threat by credit card companies to withdraw use of their payment systems couldn’t be ignored. After all, how many consumers would be willing to send a check or money order to a far-off jurisdiction in the hope that days or weeks later they will be allowed to download some saucy pictures? If the Stolen Content Websites cannot get paid for their unlaw*819ful products, or if payment is made more difficult or cumbersome, this will dramatically affect their operations. Some may lose customers who are unwilling to use alternative forms of payment;17 others may go out of business; still others may remove the infringing content from their websites. Even the majority admits that “fear of losing access to credit card payment processing services would be a sufficient incentive for at least some website operators to comply with a content-based suggestion from Defendants.” Maj. op. at 804.18 As a consequence, infringing activity would be “stoptped] or limit[ed].” See Amazon, 487 F.3d at 729.
The majority also reads the complaint for less than it’s worth by “under-standfing]” plaintiff to allege “that the ‘Stolen Content Websites’ could not continue to exist as websites offering images for sale online should defendants withdraw their services, not [to allege] that the websites would completely vanish or that infringement by these sites in all its forms would necessarily cease.” Maj. op. at 805-06 n. 18. But plaintiff expressly alleges what the majority “understand^]” it not to allege, namely that the sites “cannot exist” without defendants, First Am. Compl. at 2 117, and that “the Stolen Content Websites would be eradicated” if they could not use credit cards, id. at 9-10 ¶ 35. It is horn-book law that we must construe complaints liberally on a motion to dismiss. See Glus
v. Brooklyn Eastern Dist. Terminal, 359 U.S. 231, 235, 79 S.Ct. 760, 3 L.Ed.2d 770 (1959); Conley v. Gibson, 355 U.S. 41, 47-48, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A liberal construction means reading ambiguous provisions in a way that would save the complaint from dismissal, and sometimes even reading between the lines to give plaintiff the benefit of every reasonable inference. I have never heard of reading a complaint liberally by ignoring allegations that are clearly present.
But let’s say the majority “understand[s]” plaintiffs allegations correctly: So what? To sustain a vicarious infringement claim, plaintiff need not allege that the Stolen Content Websites “would completely vanish or that infringement by these sites in all its forms would necessarily cease.” Maj. op. at 805-06 n. 18. The standard is “stop or limit” the infringing conduct. Amazon, 487 F.3d at 725 (emphasis added) (quoting Grokster, 545 U.S. at 930, 125 S.Ct. 2764). And my colleagues admit that plaintiff has alleged that “at least some website operators [would] comply with a content-based suggestion from Defendants.” Maj. op. at 804. Q.E.D.
To resolve this case, however, we need not adopt a rule holding all credit cards responsible for all infringing Internet sales because plaintiff has alleged far more than the ordinary credit card/merehant relation*820ship. According to plaintiff, defendants have adopted special rules and practices that apply only to the Stolen Content Websites, and that are designed to make it easier for these websites to ply their illegal trade. First Am. Compl. at 9-11 ¶¶ 33-37. Plaintiff claims that the credit cards have singled out the Stolen Content Websites for preferential treatment because of the unusual and substantial profits they make on such transactions. Read fully and fairly, the complaint alleges that defendants are not merely passive providers of services available on equal terms to legal and illegal businesses alike; they are actually in cahoots with the pirates to prop up their illegal businesses and share their ill-gotten gains. If this is not vicarious infringement, nothing is.
The majority claims that Amazon employs “reasoning closely analogous” to its own, maj. op. at 803, but it is mistaken. Amazon addressed two questions of vicarious infringement, one involving third-party websites whose images are picked up by Google’s search engine, the other involving websites that participate in its AdSense program. As to the first, Google could not be vicariously liable because “Perfect 10 ha[d] not shown that Google has contracts with third-party websites that empower Google to stop or limit them from reproducing, displaying, and distributing infringing copies of Perfect 10’s images on the Internet.” 487 F.3d at 730.19 In the absence of such a contractual relationship, there could be no vicarious infringement, because Google lacked “the legal right to stop or limit the direct infringement of third-party websites.” Id. at 730. Why the majority believes this is in any way analogous, or even remotely instructive, to our situation, where the credit cards do have contracts giving them a right to control what merchants sell on their websites, is a mystery.
Google’s relationship with websites that participate in its AdSense program presents a somewhat closer analogy because Google did have contracts that would have allowed it to kick websites out of AdSense for displaying infringing images. But that’s as far as the similarity goes: Ad-Sense is an advertising program; Google pays participating merchants to host third-party ads on their websites. This is the cyberspace analogue of renting out space on your land for a billboard. The ads have no effect on the operation of the host websites; users can download infringing content whether or not ads are present. Being excluded from AdSense would thus mean some loss of revenue, but would have no effect on the operation of the business itself. It is therefore far from certain that merchants would be induced to modify their businesses to avoid being excluded from AdSense.20
