Federal Appeals Court Clarifies Online Fair Use

By Dames, K Matthew

Intellectual Property How could the Internet function if every click from a search engine to Web-based content carried the risk of copyright infringement with it? This was the question a federal appeals court in California answered partially in May, when it held that search engine giant Google was not liable for copyright infringement when it linked to a publisher’s thumbnail images, despite the publisher’s request to refrain from doing so. The decision in Perfect 10 v. Google (http://tinyurl.com/2epgkf) helps clarify the boundaries of fair use in the online environment. But does the opinion have a broader impact?

Let’s take a closer look at Perfect 10′s copyright infringement lawsuit, which includes an analysis of the federal trial and appeals court decisions. I have also explored what the decision means for the future of Web-based information access – including search engine indexing, linking, and framing – and how it may impact Google’s ongoing litigation with publishers over the Google Book Search project.

Girls on Film

This controversy started in 2001, when Google began receiving complaints from Perfect 10 that the search giant’s display of Perfect 10′s thumbnail images was a copyright violation. Perfect 10 markets, sells, and licenses copyrighted images of nude models. The company also owns and operates a password-protected, subscription- based Web site; subscribers pay a monthly access fee to view Perfect 10 images.

Although Perfect 10′s images are copyrighted, many of them are free through Web sites that have no affiliation or contractual relationship with Perfect 10; many of these images are published illegally without Perfect 10′s permission. Several search engines – including those from Google andAmazon.com – routinely pick up and link to Perfect 10′s images. (The availability of Perfect 10′s images can be verified by searching Google Image using the search terms “perfectlO” or “perfect 10.”)

Perfect 10 sued Google for copyright infringement in November 2004; the content provider followed with a copyright infringement lawsuit against Amazon in June 2005. Shortly after filing the lawsuit againstAmazon.com, Perfect 10 asked a federal district court for an injunction that would have kept Amazon and Google from “copying, reproducing, distributing, publicly displaying, adapting or otherwise infringing, or contributing to the infringement” of Perfect 10′s photos or linking to Web sites that provide full-size infringing versions of Perfect 10′s photos. After consolidating the lawsuits, the district court denied Perfect 10′s injunction request against Amazon.com but granted the injunction request against Google.

In enjoining Google from publicly displaying Perfect 10′s images, district court judge A. Howard Matz concluded that Google’s creation and public display of thumbnails infringed on Perfect 10′s copyrights. Matz also rejected Google’s fair use argument. “The Court concludes that Google’s creation of thumbnails of PlO’s copyrighted full-size images, and the subsequent display of those thumbnails as Google Image Search results, likely do not fall within the fair use exception,” Matz wrote. “The Court reaches this conclusion despite the enormous public benefit that search engines such as Google provide. Although the Court is reluctant to issue a ruling that might impede the advance of internet technology, and although it is appropriate for courts to consider the immense value to the public of such technologies, existing judicial precedents do not allow such considerations to trump a reasoned analysis of the four fair use factors.”

Google Appeals Fair Use Rejection

Recognizing the importance of this issue, many parties (including Internet service providers, communications coalitions, and the Consumer Electronics Association) supported Google’s fair use position during the company’s appeal to the federal appeals court. The Electronic Frontier Foundation (EFF) and five library representative organizations filed a “friend of the court” brief on Google’s behalf in which they argued that holding Google liable for copyright infringement for linking to protected images would threaten the activity of virtually every online user.

“Perfect 10 … urge[s] this Court to erase the line between direct and secondary [infringement] liability with respect to the public display right, replacing the statute’s focus on who is transmitting with a radically expansive conception that would impose direct (and hence strict) liability on anyone who, as Google does, transmits a link and thereby ’causes the appearance’ of a Perfect 10 image,” wrote EFF’s Fred von Lohmann on the amicus brief he filed on behalf of his organization, ALA, the American Association of Law Libraries, and three other library associations. “This conception is not only at odds with well-established principles of copyright jurisprudence, … but would also inflict ‘a tremendous chilling effect on the core functionality of the web – its capacity to link.’ … No principled distinction separates Google’s links to Perfect 10 images from the billions of links transmitted by web publishers, libraries, bloggers, and regular internet users every day. A rule that threatens strict liability for any image displayed as a result of the transmission of a URL (whether expressed as a link, in-line link, or frame) would radically change linking practices, and thereby transform the internet as we know it.”

Appeals court judge Sandra S. Ikuta agreed with this central premise when she discussed Google’s transformative use of the thumbnail images and how such use tipped the balance of fair use toward Google. Citing the 2003 decision in Kelly v. Arriba, which held defendant Arriba’s use of thumbnail images was a fair use primarily based on the transformative nature of a search engine and its benefit to the public, Ikuta noted the parallel between Arriba’s thumbnail use and Google’s similar use.

