University of Geneva Internet Law, June 2017 -- "Practising Cyberlaw: Litigating Internet Disputes"
  • 1 University of Geneva Internet Law, June 2017 -- "Practising Cyberlaw: Litigating Internet Disputes" (General Overview)

    This playlist includes readings for the “Practising Cyberlaw: Litigating Internet Disputes” session of the University of Geneva Internet Law Summer School course, June 2017.

    • 1.1 WestOrange.info Dispute (1 of 2): Richard D. Trenk, May 23, 2013 cease and desist letter, read all

    • 1.2 WestOrange.info Dispute (2 of 2): Stephen B. Kaplitt, June 17, 2013 response to cease and desist letter, read all

    • 1.3 Shepard Fairey v. The Associated Press, No. 09-01123 (AKH) (S.D.N.Y.) (1 of 2): Complaint, (February 9, 2009), read paragraphs 1-2, 9-40, skim the exhibits

    • 1.4 Shepard Fairey v. The Associated Press, No. 09-01123 (AKH) (S.D.N.Y.) (2 of 2): Answer, Affirmative Defenses, and Counterclaims, (March 11, 2009), read paragraphs 53-64, 69-134, 158-162

    • 1.5 Savage v. Council on American-Islamic Relations, Inc., No. C 07-6076 SI (N.D. Cal.) (1 of 2): Defendant's Motion for Judgment on the Pleadings, read pp. 1-12 (stop at "B. Savage's RICO Claims . . .") (be sure to use the printed page numbers at the bottom, not the pdf numbers or PACER numbers at the top)

    • 1.6 David Streitfeld, "European Court Lets Users Erase Records on Web," NYTimes.com (May 13, 2014)

    • 1.7 Christopher Bavitz, "ABC v. Aereo, Innovation, and the Cloud," Internet Monitor 2014: Reflections on the Digital World (December 2014) (avail on Medium.com, January 30, 2015)

    • 1.8 A&M Records, Inc. v. Napster, Inc., No. CV99-05183 (MHP), 2000 WL 1170106 (N.D.Cal. 2000), district court decision on Daubert motions, read pp 1-4 (legal standard, Jay report), 10-12 (Tygar report and Conclusion)

      1
      A & M RECORDS, INC., et al, Plaintiff(s),
      v.
      NAPSTER, INC., Defendant(s).
      2
      Jerry LEIBER, individually and doing business as Jerry Leiber Music, et al, Plaintiff(s),
      v.
      NAPSTER, INC., Defendant(s).
      3

      No. C9905183MHP, C000074MHP.

      4

      United States District Court, N.D. California.

      5

      Aug. 10, 2000.

      6

      Named Expert: Jay, Fine, Fader, Hall, Lessig, Tygar

      7
      MEMORANDUM AND ORDER RE ADMISSIBILITY OF EXPERT REPORTS
      8
      PATEL, Chief J.
      9

      On July 3, 2000, in conjunction with its opposition to plaintiffs' motion for a preliminary injunction, defendant Napster, Inc. ("Napster") filed a motion to exclude the reports of plaintiffs' experts, Dr. E. Deborah Jay ("Jay Report") and Michael Fine ("Fine Report"). Defendant objected separately to the expert report of Dr. David J. Teece ("Teece Report"). Plaintiffs filed a brief opposing the exclusion of the Jay and Fine Reports on July 13, 2000. Plaintiffs also objected to three of defendant's expert reports-those of Dr. Peter S. Fader, Dr. Robert Hall, Professor Lawrence Lessig, and Dr. J.D. Tygar ("Fader Report," "Hall Report," "Lessig Report," and "Tygar Report," respectively). Plaintiffs request the exclusion of the first three reports in their entirety and object to certain portions of the Tygar Report.

      10

      After considering the parties' arguments, and for the reasons set forth below, this court now enters the following memorandum and order.

      11
      LEGAL STANDARD
      12
      I. Federal Rules of Evidence
      13

      Both the relevant case law and the parties' briefs make reference to three Federal Rules of Evidence-Rules 104, 403, and 702. Rule 104, governing general questions of admissibility, states:

      14

      Preliminary questions concerning the qualification of a person to be a witness, the existence of a privilege, or the admissibility of evidence shall be determined by the court, subject to the provisions of subdivision (b) [pertaining to conditional admissions]. In making its determination it is not bound by the rules of evidence, except those with respect to privileges.

      15

      The trial judge initially must determine if the expert is proposing to testify to scientific or other specialized knowledge that "will assist the trier of fact to understand or determine a fact in issue." Daubert v. Merrell Dow Phamaceuticals, Inc., 509 U.S. 579, 591, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).

      16

      Rule 403 provides that, "[a]lthough relevant, evidence may be excluded if its probative value is substantially outweighed by danger of unfair prejudice, confusion of the issues, or misleading the jury or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence."

      17

      Rule 702 applies to testimony by experts and states that:

      18

      If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.

      19

      In its landmark Daubert opinion, the Supreme Court held that Rule 702 does not embody the requirement that an expert opinion is inadmissible unless it is " 'generally accepted' as reliable in the relevant scientific community." Daubert, 509 U.S. at 584 (rejecting the test articulated in Frye v. United States, 293 F. 1013, 1014 (1923)); see id. at 597.

      20
      II. Daubert Gatekeeping Obligations
      21

      In Daubert, the Supreme Court held that the Federal Rules of Evidence-particularly Rule 702-give the trial court the duty of ensuring that expert testimony is "relevant to the task at hand" and has a reliable basis in the knowledge and experience of the relevant discipline. Daubert, 509 U.S. at 597.To determine the relevance and reliability of scientific evidence, the Daubert Court said, the trial judge must undertake a flexible inquiry, focusing on the principles and methodology used, rather than the conclusions reached. See id.at 594-95.Several factors may bear on a judge's gatekeeping determination. These factors, include, but are not limited to, whether (1) the "theory or technique ... can be (and has been tested);" (2) the theory or technique "has been subjected to peer review and publication;" (3) the technique has a "known or potential rate of error;" (4) there are "standards controlling the technique's operation;" and (5) the theory or technique enjoys "general acceptance" within a "relevant scientific community." Id. at 592-94.The Supreme Court emphasized that it did not intend to create a "definitive checklist or test." Id. at 594; Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 150, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999).

