Perfect 10, Inc. v. Amazon.com, Inc.

Facts

Perfect 10, Inc. (Plaintiff) markets and sells copyrighted images of nude models, and operates a subscription website on the Internet accessible to subscribers who pay a monthly fee. Members may view images of Perfect 10 (Plaintiff) in a “member’s only” area of the site by using a personal password required to log-in. Plaintiff has also licensed copyrighted images in a reduced size for download and use on cell phones. Google, Inc. (Defendant) operates a search engine, a software program that automatically accesses thousands of websites (collections of web pages) on the Internet and indexes them within a database stored on Defendant’s computers. When a Google (Defendant) user accesses Defendant’s website and types in a search query, Defendant’s software searches its database for websites that respond to the particular search query. Defendant then sends relevant information from its index of websites to the user’s computer. Defendant’s search engines can provide results in the form of text, images, or videos. The Google (Defendant) search engine that provides responses in the form of images is called “Google Image Search.” Google Image Search identifies text in its database responsive to the query and then communicates to users the images associated with the relevant text. Defendant’s software cannot identify and index the images themselves. Google Image Search provides search results as a web page of small images called “thumbails,” which are stored in Google’s (Defendant) servers. The thumbnail images are reduced, lower-resolution versions of full-sized images stored on third-party computers. When a user clicks on a thumbnail image, Defendant’s software directs the user’s browser to create on the user’s computer screen a small rectangular box that contains the Google (Defendant) thumbnail and a larger box that contains the full-size image, which the user’s computer has been instructed to access from the third-party site that houses that image. Defendant does not store the images that fill this larger box and does not communicate the images to the user. The two boxes together appear to be coming from the same source, since they are in the same frame, but they actually come from two sources—Google (Defendant) and the third-party website. The process the web pages use to direct a user’s browser to incorporate content from different computers into a single window is referred to as “in-line linking.” The term “framing” refers to the process by which information from one computer appears to frame and annotate the in-line linked content from another computer. Defendant also stores web page content in its cache, which ultimately means that Defendant’s cache copy can provide a user’s browser with valid directions to an infringing image even though the updated web page no longer includes that infringing image. Google (Defendant) also generates revenue through a business program called “AdSense.” Under this program, a website owner can register with Google (Defendant) to become an AdSense “partner.” The owner then places HTML instructions on its web pages that signal Google’s (Defendant) server to place advertising on the web pages that is relevant to the web pages’ content Google’s (Defendant) computer program picks the advertising automatically by using an algorithm, and the AdSense participants share the revenues that result from such advertising with D. Some website publishers pirated Plaintiff’s images and Defendant’s search engine automatically indexed the web pages containing the pirated images and provided thumbnail versions of the images in response to user inquiries. Perfect 10 (Plaintiff) repeatedly informed Google (Defendant) that its thumbnail images and in-line linking to the full-size images infringed Plaintiff’s copyright and when Defendant continued its search engine practices, Plaintiff filed a copyright infringement action against Defendant, and sought a preliminary injunction to prevent Google (Defendant) from infringing Plaintiff’s copyright in its images and linking to websites that provide full-size infringing versions of Plaintiff’s photographs. The district court granted the preliminary injunction, finding harm to the derivative market for Plaintiff’s reduced-size images. The court also ruled that Defendant’s search engine likely infringed Plaintiff’s display right with regards to the infringing thumbnails, but that Plaintiff was not likely to succeed on its claim that Google (Defendant) violated Perfect 10’s (Plaintiff) display or distribution right regarding its full-size infringing images. The district court used a “server test” in reaching these conclusions, reasoning that a computer owner that stores an image as electronic information and serves that electronic information directly to the user is displaying the electronic information in violation of a copyright holder’s exclusive display right. Also, however, the court reasoned that the owner of a computer that does not store and serve the electronic information to a user is not displaying that information, even if such owner in-line links to or frames the electronic information. The district court also reasoned that distribution requires an “actual dissemination” of a copy, and since Google (Defendant) did not communicate the full0size images to the ser’s computer, Defendant did not distribute these images. Defendant raised the affirmative defense that its use was a fair use, but the district court rejected this defense. The court of appeals granted review.