Page:Perfect 10, Inc. v. Amazon.com, Inc..pdf/31

 liable for the infringements of third-party websites and Amazon.com users. The district court concluded that Perfect 10 was unlikely to succeed in proving that Amazon.com was a direct infringer, because it merely in-line linked to the thumbnails on Google’s servers and to the full-size images on third-party websites. Perfect 10 v. Amazon, No. 05–4753, consolidated with 04–9484 (C.D.Cal. February 21, 2006) (order denying preliminary injunction). In addition, the district court concluded that Perfect 10’s secondary infringement claims against Amazon.com were likely to fail because Amazon.com had no program analogous to AdSense, and thus did not provide any revenues to infringing sites. Id. Finally, the district court determined that Amazon.com’s right and ability to control the infringing conduct of third-party websites was substantially less than Google’s. Id. Therefore, the district court denied Perfect 10’s motion for a preliminary injunction against Amazon.com. Id.

We agree that Perfect 10 has not shown a likelihood that it would prevail on the merits of its claim that Amazon.com directly infringed its images. Amazon.com communicates to its users only the HTML instructions that direct the users’ browsers to Google’s computers (for thumbnail images) or to a third party’s computer (for full-size infringing images). Therefore, Amazon.com does not display or distribute a copy of the thumbnails or full-size images to its users.

We also agree with the district court’s conclusion that Amazon.com does not have “the right and ability to supervise the infringing activity” of Google or third parties. The district court did not clearly err in concluding that Amazon.com lacked a direct financial interest in such activities. Therefore, Perfect 10’s claim that Amazon.com is vicariously liable for third-party infringement is unlikely to succeed.

However, the district court did not consider whether Amazon.com had “actual knowledge that specific infringing material is available using its system,” Napster, 239 F.3d at 1022 (emphasis in original), and could have “take[n] simple measures to prevent further damage” to copyrighted works, Netcom, 907 F.Supp. at 1375, yet continued to provide access to infringing works. Perfect 10 has presented evidence that it notified Amazon.com that it was facilitating its users’ access to infringing material. It is disputed whether the notices gave Amazon.com actual knowledge of specific infringing activities available using its system, and whether Amazon.com could have taken reasonable and feasible steps to refrain from providing access to such images, but failed to do so. Nor did the district court consider whether Amazon.com is entitled to limit its liability under title II of the DMCA. On remand, the district court should consider Amazon.com’s potential contributory liability, as well as possible limitations on the scope of injunctive relief, in light of our rulings today.

We conclude that Google’s fair use defense is likely to succeed at trial, and therefore we reverse the district court’s determination that Google’s thumbnail versions of Perfect 10’s images likely constituted a direct infringement. The district court also erred in its secondary liability