Ninth Circuit Reverses Ruling In Perfect 10 v. Google Case

Bingham last discussed the Perfect 10 v. Google case in an Alert issued in March 2006. We noted that the district court's decision1 denying Google's fair use defense yielded an ironic result: namely, works that were previously available to the public suddenly became unavailable even though Perfect 10's sale of some of those works was hypothetical.

To Review the March 2006 Alert, please click here.

Unsurprisingly, Google appealed the district court decision on several grounds, including the fair use issue. The Ninth Circuit reversed and found that Google will likely be able to sustain its fair use defense because Perfect 10 relied on hypothetical, rather than actual, adverse effects on its market.2 The case is still in its initial stages, and facts might be developed that could yield a different result under the Ninth Circuit's decision. Moreover, the Ninth Circuit also determined that the district court applied the wrong test in its analysis of contributory infringement and remanded that claim for further review.

Background

One of many functions performed by Google's search engine is the delivery of thumb-nail sized images rather than text in response to a query. Perfect 10, an adult entertainment publisher, sued Google and Amazon.com, Inc.3 for copyright infringement, alleging that Google retrieved Perfect 10's copyrighted images and stored and/or displayed them on Google's server. Perfect 10 objected to Google's practice because Perfect 10 was exploiting its copyrighted images by selling them for download to mobile phones, where the images appeared in a thumbnail-sized format identical or nearly identical to the version appearing after a search on the Google service. Perfect 10 filed a motion seeking injunctive relief, asking the court to order Google and Amazon to stop displaying thumbnail images of Perfect 10 models in its image search results and to stop users from linking directly to third-party sites that host and serve infringing full-size images.

The District Court's Decision

The initial matter before the district court was whether Google's use of Perfect 10's images was an infringing use. The court began by applying what it referred to as the "server test." Under this analysis, a search engine such as Google is capable of copyright infringement only if it actually stores the copyrighted images on its own servers. The court determined that Google creates and stores thumbnails of Perfect 10's copyrighted images on its servers, thus making it liable for copyright infringement. The court applied the server test to the full-size images and determined that Google would likely not be found liable for...