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November 2013: Victory for Leading Russian ISP

November 2013

The firm secured a favorable settlement for its client Yandex LLC, which operates the leading Internet search engine in Russia and the fourth largest Internet search engine in the world. Yandex was sued by Perfect 10, Inc., a Los Angeles-based adult-entertainment company that publishes a largely-defunct magazine and website. In recent years, Perfect 10 has sued a number of different Internet service providers (ISPs) for copyright infringement, alleging that the widespread availability of Perfect 10’s copyrighted images on the Internet has destroyed its business. In an earlier case brought by Perfect 10, Quinn Emanuel secured a complete victory for its client Google when Perfect 10 voluntarily dismissed its claims after years of hard-fought litigation. Fresh on the heels of that dismissal, Perfect 10 turned its attention to Yandex, and Quinn Emanuel responded again.

As in its case against Google, Perfect 10’s claims against Yandex were premised largely on Yandex’s alleged role in contributing to the copyright infringement of Perfect 10’s images by providing its users “links” to third-party websites that allegedly displayed infringing copies of those images. Perfect 10 alleged tens of thousands of infringements against Yandex. It sought statutory damages for each work allegedly infringed, totaling tens of millions of dollars. Recognizing the significant amount at stake, Quinn Emanuel charted a two-prong course for narrowing the scope of Perfect 10’s claims and the potential damages at issue.

First, the firm helped Yandex solidify its policy and practices under the Digital Millennium Copyright Act, 17 U.S.C. § 512, et seq. (“DMCA”), thereby ensuring Yandex’s entitlement to DMCA “safe harbor” to avoid monetary liability for copyright infringement.

Second, the firm developed evidence showing that the vast majority of the tens of thousands of alleged acts of infringement at issue were “extraterritorial” because they occurred abroad, such that they were not actionable under the U.S. Copyright Act. This process entailed a painstaking analysis of the more than 16,000 pages of DMCA notices that Perfect 10 had sent to Yandex to first decipher the alleged “acts of infringement” identified by Perfect 10, and then identify the geographic location where each of the allegedly-infringing images was hosted. The evidence Quinn Emanuel developed showed that nearly 90% of Perfect 10’s claims against Yandex were premised on allegedly-infringing images that were hosted abroad. Yandex then argued on summary judgment that under the Ninth Circuit’s “server test”—which holds that for purposes of copyright infringement claims against ISPs, the act of infringement is the “hosting” of the image (see Perfect 10, Inc. v., Inc., 508 F.3d 1146, 1162 (9th Cir. 2007))—the location of an act of infringement on the Internet is likewise the location where the allegedly-infringing content is hosted.

Within 24 hours of the oral argument on Yandex’s summary judgment motion—which was handled primarily by Quinn Emanuel junior associates—the Court granted Yandex’s motion in full, thereby wiping out all of Perfect 10’s direct infringement claims and nearly all its secondary infringement claims. Even though no authority had ever joined the “server test” with the “extraterritoriality doctrine” in the manner Quinn Emanuel had done, the firm convinced the Court that this was the right test for assessing territoriality. Soon after this victory, the case settled on favorable terms for Yandex. While only time will tell if this case will be Perfect 10’s final salvo against ISPs, the firm has ensured that other ISPs operating abroad will have a better understanding of how to avoid liability for infringement under the U.S. Copyright Act.