Because plaintiff had not presented proof that any third-party websites would stop infringing if they were threatened *821with exclusion from AdSense, Amazon concluded that plaintiff there had not met its burden for a preliminary injunction. Our case is presented on a motion to dismiss and plaintiff here need only make allegations. And plaintiff alleges that the infringing websites could not continue doing business at all without the use of credit cards. Amazon’s reasoning on this point gives the majority no help.
The majority’s attempt to distinguish Napster is equally thin. My colleagues argue that “[t]he Napster program’s involvement with ... the infringement was much more intimate and directly intertwined with it than Defendants’ payment systems are.” Maj. op. at 803. But I don’t see how much more “directly intertwined” you can get in a purchase transaction than carrying the payment from buyer to seller. If this were a drug deal, for example, 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.' Both would be held equally culpable.
Thus, the majority’s insistence that defendants “cannot themselves block access to the Internet, to any particular websites, or to search engines enabling the location of such websites,” maj. op. at 804, is beside the point. Physical control over the infringing activity is one way to stop infring-ers, but it’s certainly not the only way. Withdrawing crucial services, such as financial support, can be just as effective, and sometimes more effective, than technical measures that can often be circumvented.21
Finally, the majority dismisses the Supreme Court’s opinion in Grokster by suggesting that the Court could not have meant what it said because the standard it announced (and which we adopted in Amazon ) would sweep in too many goods and services that contribute to infringing activity. See maj. op. at 806 (listing hardware manufacturers, software engineers, technical support companies and utilities). The majority misreads the Court’s opinion. Providing a crucial service to an infringer may give someone the practical ability to stop infringement, but that’s only half of what it takes to be a vicarious infringer. The other half is a right, found in contract, to control the infringer’s actions. See Amazon, 487 F.3d at 730 (requiring “contracts with [direct infringers] that empower [defendant] to stop or limit them from reproducing, displaying, and distributing infringing copies”). Those third parties the majority worries about could not be held vicariously liable because they lack the legal right to stop the infringement. So far as I know, utilities are provided by public franchise, not by contract, and a utility has no right to stop providing electricity or phone service because it learns that its electrons are being put to illegal use.22 Computer manufacturers don’t usu*822ally retain the right to reclaim computers they have sold because they are being used unlawfully. Ditto for software producers and repairmen. Having no contract that authorizes them to stop providing services on account of illegality, these actors do not meet the first prong of the test for vicarious infringement. See p. 816 n. 10 supra.23
Trademark Infringement
For precisely the same reasons, I disagree with the majority when it claims that defendants do not contributorily infringe on Perfect 10’s trademark because they lack “[djirect control and monitoring of the instrumentality used by a third party to infringe the plaintiffs mark.” Maj. op. at 807 (internal quotation marks omitted). The Lanham Act forbids “use in commerce ... of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion.” 15 U.S.C. § 1114(l)(a). Plaintiff alleges that the Stolen Content Websites sell images marked with Perfect 10’s trademark. First Am. Compl. at 17 ¶ 65. Without defendants’ payment systems, the infring-ers would find it much harder to peddle their infringing goods. Plaintiff thus pled facts sufficient to state a claim for contributory trademark infringement.
The cases on which the majority relies are not to the contrary. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982), involved a manufacturer and says nothing of consequence bearing on our situation. Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 984 (9th Cir.1999), turned on the fact that the defendant there, a registrar of Internet domain names, lacked sufficient control “over the third party’s means of infringement,” because it lacked “control and monitoring of the instrumentality used by a third party to infringe the plaintiffs marks.” Id. By contrast, credit cards are directly involved in every infringing transaction; not only do they process the payment for virtually every sale of pirated images by the Stolen Content Websites, they control whether such transactions will go forward. This is more than enough to establish the “control and monitoring” that Lockheed Martin requires for contributory trademark infringement.
As to vicarious trademark infringement, the majority claims that there is neither a symbiotic partnership between the direct infringers and defendants, nor authority to bind one another in transactions with third parties. Maj. op. at 807 (citing Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143 (7th Cir.1992)). But plaintiff alleges that the Stolen Content *823Websites cannot operate without the use of credit cards, First Am. Compl. at 2 ¶ 7, while defendants make huge profits by-processing these illegal transactions. See also p. 820 supra. If this is not symbiosis, what is? Likewise, while “the websites’ contracts with the consumers ... bind the websites to provide the infringing images,” maj. op. at 808 (emphasis removed), it is defendants’ actions that bind the websites to that contract. Only after the credit cards approve and process the payment does the obligation to deliver the stolen content come into existence. The majority thus errs in absolving defendants of vicarious trademark infringement.
State Law Claims
