Perfect 10 v Google is a coda to the Kelly v Arriba case of 2003.  It deals with most of the same issues – online photography copyright infringement from image search engines, the creation of thumbnails from full-sized images, and whether that use is fair in the law.  Perfect 10 is an online pornography site that sued for an injunction from Google.  They no longer wanted their photos to come up as results in Google image searches, and said that the creation of thumbnails infringed their display and commercial rights.  Google responded by affirming fair use, using Kelly v Arriba as precedent.  The district court in this case ruled that Google does not infringe on the display rights of Perfect 10, but that their use is commercial, due to the presence of Google AdSense on the pages.    Google makes money from AdSense, and Perfect 10 claims the economic value of their photos increases Google’s revenue, thereby infringing on their market.  Perfect 10 also sells small, lower-quality versions of their photos to cell phone subscribers, indicating an emerging market for thumbnail-quality images.  This shows a distinct change in the market since the Kelly decision – a change in technology has created a new business model that embraces thumbnails as viable commercial entities. 
One important issue from the case is how to determine if the “display” right of a photography copyright owner is being infringed online, and how linking is involved.  If it is determined that linking to a photo is the same as “causing the appearance” of the photo, then a core function of the internet will become an infringing activity – linking to someone else’s photo, even if the link is to their site.  More people are on the web every day, and more content is being uploaded.  With the advent of blogs, an entire subculture has materialized based on the linking of content.  Linking, framing, and hotlinking are all major aspects of the general everyday use of the web.
This case has reversed certain aspects of the Kelly decision, and illustrated how technology innovation and new markets are constantly in flux.  Copyright protections and possible infringements are going to be equally in flux, as online rights are tested in court.  It is impossible to predict the ways in which new markets will be created, and many copyright owners will continue to push the boundaries of copyright law.  The online world seems brand new and many believe there is no room for our copyright tradition of moderation and balance.  But it becomes more important every day to find that balance between private and public interests. 
In July of 2006, both Google and Perfect 10 submitted briefs for the appeal of this case, meaning it is far from over.  Fair use and emerging commercial markets will continue to be argued, and hopefully a balance can be found.

The case of Kelly v Arriba was very important in the realm of online content, namely photography, and tested the laws governing online photos.  Kelly was a photographer who sued the search engine Arriba Soft for copyright infringement.  Arriba trawled the internet for images, took the photo to make a thumbnail of it, and did not keep the full-sized original on their server.  They linked to a full-size version of the photo on the original site.  Arriba claimed their use was fair use, and though Kelly won in the district court, it was reversed on appeal.
  The decision that the thumbnails were fair use was based on the four fair use factors – mainly that Arriba’s use of the photos was transformative, and they did not harm the economic or commercial value of the original photo because the thumbnail was small and of poor quality.  It can be argued that this took some rights away from the photographer, creating the assumption that thumbnails are not commercially useful.  The Court placed a good deal of subjective emphasis on the quality of thumbnails, and did not foresee a market for them.  However, the site was a search engine, and linked users to the original photography website, more than likely increasing the photographer’s traffic and online exposure.  The key issue is that Arriba’s use of the photos benefited the public, due to the purpose of their site as a public image search engine, and not as a commercial photography site.
In the discussion of the third fair use factor, the Court agrees that creative works need more protection online, but that is the only factor that went in Kelly’s favor.  The Court goes along with the idea that if something is on the internet, it is published, and therefore the content owner loses some control.  The focus of the case seemed to lie with the quality of the thumbnail image versus the full-sized image, and not with the artist’s right to control markets and derivative works (which it can be argued that thumbnails are).  The web is clearly a tool for the public, and therefore contains new markets.   This case brings up many important online photography copyright issues that can be argued in a variety of ways.  The importance of finding a balance to these interests and rights, as well as reconciling the public versus private benefits of online content becomes clear.
The more recent case of Perfect 10 v Google brought these issues back into the spotlight earlier this year, with another decision involving thumbnails, search engines and online photography copyright concerns.