Perfect 10 is in the business of licensing its copyrighted images of naked women to end users. Preventing end users from circumventing licenses by downloading infringing reproductions of those nude images is therefor critical to Perfect 10′s business.
When Perfect 10 started licensing small versions of its images for cell phones, it became concerned that Google’s free thumbnails of the nude images would supplant that entire market. Perfect 10 was also concerned with Google’s in-line linking and other “arms length” uses of Perfect 10′s full size images. On appeal of both parties from the district court ruling, the 9th Circuit affirmed several lower court rulings with regard to Google’s display of Perfect 10′s copyrighted nude images.
In Perfect 10 v. Amazon/Google, the 9th Circuit affirmed the lower courts ruling that Perfect 10 had indeed made a prima facia case that Google’s display of the thumbnails was an infringement. The 9th Circuit, however, reversed the lower court’s finding that Google would not be able to prove the infringement was a fair use under the Copyright Act.
The high court found rigorous application of copyright principles in this instance would stifle the very creativity the Copyright Act was designed to foster. The 9th Circuit relied heavily on the “transformative” nature of Google’s use, finding rather than superseding Perfect 10′s use, Google’s thumbnails use transformed the original copyrighted work into a new creation. The high court held 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.”
With regard to full size images, the 9th Circuit appeared to affirm the district court’s “server test” of infringement. The Server Test looks at whether the owner of the computer is actually storing and serving the electronic information to the user. Under the test, in-line linking or framing does not constitute a “display” as that term is used in the Copyright Act. While in-line linking and framing may confuse users as to which computer is actually “displaying” the images, confusion is a factor in under trademark law, not copyright law.
The 9th Circuit also ruled the lower court erred in its resolution of the issue of secondary (contributory and vicarious) liability because the lower court failed to consider whether Google knew of the third party infringements and failed to take reasonable steps to prevent access thereto.