No U.S. Jurisdiction Where Servers Hosting Infringing Photographers Were Outside U.S., Despite Presence of “Thumbnail” Photos and Links on U.S. Servers

The World in U.S. Courts: Fall 2013 - Intellectual Property (IP) | July.12.2013

Perfect 10, Inc. v. Yandex N.V., 2013 U.S. Dist. LEXIS 98608 (N.D. Cal. July 12, 2013)

Perfect 10 operates a website that publishes copyrighted thumbnail images of naked women and, for a fee, provides full-sized copyrighted versions of the same images. The Yandex defendants are a set of interrelated companies that operate the leading Russian search engine. Perfect 10 alleged that the Yandex defendants engaged in various direct, indirect, and vicarious acts of copyright infringement in connection with conduct that included hosting the copyrighted images, linking to third-party sites that hosted the copyrighted images.

The court concluded that copyright infringement in connection with such claims was to be judged based on the location of the servers on which the defendant committed the allegedly infringing acts and not the location anywhere in the world where a user might download the images. Full-sized images were hosted on servers in Russia, and the court concluded that such extraterritorial activity was outside the scope of the U.S. Copyright Act. Thumbnail images were hosted on U.S. servers, and these were found to be subject to the “fair use” defense as they were “transformative”—used in connection with web searches to direct the viewer to different content. In some cases, that other content included copyrighted full-sized images that were “in-line linked” to the Yandex servers and displayed as if they were part of the Yandex search results. This was found not to constitute direct infringement, and so the issue of “fair use” did not arise.

The court disposed of additional arguments by Perfect 10 that other factors weighed against fair use: that the Yandex search engines did not benefit Americans and so did not advance the policies of the copyright act, and that the existence of 40,000 copyrighted works at issue made Yandex’s use too substantial.

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