The majority disposes of the state law claims on the same theory as the copyright claims, namely, that defendants are not directly involved in the infringing activity. Maj. op. at 808-09. But defendants are involved, because they provide the means to pay for the infringing content and thus make “massive quantities” of infringement possible. First Am. Compl. at 18 ¶ 73.
The case on which the majority relies, Emery v. Visa International Service Association, 95 Cal.App.4th 952, 116 Cal.Rptr.2d 25 (2002), is not on point because, in that case, plaintiff sued only Visa, not the merchant banks that had a direct relationship with the alleged wrongdoer or the consumers. Id. at 956, 962, 116 Cal.Rptr.2d 25. Plaintiff there also based his theory of liability on advertising letters bearing the credit card logo. Emery held that plaintiff hadn’t proven Visa could police the use of its logo in letters peddling an illegal lottery sent by merchants directly to consumers. By contrast, plaintiff here alleges that defendants are knowing participants in thousands of transactions that amount to unfair trade practices and infringe on the right of publicity of the women depicted in the stolen images. I see nothing in Emery that would preclude plaintiffs state law claims, as alleged in the complaint.
It would certainly be much easier for us if plaintiff were suing the Stolen Content Websites rather than the credit cards. No doubt, they would if they could.24 But direct infringers are sometimes too ubiquitous, too small or too difficult to find. That’s why we have cases such as Fonovi-sa, Napster, Aimster, Grokster and Amazon. Here, plaintiff alleges that many direct infringers have no physical presence in the United States. They operate from far-off jurisdictions, where lawsuits are difficult to bring and remedies impossible to enforce because the infringers can easily move their operations to servers in other remote jurisdictions.
The weak link in the pirates’ nefarious scheme is their need to get paid; for this they must use the services of legitimate financial institutions. If plaintiffs allegations are to be believed, the financial institutions (defendants here) collect billions for sellers of stolen merchandise; in a very real sense, they profit from making piracy possible. I can see no reason they should not be held responsible.
The majority’s refrain that imposing liability on defendants here would violate “the public policy of the United States,” maj. op. at 795, 797, is equally off base. While the majority correctly identifies that *824policy as facilitating the development of electronic commerce, id. at 794 n. 2, that solicitude does not extend to commerce in illegal merchandise. I am aware of no policy of the United States to encourage electronic commerce in stolen goods, illegal drugs or child pornography. When it comes to traffic in material that violates the Copyright Act, the policy of the United States is embedded in the FBI warning we see at the start of every lawfully purchased or rented video: Infringers are to be stopped and prosecuted. Preventing financial intermediaries from servicing such shady transactions is entirely consistent with that policy. If Congress believes that this places too heavy a burden on credit cards, it can grant the cards immunity (along with corresponding responsibilities), as it did for ISPs in passing the DMCA.25
The majority’s solicitude for “credit cards ... as the primary engine of electronic commerce,” and for preserving “the vibrant and competitive free market that presently exists for the Internet,” maj. op. at 794, is understandable but misguided. It does not serve the interests of a free market, or a free society, to abet marauders who pilfer the property of law-abiding, tax-paying rights holders, and who turn consumers into recipients of stolen property. Requiring defendants to abide by their own rules, which “strictly prohibit members from servicing illegal businesses,” First Am. Compl. at 6 ¶ 20, will hardly impair the operation of a “vibrant and competitive free market,” any more than did the recent law prohibiting the use of credit cards for Internet gambling. See 31 U.S.C. § 5364.
Nor does plaintiff seek to hold the credit cards responsible for illegal activities of which they are unaware. Plaintiff claims that it has repeatedly written to defendants, “putting them on notice of more than 240 specifically identified Celebrity Porn Websites with obvious stolen content that they were supporting.” First Am. Compl. at 19 ¶ 75. Plaintiff has also sent defendants “[djeclarations from celebrities [such as Britney Spears, Christina Aguil-era, Anna Kournikova and Yasmine Bleeth] stating that they have not authorized the use of their name, likeness, or identity on pornographic websites arid that they do not want their images and names so used....” Id. at 19 ¶ 77. Credit cards already have the tools to police the activities of their merchants, which is why we don’t see credit card sales of illegal drugs or child pornography. According to plaintiff, “defendants inspect websites and business premises, and obtain and review merchants’ bank statements, tax returns, credit reports, and a merchant’s other financial information.... ” Id. at 7 ¶ 26. Plaintiff is not asking for a huge change in the way credit cards do business; they ask only that defendants abide by their own rules and stop doing business with crooks. Granting plaintiff the relief it seeks would not, I am confident, be the end of Capitalism as we know it.
This is an easy case, squarely controlled by our precedent in all material respects. Fairly applying our cases to the facts alleged by Perfect 10, we should reverse the district court and give plaintiff an opportunity to prove its case through discovery and trial. In straining to escape the strie-*825-833tures of our caselaw, the majority draws a series of ephemeral distinctions that are neither required nor permitted; the opinion will prove to be no end of trouble.

