Brief Fact Summary. Google, Inc. (Defendant) claimed that even if its transmission of thumbnail images of Perfect 10, Inc.’s (Plaintiff) copyrighted nude images, or its in-line linking to or framing of full-size images that infringed Plaintiff’s copyright in the images constituted infringement of Plaintiff’s display or distribution rights, its use still constituted a fair use.
Synopsis of Rule of Law. (1) A computer owner that stores an image as electronic information and provides that electronic information directly to a user violates the copyright holder’s exclusive right to display the image. (2) A computer owner that in-line links to or frames a full-size image does not infringe the distribution right of the image’s copyright owner when the image is displayed on the computer screen of a user. (3) A search engine’s owner’s appropriation of a copyrighted image for use as an indexed thumbnail picture is a protected â€œfair useâ€ under the copyright law where the balance of the statutory fair use factors favors the owner of the search engine.
Issue. (1) Does a computer owner that stores an image as electronic information and provides that electronic information directly to a user violates the copyright holder’s exclusive right to display the image? (2) Does a computer owner that in-line links to or frames a full-size image does not infringe the distribution right of the image’s copyright owner when the image is displayed on the computer screen of a user? (3) Is a search engine’s owner’s appropriation of a copyrighted image for use as an indexed thumbnail picture is a protected â€œfair useâ€ under the copyright law where the balance of the statutory fair use factors favors the owner of the search engine?
Held. (Ikuta, J.) (1) Yes. A computer owner that stores an image as electronic information and provides that electronic information directly to a user violates the copyright holder’s exclusive right to display the image. The district court’s reasoning and â€œserver testâ€ comport with the language in the Copyright Act, and, therefore, its ruling is correct as far as Perfect 10’s (Plaintiff) display rights. Based on the plain language of the statute, a person displays a photographic image by using a computer to fill a computer screen with a copy of the photographic image fixed in the memory of the computer. Google’s (Defendant) computers store thumbnail versions of Plaintiff’s copyrighted images and communicate copies of those thumbnails to Defendant’s users. Therefore, Plaintiff has made a prima facie case that Defendant’s communication of its stored thumbnail images directly infringes Plaintiff’s display right. Conversely, Defendant’s computers do not store the full0siuze photographic images, but merely in-line links to, and frames, those images. Therefore, Google (Defendant) does not have a copy of the images for purposes of the Copyright Act, i.e., it does not have any â€œmaterial objects . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicatedâ€ and therefore Google (Defendant) cannot communicate a copy as defined under 17 U.S.C. Â§ 101. While Google (Defendant) may facilitate access to infringing copies, such assistance only implicates contributory liability for copyright infringement, not direct liability. Even if such in-line linking and framing may cause some computer users to believe they are viewing a single Google (Defendant) web page, the Copyright Act, unlike the Trademark Act, does not protect a copyright holder against acts that cause consumer confusion. Finally, the same analysis is applicable to Defendant’s cache.
(2) No. A computer owner that in-line links to or frames a full-size image does not infringe the distribution right of the image’s copyright owner when the image is displayed on the computer screen of a user. Again, the district court’s ruling is consistent with the language of the Copyright Act. Under Â§ 106(3), a copyright owner has the exclusive right â€œto distribute copies. . . .â€ â€œCopiesâ€ means â€œmaterial objects . . . in which a work is fixed,â€ and the Supreme Court has indicated that in the electronic context, copies may be distributed electronically. Because the full-size images are not on Defendant’s computers, it cannot â€œdistributeâ€ them. It is the third-party website publisher’s computer that distributes copies of the images by transmitting the photographic image electronically to the user’s computer. Plus, Plaintiff’s argument that merely making the images â€œavailableâ€ constitutes distribution is not supported. A â€œdeemed distributionâ€ rule that is applicable in other contexts is inapplicable to Defendant because Defendant does not own a collection of Plaintiff’s full-size images and does not communicate these images to the computers of people using Defendant’s search engine; it only indexes the images Google (Defendant) therefore cannot be deemed to distribute copies of these images.