      22

      In Kumho Tire, the Supreme Court extended Daubert principles to the testimony of engineers and other technical experts who are not scientists. See Kumho Tire, 526 U.S. at 141.It held that the gatekeeping obligation Daubert imposed on trial courts applies to all expert testimony. See Kumho Tire, 526 U.S. at 147.

      23
      DISCUSSION
      24
      I. Defendant's Objections
      25
      A. Jay Report
      26

      Dr. E. Deborah Jay is the President and Chief Executive Officer of Field Research Corporation, which plaintiffs retained "to conduct a survey with a random sample of college and university students in order to identify persons who use Napster to download music."Jay Rep. at 1. Jay focused exclusively on college students because journalistic articles discussed college students using Napster. See Heather Mewes Dec., Exh. A (Jay Dep.) at 18:4-12, 22:2-13. The survey purported to track the reasons survey respondents used Napster, see Jay Rep. at 13-14, and the impact of Napster on their music purchases. See id. at 15-16.

      27

      Defendant challenges the admissibility of the Jay Report on the ground that the survey was fatally under-inclusive because it only surveyed college or university students without obtaining data on the extent of Napster use outside colleges and universities. In her deposition, Jay admitted that she did not analyze non-college Napster use or have any information about it. See id. at 24:15-25, 25:1-2.She did not know the median age of Napster users. See id. at 17:25-18:1.Jay also stated that she could project her results to the universe of college users, but declined to project them to Napster users as a whole. See id. at 24:15-25:9.

      28

      Defendant contends that the proper universe for determining lost sales or injury to plaintiffs is all of plaintiffs' customers, not merely those who currently attend college or university. According to Napster, "if Napster users other than college students were increasing sales sufficient to offset any purported loss among college students ..., Plaintiffs' claim of harm would evaporate."Def.'s Mot. to Exclude Jay Rep. at 2.

      29

      In opposing defendant's motion to exclude the Jay Report, plaintiffs primarily argue that (1) defendant's criticisms of the report are invalid, and (2) objections to survey methodology affect the weight, rather than the admissibility of evidence.[1] According to plaintiffs, Napster executives themselves have opined that college students constitute the target demographic and the largest portion of Napster users. See Pl.'s Opp. to Def.'s Mot. to Exclude Jay Rep. at 3 (citing Fanning Dep. at 303:9-11, Brooks Dep. at 145:10-12, and Richardson Dep. at 246:13-14). Plaintiffs contend that, because college students represent an important segment of both Napster users and the record-buying public, survey results showing a linkage between college Napster use and a decline in college record sales is probative of plaintiffs' harm.

      30

      Identification of the relevant target population or universe constitutes one of the first steps in designing a survey; the researcher must design that universe carefully. See Reference Manual on Scientific Evidence 235 (Fed. Judicial Ctr.1994). Although Jay appears to have chosen her target population from only a portion of the Napster user base, depositions of Napster executives corroborate the media reports upon which she relied. For example, Elizabeth Brooks testified, "We believes [sic] ourselves to have a high college demographic, and beyond that to be primarily [ages] 12 to 24." Julia Greer Reply Dec. (Brooks Dep.) at 145:10-12 Defendant has failed to produce persuasive evidence that college or university students do not constitute a significant percentage of Napster users. Even if a statistic cited by defendant's expert Dr. Peter S. Fader were to be believed, college students still account for about a quarter of Napster's users. See Dec. of David Lisi (Fader Rep.) ¶ 49. The court recognizes the Jay Report for what it is-a report that looks at only one segment of the Napster user population. That segment is significant, and the court finds evidence of lost sales attributable to college use to be probative of irreparable harm for the purposes of the preliminary injunction motion.

      31

      Defendant misreads Ninth Circuit case law on the impact of Daubert on methodological flaws in surveys. The Ninth Circuit has stated that "[c]hallenges to survey methodology go to the weight given the survey, not its admissibility." Wendt v. Host Int'l, Inc., 125 F.3d 806, 814 (9th Cir.1997) (holding that exclusion of survey about trademark confusion was not abuse of discretion). Far from providing that methodological flaws render a survey inadmissible, the court in Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir.1997), specifically stated: "Unlike novel scientific theories, a jury should be able to determine whether asserted technical deficiencies undermine a survey's probative value."Id. at 1143 n. 8; see also Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 780 F.Supp. 1283, 1296 (N.D.Cal.1991), aff'd,964 F.2d 965 (9th Cir.1992) (holding that alleged under-inclusiveness of survey in copyright infringement action affected "the weight of the survey, not its admissibility"), cert. denied,507 U.S. 985, 113 S.Ct. 1582, 123 L.Ed.2d 149 (1993).

      32

      Defendant cites several district court cases outside the Ninth Circuit for the proposition that methodological flaws in surveys render them inadmissible under Daubert and Kumho Tire.See e.g ., Winning Ways, Inc. v. Holloway Sportswear, Inc., 913 F.Supp. 1454, 1467 (D.Kan.1996) (holding that under-inclusiveness of survey rendered it inadmissible); Toys "R" Us, Inc. v. Canarsie Kiddie Shop, Inc.,559 F.Supp. 1189, 1204 (E.D.N.Y.1983) (stating that failure to satisfy one or more criteria for trustworthiness of surveys, including definition of the proper universe, may lead to exclusion of the survey). These cases do not constitute controlling authority, and the court may disregard them. Here, the choice of the universe is but one potential flaw in a survey that otherwise comports with the applicable standards.

