Perfect 10 not perfect in California file-sharing lawsuit

RapidShare is a well known online file-hosting company, based in Germany.  If you have a file you wish to share with your friends, you can load it onto RapidShare’s servers, where it will be accessible by following a certain link. You can then distribute the file by sending the link to your friends, or putting it up on a website or chatroom.  Unlike Kazaa or Napster, RapidShare does not index its files or offer a search engine, so it is not possible to search for (lets say), Justin Bieber songs and find files containing the fine work of Mr. Bieber.
In 2009 Perfect 10, an adult entertainment company, sued RapidShare for copyright infringement and sought an interlocutory injunction prohibiting RapidShare from (1) “continuing to infringe thousands of Perfect 10 copyrighted images; and (2) continuing to engage in unfair competition with Perfect 10.”  The court issued its decision on May 18, dismissing Perfect 10’s interlocutory application.
The court found that Perfect 10 had not shown that it was likely to succeed on the merits of its claims for direct and contributory copyright infringement. Perfect 10’s claim of direct copyright infringement was unlikely to succeed because RapidShare does not upload the images to its server and RapidShare does not make its images available to users in the same manner as Napster and Kazaa since, without an index or browsing system, its work cannot be easily viewed by the general public. Perfect 10’s claim of contributory copyright infringement was unlikely to succeed because Perfect 10 failed to show that RapidShare induced, caused, or materially contributed to the infringing conduct.  Unlike Napster, which indexed files, which materially contributed to the infringing conduct, RapidShare did not take any action to encourage infringing conduct.
While this decision is only a preliminary injunction, it promises to be an interesting case in determining whether internet companies have contributory liability in relation to the copyright infringement  engaged in by their users. Like Napster and Kazaa, RapidShare has a business model that is dependant on people using its service, and financially gains when people use its service to engage in copyright infringement. However, like YouTube, the service that RapidShare offers has substantial non-infringing uses, and there is little evidence that RapidShare is taking actions that encourage infringing conduct. 
In any event, this litigation is certainly one to watch. The preliminary injunction decision can be found at

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