Over at Ars, I analyze yesterday’s Perfect 10 decision:
Perfect 10 attempted to distinguish its service from the Kelly precedent in two ways. First, although Google doesn’t typically display advertising on image search result pages, some of the sites containing infringing images participate in Google’s AdSense program. Second, Perfect 10 had licensed its images for sale in thumbnail form to cell phone users, and the company argued that the thumbnails in Google’s search results undermined the market for cell-phone thumbnails. The district court sided with Perfect 10 in 2004, and Google appealed the decision.
Writing for the Ninth Circuit Court of Appeals, judge Sandra Ikuta firmly rejected both of those arguments. She noted that there was no evidence that any mobile phone users had actually used Google’s image search engine to download Perfect 10′s images. And while she acknowledged that Google did generate a small amount of revenue from infringing websites that participated in the AdSense program, she ruled that “the transformative nature of Google’s use is more significant than any incidental superseding use or the minor commercial aspects of Google’s search engine and website.”
Perfect 10 seems to have taken a “kitchen sink” approach in its attack on Google, and the as a result the decision is kind of sprawling, touching on a variety of theories for both direct and indirect liability. As far as I can see, almost all of them worked out in a pro-Google (and in my view, a pro-innovation) direction. The possible trouble spot is the Napster issue, where the Ninth Circuit sent the case back to the district court for further consideration. But as long as Google can make a plausible case that they can’t be expected to police each of the billions of websites they link to, they should be fine.