      33

      The Jay Report is probative of irreparable harm and will be admitted. The court need not opine whether the report is probative of damages, as that issue has not yet ripened.

      34
      B. Fine Report
      35

      Plaintiffs engaged Michael Fine-the Chief Executive Officer of Soundscan-to determine the effect of online sharing of MP3 files. SeeFine Rep. at 1. They seek to introduce his report as evidence of irreparable harm, not to establish a specific amount of monetary damages. See Pl. Opp. to Def.'s Mot. to Exclude Fine Rep. at 5.

      36

      Fine's study examined retail music sales trends in three types of stores in the United States: (1) all stores located within one mile of any college or university on a list acquired from Quality Education Data;[2] (2) all stores located within one mile of any college or university on a list of colleges and universities that have banned Napster use;[3] (3) all stores within one mile of any college or university listed among the "Top 40 Most Wired Colleges in 1999," according to Yahoo Internet Life.[4] Researchers working on the Fine Report used Soundscan Point of Sale data to compare music sales totals from the latter two categories with (1) national totals and (2) sales from the first category, "All College Stores." The report tracked retail sales in the first quarter ("Q1") of 1997, 1998, 1999, and 2000. Napster was not online until the final data point, Q1 2000. See Def.'s Mot. to Exclude Fine Rep. at 5; Mewes Dec., Exh. B (Fine Dep.) at 24:1-8.

      37

      After examining the data, Fine concluded that "on-line file sharing has resulted in a loss of album sales within college markets ."Fine Rep. at 1. While national sales grew "significantly and consistently" in the quarters he studied, sales at stores near colleges or universities declined, with sales in the "Top 40 Most Wired Colleges" and "Napster-banned" subsets showing an even sharper decline than those in the "All College Stores" category. Fine's conclusions were not limited to Napster, but rather assessed the effects of online file sharing in general. See id.; Pl.'s Opp. to Def.'s Mot. to Exclude Fine Rep. at 7.

      38

      Defendant argues that the Fine Report should be excluded because it employed a flawed methodology. First, the report failed to consider all causal factors in the decline of retail music sales. Specifically, it did not account for the possible effects of Internet record sales on sales in retail stores. Defendant contends that the fact that the report shows a decline in retail sales beginning in Q1 1999-before Napster came into existence-demonstrates that some factor besides Napster caused a decline in music sales in retail stores. Second, Fine compared weighted national sales numbers with raw numbers from the three college-related categories. Defendant maintains that this method of comparing the college sub-populations with national sales was invalid. Moreover, Soundscan's proprietary database is not subject to peer review. Thus, according to defendant, Fine's research results must be excluded pursuant to Daubert and Kumho Tire.

      39

      Plaintiffs respond that Fine had valid, practical reasons for excluding Internet sales data. First, because he could not determine the location of Internet purchasers, he could not adjust the data for sales at college stores (which were identified geographically) to include Internet sales. Second, plaintiffs claim that Internet sales volume is de minimis compared to retail sales. Internet sales purportedly account for only one percent of national sales, if sales by Amazon.com are excluded. See Pl.'s Opp. to Def.'s Mot. to Exclude Fine Rep. at 6 n. 4. Third, Fine excluded Internet sales from all his comparisons.

      40

      As to defendant's other objections, plaintiffs note that Fine averred that the use of weighted national sales data was necessary because Soundscan does not have contracts with every retail outlet. His results were computed as percentages, rather than actual dollar values. According to Fine, the use of percentages means that weighting has no absolutely no effect on the results. See Mewes Dec., Exh. B (Fine Dep.) at 42:4-14. Finally, plaintiffs dispute defendant's assertion that the Fine Report is inadmissible under Daubert and Kumho Tire because the proprietary nature of the Soundscan database makes it unavailable for peer review.

      41

      The court finds some aspects of the Fine Report troubling-especially the fact that its shows a decline in retail sales prior to the launching of Napster. This limitation, combined with Fine's decision not to track Internet music sales, reduces the study's probative value. The court nevertheless declines to exclude the Fine Report. The primary case upon which defendant relies, McGlinchy v. Shell Chemical Co., 845 F.2d 802 (9th Cir.1988), involved the exclusion of expert studies that posed a great danger of misleading a jury about the proper amount of damages .In contrast, plaintiffs offer the Fine Report to aid the court in determining whether they have suffered irreparable harm. Although the Fine Report may not be probative of the exact amount of damages, the court does not confront that question now.

      42

      The Ninth Circuit has expressed confidence in a jury's ability to decide whether asserted technical deficiencies undermine the probative value of non-scientific expert studies. See Southland Sod Farms, 108 F.3d at 1143 n. 8. Certainly then, the court can determine the proper weight to give the Fine Report. The danger of confusion is reduced because the Fine Report does not make claims beyond the limits of its methodology; Fine admits that his conclusions encompass all music file-sharing, not just that facilitated by Napster.

      43

      The court also rejects defendant's contention that the proprietary nature of the Soundscan's software system mandates exclusion under Daubert. Soundscan is widely used in the recording industry to track music sales, and plaintiff apparently made the software available to defendant to run its own tests. Although publication or some other form of peer review is a pertinent consideration, the Supreme Court specifically noted that this factor is not dispositive of reliability. See Daubert, 509 U.S. at 594.Accordingly, this court declines to exclude the Fine Report, insofar as it is offered to show irreparable injury.

      44
      C. Teece Report
      45

      Defendant objects to the entire Teece Report under the Daubert standard, Rule 702, and Rule 403. Plaintiffs engaged Teece to analyze the way that Napster, Inc. benefits from value creation for Internet companies; whether plaintiffs have suffered or are likely to suffer harm in their existing and planned businesses due to defendant's activities; and the importance of intellectual property protection to the United States' economy. See Teece Rep. at 2.

