Perfect 10 v. Google, Inc. Order by United States District Court of California. February 2006.

In August 2005, Perfect 10 sued Google and Amazon for displaying thumb nail images. Perfect 10, an adult photography company, makes money by selling rights to copyrighted material. Perfect 10 sought an injunction and compensation from Google on the grounds that Google was illegally displaying thumbnail images of copyrighted Perfect 10 photos and linking to third party sites that further illegally host copyrighted materials. Google asserts that it does not infringe directly because it does not create the image that the image search pulls up and displays.

The court issued a preliminary injunction ruling that the thumbnail images from a Google image search did constitute copyright infringement, but the links provided to the full images did not. Google admitted that it created and stored the thumbnail images on its own servers. Thus, as to the thumbnails, Google distributed infringing copies of Perfect 10’s images. The links to the full size photographs do not involve any creation or dissemination even though there is a local browser caching. This local browser caching constitutes fair use. The court found that the use of the thumbnails was not fair use since Google made money from their creation and the thumbnails were not transformative because P10 also licenses thumbnail images. Thus, users could circumvent P10’s licenses by downloading the free thumbnails. The Court did note that Google does “provide great value to the public” as a search engine, stating that “search engines have become essential sources of vital information for individuals, government, non-profits and businesses….” Ultimately, Google’s thumbnail images did economically harm the value of the P10 images. Thus, the Court enjoined Google from further dissemination of the thumbnail images. In the case of AFP, Google must clearly not host and serve the image. However, the act of organizing the web and making news more readily available to users, perhaps even with leads and headlines seems reasonable.

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.