Google searches facilitated access to images that infringed on Perfect 10 copyrights.
Google stores thumbnails of images, then links to the webpage.
Google also stores webpage content in its cache, so an infringing image could be viewed this way even if the webpage owner removed HTML instructions, a user could still get there. The owner would have to change the web address of the image or render it unavailable in order for it to be inaccessible through the cache.
Perfect 10 users have to pay a fee to view the images in the "members' area' of the site. Google does not have these images in its index or database.
However, some website publishers republish the images w/o authorization. When this happens, Google may index the webpages containing the images and provide thumbnail versions of images in response to searches.
When a user clicks on the image, Google links to the website containing the image, but also frames the image with its own website.
Procedural History
District court preliminarily enjoined Google from creating and publicly displaying thumbnail versions of the pictures, but not from linking to third party websites that displayed the images.
COA affirms in part, reverses injunction, and remands.
Issues
Does the use of thumbnail images to facilitate internet browsing constitute fair use of copyrighted material?
Holding/Rule
The use of thumbnail images to facilitate internet browsing and searching constitutes fair use of copyrighted material.
Reasoning
Direct infringement:
There is no dispute that Google's computers store thumbnail versions of Perfect 10's copyrighted images and communicate copies of these thumbnails to users. This fulfills P's prima facie case for direct infringement.
Google does not have a copy of the images for purposes of the Copyright Act, however, when it frames in-line linked full-size images.
Providing HTML instructions is not the same as showing a copy, because HTML instructions do not themselves cause infringing images to appear on the screen and Google does not store the image.
Facilitating access may raise contributory liability issues, but it does not constitute direct infringement.
This analysis is equally applicable to Google's cache, because Google does not store the image.
Fair Use Defense:
Google contends use of thumbnails is a fair use of the images.
In Kelly v. Arriba Soft Corp., the Court considered a similar claim and held that the search engine's use of thumbnails was fair use based on the transformative nature of a search engine and its benefit to the public. District Ct distinguished this case.
Factor Test:
Purpose and character of use (transformative?)
D's use of thumbnails is highly transformative, because it transforms the image into a pointer directing the user to a source of information.
Completely changes the purpose of the original work, and in this way is more transformative than a parody.
Even making an exact copy can be transformative so long as the copy serves a different function.
D. Ct. said that D's use of thumbnails superseded P's right to sell reduced-size images for cell phone use and because D profited (through AdSense) from the links.
D. Ct. did not consider, however, that perhaps the value of the search engine to the public outweighed the commercial nature of Google.
Superseding use (cell phone pics) doesn't seem to actually be occurring.
Also, transformative nature of Google's search engine and benefit to the public outweighs commercial gain from AdSense.
Nature of the copyrighted work
This factor weighs only slightly in favor of Perfect 10.
The images are "creative in nature" and therefore closer to the core of intended copyright protection. However, P's images were previously published, and thus is no longer entitled to the enhanced protection available for unpublished work.
Amount and substantiality of the portion used
This factor favors neither party, because in Kelly, the Court held that the use of entire photographic images was reasonable in light of the purpose of a search engine.
Effect of use on the market
Because the thumbnails were not a substitute for the full-sized images, they do not harm the ability to license or sell the full-sized images.
P argued that when the intended use is for commercial gain, market harm can be presumed. However, D's use of thumbnails is highly transformative, so it is not the case that market harm can be presumed.
Argument that it harms P's cell phone download market is hypothetical.
This factor also favors neither party.
In light of this, Google is likely to succeed in proving its fair use defense.
Therefore, the preliminary injunction order is vacated.