      46

      The court finds no fault with Teece's expert qualifications. Teece earned a Ph.D. in Economics from the University of Pennsylvania in 1975. See id. at 1. He is currently a professor at the Haas School of Business and Director of the Institute for Management Innovation and Organization at the University of California, Berkeley. See id. He also directs an international economics consulting firm that he co-founded in 1988. See id.

      47

      Teece examined depositions and documents produced in conjunction with this litigation, as well as outside studies and media reports. His conclusions were drawn from consideration of Napster, Inc.'s internal documents. Although the Teece Report has not undergone peer review, it is not the type of document that is ordinarily subject to such scrutiny. See Daubert, 509 U.S. at 594 (stating that peer-review factor is not dispositive). The Teece Report comports with the standards that professional economists generally follow. Accordingly, defendant's objections to it are overruled.

      48
      II. Plaintiffs' Objections
      49
      A. Fader Report
      50

      A tenured Associate Professor of Marketing at the Wharton School of the University of Pennsylvania, Dr. Peter S. Fader specializes in using data generated by new information technology, such as the Internet, to assist companies in developing marketing strategies. SeeLisi Dec. (Fader Rep.) ¶¶ 1-2. He considers himself an expert on consumer surveys. See Greer Dec. of July 13, 2000, Exh. 1 (Fader Dep.) at 28:18-20. However, he admitted in his deposition that he has never before prepared a consumer survey for litigation and he is unfamiliar with the standards set forth by federal courts for the reliability of such surveys. See id. at 20:8-9, 35:14-18.

      51

      The Fader Report concludes that Napster is beneficial to the music industry because MP3 music file-sharing stimulates more compact disc sales than it displaces. See Lisi Dec. (Fader Rep.) ¶¶ 6-8. Fader relied on three types of evidence to reach this conclusion: (1) analysis of media reports, surveys, and other reports prepared and authored by other people; (2) a survey, conducted by Greenfield Online, over which Fader exercised some supervisory control; and (3) Fader's analysis and criticism of the Jay and Fine Reports.

      52

      The centerpiece of the Fader Report is the Greenfield Online survey, which Fader purportedly designed and oversaw. See id. ¶ 65.He cited the Greenfield survey as evidence that Napster use is associated with overall increases-rather than decreases-in CD purchases.See Lisi Dec. (Fader Rep.) ¶ 67. The Greenfield Online profile describes the company as "the pioneer in using the Internet for marketing research." Id. Exh. C ¶ 1. However, in his deposition, Fader stated that his knowledge of Greenfield's purported expertise came from representations that Greenfield itself made. See Greer Dec., Exh. 1 (Fader Dep.) at 226:19-25, 227:1-2.

      53

      Greenfield maintains a proprietary database of over 500,000 registered panel members. To choose a survey sample from this panel, Greenfield relied on Forrester Research Inc.'s Year 2000 Benchmark survey of 80,000 offline and online individuals in the United States. See Lisi Dec. (Fader Rep.), Exh. C ¶ 2. The Forrester Benchmark survey was used to assign a sample weight to panel members. See id.Fader admitted under oath that he had never seen the Forrester Benchmark survey, nor does he know how it was conducted. See Greer Dec. (Fader Dep.) at 236:17-25, 237:1-2, 241:19-23, 242:1-2.

      54

      After choosing its sample, Greenfield sent an invitational letter to a "randomly-selected, Internet-representative sample of 35,000 panel members" who were not informed about the purpose of the survey. See Lisi Dec. (Fader Rep.), Exh. C ¶ 2. While the Fader Report states that letter recipients "did not receive any incentive to participate," id., Greenfield offers potential members of its larger panel chances to win sweepstakes and other incentives to join. See Greer July 13, 2000 Dec., Exh. 1 (Fader Dep.) at 245:18-22. Fader never reviewed a copy of the invitation letter. See id. at 244:8-9.

      55

      Of the 12,940 persons who completed the survey questionnaire, 8,517 were included in the Fader Report according to age, residence, familiarity with downloading MP3 files, and completion of the entire survey. See Lisi Dec. (Fader Rep.), Exh. C ¶ 3. Fader admitted at his deposition that he does not believe survey responses were validated to insure that the person who answered the questions was the one to whom the survey was sent. See Greer July 13, 2000 Dec ., Exh. 1 (Fader Dep.) at 254-24-25, 255:1-3.

      56

      Plaintiffs object to the Greenfield survey on the ground that it was not conducted according to recognized standards governing the reliability of surveys offered as evidence in litigation. The greater problems, in this court's view, are that Fader played a minimal role in overseeing the administration of the survey, and his report contains almost no tables or other objective data about the survey respondents and their answers. Defendant admitted at the preliminary injunction hearing that Exhibit 7 to the Fader Report constitutes the only objective, statistical breakdown of the Greenfield survey, aside from Fader's own characterization of the results. This lack of data prevents the court from conducting its own impartial review of the survey pool and responses. Furthermore, Fader contracted the work on the Greenfield survey to a company about which he knew relatively little and did not review key documents, such as the invitation letter or the Forrester Benchmark survey. In short, his claim to have designed and overseen the Greenfield survey appears exaggerated, and the generality of his report renders it of dubious reliability and value.

      57

      Aside from the Greenfield study, Fader primarily relied on newspaper and magazine articles that he did not write or research and studies that he did not conduct. For example, to support his contention that college students do not constitute the majority of Napster users, he cited two reports: the Pew Internet & American Life Project, Internet Tracking Report ("Pew Report"), June 8, 2000; and Cyberdialogue, Inc., Cybercitizen Entertainment Continuous Advisory Service: CyberBits Trend Report, No. 1, 2000.See Lisi Dec. (Fader Rep.) ¶ 49. He admitted in his deposition that he does not know how the Pew Report selected its participants or whether it followed proper survey methodologies. See Greer July 13, 2000 Dec. (Fader Dep.) at 136:15-24, 160:16-22. The "chorus of data refuting plaintiffs' finding of substantial negative impact on music purchasing" also turns out to be a handful of studies and surveys conducted by others. See Lisi Dec. (Fader Rep.) ¶¶ 36-45. Fader appears to have limited knowledge of how these surveys were conducted. For instance, he conceded in his deposition that he had not seen the interview instructions for a 1999 survey by Digital Mogul and CENTRIS, nor could he vouch for its methodological rigor. See Greer July 13, 2000 Dec. (Fader Dep.) at 141:17-25, 142:10-16.

