to a source of information.^587 In addition, “a search engine provides social benefit by
incorporating an original work into a new work, namely, an electronic reference tool.”^588
In a significant ruling, the Ninth Circuit disagreed, on two grounds, with the district
court’s conclusion that Google’s use of thumbnail images was less transformative than the video
search engine at issue in Kelly v. Arriba Soft because Google’s use of thumbnails superseded
Perfect 10’s right to sell its reduced-size images for use on cell phones. First, the Ninth Circuit
noted that the alleged superseding use was not significant at the present time, because the district
court had not found that any downloads of Perfect 10’s photos for mobile phone use had actually
taken place.^589 Second, the court concluded “that the significantly transformative nature of
Google’s search engine, particularly in light of its public benefit, outweighs Google’s
superseding and commercial uses of the thumbnails in this case.”^590 Accordingly, the first fair
use factor weighed in favor of Google.
The Ninth Circuit found that the district court had correctly analyzed the second and third
factors.^591 With respect to the fourth factor, Perfect 10 challenged the district court’s finding of
no harm to the market for the full sized images on the ground that likelihood of market harm may
be presumed if the intended use of an image is for commercial gain. The court noted, however,
that this presumption does not arise when a work is transformative because market substitution is
less certain. Because Google’s use of thumbnails for search engine purposes was highly
transformative and market harm could therefore not be presumed, and because Perfect 10 had not
introduced evidence that Google’s thumbnails would harm its existing or potential market for
full size images, the Ninth Circuit rejected Perfect 10’s argument.^592
With respect to harm to Perfect 10’s alleged market for reduced size images, the Ninth
Circuit noted that the district court did not make a finding that Google users had actually
downloaded thumbnail images for cell phone use, so any potential harm to that alleged market
remained hypothetical. Accordingly, the court concluded that the fourth factor favored neither
party.^593 Balancing the four factors, and particularly weighing Google’s highly transformative
use and its public benefit against the unproven use of thumbnails for cell phone downloads, the
(^587) 508 F.3d at 1165.
(^588) Id. The Ninth Circuit rejected Perfect 10’s argument that providing access to infringing web sites cannot be
deemed transformative and is inherently not fair use. The court noted that Google was operating a
comprehensive search engine that only incidentally indexed infringing web sites. “This incidental impact does
not amount to an abuse of the good faith and fair dealing underpinnings of the fair use doctrine. Accordingly,
we conclude that Google’s inclusion of thumbnail images derived from infringing websites in its Internet-wide
search engine activities does not preclude Google from raising a fair use defense.” Id. at 1164 n.8.
(^589) Id. at 1166.
(^590) Id.
(^591) Id. at 1167- 68
(^592) Id. at 1168.
(^593) Id.