. I join part C of the "California Statutory and Common Law Claims" section of the opinion, dealing with plaintiff's libel and prospective economic advantage claims.

. Throughout this dissent, I refer to defendants collectively as credit card companies or credit cards. In so doing, I am adopting the same simplifying assumptions as the majority. I am aware that Visa and MasterCard don’t deal directly with merchants; rather, merchants obtain credit card accounts from banks, which are in turn authorized by Visa or MasterCard to use their respective payment systems. Some of the other defendants are involved in clearing these transactions. For a description of how the system works, see Emery v. Visa Int'l Serv. Ass’n, 95 Cal.App.4th 952, 956, 116 Cal.Rptr.2d 25 (2002). It may well be that some of the defendants will be absolved of liability because they have no direct contact with merchants or consumers, but that is a matter to be sorted out after discovery.

. As the majority points out, maj. op. at 797 n. 6, 800 n. 11, plaintiffs allegations might also support a theory of direct infringement. See First Am. Compl. at 8 ¶ 30 ("Defendants, jointly with the Stolen Content Websites, are engaged in ... the willful and systematic infringement of the intellectual property rights of” plaintiff and others). Because plaintiff has not argued this theory on appeal, we have no occasion to address it. But the fact that defendants may also be committing direct infringement does not diminish their responsibility as indirect infringers for providing essential services to buyers and sellers of stolen merchandise. A defendant can be liable for both direct and indirect infringement based on the same conduct. See, e.g., Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772, 791 (5th Cir.1999).

. Neither Google nor the credit cards here were designed for infringement. The majority tries to distinguish this case from Napster and Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005), where defendants’ services were designed for no other purpose. Maj. op. at 799 n. 10, 801. But Napster and Grokster are not the endpoint of this court’s caselaw: Even though Google has many legitimate, noninfringing uses, Amazon held that it would be guilty of contributory infringement if it could modify its service to avoid helping infringers.

. Amazon, as well as Napster and Grolcster, hold as much.

. The majority argues that "[bjecause location services lead Internet users directly to infringing images, and often display them on the website of the service itself, we find that location services are more important and more essential — indeed, more 'material' — to infringement than payment services are.” Maj. op. at 797-98 n. 8. Skipping lightly over the fact that we lack the power to "find” anything, the majority admits that payment services are important, essential and material. That location services may — or may not — be more so, is of no consequence; this is not a race where there can be only one winner.

.The majority's claim that "Perfect 10’s factual allegations are not to the contrary,” maj. op. at 797 n. 7, is simply not accurate. Indeed, elsewhere in the opinion, the majority concedes that plaintiff has made "a factual allegation” that the Stolen Content Websites "could not continue to exist as websites offering images for sale online.” Id. at 805-06 n. 18. How then can the majority hold here, apparently as a matter of law, that defendants are absolved of liability because "other viable funding mechanisms are available”? Maj. op. *813at 797. If we accept as true, as the majority says it does, that the Stolen Content Websites will no longer be able to sell their images, how can we hold that they could still do so by developing other (unknown and unsuspected) ways to get paid?

