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Copyright Law Commentary
In Amazon.com Case, Court Classifies Framed Display of Images in Web Search Engines as Fair Use
Perfect 10, Inc. v. Amazon.com, Inc.
Posted: 07/26/2007
By: Thomas F. Zuber, Esq.
Introduction
In this appeal brought by both the copyright owner Perfect 10, Inc. and defendants which included Internet search engine and Internet retailer (Google, Inc. and Amazon.com, Inc.), the Court of Appeals ruled that the Internet search engine operator's act of framing in-line linked full-size images of copyrighted photographs on its website did not constitute "display" of copies of such photographs, within the meaning of Copyright Act, as would amount to copyright infringement. Although the storage and transmission of a thumbnail image version of a full-size copyrighted image is considered direct infringement of the exclusive right to display a work, the use falls under the fair use exception.
Detailed Commentary
BACKGROUND
Defendant Google, Inc. operates a search engine. The search engine functions through a webpage, which, like all webpages, can only be accessed by a web browser (e.g., Internet Explorer, Netscape, Mozilla). The web browser is not affiliated with Google.
Google’s search engine indexes pages found on the Internet and stores that information in a database. When users query a search term, Google scans its database for content that is relevant to the query and returns a list of results sorted by relevancy. In addition to indexing websites, Google also indexes pictures. Google furthermore enables users to perform a “Google Image Search.” Like the website search, the user’s query is compared to an index of websites; however, instead of returning a matching website, the image search returns the associated image with that website. The images are displayed on a webpage as a gallery of thumbnails, which are smaller sized and lower-resolution versions of the original images. Google does not index the original images, but it does store the thumbnail images on its servers.
Upon clicking the image, Google automatically sends instructions to the user’s web browser to open a new page. This new page has two areas. In the lower area, Google directs the browser (by a process known as in-line linking) to a third party website that contains the original, full-sized image. The third party website is incorporated into the bottom part of the page by a process known as “framing.” This process is called “framing” since the image, which is only located on a third-party computer and never stored by Google, is simply gathered and incorporated by instructions from Google to the web browser. The original image is then downloaded by the web browser to the user’s computer. Google does not store the original image, nor does it communicate the images to the user; it only provides instructions to access the third-party website and image. The upper area contains the thumbnail, now appearing without the surrounding gallery, along with name of the original image. The thumbnail is stored on Google’s servers.
Google also caches webpages. Caching refers to the process of storing information about a website for quick access. Google copies the text, but not the images of a website in order to make its search more efficient. When website publishers change the content of their website, Google’s index does not respond immediately. This means that if a website publisher removes a link to a image but does not remove or restrict access to the image itself, Google’s image search may still retrieve that image and frame it.
Also relevant to this case is Google’s AdSense. Website owners may register for AdSense with Google. Owners then incorporate code received from Google into their website. The code displays an advertisement on the webpage that is relevant to the page’s content. Google selects the advertisement by means of an algorithm. Advertisers agree in advance to to share the revenues that result from such advertising. Google also generated revenue through an agreement with Amazon by providing search results to Amazon for their customers. Amazon would route queries to Google who would transmit the search results back to Amazon.
Plaintiff Perfect 10, Inc. sells and markets copyrighted photographs of nude models. Among several other enterprises, Perfect 10 operates a website where members who pay a monthly fee are given a password that is used to access Perfect 10’s digital pictures. Some of Perfect 10’s pictures were republished without permission on other websites. Google’s image search framed and contained links to unauthorized republications of Perfect 10’s images which were stored on third-party computers, but not to Perfect 10’s password-protected content which were stored on Perfect 10’s computers.
From May 2001 to 2005, Perfect 10 sent notices to Google that its thumbnails and links infringed Perfect 10’s copyright. On November 19, 2004, Perfect 10 filed suit against Google and later against Amazon for copyright infringement, requesting a preliminary injunction be granted preventing Google and Amazon from copying, reproducing, distributing, publicly displaying, adapting or otherwise infringing, or contributing to the infringement of its photographs, linking to websites that provide full-size infringing images, and infringing Perfect 10’s passwords. The district court granted the preliminary injunction against Google with respect to the thumbnail images but denied the injunction as far as linking to infringing websites and also denied the preliminary injunction against Amazon. Google and Perfect 10 appealed. Remanding to the district court, the 9th circuit affirmed in part and reversed in part.
