The Ninth said that Google's Image Search thumbnails are fair use -- that's the good news. The less-great news is that the court also ruled that Google is a "secondary infringer" where it has "actual knowledge" of copycat sites in its index and fails to do anything about it.
Today's decision reversed the lower court's holding [PDF] that Google's thumbnails were not a fair use, following and bolstering an earlier image search engine precedent, Kelly v. Arriba Soft [PDF]. The court rightly took into account the important public benefit that search engines provide -- not simply the impact on the particular parties in this case -- and what would serve copyright's fundamental goal of promoting access to creative works. While Google's transformative use of the image provided a very real public benefit, Perfect 10's potential loss of thumbnail licensing revenue was highly speculative.The Court also shot down Perfect 10’s claim that Google was displaying the full-sized versions of infringing images from third-party websites by framing them or providing an HTML in-line link tag to end users. The Court correctly discerned the technology at issue, finding that when you frame a page or provide an in-line link, it’s the site that you’re pointing to that could be displaying the picture, not the search engine that coughs up the HTML.