LOS ANGELES - A U.S. appeals court Wednesday said Google Inc. does not infringe the copyrights of adult entertainment company Perfect 10 Inc. by displaying small versions of its images in search results.
But the 9th U.S. Circuit Court of Appeals said a lower court should reconsider whether Google helps violate copyrights by pointing people to sites that display unauthorized photos.
A U.S. District Court judge last year issued a preliminary injunction against Google, finding that Perfect 10 had submitted enough evidence to suggest that the search engine directly violated copyrights by displaying the small image, known as a "thumbnail,'' even though the full-sized image was on a third party's website.
But the judge said Google could not be held liable for the actions of a user who clicks on the thumbnail and is directed to a site that contains illegal copies of Perfect 10's photos.
A three-judge panel of the 9th Circuit essentially flipped the earlier ruling.
The panel said the lower court erred in granting the preliminary injunction, saying that the display of a thumbnail could be considered "fair use'' under copyright law.
Still, the panel said the lower court should not have rejected Perfect 10's claim that search engines can be held liable when they act as the middleman between a web searcher and a website that contains illegal copies.
"There is no dispute that Google substantially assists web sites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials,'' the court's decision said.
"We cannot discount the effect of such a service on copyright owners, even though Google's assistance is available to all web sites, not just infringing ones.''
Perfect 10, a Beverly Hills-based company that publishes a magazine and a website displaying nude women, said it was generally pleased with the decision, though it may file an appeal.
"This confirms what we've believed all along _ that a search engine cannot knowingly facilitate access to infringing material without consequence,'' said Daniel Cooper, Perfect 10's general counsel.
Google praised the decision.
"We are delighted that the court affirmed long-standing principles of fair use, holding that Google's image search is highly transformative by creating new value for consumers,'' Google general counsel Kent Walker said.
At issue is Google's search engine technology that displays thumbnail images in response to a search request.
When a user clicks on a thumbnail, the page splits into two frames. The top of the page displays a narrow band that includes the thumbnail image and a warning that the thumbnail "may be scaled down and subject to copyright.'' The narrow band is hosted on computers owned by Google.
The lower part of the page is hosted by the third-party website that displays the full-size image.
Perfect 10 alleges that the display of the thumbnail is a direct violation of its copyright, and that the display of the larger image, even though it is hosted by a third-party website, constitutes a secondary copyright infringement on the part of Google.
The company sued Google in 2004 and Amazon.com Inc., which runs a web search service called A9, in 2005. The cases were consolidated. Wednesday's decision applies to both companies.