The Court of Appeals began by noting that the burden of proof in requesting a preliminary injunction falls on the plaintiff. The plaintiff must demonstrate either (1) the probability of success on the merits and a possibility of irreparable harm or (2) that serious concerns are raised and the balance of hardships falls in favor of the plaintiff as well as overcoming the defendant’s affirmative defenses with proper evidence. The District Court’s conclusions of law were reviewed de novo, and the preliminary injunction was reviewed for abuse of discretion. A&M Records, Inc. v. Napster, Inc., 239 F.3d at 1013 (internal quotation and citation omitted).
NO DIRECT INFRINGEMENT BY GOOGLE
Perfect 10’s first claim was for direct infringement of the exclusive right to display and distribute copyrighted material. See 17 U.S.C. Section 106 (granting owners the exclusive right to reproduce, distribute, and publicly display copyrighted works). Accordingly, to succeed on claim of direct infringement, noted the court, the plaintiff must show ownership of the infringed material, that the infringer violated an exclusive right, and overcome the infringer’s affirmative defenses such as fair use. Since ownership was not contested, the first issue was whether Google violated one of Perfect 10’s exclusive copyrights.
Google Did Not Violate an Exclusive Copyright
Google’s Thumbnails Do Not Constitute Displays:
The first question the court addressed was how to define a “display” on the Internet. According to the Copyright Act, “display” means “to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process...” 17 U.S.C. Section 101. A “copy” is defined as a material object...in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated...with the aid of a machine or device.” Id. Lastly, “fixed” means “its embodiment in a copy...is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” Id.
Endorsing the “server test,” the Appellate Court stated that a digital image is fixed and becomes a copy once it is stored in a computer’s server or hard disk. The copy is displayed when the image fills the computer screen (with the copy stored on the computer’s memory) or when the stored image is communicated to another person’s computer. Id. (citing 17 U.S.C. Section 101). Affirming the District Court’s ruling, the court held that there was no question that Google had displayed copies without permission. A copy was fixed once Google stored thumbnail versions of Perfect 10’s images on Google computers, and the copy was displayed once Google communicated copies of those thumbnails to it’s users.
The court explained that Google cannot be said to display full-sized copies of Perfect 10’s images when framed images appear on a Google user’s computer screen. This is because Google’s computers did not store the images but rather provided coded instructions that directed the user’s web browser to the full-sized copy. Because no copy was stored by Google, the image was never fixed; without fixture, there is no copy, and without a copy, there cannot be a display under 17 U.S.C. Section 101. Said the court: “Google may facilitate the user’s access to infringing images. However, such assistance raises only contributory liability issues, and does not constitute direct infringement of the copyright owner’s display rights.” 2007 WL 1428632 at 5773 (citation omitted). The court conceived a similar analysis with regard to Google’s cache. Since the cache only stores the text of the website which may contain links to full-size infringing images, but not the images themselves. Once again, without storing images there is no fixture, no copy, and therefore no display.
Google Did Not Distribute Copies:
With regard to the exclusive right to distribute copies, the court noted that section 106(3) of the Copyright Act provides owners with the exclusive right “to distribute copies...to the public by sale or other transfer of ownership, or by rental, lease, or lending” where “copies” means “material objects...in which a work is fixed.” 17 U.S.C. Section 106(3); 17 U.S.C. Section 101. Relying on N.Y. Times Co. v. Tasini, 533 U.S. 483, 498 (2001), the Appellate Court stated that copies must be distributed electronically. Since Google did not also distribute copies, but instead merely provided coded instructions for user’s web browsers to retrieve the full-size images, Google could not be said to have distributed copies. Instead, said the court, “(i)t is the website publisher’s computer that distributes copies of the images by transmitting the photographic image electronically to the user’s computer.” 2007 WL 1428632 at 5774.
