Advanced Copyright Issues on the Internet - Fenwick & West LLP

to a source of information. 314 In addition, “a search engine provides social benefit byincorporating an original work into a new work, namely, an electronic reference tool.” 315In a significant ruling, the Ninth Circuit disagreed, on two grounds, with the districtcourt’s conclusion that Google’s use of thumbnail images was less transformative than the videosearch engine at issue in Kelly v. Arriba Soft because Google’s use of thumbnails supersededPerfect 10’s right to sell its reduced-size images for use on cell phones. First, the Ninth Circuitnoted that the alleged superseding use was not significant at the present time, because the districtcourt had not found that any downloads of Perfect 10’s photos for mobile phone use had actuallytaken place. 316 Second, the court concluded “that the significantly transformative nature ofGoogle’s search engine, particularly in light of its public benefit, outweighs Google’ssuperseding and commercial uses of the thumbnails in this case.” 317 Accordingly, the first fairuse factor weighed in favor of Google.The Ninth Circuit found that the district court had correctly analyzed the second and thirdfactors. 318 With respect to the fourth factor, Perfect 10 challenged the district court’s finding ofno harm to the market for the full sized images on the ground that likelihood of market harm maybe presumed if the intended use of an image is for commercial gain. The court noted, however,that this presumption does not arise when a work is transformative because market substitution isless certain. Because Google’s use of thumbnails for search engine purposes was highlytransformative and market harm could therefore not be presumed, and because Perfect 10 had notintroduced evidence that Google’s thumbnails would harm its existing or potential market forfull size images, the Ninth Circuit rejected Perfect 10’s argument. 319With respect to harm to Perfect 10’s alleged market for reduced size images, the NinthCircuit noted that the district court did not make a finding that Google users had actuallydownloaded thumbnail images for cell phone use, so any potential harm to that alleged marketremained hypothetical. Accordingly, the court concluded that the fourth factor favored neitherparty. 320 Balancing the four factors, and particularly weighing Google’s highly transformativeuse and its public benefit against the unproven use of thumbnails for cell phone downloads, the314315316317318319320508 F.3d at 1165.Id. The Ninth Circuit rejected Perfect 10’s argument that providing access to infringing web sites cannot bedeemed transformative and is inherently not fair use. The court noted that Google was operating acomprehensive search engine that only incidentally indexed infringing web sites. “This incidental impact doesnot amount to an abuse of the good faith and fair dealing underpinnings of the fair use doctrine. Accordingly,we conclude that Google’s inclusion of thumbnail images derived from infringing websites in its Internet-widesearch engine activities does not preclude Google from raising a fair use defense.” Id. at 1164 n.8.Id. at 1166.Id.Id. at 1167-68Id. at 1168.Id.- 82 -