      58

      Given these limitations, the court finds that Fader cannot attest credibly that the surveys upon which he relied (including the Greenfield survey) conformed to accepted survey principles. Nor is the court willing to rely on opinions based on information reported in newspapers and magazines. Although plaintiffs' motion to exclude the Fader Report is denied, the court chooses not to rely on Fader's findings in determining the issues of fair use and irreparable harm.

      59
      B. Lessig Report
      60

      Plaintiffs challenge the Lessig Report because they believe it constitutes inadmissible legal opinion. Lawrence Lessig is a Professor of Law at Stanford Law School. See Lisi Dec. (Lessig Rep.) ¶ 2. He has written extensively in the field of Internet regulation, see id. ¶ 3, but he is not formally trained in computer science or computer programming. See id. ¶ 6. He states that the expertise he brings to this case lies "in understanding the relationship between law and technology." Id. His report expresses the view that this court should follow the Supreme Court's approach of considering the practical effect of legal regulation on Internet technology before wielding its injunctive power. See id. ¶¶ 10-11.

      61

      The Ninth Circuit does not allow attorneys to testify about the applicable law. See Aguilar v. International Longshoreman's Union Local No. 10, 966 F.2d 443, 447 (9th Cir.1992). Treatises also opine that expert legal testimony is inadmissible. SeeMcCormick on Evidence § 12, at 31 (E. Cleary's Lawyer, 3d ed.1984); VII Wignmore on Evidence § 1952, at 81. The Lessig Report merely offers a combination of legal opinion and editorial comment on Internet policy. Therefore, this court grants plaintiffs' motion to exclude it.

      62
      C. Hall Report
      63

      Dr. Robert E. Hall is a tenured Professor of Economics at Stanford University and a Senior Fellow at the Hoover Institution. See Lisi Dec. (Hall Rep.) ¶ 1. The parties do not dispute Hall's qualifications as an expert in economics. Defendant offers the Hall Report to show that Napster will not reduce plaintiffs' profits in the near future, whereas "shutting down" Napster with a preliminary injunction creates a significant probability that Napster will lose most of its value. See id. ¶ 6. Hall reasons that Napster promotes more sales than it displaces. See e.g., id. ¶ 31.

      64

      Plaintiffs challenge the Hall Report on two broad bases. First, they contend that Hall failed to consider evidence that was inconsistent with his position. Specifically, he disregarded the Jay Report, ignored relevant data in studies by the University of Southern California and Rolling Stone magazine, and attacked aspects of the Fine Report showing that music sales near college campuses were lower than the national average. Plaintiffs cite Concord Boat Corp. v. Brunswick Boat Corp., 207 F.3d 1039, 1056-57 (8th Cir.2000) to show that other courts have criticized Hall for ignoring inconvenient evidence. Plaintiffs also point to passages in Hall's deposition indicating that he neglected to consider the Jay Report, which he obtained and even cited, and that in retrospect, he thought his analysis of the USC Study was "not completely fair." Pl.'s Mot. to Exclude Hall Rep. at 6-7 & n. 4.

      65

      Second, plaintiffs contend that the Hall Report is irrelevant, insofar as it discusses the potential hardship created by "shutting down" Napster. Plaintiffs note that they do not seek to preliminarily enjoin all of Napster's activities-for example, they do not object to the chat room, the New Artist Program, the news feature, or the instant messaging.

      66

      The court agrees that Hall relied too heavily on outside studies that favored defendant without performing any analysis of the Jay Report. However, these shortcomings are not grave enough to warrant exclusion of his expert opinion. Insofar as the Hall Report assumes the requested injunction would put defendant out of business, it tends to corroborate plaintiffs' argument that Napster has no legitimate non-infringing uses. Since this conclusion benefits plaintiffs, they would be wise not to object too strenuously to admission of the Hall Report.

      67
      D. Tygar Report
      68

      Dr. J.D. Tygar is a tenured Professor of Engineering and Computer Science at the University of California, Berkeley. He is an expert in software engineering, computer security, and cryptography. See Lisi Dec. (Tygar Rep.) at 1. He offers conclusions about, inter alia, Napster's ability to detect and prevent infringement. Plaintiffs make individual objections to the conclusions offered in his report.

      69
      1. Conclusion 1: Comparability of Napster Software to Cassette Decks
      70

      In Conclusion 1 of his report, Tygar likens Napster to cassette decks, VCRs, digital audio tape recorders and other devices because of its ability to reproduce music. Plaintiffs challenge this opinion on the grounds of relevance and lack of foundation in either empirical evidence or expertise. The court sustains this objection. The instant litigation is not confined to Napster's software, but encompasses the entire system that defendant Napster, Inc. operates. The court has indicated previously that it considers Napster's search engine to be part of the Napster system. See A & M Records, Inc v. Napster, 2000 WL 57136, at *6 (N.D.Cal. May 12, 2000). As plaintiffs note, cassette decks do not perform search functions. Tygar's deposition testimony reveals that he did not conduct any tests to determine whether cassette decks or the other devices he mentioned are capable of performing critical Napster functions like searching and indexing. Many of them clearly do not perform such tasks. Accordingly, Conclusion I will be struck in its entirety.

