May Law Beat: 1

Gregory A. Piccionelli
Here's a poser for you: Where would you find the one company that is simultaneously at the forefront of the federal government's concerns over minors' access to adult sexual content and at the cutting edge of the adult industry's concerns over pirated content?

The answer: Google. But I am not suggesting that to answer the question you perform an online search. Instead, I am referring to Google, the noun. In fact, I am referring to Google, the proper noun — the giant Internet, bent-on-global-content-domination, company. That Google.

The e-commerce behemoth, whose name also means the unfathomably large number of 10 to the 100th power, has been in the legal spotlight recently because it has been sued in two very important and very high-profile cases.

In the first action, Perfect 10 Magazine Inc. sued Google alleging that Google's image search function infringes Perfect 10's copyrights and trademark rights by providing searchers with cached thumbnail versions of pirated Perfect 10 photographs located on websites Google has spidered. On Feb. 17, the federal court hearing the case issued a preliminary injunction preventing Google from making Perfect 10's images available through its image search feature based on the court's opinion that Perfect 10 will probably prevail in its claim that Google's image search function infringes its rights.

In the other case, the U.S. Justice Department filed a motion in federal court seeking a court order that would compel Google to turn over "a multi-stage random sample of one million URLs" from Google's database and a computer file with "the text of each search string entered onto Google's search engine over a one-week period."

Justice filed the lawsuit after Google refused to comply with a subpoena served on Google, Yahoo, AOL and Microsoft in August, seeking the information to defend the constitutionality of the Child Online Protection Act (COPA). Google's refusal to comply with the subpoena on the grounds that compliance would violate its trade secrets and the privacy of its users, prompted Justice to file its motion to compel Google to turn over the data.

Like the Free Speech Coalition's legal challenges to the federal 2257 regulations and Utah's email registry, the Extreme Associates prosecution and the COPA trial later this year, "the Google cases" also are critically important to the adult entertainment industry. For example, the outcome of the Perfect 10 case could profoundly impact the intellectual property rights of adult entertainment content producers.

Here's why. At issue in the Perfect 10 case is the question of whether Google's image search function that creates, stores and publishes thumbnail versions of Perfect 10 content — and thousands of other copyright protected photographs in response to image search requests — can assert a defense to copyright infringement under the "fair use" doctrine.

This doctrine presents a limitation upon a copyright owner's property rights in the copyrighted work to ensure the free flow of information for purposes such as news reporting, teaching, comment and criticism. If a party's use of copyrighted material is a "fair use" of the work or works in question, they are shielded from what would otherwise be copyright infringement.

What is Fair Use?
So what constitutes fair use of copyrighted works? Here is a two-word answer lawyers are famous for: It depends. The outline of the fair use doctrine is set forth in Section 107 of the Copyright Act. But what actually comprises fair use in any particular situation depends on the nature of the work and the facts surrounding the use. Section 107 sets forth a non-exhaustive list of factors to be considered in determining whether the use made of a work is indeed a fair use. These factors include (1) the purpose and character of the use, including whether the use is commercial or nonprofit; (2) the nature of the work itself; (3) the amount and substantiality of the portion of the work used; and (4) the effect the use has upon the potential market for, or the value of, the work.

The Copyright Act's fair use doctrine also has been the subject of judicial interpretation in a large number of copyright cases, including U.S. Supreme Court decisions. The fair use doctrine is therefore flexible and capable of changing and evolving over time in response to changes in technology, etc.

An example of the evolving nature of the fair use doctrine and how it is applied on the Internet may well be what is under way in the Perfect 10 case. In the court's opinion published on Feb. 21, 2005, the court concluded that Google's creation and publication of thumbnail reproductions of Perfect 10's copyright protected photographs does not constitute fair use. The court reached this conclusion, in part, because it found that "Google offers and derives commercial benefit from its Ad Sense program," which allows participating third-party websites "to carry Google-sponsored advertising and share revenue that flows from the advertising displays and click-throughs."

The court also may have pushed the evolution of the fair use doctrine in response to new technology in a significant way by also basing its decision on the fact that Google's image search feature allows consumers to freely download small thumbnail photographs to their cellphones. The court found that this use could have a substantial negative effect on the market for Perfect 10's photographs "to the extent that users may choose to download free images to their phone rather than purchase Perfect 10's reduced-size images." In reaching this conclusion, the court reasoned that this case differed from a previous case in which thumbnail search retrievals were found to be fair use.

Because of the Perfect 10 decision, we may be witnessing an important shift in the fair use doctrine. It is a potential change that all adult content creators should carefully note. While both sides are appealing the judge's ruling, this case could be of critical importance to content producers because nearly all content producers are, or will in the future be, exploiting their content via small screen devices such as mobile phones and personal entertainment devices such as Apple's iPod and Sony's PSP.

If Perfect 10 prevails against Google, virtually every search engine with image searching capability could be liable to numerous adult entertainment companies for copyright infringement on a massive scale. Also, other sites depicting thumbnail images, such as eBay, may also become vulnerable to huge copyright infringement actions.

In part two, we'll take a look at producer rights and beyond.

Gregory A. Piccionelli is a senior member of Piccionelli & Sarno, one of the world's most experienced law firms specializing in Internet, intellectual property and adult entertainment matters. He can be reached at (310) 553-3375.

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