Christine Pepe is an associate in the law firm of McDermott Will and Emery LLP, and a member of the Intellectual Property, Media and Technology (IPMT) Department. She is based in the firm’s New York office. In holding that Perfect 10 was unlikely to succeed in overcoming GoogleÃ¢â?¬â?¢s fair use defense, the U.S. Court of Appeals for the Ninth Circuit reversed the district courtÃ¢â?¬â?¢s ruling that GoogleÃ¢â?¬â?¢s thumbnail versions of Perfect 10Ã¢â?¬â?¢s images constituted direct infringement and vacated the preliminary injunction. Perfect 10, Inc. v. Amazon.com (No. 06-55405) and Perfect 10, Inc. v. Google Inc. (Case Nos. 06-55406, -55425) (9th Cir., May 16, 2007) (M.D. Smith, J.). With regard to the in-line linking to images, the Court remanded for further fact finding on the issues of contributory infringement by both Google and Amazon and whether they are entitled to safe harbor immunity under the Digital Millennium Copyright Act (DMCA). The plaintiff, Perfect 10, markets and sells copyrighted images of non-surgically enhanced nude models and operates a related subscription website on the Internet for Ã¢â?¬Å?member onlyÃ¢â?¬Â? viewing of certain images. Perfect 10 has also licensed a third party to sell and distribute Perfect 10Ã¢â?¬â?¢s reduced-size copyrighted images for download to cell phones. However, certain website publishers republish Perfect 10Ã¢â?¬â?¢s images on the Internet without authorization. Once this occurs, GoogleÃ¢â?¬â?¢s search engine may automatically index the webpage containing these images and provide thumbnail versions of images in response to user inquiries. When a user clicks on the thumbnail version of an image returned by a Google search, the userÃ¢â?¬â?¢s browser accesses the third-party webpage and Ã¢â?¬Å?in-line linksÃ¢â?¬Â? to the full-sized infringing image stored on the website publisherÃ¢â?¬â?¢s computer. This image then appears on the lower portion of the window on the userÃ¢â?¬â?¢s computer screen framed by information from GoogleÃ¢â?¬â?¢s webpage. In separate actions against Google and Amazon (now consolidated), Perfect 10 sought a preliminary injunction to prevent Google and Amazon from infringing or otherwise contributing to the infringement of Perfect 10Ã¢â?¬â?¢s photographs and from linking to websites that provide infringing versions of the photographs. Because it merely in-line linked to the thumbnails on GoogleÃ¢â?¬â?¢s server and to full-size images on third-party websites, the district court refused to enjoin Amazon. However, the district court did enjoin GoogleÃ¢â?¬â?¢s use of the thumbnails of Perfect 10Ã¢â?¬â?¢s images, noting 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 holderÃ¢â?¬â?¢s exclusive display right. Applying this definition, the district court held that Perfect 10 was likely to succeed in its claim that GoogleÃ¢â?¬â?¢s display of the thumbnails constituted direct infringement. However, the district court held that Perfect 10 was not likely to succeed in its claim that GoogleÃ¢â?¬â?¢s Ã¢â?¬Å?in-line linkingÃ¢â?¬Â? to full-size images constituted direct infringement, in violation of Perfect 10Ã¢â?¬â?¢s display and distribution rights. The Ninth Circuit affirmed the district court findings that Perfect 10 was unlikely to succeed in proving direct infringement. Specifically, with regard to the in-line linked images, the Court held that because in-line linking does not involve communicating a copy of the image, but rather only HTML (Hyper Text Markup Language) instructions that direct a userÃ¢â?¬â?¢s browser to a website publisherÃ¢â?¬â?¢s computer that stores the image, there is no direct infringement. Moreover, the Court held that Perfect 10 must also show a likelihood that it will prevail against GoogleÃ¢â?¬â?¢s fair use defense. In that regard, the district court held that the commercial nature of GoogleÃ¢â?¬â?¢s use weighed against its transformative nature and that GoogleÃ¢â?¬â?¢s use of thumbnails superseded Perfect 10Ã¢â?¬â?¢s right to sell its reduced-size images for use on cell phones. On this issue, the Ninth Circuit reversed, finding that Google used Perfect 10Ã¢â?¬â?¢s images in a new context to serve a different purpose and that the significantly transformative nature of GoogleÃ¢â?¬â?¢s search engine, in view of its public benefit, outweighed any alleged superseding and commercial use of the thumbnails. The Court therefore vacated the preliminary injunction. With regard to in-line linking to copyrighted images, the Ninth Circuit remanded for further findings on contributory infringement and whether the DMCA safe harbor provision limits injunctive relief. The district court held that Perfect 10 was unlikely to succeed on its contributory infringement claim against either Google or Amazon. However, the Court held that the parties could be held contributorily liable if they had knowledge that infringing Perfect 10 images were available using their systems, could take simple measures to prevent further infringement and failed to do so. Because there were factual disputes over whether there are reasonable and feasible means for Google and Amazon to refrain from providing access to infringing images, the Court remanded these issues to the district court. The Court also remanded for further findings on whether Google and Amazon satisfied the requirements of Ã?Â§512(d) of the DMCA (i.e., whether adequate notices were sent to the parties and whether the responses to the notices were adequate). Reprinted with permission from McDermott Will and EmeryÃ¢â?¬â?¢s IP Update, June 2007.