In Perfect 10, Inc. v. Amazon.com, Inc., et al., No. 06-55405 (9th Cir., May 16, 2007). The Ninth Circuit holds that Google’s creation and display in search results of lower resolution ‘thumbnail’ copies of infringing images found on third party websites for the purpose of aiding the public in locating such images is a fair use that does not infringe the rights of the holder of the copyright therein. In reaching this result, the court relied largely on the transformative nature of the thumbnails Google created, which, by facilitating the public’s ability to search the web for images, serve a different purpose than the original images, which are designed to entertain.
Applying the “server test”, the Ninth Circuit further held that framing infringing images found on third party web sites via “in-line linking” to such sites does not directly infringe the display or distribution rights of the holder of the copyrights in such images.
Reversing the District Court, the Ninth Circuit held, however, that Google is potentially liable on a theory of contributory infringement for infringing plaintiff’s copyrights as a result of its provision of in-line links to third party websites carrying infringing content. Contributory infringement, requires (1) knowledge of the infringing activity and (2) a material contribution -- actual assistance or inducement -- to the alleged piracy. According to the Court, “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.” Issues of fact mandated denial of plaintiff’s motion for summary judgment. Left for the District Court to resolve on remand was whether the Digital Millennium Copyright Act (“DMCA”) immunized Google from liability for such contributory infringement.
Finally, the Ninth Circuit held that Perfect 10 was unlikely to prevail on vicarious infringement claims arising out of Google’s provision of in-line links to third party web sites that contained infringing images. Vicarious liability or vicarious infringement, a form of indirect copyright infringement, is found where an operator has (1) the right and ability to control users and (2) a direct financial benefit from allowing their acts of piracy. User agreements or Acceptable Use Policies may be evidence of an operator's authority over users. The financial benefit may include a subscription fee, advertising revenues, or even a bartered exchange for other copyrighted. Under the doctrine of vicarious liability, liability may be found even if there is no specific knowledge of infringing acts occurring on a site.The Court held that Perfect 10 had not demonstrated that Google had the ability to control such third party websites, and compel them to remove infringing images found on their sites, a prerequisite to a finding of vicarious infringement.