. I note in passing that, even if we were to accept the majority's speculations, they would be insufficient. That the Stolen Content Websites “might” change the way they do business or develop alternative payment mechanisms hardly proves that "other viable funding mechanisms are available.” Maj. op. at 797 (emphasis added). The majority's prognostication as to what "might” happen in the future leaves open the likelihood that it will not happen, and positively admits that there are no viable alternative payment mechanisms today.

. The majority seeks to distinguish Napster and Grokster on similar grounds by arguing that the defendants do not provide the "tools to locate infringing material,” id. at 800, and that the infringing material "[n]ever reside[s] on or pass[es] through any network or computer Defendants operate,” id.

.The majority consigns the dance hall/absentee landlord cases to oblivion by holding that they have no relevance to the Internet. Maj. op. at 798 n. 9. It is true that these cases were developed in a brick and mortar world, but the distinction they draw between those who materially assist infringement (and are therefore liable) and those who are more remotely involved (and are therefore not liable) is equally important — perhaps even more important — in cyberspace than in real space. That Napster and Grokster did not consider these cases is hardly significant. The defendants there were centrally involved in the infringing transactions — indeed, as the majority reminds us, their systems were created solely to promote infringement, maj. op. at 799 n. 10, 801 — and thus there could be no argument that their involvement in the infringing transactions was too peripheral to give rise to a claim of secondary infringement. The Seventh Circuit managed to apply the dance hall cases to the Internet, see In re Aimster Copyright Litig., 334 F.3d 643, 654 (7th Cir.2003), and I'm confident that federal judges west of the Rockies could have figured out how to do the same.

. Amazon interprets the "stop or limit” language as requiring "a legal right to stop or limit the allegedly infringing conduct, as well as the practical ability to do so.” Amazon, 487 F.3d at 730.

. Plaintiff’s allegation on this point, as on many others, is very specific:
When MasterCard or Visa learns of a merchant engaged in illegal, fraudulent, or otherwise improper business practices, their own regulations require them to cause member banks to investigate and, depending on the nature of the misconduct, terminate the merchants from the Visa and MasterCard systems. The rules of both associations strictly prohibit members from servicing illegal businesses.
First Am. Compl. at 6 ¶ 20.

. In fact, there can be no doubt that it’s true. For example, the MasterCard Merchant Rules Manual provides that "[a] Payment Transaction may not be effected for any of the following reasons: ... to transfer gambling winnings or funds related to chips, currency, or other value usable for gambling that were purchased in connection with gambling; for any illegal purpose or any other purpose deemed by MasterCard to be impermissible.” MasterCard International, Merchant Rules Manual § 2.1.11.3(6) (2006) (emphasis added), available at http://www.mastercard.com/ us/wce/PDF/12999 — MERC-Entire—Manual, pdf.

. Visa's website, for example, explains that "Visa and its card issuers and acquirers have in place an efficient dispute resolution process.” Visa USA, Chargebacks & Dispute Resolution, http://www.usa.visa.conV merchants/operations/chargebacks — dispute— resohitiorVindex.html (last visited March 24, 2007). It also notes that "[cjhargebacks arise for many reasons, primary among which are customer disputes, fraud, processing errors, authorization issues, and non-fulfillment of copy requests.” Id. (emphasis added).

.The majority tries to take back in a footnote what it says in text by claiming that an “absolute right to stop” is not "a prerequisite” to vicarious liability, but that its absence is "evidence that[defendants], much like Google, lack the right and ability to control those [infringing] activities.” Maj. op. at 804 n. 16. Alas, it won’t work. If not having an “absolute right to stop” is merely "evidence” that defendants lack sufficient control for vicarious infringement, then this can be offset by other evidence that they do have such control. Conflicts in the evidence must be resolved after discovery and trial, not on a motion to dismiss.
"Practical ability,” the standard announced in Amazon, is a capacious concept, far broader than "absolute right to stop.” Even if the majority were right that defendants lack the "absolute right to stop” the infringements, plaintiff would be entitled to show that defendants have the "practical ability” to do so. If the majority means what it says in its footnote, then what it says in text is beside the point. In fact, there can be no doubt that the majority means what it says in text, because it upholds dismissal of the complaint on the ground that defendants lack the "absolute right to stop” the infringers; the footnote is merely an unpersuasive attempt to sweep the conflict with Amazon under the rug.

.The conflict with Amazon is clearly drawn in footnote 17, where the majority explicitly disavows "practical ability” as the standard for vicarious infringement. Maj. op. at 805 n. 17.The majority is free to disagree with the standard adopted by our caselaw, but it is not free to reject it.