“Google’s use of thumbnails is highly transformative. In Kelly, we concluded that Arriba’s use of thumbnails was transformative because Arriba’s use of the images servefd] a different function than Kelly’s use – improving access to information on the [IJnternet versus artistic expression.' ... Although an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information," Ikuta wrote.

"[A] search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool. … The fact that Google incorporates the entire Perfect 10 image into the search engine results does not diminish the transformative nature of Google’s use. As the district court correctly noted, … even making an exact copy of a work may be transformative so long as the copy serves a different function than the original work.”

Ikuta concluded that “the significantly transformative nature of Google’s search engine, particularly in light of its public benefit, outweighs Google’s superseding and commercial uses of the thumbnails in this case. … Weighing this significant transformative use against the unproven use of Google’s thumbnails for cell phone downloads, and considering the other fair use factors, all in light of the purpose of copyright, we conclude that Google’s use of Perfect 10′s thumbnails is a fair use.” Based in part upon this determination, Ikuta lifted the injunction against Google.

Ongoing Impact of the Perfect 10 Case

Certainly, the effect of the appeals court’s decision in Perfect 10 v. Google is positive to the extent that it deals with the narrow issue of finding Google liable for direct copyright infringement due to its indexing of Perfect 10′s images. According to some commentators, however, it may be difficult to find broader impact in the decision for several reasons.

First, Ikuta’s opinion dismisses a direct liability claim against Google for copyright infringement but leaves open the possibility that Google and Amazon.com may be liable for indirect, or secondary, copyright infringement. Ikuta returned the case to the district (trial) court to resolve the secondary liability issues.

Second, the ruling is based upon a specific set of facts, which means its impact beyond the parties in this case may be minimal. “I don’t think the opinion will have a lot of immediate impact as precedent because it can be read as limited to very specific facts,” wrote Eric Goldman, law professor at Marquette University, on his Technology and Law Marketing Blog shortly after the appeals court posted the opinion to its Web site.

Third, one of the outstanding issues that Ikuta did not address in her opinion concerns Google’s potential liability under the Digital Millennium Copyright Act (DMCA). In response to Perfect 10′s claims, Google responded that it should not be held liable for copyright infringement because Section 512 of the DMCA shields Internet service providers from legal exposure when it runs or manages digital network communications or caches information on its network.

This provision is what many commentators call the DMCAs “safe harbor” provisions. Ikuta noted this issue is related to Perfect 10′s allegations that Google was indirectly liable for copyright infringement. Since Ikuta concluded the district court failed to properly address secondary liability at trial, she ordered the district court to reconsider the “safe harbor” issue as well. Given the nature of this case – alleged online copyright infringement based upon unauthorized linking to, and framing of, protected images – the unresolved “safe harbor” issue that the district court will reconsider is potentially as important as the fair use issue that Ikuta resolved. Of course, many information professionals will wonder about the effect the Perfect 10 decision will have on Google’s ongoing litigation with book publishers who have sued the search giant over its implementation of its Google Book Search project. Google, of course, is claiming its activities fall squarely within the realm of fair use, while the publishers’ industry representatives claim Google Book Search is a massive, ongoing copyright infringement. The Perfect 10 decision certainly helps Google’s argument, particularly since the opinion suggests that asking for and receiving permission to access copyrighted work is not necessarily a prerequisite to fair use. (Google’s failure to seek permission for Google Book Search seems to be one of the central tenets of the publishers’ legal complaint.)

On the other hand, the Perfect 10 decision and its predecessor, Kelly v. Arriba, have been adjudicated in a different jurisdiction (federal trial and appeals courts in California) than the forum in which the Google Book Search cases are being litigated (a federal trial court in New York). The difference is significant since different courts can bring vastly different results.

William Patry, senior copyright counsel at Google and author of The Patry Copyright Blog, noted last summer that the legal standard for obtaining an injunction, which the publishers have requested in the Google Book Search litigation, is vastly different between the 9th Circuit (which includes the California federal courts) and the 2nd Circuit (which includes the New York federal courts). Further, the New York federal courts that have jurisdiction over the Google Book Search litigation are not required to follow the precedent in the Perfect 10 case because the case is from an entirely different circuit.

In the end, the Perfect 10 decision is a good case to the extent that it clarifies online copyright liability for fair use, linking, and search engine indexing. We must wait, however, to determine whether the case will have any broader impact-including any impact on the Google Book Search case-beyond its narrow facts.

Perfect 10 sued Google for copyright infringement in November 2004. …

Of course, many information professionals will wonder about the effect the Perfect 10 decision will have on Google’s ongoing litigation with book publishers. …

K. Matthew Dames is the editor of Copycense (www.copycense.com). Send your comments about this column to itlet ters@infotoday. com.

Copyright Information Today, Inc. Jul/Aug 2007

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