In exonerating Google, the court rejected Perfect 10’s argument that Google should be held liable under the “deemed distribution” rule. Perfect 10 relied on Hotaling v. Church of Jesus Christ of Latter-Day Saints and A&M Records, Inc. v. Napster, Inc. for the proposition that simply making images “available” infringes on the exclusive right to distribute. Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997); A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). In Hotaling, the court held that by making a collection of works available for public display, that owner may be deemed to have distributed copies of the works. Hotaling, 118 F.3d at 203. In Napster, the copyright owner’s distribution rights were infringed by Napster users when users made their music collection available to other Napster users for downloading. Napster, 239 F.3d at 1011-14. The court held that both cases do not apply since unlike the parties in Hotaling and Napster, Google did not own or communicate Perfect 10’s full-size images, but merely indexed them.
Google’s Use Constituted Fair Use
In order to win the preliminary injunction for infringing on Perfect 10’s exclusive right to display (thumbnails), Perfect 10 is required to overcome Google’s affirmative defenses. The first defense asserted by Google was fair use. This defense permits a party to use copyrighted material without consent under specific circumstances. In making its determination, a court is guided by 4 statutory factors:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
17 U.S.C. Section 107.
Purpose and character of the use:
The first factor requires that a court consider “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C. Section 107(1). The “central purpose of this inquiry,” said the court, “is to determine whether and to what extent the new work is ‘transformative.’” 2007 WL 1428632 at 5778 (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 at 579 (1994)). In order to qualify as transformative, the work must add something new altering the former work with new expression, meaning, or message; in contrast, if the new work supercedes the original work, the fair use defense is hampered. Id. Since the thumbnails were nearly direct copies of the original work, the main issue the court considered was the function of Google’s thumbnails.
The court found that Google’s thumbnails were highly transformative. While the main function of Perfect 10’s images was artistic or entertainment, Google’s search was aimed at improving access to information on the Internet. A search engine provides a social benefit, just as a parody (the quintessential transformative work) does.
Perfect 10 argued that Google’s thumbnails superseded it’s reduced-sized images available for cell-phone backgrounds. Furthermore, that the commercial benefit Google received from its AdSense program should weigh against a finding that the work is transformative. The Appellate Court agreed, but disagreeing with the District Court, state that the superseding nature and commercial benefit were thus far insignificant and did not outweigh the transformative qualities of Google’s use or the public benefit provided by Google.
The nature of the copyrighted work:
In evaluating this factor, a court may consider whether the original work was creative in nature and thus closer to the core of intended copyright protection, weighing against a finding of fair use. Kelly v. Arriba Soft Corp., 336 F.3d 811 at 816 (9th Cir. 2003). Protection against fair use is enhanced when the work has yet to be published, in order to preserve an owners right to decide how and when to first publish his or her work. 2007 WL 1428632 at 5783. Here the Appellate Court noted that although the photos were creative in nature, Perfect 10 had already published its images on the Internet, thereby exhausting its right of first publication. There being no need for enhanced protection, the court found that this factor weighed only slightly in favor of Perfect 10.
The amount and substantiality of the portion used:
Under this factor, the court considered “whether the amount and substantiality of the portion used in relation to the copyrighted work as a whole . . . are reasonable in relation to the purpose of the copying.” 2007 WL 1428632 5784 (quoting Campbell, 510 U.S. At 586). Analogizing to Kelly, the Appellate Court deemed reasonable the use of the entire photographic image for the purpose of searching. The entire image is needed to help users recognize the image and decide whether to continue searching. The court concluded that this factor favored neither Perfect 10 nor Google.
Effect of use on the market:
The fourth factor requires that a court consider “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. Section 107(4). Again analogizing to Kelly, the court stated that the thumbnails did not harm Perfect 10’s ability to sell or license full-sized images. Perfect 10 argued that the commercial nature of Google’s use should establish a presumption that Perfect 10’s market would be affected. However, the court rejected this argument, stating that the presumption does not arise when the work, like this one, is transformative.
