Zada waged war against the two largest credit card behemoths in January of this year, along with First Data Corp., Cardservice International and Humboldt Bank.
Perfect 10 holds copyrighted images of nude and topless women who have not been surgically enhanced and makes that content available on a subscription basis through the Perfect 10 website and a quarterly magazine.
Zada's complaint accused the two credit card companies and banks of facilitating and profiting from the illegal use of copyrighted material on adult entertainment websites.
The complaint stated that Visa and MasterCard have made large sums of money from the sale of pirated adult content and should be held liable for any related copyright violation.
However, in an Aug. 5 ruling, Judge James Ware dismissed the allegations as failing to provide enough facts that the credit card companies and their affiliates participated, knowingly or not, in copyright infringement of Perfect 10's content.
Zada told XBiz in an earlier interview that over the past six years he has lost more than $29 million to copyright infringement and along with that, nearly $8 million in legal fees defending content for his Perfect 10 website and magazine.
After pumping most of his capital into producing quality content, Zada said he didn't realize webmasters were going to steal his images faster than he could produce them.
The August ruling comes on the heels of another ruling in a similar case against three payment processing companies for copyright and trademark infringement, unfair competition, false advertising, violation of right of publicity and RICO (Racketeer Influenced and Corrupt Organizations) Act violations.
Zada's lawsuit against CCBill, iBill, and Internet Key was rejected in July by U.S. District Judge Lourdes G. Baird based on the determination that the three companies did not directly or knowingly infringe on Perfect 10's content and that they qualified for safe harbor protections under the Digital Millennium Copyright Act, which limits online service providers from copyright infringement liability, among other conditions.
The plaintiffs argued that safe harbor only applied to search engines like Yahoo and Google, which locate and link to sites they are not affiliated with. But Baird said that a company that linked to a limited network of sites with which it had contractual relationships still qualified under the safe-harbors provisions.
Both decisions are a major setback to Zada, after spending years pursuing alleged copyright infringers. In 2002 Zada won a preliminary injunction against Cybernet Ventures Inc., the owners of adult verification service Adult Check. A similar lawsuit against Paycom was dismissed in 2002.
Zada has said that his company will appeal Ware's ruling.