. Those customers may take their patronage to plaintiff's website.

. The majority disparages this as mere "financial pressure,” but I am aware of no prior case holding that the legal right to exercise "financial pressure" over infringing activity is insufficient to support a finding of vicarious infringement. This is a dangerous precedent. We live in a commercial world and economic incentives are often the strongest possible motivators — far stronger than the often empty threat of litigation. As this case demonstrates, litigation can be costly and protracted, and its results uncertain. By contrast, the threat of stopping an essential service can be implemented at once, without hiring an army of lawyers or persuading judges and juries of the rightness of one's cause. In an economy marked by competition, financial pressure which raises costs or diminishes patronage can be a powerful weapon. By holding that the legal right to exercise financial pressure is an insufficient basis for establishing vicarious infringement, my colleagues take a hasty and unwise step in the development of the law.

. Amazon also relied on the district court’s finding that Google "lacks the practical ability to police the third-party websites' infringing conduct” because the technical means for doing so suggested by plaintiff "were not workable.” Id. at 731 (citing district court’s opinion, Perfect 10 v. Google, Inc., 416 F.Supp.2d 828, 857-58 & n. 25 (C.D.Cal.2006)). There is not, and cannot be, such a finding here as the case is presented on a 12(b)(6) motion.

. Anecdotal evidence suggests that the Ad-Sense program produces vastly less revenue for most program members than what they earn through their businesses. One poll found that 45% of AdSense members surveyed earned less than $30 per month from the program, and only a small percentage earned a substantial amount. Darren Rowse, AdSense Earnings for November-Poll Results, Problogger (Dec. 19, 2005), http://www. problogger.net/archives/ 2005/12/19/adsense-earnings-for-november-poll-results/.

. Providing financial support has long been held to be a basis for vicarious infringement, where that financial support carries with it the contractual right to approve the infringing activity. See Davis v. E.I. DuPont de Nemours & Co., 240 F.Supp. 612 (S.D.N.Y.1965). In Davis, DuPont sponsored a dramatization of "Ethan Frome,” which was alleged to infringe several copyrights. DuPont was held vicariously liable, even though it did not own the studio or the broadcast facilities, and could not have prevented airing of the show with another sponsor.

. See, e.g., Rules and General Orders of the Vermont Public Service Board § 3.302, available at http://www.state.vt.us/psb/rules/Official AdoptedRules/RulesComplete.pdf (last visited May 14, 2007) ("[N]o utility shall disconnect residential service of gas, electric, or water unless payment of a valid bill or charge is delinquent.”); State of New Hampshire, Consumer Rights and Responsibilities, at 5 (1996), available at http://services.unitil.com/ content/info/consumer — rights.html.

. The majority is also mistaken when it suggests that parties would be held vicariously liable for infringement simply because, in a market economy, they are free not to deal with one another. Maj. op. at 805 n. 17. Our cases have been very clear that more is required for vicarious infringement; defendant must have a formal contractual or principal-agent relationship with the infringer. It is that contract or relationship that forms the predicate for vicarious liability, and plaintiff must point to some term in the contract or formal relationship that gives defendant a right to stop the infringing activity. See, e.g., Aimster, 334 F.3d at 654; Fonovisa, 76 F.3d at 262; Amazon, 487 F.3d at 729-31. Responding to a service call, in the absence of a contract which provides that the service may be discontinued in the event of illegal conduct, cannot form the basis of vicarious liability and thus the fact that the technician is free to leave can't render him vicariously liable. The requirement that plaintiffs point to a relationship explicitly spelled out in a contract or other legal arrangement is an important limitation on who may be held to answer for vicarious infringement. It should not be casually discarded.

. In fact, Perfect 10 has brought suit against some direct infringers. See Perfect 10, Inc. v. CCBill, LLC, 481 F.3d 751 (9th Cir.2007) (reversing summary judgment on direct infringement claim); Perfect 10, Inc. v. Talisman Commc’ns Inc., No. CV99-10450, 2000 WL 364813 (C.D.Cal. Mar. 27, 2000).

. The majority finds it "anomalous” to hold credit cards liable without DMCA-compliant notice, while ISPs are immune unless they receive such a notice. Maj. op. at 795-96 n. 4. But there is no anomaly in treating parties that are covered by the statute differently from those that are not. Plaintiff here did give ample notice to the credit cards, see p. 824 infra, and should not have its claim dismissed for failing to allege compliance with a statute that does not apply to them.