LOS ANGELES — A federal judge has appointed a receiver to satisfy a $5.6 million judgment against Perfect 10, which at the same time has asked the 9th U.S. Circuit Court of Appeals to rehear a panel’s decision that approved the award.
The approval of a receiver and the en banc appeal stem from Perfect 10’s $25 million lawsuit accusing Texas-based Giganews Inc. of direct and contributory infringement by allowing users to upload more than 165,000 images owned by Perfect 10 and neglecting to remove them when notified.
A federal judge sided with Giganews in 2015 and ordered Perfect 10 to pay the usenet service provider’s $5.64 million in attorneys’ fees and court costs defending the suit. Perfect 10 appealed the decision, challenging the central issue of “safe harbor” as defined in the Digital Millennium Copyright Act.
But in February, the 9th Circuit said that all of Perfect 10’s arguments in the case lacked merit, upholding the multimillion-dollar judgment.
On Friday, Norm Zada, who founded Perfect 10 in 1997, told XBIZ that despite the 9th Circuit’s initial ruling, he’s hopeful that an en banc panel will reverse course. The 9th Circuit has yet decided whether to grant a rehearing.
“Basically what has happened is that group that makes hundreds of millions of dollars by not paying people for the use of their property took advantage of an overworked federal justice system and provided false and misleading materials to persuade judges that the victim was actually responsible for the crime,” Zada said.
Zada was critical of recent press reports that characterized his legal claims were “frivolous” and that his targets were typically “big companies with deep pockets” (Perfect 10 has sued Google, Amazon, Visa, MegaUpload, Tumblr, Microsoft, CCBill and LeaseWeb, among others).
“[T]o suggest that filing a lawsuit against a party that steals your property is ‘frivolous,’ is ludicrous,” Zada said. “Prior to the case against Giganews, which is still on appeal, Perfect 10 only lost one case, the one against Visa, by a 2 to 1 vote.
“I intend to pursue this matter to the bitter end and will expose the various methods used by various unscrupulous attorneys to destroy copyright protection in this country in a forthcoming book.”
While the 9th Circuit wrangles with the request for a re-hearing in the case, a federal judge has laid out the terms of the inclusion of a receiver.
U.S. District Judge Andre Birotte Jr. ordered Zada and other Perfect 10 principals to turn over the books in relation to the company’s assets, including its intellectual property.
Finding assets might be hard to do, however. In court papers in 2015, Zada said that revenue for Perfect 10 is less than $40,000 a year and that the company has no more than $70,000 in financial assets. At the time, he said he hadn’t made any money as its CEO since 2007, “so there was no income to offset losses against.”