      71
      2. Conclusion 2: Applicability of 17 U.S.C. Section 512(a)
      72

      In Conclusion 2, Tygar opines that Napster is similar to "existing file sharing techniques" like the search engines Lycos and Alta Vista, email, and the World Wide Web-among others. He further states that he believes Napster qualifies for the safe harbor in 17 U.S.C. section 512(a).See Lisi Dec. (Tygar Rep.) at 26. Tygar's opinions in Conclusion 2 conflict with this court's ruling on defendant's motion for summary adjudication. See A & M Records, Inc v. Napster, 2000 WL 57136, at *7-8 (N.D.Cal. May 12, 2000). There, the court expressly held that section 512(a) does not cover Napster because, unlike protected Internet service providers, Napster does not act as a mere conduit for file sharing. See id.

      73

      Lay persons may not offer expert testimony about the content of the law. See, e.g., United States ex rel Oliver v. Parsons Co., 195 F.3d 457, 462 (9th Cir.1999), cert. denied,__U.S.__, 102 S.Ct. 2657 (2000); Crow Tribe of Indians v. Racicot, 87 F.3d 1039, 1045 (9th Cir.1996). Such testimony is especially inappropriate when it conflicts with past rulings of the court. Therefore, Conclusion 2 is inadmissible.

      74
      3. Conclusion 3: Access to Copyright Information and Ability to Obtain Authorization from Copyright Owners
      75

      According to Conclusion 3, Napster cannot distinguish copyrighted material restricted by the owner from either uncopyrighted material or copyrighted material for which the owner or the law permits free distribution. Tygar further opined that it would be "technically infeasible" to require Napster to obtain information from the rights-holder before providing access to the material. See Lisi Dec. (Tygar Rep.) at 28. At his deposition, Tygar clarified that, by "Napster," he meant the computer program, rather than the defendant company. See Greer July 13, 2000 Dec. (Tygar Dep.). at 84:3-10.

      76

      Plaintiffs first challenge Tygar's opinion regarding Napster's ability to identify copyrighted material on the ground that it does not reflect "good science" under Daubert.They object that Tygar did not interview Napster employees or conduct any empirical research about rights-checking. See id. at 172:14-25, 173:1-2.He also failed to confer with his peers in the field of computer science. See id. at 172:6-13, 175:11-14.At his deposition, he characterized his research as qualitative, rather than quantitative. See id. at 175:9-10.

      77

      Plaintiffs also argue that Tygar's opinion on Napster's ability to obtain information about copyrights must be excluded because it is not the product of his expertise as a computer scientist. According to plaintiffs, Tygar does not understand (and hence cannot offer opinions about) how other copyright users like radio and television stations obtain authorizations. Tygar does not discuss these other channels of distribution, however. As plaintiffs note, he generally limits his conclusions to the capabilities of the Napster computer program.

      78

      The court overrules plaintiffs' objection to the extent that Conclusion 3 discusses whether the Napster system can determine if a given MP3 file has been pre-authorized for distribution. Tygar's failure to give a more detailed explanation of how he analyzed the Napster service bothers the court; however, given his expert qualifications, this shortcoming does not warrant excluding his report. However, speculation on pages 32 and 33 about the ability of humans to check for pre-authorization lies beyond the scope of Tygar's expertise and must be excluded.

      79
      4. Conclusion 4: Napster's Ability to Check Authorizations
      80

      Plaintiffs object to this conclusion because it does not encompass other methods of checking authorizations "both on the Internet and in the real world."Pl.'s Mot. to Exclude Tygar Rep. at 8. However, Conclusion 4 is limited to the ability of the Napster computer program to check authorizations. This lies within Tygar's expertise as a computer scientist. The court therefore overrules plaintiffs' objection.

      81
      5. Conclusion 5: Authorization Would Change the Web to a "Centralized Utility"
      82

      Conclusion 5 merely amounts to editorial comment on Internet policy. It does not appear to be based on any research or expertise. Because it does not aid the trier of fact, it will be excluded.

      83
      6. Conclusion 6: Watermarking Could Carry Rights Information with a Recording
      84

      Plaintiffs object that Conclusion 6 is irrelevant because the preferred watermarking standard is not an issue in this case. The court disagrees. Because Napster has raised acquiescence and waiver as defenses, Tygar's expert opinion about the recording industry's failure to develop technologies to protect its copyrights has relevance. The court overrules plaintiffs' objection.

      85
      7. Conclusion 7: Napster's Ability to Tell Whether a Use of the System is Infringing
      86

      Here, Tygar speculates about possible legitimate uses of the Napster system. While this opinion is relevant to defendant's fair use defense, neither a lay person nor an attorney may presume to instruct the court in the law. Accordingly, Conclusion 7 is inadmissible.

      87
      CONCLUSION
      88

      For the foregoing reasons, defendant's motion to exclude the Jay Report and the Fine Report is DENIED. The court also DENIES plaintiffs' motion to exclude the Fader Report and the Hall Report, but GRANTS plaintiffs' motion to exclude the Lessig Report. Plaintiffs' motion to exclude the Tygar Report is GRANTED as to Conclusions 1, 2, 5, 7, and the portion of Conclusion 3 on pages 32-33 that deals with humans' ability to check for preauthorization. The court deems the remainder of the Tygar Report to be admissible.

      89

      IT IS SO ORDERED.

      90

      [1] Plaintiffs also contend that Napster's motion is improper because it violates this court's rule prohibiting separate motions to strike. See Rules of the Hon. Marilyn Hall Patel, at Addendum I. The court considers this argument disingenuous and will disregard it because plaintiffs have also filed separate motions to strike the opinions of Drs. Fader, Hall, and Tygar and Professor Lessig.

      91

      [2] 4,454 schools and 2099 stores. See Fine Rep. at 5.

      92

      [3] 67 schools and 48 stores. See id.Fine admits that he did not check to see why the schools banned Napster. See Mewes Dec., Exh, B (Fine Dep.) at 58:8-10.

      93

      [4] 40 schools and 44 stores. See Fine Rep. at 5. Fine concedes that he did not verify the accuracy of the Yahoo Internet Life report. See Mewes Dec., Exh. B (Fine Dep.) at 17:15-17.

