Page:Perfect 10, Inc. v. Amazon.com, Inc..pdf/24

 liable for its in-line linking to infringing full-size images under the doctrines of contributory and vicarious infringement. The district court ruled that Perfect 10 did not have a likelihood of proving success on the merits of either its contributory infringement or vicarious infringement claims with respect to the full-size images. See Perfect 10, 416 F.Supp.2d at 856, 858. In reviewing the district court’s conclusions, we are guided by the Supreme Court’s recent interpretation of secondary liability, namely: “[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement, and infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” Grokster, 545 U.S. at 930, 125 S.Ct. 2764 (internal citations omitted).

Direct Infringement by Third Parties. As a threshold matter, before we examine Perfect 10’s claims that Google is secondarily liable, Perfect 10 must establish that there has been direct infringement by third parties. See Napster, 239 F.3d at 1013 n. 2 (“Secondary liability for copyright infringement does not exist in the absence of direct infringement by a third party.”).

Perfect 10 alleges that third parties directly infringed its images in three ways. First, Perfect 10 claims that third-party websites directly infringed its copyright by reproducing, displaying, and distributing unauthorized copies of Perfect 10’s images. Google does not dispute this claim on appeal.

Second, Perfect 10 claims that individual users of Google’s search engine directly infringed Perfect 10’s copyrights by storing full-size infringing images on their computers. We agree with the district court’s conclusion that Perfect 10 failed to provide sufficient evidence to support this claim. See Perfect 10, 416 F.Supp.2d at 852. There is no evidence in the record directly establishing that users of Google’s search engine have stored infringing images on their computers, and the district court did not err in declining to infer the existence of such evidence.

Finally, Perfect 10 contends that users who link to infringing websites automatically make “cache” copies of full-size images and thereby directly infringe Perfect 10’s reproduction right. The district court rejected this argument, holding that any such reproduction was likely a “fair use.” Id. at 852 n. 17. The district court reasoned that “[l]ocal caching by the browsers of individual users is noncommercial, transformative, and no more than necessary to achieve the objectives of decreasing network latency and minimizing unnecessary bandwidth usage (essential to the [I]nternet). It has a minimal impact on the potential market for the original work.…” Id. We agree; even assuming such automatic copying could constitute direct infringement, it is a fair use in this context. The copying function performed automatically by a user’s computer to assist in accessing the Internet is a transformative use. Moreover, as noted by the district court, a cache copies no more than is necessary to assist the user in Internet use. It is designed to enhance an individual’s computer use, not to supersede the copyright holders’ exploitation of their works. Such automatic background copying has no more than a minimal effect on Perfect 10’s rights, but a considerable public benefit. Because the four fair use factors weigh in favor of concluding that