In the 2002 lawsuit, Perfect 10 accused CCBill and CWIE of, among other things, copyright and trademark infringement. The two companies had provided services for several websites that featured Perfect 10 content without the adult company's consent.
The court ruled in favor of the defendants, citing section 230 of the Communications Decency Act in its opinion.
Under the section, those offering an "interactive computer service" are not responsible for the content posted by its users, as long as they show effort to restrict access to "filthy, excessively violent, harassing or otherwise objectionable" material.
The court opinion stated that service providers are immune from legal attack because they did not post the copyrighted material.
"It's a strong opinion protecting online freedom," Jason Schwartz, Electronic Frontier Foundation staff attorney, told XBIZ. "A way of attacking free speech online is to go after the service provider who gives the speaker a forum. This ruling protects the service provider from attack and guarantees more freedom for the user."
The 1998 Digital Millennium Copyright Act states that web hosts are not liable for user content, so long as they take down the illegal material immediately after being notified by the copyright holder and are not receiving "direct financial benefit" from the posted content.
Perfect 10 argued that CCBill and CWIE should have taken down its content on two sites — Illegal.net and StolenCelebrityPics.com — because the companies should have been aware of the infringing content.
The judge disagreed with Perfect 10's argument, saying service providers should not have the burden of proving whether content is "actually illegal."
"The reality is, the way that this 9th Circuit ruling reads, it now makes entirely clear that plaintiffs can't make any state-based claims against online service providers — they're all gone," said Eric Goldman, a professor at Santa Clara University School of Law.
The court soon will release rulings in two other similar cases involving Perfect 10, which are currently awaiting decisions.