  • 2 University of Geneva Internet Law, June 2017 -- "Practising Cyberlaw: Litigating Internet Disputes" (Problem #1)

    This playlist includes readings for problem #1 of 4, as part of the “Practising Cyberlaw: Litigating Internet Disputes” session of the University of Geneva Internet Law Summer School course, June 2017.

  • 3 University of Geneva Internet Law, June 2017 -- "Practising Cyberlaw: Litigating Internet Disputes" (Problem #2)

    This playlist includes readings for problem #2 of 6, as part of the “Practising Cyberlaw: Litigating Internet Disputes” session of the University of Geneva Internet Law Summer School course, June 2017.

  • 4 University of Geneva Internet Law, June 2017 -- "Practising Cyberlaw: Litigating Internet Disputes" (Problem #3)

    This playlist includes readings for problem #3 of 6, as part of the “Practising Cyberlaw: Litigating Internet Disputes” session of the University of Geneva Internet Law Summer School course, June 2017.

  • 5 University of Geneva Internet Law, June 2017 -- "Practising Cyberlaw: Litigating Internet Disputes" (Problem #4)

    This playlist includes readings for problem #4 of 6, as part of the “Practising Cyberlaw: Litigating Internet Disputes” session of the University of Geneva Internet Law Summer School course, June 2017.

    • 5.1 December 6, 2011 letter from Facebook (counsel: Joseph Cutler, Perkins Coie) to Hunter Moore, read all

    • 5.2 ABC, et al., v. Aereo, Inc., 1:12-cv-01543-AJN (SDNY) (1 of 2): Expert Report of Paul Horowitz, April 17, 2012, read pp. 1-5; 18-28

    • 5.3 ABC, et al., v. Aereo, Inc., 1:12-cv-01543-AJN (SDNY) (2 of 2): Expert Report of John Kelly, April 10, 2012, skim all

    • 5.4 Perfect 10 v. Amazon.com, 508 F.3d 1146 (9th Cir. 2007)

      1
      508 F.3d 1146
      2
      PERFECT 10, INC., a California corporation, Plaintiff-Appellant,
      v.
      AMAZON.COM, INC., a corporation; A9.Com Inc., a corporation, Defendants-Appellees.
      Perfect 10, Inc., a California corporation, Plaintiff-Appellant,
      v.
      Google Inc., a corporation, Defendant-Appellee.
      Perfect 10, Inc., a California corporation, Plaintiff-Appellee,
      v.
      Google Inc., a corporation, Defendant-Appellant.
      Perfect 10, Inc., a California corporation, Plaintiff-Appellant,
      v.
      Google Inc., a corporation, Defendant-Appellee.
      Perfect 10, Inc., a California corporation, Plaintiff-Appellee,
      v.
      Google Inc., a corporation, Defendant-Appellant.
      Perfect 10, Inc., a California corporation, Plaintiff-Appellee,
      v.
      Google Inc., a corporation, Defendant-Appellant.
      3
      No. 06-55405.
      4
      No. 06-55406.
      5
      No. 06-55425.
      6
      No. 06-55759.
      7
      No. 06-55854.
      8
      No. 06-55877.
      9
      United States Court of Appeals, Ninth Circuit.
      10
      Argued and Submitted November 15, 2006.
      11
      Filed May 16, 2007.
      12
      Amended December 3, 2007.
      13

      [1153] Russell J. Frackman and Jeffrey D. Goldman, Mitchell, Silberberg & Knupp LLP, Los Angeles, CA, Jeffrey N. Mausner, Berman, Mausner & Resser, Los Angeles, CA, Daniel J. Cooper, Perfect 10, Inc., Beverly Hills, CA, for plaintiff-appellant Perfect 10, Inc.

      14

      Andrew P. Bridges and Jennifer A. Golinveaux, Winston & Strawn LLP, San Francisco, CA, Gene C. Schaerr, Winston & Strawn LLP, Washington, DC, for defendant-appellee and cross-appellant Google Inc.

      15

      Mark T. Jansen & Anthony J. Malutta, Townsend and Townsend and Crew LLP, San Francisco, CA, for defendants-appellees Amazon.com and A9.com, Inc.

      16

      Fred von Lohmann, Electronic Frontier Foundation, San Francisco, CA, for amicus curiae Electronic Frontier Foundation, American Library Association, Medical Library [1154] Association, American Association of Law Libraries, Association of Research Libraries, and Special Libraries Association in support of Google Inc.

      17

      Victor S. Perlman, of counsel, American Society of Media Photographers; Nancy E. Wolff, of counsel, Cowan, DeBaets, Abrahams & Sheppard, LLP; Robert W. Clarida and Jason D. Sanders, Cowan, Liebowitz & Latman, P.C., New York, NY, for amicus curiae American Society of Media Photographers, Inc., Picture Archive Council of America, Inc., British Association of Picture Libraries and Agencies, Inc., Stock Artists Alliance, The Graphic Artists Guild, American Society of Picture Professionals and National Press Photographers, in support of Perfect 10 on issue of Google's liability for the display of full-size images.

      18

      Eric J. Schwartz and Steven J. Metalitz, Smith & Metalitz LLP, Washington, DC, for amicus curiae Motion Picture Association of America, Inc. in support of Perfect 10.

      19

      Jonathan Band, Jonathan Band PLLC, Washington, DC, for amicus curiae Net-Coalition, Computer and Communications Industry Association, U.S. Internet Service Provider Association, Consumer Electronics Association, Home Recording Rights Coalition, Information Technology Association of America, and Internet Commerce Coalition in support of Google Inc.

