United States: Copyright’s Fair Use Doctrine: The Latest Chapter

While recognizing the enormous public benefit that search engines like Google provide, a California federal court nevertheless granted a plaintiff’s motion for a preliminary injunction against the Internet search giant from creating and displaying thumbnail versions of the plaintiff’s copyrighted photos in Google’s image search results. The plaintiff, Perfect 10, Inc., did not enjoy a complete victory, however, because the Court denied Perfect 10’s motion to enjoin Google from linking to third-party websites that host and serve infringing full-size images, finding that Google cannot be held liable where the infringing work is not displayed from its own servers.¹

Perfect 10, an adult entertainment publisher, sued Google and Amazon.com, Inc. for copyright infringement. Perfect 10 later 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 also stop users from linking directly to third-party sites that host and serve infringing full-size images.²

The initial matter before the 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 the server test, 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. However, the Court basically provided Google with a "safe harbor" with respect to the full-size images. Again applying the server test, the Court determined that Google would likely not be found liable for infringement of the full-size images that are displayed not from Google’s own servers, but via direct linking to third-party websites, i.e., third-party servers. Google merely provides the link, not the content, and as such, Perfect 10’s claim of direct infringement with respect to these actions would likely fail.

Perfect 10 posited a second argument that Google is also likely to be held secondarily liable under the doctrines of contributory and vicarious infringement. The Court undertook a thorough analysis and determined that it was unlikely Google would be found either contributorily or vicariously liable for any use of Perfect 10’s copyrighted images. The Court reasoned that infringing websites, such as those to which Google provides a link, existed long before Google Search Image was developed and would continue to exist were it shut down. Therefore, the Court held that Perfect 10 failed to meet its burden of establishing either that Google would be found to have materially contributed to the direct infringement taking place on infringing third-party sites, or that Google exercised any control over the infringing sites.

Thus, the only remaining infringement claims were related to those thumb-nail images that were directly displayed from Google’s servers. And as to those, Google unsuccessfully relied on the "fair use" defense to justify its conduct.

The fair use doctrine³ is a defense to a copyright infringement claim that allows the reproduction of copyrighted materials for certain purposes without obtaining permission from, or paying a fee or royalty to, the rights holder. Although the idea of fair use first arose in the context of written work, the doctrine has been applied to the redistribution of music, photos and videos over the Internet and other contemporary technologies. The application of fair use is not absolute; it is contextual and changes based on application. In fact, it has been said that fair use is so flexible as to defy definition.⁴ Strictly speaking, the Copyright Act does not define fair use. Rather, it lists a set of factors to be applied against the objectives of copyright law for the purpose of determining whether the use made of a copyrighted work in any particular case is "fair":

1. Purpose and Character of Use: A fair use defense will be rejected if the use of the copyrighted work is for commercial purposes without a transformation of the work. A transformative use adds a further purpose or different character to the work, and thus is often considered to benefit the public;

2. Nature of Copyrighted Work: More creative works typically deserve more copyright protection than fact-based works. However, the fact that a work, even if more creative, has already been published weighs in favor of finding fair use;

3. Amount of and Substantiality of Portion Used: Copying an entire work generally, but not always, goes against a finding of fair use; and

4. Effect on the Potential Market: The extent of market harm caused by the infringing conduct, and whether the conduct would result in a substantially adverse impact on the potential market for the original work, results in a rejection of the fair use defense.

The Court found that factors one, two and four weighed in favor of Perfect 10. First, Google’s display of thumbnails is clearly commercial. Google derives significant commercial benefit in the form of increased user traffic and advertising revenue. However, Google’s use is simultaneously transformative in that it serves the public interest by enhancing Internet searches and the dissemination of other creative works. Thus, the Court found that factor one slightly favors Perfect 10.

Because Perfect 10’s photos are creative, they are subject to greater copyright protection. The images, however, are always already published both in print and on the Internet before they appear in a Google image search, making the works more likely to qualify as fair use. The Court found that, on balance, factor two weighs slightly in Perfect 10’s favor.

The Court found factor three neutral, favoring neither party. Although Google uses an entire image in its application, its use is no greater than necessary to achieve the objective of providing effective image search capabilities.

Factor four appears to have been the determining factor in the Court’s deciding that Google’s use of thumbnails is not protected by the fair use defense. Perfect 10 demonstrated to the Court that it has a licensing agreement with a third party, Fonestarz Media Limited, for the world-wide sale and distribution of its reduced-size copyrighted images for download and use on mobile phones. Perfect 10 successfully argued that Google’s thumbnails are essentially the same size and same quality as the reduced-size images that Perfect 10 licenses to Fonestarz. Hence, users were choosing to download free images rather than pay for the same work. Thus, Google could not claim fair use where is was creating and displaying thumbnails that were identical to the works that Perfect 10 was selling for the mobile phone download market.

It is this commercial use of thumbnails that sets this case apart from prior determinations. Until now, thumbnails were used only to enhance access to information on the Internet. Such images had no significant commercial use, nor were they likely to adversely impact a copyright owner’s potential market. Thus, such images typically were found to be protected by the fair use doctrine. By creating a commercial market for thumbnails, fair use may no longer be a viable source of protection for companies providing image search services.

Even though this decision is preliminary, it has far reaching implications for other companies engaged in the business of facilitating and improving access to information on the Internet. Given the flexibility of the fair use doctrine and the pace that evolving technologies are reaching the marketplace, there may be other applications that have to date qualified as fair use, but that now may no longer benefit from such protection. Companies may find new commercial applications for their copyrighted materials, and other courts may see fit to apply this analysis to such applications, thus potentially narrowing the fair use doctrine as it could be applied to the reproduction of copyrighted works over the Internet and other technologies.

Certainly, the Court’s decision seems to be directed at those instances where the copyrighted work, in its thumbnail sized incarnation, is offered for sale for download to a mobile phone or other device. But in so holding, the Court has rejected the fair use defense for those works that, while offered for sale, will never be purchased for download. Thus, where use of a thumbnail was protected under fair use principles one day, such use would seem to have lost that status the next with no apparent gain to the copyright holder, and with a net loss to the researching public. This seems a paradoxical result. Moreover, there is the practical issue of how a search engine, before displaying a image, will know whether the thumbnail version of that work is available for purchase from the copyright holder. It appears, given the preliminary nature of the decision, and upon further appeal or review of a full evidentiary record at the conclusion of the litigation, that a reevaluation of the fair use defense might be in order.