program, under which third party web sites could place code on their sites to request Google’s
server to algorithmically select relevant advertisements for display based on the content of the
site, and then share revenue flowing from the advertising displays and click-throughs. If third
party web sites participating in the AdSense program contained infringing copies of Perfect 10
photographs, Google would serve ads on those sites and split the revenue generated from users
who clicked on the Google-served ads.^578 Accordingly, the court concluded that “AdSense
unquestionably makes Google’s use of thumbnails on its image search far more commercial than
Arriba’s use in Kelly II. Google’ thumbnails lead users to sites that directly benefit Google’s
bottom line.”^579
Relying on the Kelly v. Arriba Soft decision, the court concluded that the use of the
thumbnails was transformative because their creation and display enabled the display of visual
search results quickly and efficiently, and did not supersede Perfect 10’s us of the full size
images. But the court noted that the transformative nature of the thumbnail use did not end the
analysis, because the use was also “consumptive.” In particular, the court noted that after it filed
suit against Google, Perfect 10 entered into a licensing agreement with a third party for the sale
and distribution of Perfect 10 reduced-size images for download to and use on cell phones.^580
“Google’s use of thumbnails does supersede this use of P10’s images, because mobile users can
download and save the thumbnails displayed by Google Image Search onto their phones.”^581 On
balance, then, the court concluded that, because Google’s use of thumbnails was more
commercial than Arriba Soft’s and because it was consumptive with respect to Perfect 10’s
reduced-size images, the first factor weighed “slightly in favor” of Perfect 10.^582
The district court ruled that the second fair use factor, the nature of the copyrighted work,
weighed “only slightly in favor” of Perfect 10 because, although its photographs were creative,
as in the case of the Kelly v. Arriba Soft case, they had appeared on the Internet before use in
Google’s search engine.^583 The court found that the third factor, the amount and substantiality of
the portion used, favored neither party because Google’s use of the copies of Perfect 10’s images
was no greater than necessary to achieve the objective of providing effective image search
capabilities.^584 Finally, the court found that the fourth factor, the effect of the use upon the
(^578) Perfect 10 v. Google, 416 F. Supp. 2d 828, 834, 846-47 (C.D. Cal. 2006), aff’d sub nom. Perfect 10 v.
Amazon.com, Inc., 508 F.3d 1146, 1169 (9th Cir. 2007).
(^579) Id. at 846. Google counterargued that its AdSense program policies prohibited a web site from registering as an
AdSense partner if the site’s web pages contained images that appeared in Google Image Search results. The
court noted, however, that Google had not presented any information regarding the extent to which the
purported policy was enforced nor had it provided examples of AdSense partners who were terminated because
of violations of the policy. In contrast, Perfect 10 submitted numerous screenshots of third party web sites that
served infringing content and also appeared to be receiving and displaying AdSense ads from Google. Id. at
846-47.
(^580) Id. at 847-49.
(^581) Id. at 849.
(^582) Id.
(^583) Id. at 849-50.
(^584) Id. at 850.