The court also rejected the argument that Google’s thumbnails encroached on Perfect 10’s market for reduced-sized images for cell phones. Examining the record, the court failed to find evidence that Google users have downloaded Google’s thumbnail images for cell phone use. Therefore, the potential harm to Perfect 10’s stake was hypothetical. The court concluded that this factor favored neither party.
In conclusion, the Appellate Court held that Google’s significant transformative use weighed 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.” Thus, the court found that Google’s use was fair. Since Perfect 10 was unlikely to overcome Google’s fair use defense the court vacated the preliminary injunction regarding Google’s use of thumbnail images and vacated and reversed the lower court’s injunction against Google’s use of thumbnails.
Contributory and Vicarious Liability
The court next considered whether Google was secondarily or vicariously liable for infringement with respect to Google’s linking to infringing full-size images. “One infringes contributorily by intentionally inducing or encouraging direct infringement, and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” 2007 WL 1428632 at 5785 (quoting Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 at 930 (2005)). The uncontested direct infringement in this case was by third party websites displaying Perfect 10’s pictures.
COURT REMANDED TO DISTRICT COURT TO DETERMINE CONTRIBUTORY LIABILITY OF GOOGLE
With regard to contributory infringement, the burden on Perfect 10 was to show that Google intentionally induced or encouraged direct infringement by either: “actively encouraging (or inducing) infringement through specific acts” or by “distributing a product distributees use to infringe copyrights, if the product is not capable of ‘substantial’ or ‘commercially significant’ non-infringing uses.” 545 U.S. at 942 (Ginsburg, J., concurring). Under the second type of contributory infringement, Google defended by arguing successfully that its products were capable of substantial non-infringing and therefore could not be held liable for contributory infringement. Under the first type, the court stated that “a computer system operator can be held contributorily liable if it ‘has actual knowledge that specific infringing material is available using its system,’” and “can ‘take simple measures to prevent further damage’ to copyrighted works yet continues to provide access to infringing works.” 5793 (internal citations omitted). Stating that the record was unclear, the court remanded the claim to the District Court for further consideration.
NO VICARIOUS INFRINGEMENT BY GOOGLE
With regard to vicarious infringement, the court used the test in Grokster which states that one “infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” Grokster, 545 U.S. at 930. Accordingly, said that the court, Perfect 10 must establish that 1) Google has control over the direct infringer and the legal right to stop the infringement, and 2) that Google derives direct financial benefit from the direct infringement. at 2007 WL 1428632 at 5793. Perfect 10 failed to convince the court of both prongs. First, Perfect 10 failed to demonstrate a likelihood of showing that Google had a legal right (or practical ability) to supervene or limit the direct infringement. There were no contracts in place that gave Google the right to restrict the distribution of Perfect 10’s images. Therefore, Google could not be held vicariously liable for infringement.
COURT REMANDED TO DISTRICT COURT TO DETERMINE CONTRIBUTORY LIABILITY OF AMAZON
Finally, the court addressed the request for preliminary injunction against Amazon that was denied by the District Court. In affirming the lower court’s ruling, the court held that like Google, Amazon does not communicate images, but simply sends coded instruction to the user’s web browser directs users to Google’s computers (for thumbnails) or third party computers (for full-size images). Therefore, Amazon could not be held liable for direct infringement. Because Amazon lacked the right and ability (according to the findings of the District Court) to to supervise the infringing activity of Google or third parties and because Amazon lacked financial benefit from infringement, the Appellate Court agreed that vicarious liability could not be attached. The court remanded to the lower court to determine whether Amazon was contributorily liable due to actual knowledge of specific infringement.
The author, Thomas F. Zuber, Esq., is a partner of Zuber & Taillieu LLP, specializing in transactions relating to patents, trademarks and copyrights.
Law Summary
Read the related Law summary: Perfect 10, Inc. v. Amazon.com, Inc.
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