Google Again Escapes Perfect 10 Injunction Request as Ninth Circuit Adopts eBay Ruling

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 Case Summary: Once again, the Ninth Circuit refuses a request for an injunction to stop Google from use of thumbnail images of Perfect 10's nude photos.

• Key Takeaway: The appeals court follows the Second Circuit in determining that the U.S. Supreme Court's eBay v. MercExchange‘s four-factor injunction analysis applies to copyright law.

The U.S. Court of Appeals for the Ninth Circuit once again rebuffed adult website operator Perfect 10 Inc. in its attempt to prevent Google Inc. from making available thumbnail sketches of copyrighted nude photos (Perfect 10 Inc. v. Google Inc., 9th Cir., No. 10-56316, 8/3/11).

The appeals court further rejected the argument that the company's allegedly imminent bankruptcy was a sufficient showing of irreparable harm as required under eBay, reasoning that there was no evidence that Perfect 10 was ever sound financially, and that stopping Google would not have dealt with the widespread availability of the images through other search engines and websites.

Ninth Circuit Overturns First Decision

Perfect 10 Inc. operates a paid subscription website featuring copyrighted photographs of nude models.

Google operates a number of different search engines, including Google Image Search, which receives a text search string and returns a number of reduced-sized, or thumbnail, images organized into a grid. Google also offers a service called Blogger, which hosts blogs created by individual users. Blogger account holders can upload images from the web onto Blogger servers or can use a hyperlink to images hosted on other servers.

Google also has implemented a policy, allowing its search engines that qualify for the safe-harbor protections of the Digital Millennium Copyright Act, to handle takedown requests from copyright owners such as Perfect 10. As part of its notification of a claimed infringement, Google forwards the takedown notice to chillingeffects.org, run jointly by the Electronic Frontier Foundation and various law schools, which posts such notices. Thus, chillingeffects.org publishes the URL for the allegedly infringing images and will continue to do so even if Google removes the search information.

Perfect 10 sued Google, among others, claiming first that Google Image Search use constitutes direct and secondary copyright infringement. In 2007, the Ninth Circuit reversed a district court's decision that preliminarily enjoined the search engine's use of the thumbnail versions, concluding that the significantly transformative nature of Google's search utility outweighs its superseding and commercial uses. Perfect 10 Inc. v. Amazon.com Inc., 508 F.3d 1146, 82 USPQ2d 1609 (9th Cir. 2007) (95 PTD, 05/17/07).

On remand, Perfect 10 again sought a preliminary injunction, adding the Blogger service and the notice forwarding feature as functions to be enjoined.

Judge A. Howard Matz of the U.S. District Court for the Central District of California denied the injunction, and Perfect 10 appealed.

Second Time Not a Charm Either

Judge Sandra S. Ikuta began by acknowledging the court's rule under Apple Computer Inc. v. Formula International Inc., 725 F.2d 521 (9th Cir. 1984), that a strong showing of likelihood of success on the merits creates a presumption of irreparable harm.

However, she said, the Supreme Court invalidated that rule in eBay Inc v. MercExchange LLC, 547 U.S. 388, 78 USPQ2d 1577 (2006) (94 PTD, 05/16/06).

Though eBay was a patent case, Ikuta said, the high court also noted the similarity in the text of the Copyright Act as to injunctions, at 17 U.S.C. §502(a). She said that the eBay court “noted that the language of the Copyright Act (like the Patent Act), states that courts ‘may' grant injunctive relief ‘on such terms as [they] may deem reasonable to prevent or restrain infringement of a copyright.' … [T]his permissive language does not evince a congressional intent to depart from traditional equitable principles, and the statutory language giving a copyright holder (like a patent holder) ‘the right to exclude others from using his property' does not suggest otherwise.”

Ikuta further noted that the Second Circuit applied the irreparable harm presumption prior to eBay, but that court concluded that it was no longer valid in Salinger v. Colting, 607 F.3d 68, 94 USPQ2d 1577 (2d Cir. 2010).

Agreeing with the sister appellate court, Ikuta said, “We therefore conclude that the propriety of injunctive relief in cases arising under the Copyright Act must be evaluated on a case-by-case basis in accord with traditional equitable principles and without the aid of presumptions or a ‘thumb on the scale' in favor of issuing such relief.”

No Perfect 10 Irreparable Harm

The court then turned to Perfect 10's specific arguments that it would suffer irreparable harm. Perfect 10's founder and president, Norman Zada, testified that the company's revenues were close to $2 million per year at one point, but have now declined to less than $150,000 per year, with an annual loss of at least $3 million. However, the court was unsympathetic.

“While being forced into bankruptcy qualifies as a form of irreparable harm,” the court said, “Perfect 10 has not established that the requested injunction would forestall that fate. To begin with, Perfect 10 has not alleged that it was ever in sound financial shape.”

In addition, the images were available for free at a number of other websites and in search engines such as Yahoo! and MSN, the court explained. Finally, Perfect 10 “failed to submit a statement from even a single former subscriber who ceased paying for Perfect 10's service because of the content freely available via Google,” the court said.

The court thus concluded that the lower court's denial of a preliminary injunction was not an abuse of discretion.

At Odds With Court's Ruling in Trademark Case?

In a footnote, the court noted that the Ninth Circuit continued to apply the pre-eBay irreparable harm presumption in a trademark case, Marlyn Nutraceuticals Inc. v. Mucos Pharma GmbH, 571 F.3d 873, 91 USPQ2d 1245 (9th Cir. 2009) (129 PTD, 7/9/09).

The court did not address the issue further, but said that each statute must be analyzed separately to see if Congress intended “a major departure from the long tradition of equity practice” defined in eBay.

The relevant statutory provision, 15 U.S.C. §1116, appears to use the same “permissive” language of 17 U.S.C. §502(a), however: “The several courts vested with jurisdiction of civil actions arising under this chapter shall have power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable.”

Chief Judge Alex Kozinski and Judge Michael Daly Hawkins joined the opinion.

David Schultz of the Law Offices of Jeffrey N. Mausner, Woodland Hills, Calif., represented Perfect 10. Google was represented by Andrew H. Schapiro of Mayer Brown, New York.

By Tony Dutra

Opinion at http://pub.bna.com/ptcj/Perfect10Aug3.pdf