(3) Yes. A search engine’s owner’s appropriation of a copyrighted image for use as an indexed thumbnail picture is a protected â€œfair useâ€ under the copyright law where the balance of the statutory fair use factors favors the owner of the search engine. Although Perfect 10 (Plaintiff) would likely prevail in its prima facie case that Google’s (Defendant) thumbnail images infringe its display rights, Plaintiff has the burden to show a likelihood that it will prevail against an affirmative fair use defense by Defendant. The first fair use factor, 17 U.S.C. Â§ 107(1), requires a court to consider â€œthe purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.â€ A â€œtransformative workâ€ is one that alters the original work â€œwith new expression, meaning, or message.â€ In this case, Defendant’s use of thumbnails is highly transformative. Defendant’s search engine provides social benefit by incorporating an original work into a new work that serves as an electronic reference tool, thereby providing an entirely new use for the original work. The district court concluded that since Defendant’s use of the thumbnails could supersede Plaintiff’s cellphone download use and because the use was commercial as Google’s (Defendant) thumbnails â€œlead users to sites that directly benefit Google’s bottom lineâ€ through the AdSense program, this fair use factor weighed â€œslightlyâ€ in favor of Perfect 10 (Plaintiff). The district court’s conclusion on this factor is erroneous because the superseding use was nonexistent insofar as the district court did not find that any downloads for mobile phone use had taken place, and because there was no evidence that AdSense websites containing infringing images significantly contributed to Defendant’s bottom line. Accordingly, the significantly transformative nature of Defendant’s search engine, particularly in light of its public benefit, outweighs Defendant’s superseding and commercial uses of the thumbnails in this case. A weighing of these considerations must promote flexibility and account for the rule that â€œthe more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.â€ The second fair use factor is â€œthe nature of the copyrighted work,â€ 17 U.S.C. Â§ 107(2). Perfect 10’s (Plaintiff) images are â€œcreative in natureâ€ and therefore â€œcloser to the core of intended copyright protection than are more fact-based works.â€ However, because the photos appeared on the Internet before Google (Defendant) used thumbnail versions in its search engine results, this factor weighs only slightly in favor of Plaintiff. The third fair use factor, 17 U.S.C. Â§ 107(3), asks whether the amount and substantiality of the portion used in relation to the copyrighted work as a whole are reasonable in relation to the purpose of the copying. Here, this factor is neutral and does not weigh in favor of either party because Google’s (Defendant) use of the entire photographic image was reasonable in light of the purpose of a search engine and since using less than the entire image would be less helpful to a computer user. The fourth fair use factor is â€œthe effect of the use upon the potential market for or value of the copyrighted work.â€ The district court in this case correctly held that Defendant’s use of thumbnails did not damage Plaintiff’s market for full-size images. Plaintiff argues that the district court erred because the likelihood of market harm may be presumed if an image’s intended use is for commercial gain. However, this presumption does not arise when a work is transformative because â€œmarket substitution is at least less certain, and market harm may not be so readily inferred.â€ As already discussed, Defendant’s thumbnail images were highly transformative, and there was no evidence that Plaintiff’s market for full-size images was harmed. Therefore, the district court did not err as far as this ruling. However, the district court did err in determining that Google’s (Defendant) thumbnails would harm the market for reduced-size images, since Perfect 10 (Plaintiff) adduced no evidence that actual sales of such images had been made for cell phone use. Any potential harm to Plaintiff’s market remains hypothetical, and, therefore, this factor does not favor either party. Weighing the fair use factors leads to the conclusion that Defendant’s use was a fair use, especially with the public utility served by its search engine and the transformative nature of its use. Plaintiff is unlikely to be able to overcome Defendant’s fair use defense. And so, the preliminary injunction regarding Google’s (Defendant) use of thumbnail images is vacated. Reversed as to this issue.
Discussion. Although finding that Google (Defendant) was not liable for its copyright infringement since its use was a fair use, the court in this case nevertheless ruled that Defendant could be contributorily liable for copyright infringement since an actor may be contributorily liable for intentionally encouraging direct infringement if the actor knowingly takes steps that are substantially certain to result in such direct infringement. In this case, the court found that Defendant substantially helped websites to distribute their infringing copies to a worldwide market and helped a worldwide audience of users access infringing materials. The court said it could not disregard the effect of such a service on copyright owners, even though Defendant’s assistance is available to all websites, not just infringing ones. The court concluded that Google (Defendant) could be held contributorily liable if it had knowledge that infringing Perfect 10 (Plaintiff)) images were available using its search engine, could take easy steps to prevent further damage to Plaintiff’s copyrighted works, and failed to do so. The court remanded so the district court could make factual findings necessary to resolve this issue.