Perfect 10 v. Amazon.com
From Internet Law Treatise
District Court: 416 F. Supp. 2d 828 (N.D. Cal. 2006)
Search engines automatically create low-resolution thumbnails of all the images they index, including images copyrighted by Perfect 10, and adult website. These images appear in search results, prompting a copyright infringement suit by Perfect 10. The district court concluded that Google's creation and display of these thumbnails from infringing websites did not fall within fair use, distinguishing Kelly v. Arribasoft [CITE]. The court also rejected the notion that in-line linking of images directly infringes a copyright owner's public display right, and reasoned that merely visiting a website that includes infringing material does not make you an infringer. 416 F. Supp. 2d at 852 n.17.
On Appeal: 487 F.3d 701, 2007 WL 1428632 (9th Cir. 2007)
The 9th Circuit held that search engines such as Google and Amazon were not directly infringing by displaying the thumbnail images. The court held that framing in-line linked, full-size images of copyrighted photographs was not a " display" nor "distribution" of Perfect 10's works. Id. at 718, 719. The court reasoned that the search engine transmitted only an address that directed a user's browser to a site where a copy of the full-size image was displayed and did not communicate a display of the work itself. Even if the thumbnail images were derived from infringing third-party websites and showed the images in their entirety, the use was fair because the search engine's use of the works was highly transformative.
The court extensively analyzed the fair use factors, and emphasized that the search engine provided a social benefit by incorporating an original work into a new work, namely, an electronic reference tool, and to the extent that operator's use was commercial and could supersede owner's sale of images, such use was not significant. Finally, the court found that use of the entire image in this circumstance was reasonable. The court also held that caching the images was fair use. Id. at 725.
On the issue of contributory infringement with full-size in-linked images, the court found that the search engine aided third-party websites in distributing their infringing copies of photographs to a worldwide market and assisted a worldwide audience of users to access infringing materials. Id. at 729. The court remanded this issue to the district court to determine whether there are reasonable and feasible means for the search engine to refrain from providing access to infringing images.
As for vicarious infringement, the court found that Perfect 10 failed to show likelihood of success on its claim because the search engine could not terminate third-party websites or block their ability to host and serve infringing full-size images on the Internet; the search engine lacked the practical ability to police the infringing activities of third-party websites. Id. at 731. This was true even though the search engine has a right to terminate in its advertising contracts. The court stated, "Google's right to terminate an AdSense partnership does not give Google the right to stop direct infringement by third-party websites. An infringing third-party website can continue to reproduce, display, and distribute its infringing copies of Perfect 10 images after its participation in the AdSense program has ended." Id. at 730.
