Perfect 10 v. Google

Citation

Perfect 10, Inc. v. Google, Inc., 416 F.Supp.2d 828 (C.D. Cal. 2006) (full-text), aff’d in part, rev’d in part sub nom. Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701 (9th Cir. 2007) (full-text).

Factual Background

Google runs a search engine with an option to search specifically for images (known as Google Image Search). The search engine displays pages of search results with small images, or thumbnails, which are smaller and lower quality versions of full-sized images found on the pages listed in the search results. When these thumbnails are clicked, Google’s web page sends a set of HTML instructions to the user’s browser creating two distinct sections on the screen. The top portion contains information provided by Google including the thumbnail that was clicked. The lower portion of the screen is filled with the third-party website that provides the full size image which is accessed by the user’s browser through the HTML instructions provided by Google.

Google also stores images temporarily in the cache of their computers and the users’ computers to facilitate faster web browsing. Amazon had an agreement with Google that allowed users of Amazon’s website to perform searches that resulted in Google’s search results being displayed through in-line linking. Ads are placed on search result pages through Google’s Adsense program.

Perfect 10 operates a subscription-based website that makes available copyrighted images of nude models to members. Its proprietary website is not available to public search. Other websites, however, displayed, without permission, images and content from Perfect 10.

Google, in response to image search inquiries, displayed thumbnail copies of Perfect 10’s photos and linked to the third-party websites, which hosted and served the full-sized, infringing images. Perfect 10 filed suit against Google, alleging that Google’s search engine directly infringed its exclusive rights to display and distribute the full-size and reduced-size (thumbnail) images under the Copyright Act and was contributorily and vicariously liable for linking to infringing third party sites. Perfect 10 also claimed that Amazon was secondarily liable for in-line linking to Google’s search results.

District Court Proceedings

As framed by the district court, the issues before it pitted intellectual property rights against “the dazzling capacity of internet technology to assemble, organize, store, access, and display intellectual property ‘content’[.] . . . [The] issue, in a nutshell, is: does a search engine infringe copyrighted images when it displays them on an ‘image search’ function in the form of ‘thumbnails’ but not infringe when, through in-line linking, it displays copyrighted images served by another website?" For the reasons discussed below, the district court found that Google’s in-line linking to and framing of infringing full-size images posted on third-party websites was not infringing, but that its display of thumbnail images was likely to be considered infringing.

Linking and Framing

With respect to in-line linking and framing of full-size images from third-party websites, the court considered, not whether the activity was infringing, but a more preliminary question: Is linking or framing a “display” for copyright purposes? If it does not come within the ambit of the copyright holder’s exclusive rights, it is not necessary to reach the question of copyright infringement.

Linking is a basic function of the Internet. The term “hyperlinking” is used to describe text or images, that when clicked by a user, transport him or her to a different webpage. “In-line linking” is somewhat different. It refers to the process whereby a webpage incorporates by reference content stored on and served by another website.

The parties offered two theories for considering whether in-line linking is a display: the "server test" advocated by Google and the "incorporation test" advocated by Perfect 10. The "server test" defines a display as the “act of serving content over the web — i.e., physically sending ones and zeroes over the internet to the user’s browser.” The “incorporation test" would adopt a visual perspective wherein a display occurs from the act of incorporating content into a webpage that is pulled up by the browser. Perfect 10 argued that the webpage that incorporates the content through in-line linking causes the “appearance” of copyrighted content and is therefore “displaying” it for copyright purposes, regardless of where it is stored.

Reviewing precedent, the court acknowledged that there is substantial authority to the effect that traditional hyperlinking does not support claims of direct copyright infringement because there is no copying or display involved. But there is little discussion of in-line linking.

The court adopted the “server test" and held that a site that in-line links to another does not itself “display” the content for copyright purposes. Among the reasons given for its determination is that the "server test" is more technologically appropriate and better reflects the reality of how content travels over the Internet.

Further, it viewed the "server test" as liability “neutral.” Application of the test doesn’t invite infringing activities by search engines, nor does it preclude all liability. It would, more narrowly, “preclude search engines from being held directly liable for in-line linking and/or framing infringing content stored on third-party websites.”

The direct infringers were the websites that “stole” Perfect 10’s full-size images and posted them on the Internet. Finally, the court reasoned, that:

[T]he server test maintains, however uneasily, the delicate balance for which copyright law strives — i.e., between encouraging the creation of creative works and encouraging the dissemination of information. Merely to index the web so that users can more readily find the information they seek should not constitute direct infringement, but to host and serve infringing content may directly violate the rights of copyright holders.”

Thumbnail Images

Applying the server test to the thumbnail images, it was clear that Google did display them. Google acknowledged that it copied and stored them on its own servers. The issue then became, like that in Kelly v. Arriba Soft, whether Google’s use of Perfect 10’s images as thumbnails was a fair use. Analyzing statutory fair use criteria, the court concluded that Google’s use of the thumbnails was not a fair use:

Purpose and Character of Use

Google’s use of the thumbnails was a commercial use; it derived commercial benefit in the form of increased user traffic and advertising revenue. In Kelly, the Court of Appeals acknowledged that Arriba Soft’s use of thumbnails was commercial, yet concluded that search results were more “incidental and less exploitative” than other traditional commercial uses. Here, the commercial nature of Google’s use was distinguishable because Google derived specific revenue from an ad sharing program with the third-party websites that hosted the infringing images.

Perfect 10 had entered into a licensing agreement with others for the sale and distribution of its reduced-size images for download to and use on cell phones. A significant factor supporting a finding of fair use is a court’s determination that the use is transformative. Although the court found that Google’s use of thumbnails to simplify and expedite access to information was transformative, it found it to be “consumptive” as well, i.e., the use merely supersedes the object of the original instead of adding a further purpose or different character. Google’s thumbnails superceded, or usurped, the market for the sale of reduced-size images, because cell phone users could download and save the images directly from Google.

