By Andrea Anapolsky

On May 16, 2007, the 9th U.S. Circuit Court of Appeals sent a mixed message to search engines everywhere – publishing thumbnail images is legal, but a search engine may still be liable if it links customers to other sites that publish certain thumbnail images without authorization.  (Perfect 10, Inc. v., Inc., CV-05-04753-AHM (9th Cir. May 16, 2007) With this ruling, what’s next in the battle between advocating for the free flow of information on the Internet and protecting copyrighted material?

Perfect 10, Inc. (“Perfect 10”) an adult entertainment company that allows subscribers access to nude photos on-line, sued Google, Inc. (“Google”) in 2004 for publishing its photos as tiny images known as “thumbnails” which appear in a user’s search results. When a Google user types in a search and clicks on the resulting thumbnail, the page splits into two frames – the top of the page has the thumbnail with a warning it may be subject to copyright, and the bottom of the page has a full-size image from a third-party website. Perfect 10 alleged Google infringed its copyrights by using its images in thumbnails and by linking users to websites that re-published their photos without authorization.

A U.S. District Court judge last year issued a preliminary injunction against Google, finding that the search engine directly violated Perfect 10’s copyrights by displaying the thumbnail, but noted that Google could not be held liable for a user who is directed to a site that contains illegal copies of Perfect 10’s photos. The 9th Circuit’s opinion overturned this earlier ruling. The Court ruled the display of a thumbnail was considered “fair use” under copyright law, but that search engines could possible be held liable when they act as a intermediary between a user and a website that contains illegal copies. The Court remanded the case on this second issue.

Due to Google’s worldwide reputation, this case received substantial attention; however, it is clear that the 9th Circuit was simply following precedent. In 2003, the 9th Circuit decided Kelly v. Arriba Soft Corporation, a similar case to Perfect 10 v. Google. (Kelly v. Arriba Soft Corporation, 280 F.3d 934 (CA9 2002))  In the Kelly case, the plaintiff (Kelly) was a photographer who had copyrighted many of his photos; the defendant (Arriba Soft Corporation) was an internet search engine. Arriba displayed its results in the form of thumbnails and Kelly sued when he discovered that his photographs were part of the search engine’s database. The Court held that Arriba’s thumbnails were considered fair use and that Arriba did not violate Kelly’s copyright.

The 9th Circuit used much of its reasoning and analysis from Kelly in the Perfect 10 v. Google decision. In determining that Google did not infringe on Perfect 10’s copyrights, the Court stated that Google’s images fell under the fair use defense, which allows for the use of copyrighted works without the copyright owner’s permission in certain situations. Using the statutory factors for fair use set out in 17 U.S.C. § 107, the Court emphasized that the use of thumbnails was “highly transformative” and that the search engine provides important social and public benefits. The Court further held that Google did not directly infringe on Perfect 10’s copyrights by displaying full-size images – Google simply provides HTML instructions to a user’s browser that direct the browser to the images on the third party website. “[P]roviding these HTML instructions is not equivalent to showing and housing a copy.” The Court leaves no doubt that the use of such full-size images and thumbnails on websites is legal and permissible under the United States Copyright Act, Title 17, United States Code.

However, the ruling does leave open the possibility that search engines could be liable for linking users to websites that illegally display full-size images of copyrighted works. The Court remanded the case for determination of whether Google could be held liable for infringement on Perfect 10’s full-size images. The Court, drawing on its rulings in previous cases,  held that “a computer system operator can be held contributorily liable if it ‘has actual knowledge that specific infringing materials are available using its system’, and can ‘take simple measures to prevent further damage’ to copyrighted works, yet continues to provide access to infringing works.”  While the District Court is charged with determining Google’s liability, the 9th Circuit may have suggested its preference by stating that “there is no dispute that Google substantially assists web sites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing material. . . and we cannot discount the effect of such a service on copyright owners.”

A decision in favor of Perfect 10 would significantly alter the manner in which search engines operate, and could easily expose other websites to similar liability issues. Due to the popularity of Google and other search engines, it is possible that the U.S. Supreme Court may have the final word on this matter. In the meantime, search engines may consider taking preventative measures by adding additional warnings in its search results when a search engine includes protected thumbnail images that link to third-party websites.

Andrea Anapolsky is an associate in Weintraub Genshlea Chediak Tobin & Tobin’s Business, Securities and Commercial Transactions section. She represents both public and private companies. Special thanks to Lindsey Hulse for assisting in the research and writing of this article.