In a case filed in California, Cloudflare stands accused of failing to terminate customers that have been repeatedly called out as copyright infringers. The case wasn't filed by Hollywood or the major record labels, but by two manufacturers of wedding dresses. The CDN provider tried to have the case dismissed recently but in a new order, the court refuses to do so.

Popular CDN and DDoS protection service Cloudflare has come under a lot of pressure from copyright holders in recent years.

The company offers its services to millions of sites, including some of the world’s leading pirate sites.

Many rightsholders are not happy with this. They accuse Cloudflare of facilitating copyright infringement by continuing to provide access to these platforms. At the same time, they call out the CDN service for masking the true hosting locations of these ‘bad actors’.

Cloudflare’s activities have also triggered some lawsuits. Just last week, we reported that an Italian court ordered the company to terminate the accounts of several pirate sites. In the U.S. there’s an ongoing copyright infringement case as well, which brought more bad news for the company a few days ago.

The case in question wasn’t filed by any of the major entertainment industry players, but by two manufacturers and wholesalers of wedding dresses. Not a typical “piracy” lawsuit, but it’s a copyright case that could have broad effects.

In a complaint filed at a federal court in California last year, Mon Cheri Bridals and Maggie Sottero Designs argued that even after multiple warnings, Cloudflare fails to terminate sites operated by counterfeit vendors. This makes Cloudflare liable for the associated copyright infringements, they said.

Cloudflare responded to the allegations and in April it filed a motion to dismiss the complaint. The company said that the rightsholders failed to state a proper claim, as the takedown notices were not proof of infringement, among other things. In addition, the notices were not formatted properly.

“Plaintiffs characterize their notifications as ‘credible’ without stating any facts that demonstrate their credibility. In any event, defective notifications, like those the plaintiffs sent to Cloudflare, cannot support any claim of actual knowledge,” Cloudflare argued.

According to Cloudflare, the notifications “may or may not be true”. Without a court determining whether they are accurate or not, the company says they don’t “convey actual knowledge of infringement.” As such, the company doesn’t believe it can be held liable.

District Judge Vince Chhabria disagrees, however. In an order signed a few days ago he denies the motion to dismiss. According to the Judge, the allegations and claims made by the wedding dress manufacturers are sufficient at this stage of the case.

“Cloudflare’s main argument – that contributory liability cannot be based on a defendant’s knowledge of infringing conduct and continued material contribution to it – is wrong,” Judge Chhabria writes.

“Allegations that Cloudflare knew its customer-websites displayed infringing material and continued to provide those websites with faster load times and concealed identities are sufficient to state a claim,” he adds.

Cloudflare also pointed out other deficiencies in the notices, and stressed that it’s not a hosting provider, but these comments were countered too. At this stage of the case, it’s enough to show that Cloudflare was aware of the alleged infringements, the Court notes.

“The notices allegedly sent by the plaintiffs gave Cloudflare specific information, including a link to the offending website and a link to the underlying copyrighted material, to plausibly allege that Cloudflare had actual knowledge of the infringing activity,” Judge Chhabria writes.

The denial of Cloudflare’s motion to dismiss means that the case will move forward. While the case has nothing to do with traditional pirate sites, any rulings could spill over, which means that other copyright holders will watch this case closely.

Mon Cheri Bridals and Maggie Sottero ultimately hope to recoup damages for the losses they’ve suffered as well preliminary and permanent injunctive relief to stop all infringing activity.

Cloudflare, for its part, will argue that it’s not actively participating in any infringing activity and that it merely has a role as a third-party intermediary, which is not liable for the alleged infringing activities of its customers.

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A copy of District Judge Vince Chhabria’s order is available here (pdf).