Nature of the Copyrighted Works

Use of published works, including images, are more likely to qualify as a fair use because the first appearance of the creative expression has already occurred.

Amount and Substantiality of the Use

As in Kelly, the court found that Google used no more of the image than necessary to achieve the objective of providing effective image-search capability.

The Effect of the Use Upon the Potential Market for or Value of the Copyrighted Work

While Google’s use of thumbnails did not harm the market for copyrighted full-size images, it did cause harm to the potential market for sales of Perfect 10’s reduced-size images to cell phone users.

The court also considered and rejected Perfect 10’s allegation that Google was guilty of contributory and vicarious copyright infringement liability.

Appellate Court Proceedings

Linking and Framing

In tacitly adopting the “server test" and affirming the district court’s finding that linking and framing did not violate the copyright holder’s exclusive rights of display and reproduction, the Court of Appeals made several observations. It considered Perfect 10’s contention that when Google frames a full-size image, it gives the “impression” that it is showing the image.

The court acknowledged that linking and framing may cause some computer users to believe they are viewing a Google Web page when, in fact, Google, through HTML instructions, has directed the user’s browser to the website publisher’s computer that stores the image. But the Copyright Act, unlike the Trademark Act, does not protect a copyright holder against acts that may cause consumer confusion. The same logic obtains with respect to the display of cached webpages. Even if the cached copies are no longer available on the third-party’s website, it is the website publisher’s computer, not Google’s, that stores and displays the infringing cached image.

Thumbnail Images

In reversing the lower court’s determination that Google’s display of thumbnail images was not a fair use, the Court of Appeals reconsidered the weight to be accorded to the statutory factors. It differed with the district court’s analysis regarding character of use and market impact.

Purpose and Character of Use

The court laid major emphasis, and weight, on the transformative nature of a search engine’s display as an electronic reference tool:

Although an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information. . . . [A] search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool. . . . In other words, a search engine puts images “in a different context” so that they are “transformed into a new creation.”

The court considered the judicial rule that “parody” is a fair use, and concluded that “[i]ndeed, a search engine may be more transformative than a parody because a search engine provides an entirely new use for the original work, while a parody typically has the same entertainment purpose as the original work.”

The fact that Google profited from its AdSense advertising program and that Perfect 10’s market for the sale of thumbnail images could be superceded by the Google display did not outweigh the public interest value of the transformative use, in the court’s opinion. It noted the absence of evidence that downloads of thumbnails for mobile phone use actually occurred. Hence, the court’s analysis of thumbnails from Kelly was controlling:

Accordingly, we disagree with the district court’s conclusion that because

Google’s use of the thumbnails could supersede Perfect 10’s cell phone download use and because the use was more commercial than Arriba’s, this fair use factor weighed “slightly” in favor of Perfect 10. Instead, we conclude that the transformative nature of Google’s use is more significant than any incidental superseding use or the minor commercial aspects of Google’s search engine and website]. Therefore, the district court erred in determining this factor weighed in favor of Perfect 10.

Effect of Use on the Market

Similarly, with respect to Perfect 10’s market for the sale of its full-sized images, the court rejected the argument that market harm may be presumed if the intended use of an image is for commercial gain. Market harm to a copyright holder will not be “readily inferred” when an arguably infringing use is otherwise transformative. And, since the “potential harm” to the market for the sale of thumbnails was hypothetical, the court concluded that the significant transformative use outweighed the unproven use of Google’s thumbnails for cell phone downloads. It vacated the district court’s preliminary injunction regarding Google’s use of thumbnails.

Likewise, the copying function related to caching of full-sized images performed automatically is a transformative, and, ultimately, a fair use, so long as the cached copies no more than necessary to assist the Internet user and the copying has no more than a minimal effect on the owner’s right, while having a considerable public benefit.

Secondary Liability

The Court of Appeals opinion devotes considerable attention to the question of Google’s possible liability for secondary copyright infringement, that is, contributory and/or vicarious infringement. It was uncontested that third-party websites were posting infringing copies of Perfect 10’s images. The court rejected the assertion that Google’s automatic caching of copies of full-sized images from third-party sites was direct infringement. But it reversed the district court’s determination that Perfect 10 was not likely to succeed with a claim for secondary liability against Google, and remanded the case for reconsideration in light of its opinion.

As defined by the U.S. Supreme Court, “[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement, and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” As applied by the Ninth Circuit, “a computer system operator can be held contributorily liable if it ‘has actual knowledge that specific infringing material is available using its system,’ and can ‘take simple measures to prevent further damage’ to copyrighted works, yet continues to provide access to infringing works.”

The Court of Appeals first considered whether Google intentionally encouraged infringement. The district court held that Google did not materially contribute to infringing conduct because it did not undertake any substantial promotional or advertising efforts to encourage visits to infringing websites, nor provide significant revenues to the infringing websites. But the Court of Appeals disagreed, reasoning:

There is no dispute that Google substantially assists websites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials. We cannot discount the effect of such a service on copyright owners, even though Google’s assistance is available to all websites, not just infringing ones. Applying our test, Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.

With respect to vicarious infringement, a plaintiff must establish that the defendant “exercises the requisite control over the direct infringer and that the defendant derives a direct financial benefit from the direct infringement.” The court found that Perfect 10 did not demonstrate that Google has the legal right to stop or limit direct infringement by third-party websites.

Because the district court determined that Perfect 10 was unlikely to succeed on its contributory and vicarious liability claims, it did not reach Google’s arguments that it qualified for immunity from liability under the DMCA. The district court was directed to consider whether Google was entitled to the limitations on liability provided by title II of the DMCA on remand.