      20

      Kenneth L. Doroshow and Linda J. Zirkelbach, Recording Industry Association of America, Washington, DC; Jacqueline C. Charlesworth, National Music Publishers' Association, Washington, DC; Robert W. Clarida, Richard S. Mandel and Jonathan Z. King, Cowan, Liebowitz & Latman, P.C., New York, NY, for amicus curiae Recording Industry Association of America and National Music Publishers' Association in support of neither party.

      21

      Appeal from the United States District Court for the Central District of California; A. Howard Matz, District Judge, Presiding. D.C. Nos. CV-05-04753-AHM, CV-04-09484-AHM.

      22

      Before: CYNTHIA HOLCOMB HALL, HAWKINS, and SANDRA S. IKUTA, Circuit Judges.

      23

      IKUTA, Circuit Judge:

      24

      In this appeal, we consider a copyright owner's efforts to stop an Internet search engine from facilitating access to infringing images. Perfect 10, Inc. sued Google Inc., for infringing Perfect 10's copyrighted photographs of nude models, among other claims. Perfect 10 brought a similar action against Amazon.com and its subsidiary A9.com (collectively, "Amazon.com"). The district court preliminarily enjoined Google from creating and publicly displaying thumbnail versions of Perfect 10's images, Perfect 10 v. Google, Inc., 416 F.Supp.2d 828 (C.D.Cal.2006), but did not enjoin Google from linking to third-party websites that display infringing full-size versions of Perfect 10's images. Nor did the district court preliminarily enjoin Amazon.com from giving users access to information provided by Google. Perfect 10 and Google both appeal the district court's order. We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1).[1]

      25

      [1155] The district court handled this complex case in a particularly thoughtful and skillful manner. Nonetheless, the district court erred on certain issues, as we will further explain below. We affirm in part, reverse in part, and remand.

      26
      I
      27
      Background
      28

      Google's computers, along with millions of others, are connected to networks known collectively as the "Internet." "The Internet is a world-wide network of networks ... all sharing a common communications technology." Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., Inc., 923 F.Supp. 1231, 1238 n. 1 (N.D.Cal.1995). Computer owners can provide information stored on their computers to other users connected to the Internet through a medium called a webpage. A webpage consists of text interspersed with instructions written in Hypertext Markup Language ("HTML") that is stored in a computer. No images are stored on a webpage; rather, the HTML instructions on the webpage provide an address for where the images are stored, whether in the webpage publisher's computer or some other computer. In general, webpages are publicly available and can be accessed by computers connected to the Internet through the use of a web browser.

      29

      Google operates a search engine, a software program that automatically accesses thousands of websites (collections of webpages) and indexes them within a database stored on Google's computers. When a Google user accesses the Google website and types in a search query, Google's software searches its database for websites responsive to that search query. Google then sends relevant information from its index of websites to the user's computer. Google's search engines can provide results in the form of text, images, or videos.

      30

      The Google search engine that provides responses in the form of images is called "Google Image Search." In response to a search query, Google Image Search identifies text in its database responsive to the query and then communicates to users the images associated with the relevant text. Google's software cannot recognize and index the images themselves. Google Image Search provides search results as a webpage of small images called "thumbnails," which are stored in Google's servers. The thumbnail images are reduced, lower-resolution versions of full-sized images stored on third-party computers.

      31

      When a user clicks on a thumbnail image, the user's browser program interprets HTML instructions on Google's webpage. These HTML instructions direct the user's browser to cause a rectangular area (a "window") to appear on the user's computer screen. The window has two separate areas of information. The browser fills the top section of the screen with information from the Google webpage, including the thumbnail image and text. The HTML instructions also give the user's browser the address of the website publisher's computer that stores the full-size version of the thumbnail.[2] By following [1156] the HTML instructions to access the third-party webpage, the user's browser connects to the website publisher's computer, downloads the full-size image, and makes the image appear at the bottom of the window on the user's screen. Google does not store the images that fill this lower part of the window and does not communicate the images to the user; Google simply provides HTML instructions directing a user's browser to access a third-party website. However, the top part of the window (containing the information from the Google webpage) appears to frame and comment on the bottom part of the window. Thus, the user's window appears to be filled with a single integrated presentation of the full-size image, but it is actually an image from a third-party website framed by information from Google's website. The process by which the webpage directs a user's browser to incorporate content from different computers into a single window is referred to as "in-line linking." Kelly v. Arriba Soft Corp., 336 F.3d 811, 816 (9th Cir.2003). The term "framing" refers to the process by which information from one computer appears to frame and annotate the in-line linked content from another computer. Perfect 10, 416 F.Supp.2d at 833-34.

      32

      Google also stores webpage content in its cache.[3] For each cached webpage, Google's cache contains the text of the webpage as it appeared at the time Google indexed the page, but does not store images from the webpage. Id. at 833. Google may provide a link to a cached webpage in response to a user's search query. However, Google's cache version of the webpage is not automatically updated when the webpage is revised by its owner. So if the webpage owner updates its webpage to remove the HTML instructions for finding an infringing image, a browser communicating directly with the webpage would not be able to access that image. However, Google's cache copy of the webpage would still have the old HTML instructions for the infringing image. Unless the owner of the computer changed the HTML address of the infringing image, or otherwise rendered the image unavailable, a browser accessing Google's cache copy of the website could still access the image where it is stored on the website publisher's computer. In other words, Google's cache copy could provide a user's browser with valid directions to an infringing image even though the updated webpage no longer includes that infringing image.

      33

      In addition to its search engine operations, Google generates revenue through a business program called "AdSense." Under this program, the owner of a website can register with Google to become an AdSense "partner." The website owner then places HTML instructions on its webpages that signal Google's server to place advertising on the webpages that is relevant to the webpages' content. Google's computer program selects the advertising automatically by means of an algorithm. AdSense participants agree to share the revenues that flow from such advertising with Google.

      34

      [1157] Google also generated revenues through an agreement with Amazon.com that allowed Amazon.com to in-line link to Google's search results. Amazon.com gave its users the impression that Amazon.com was providing search results, but Google communicated the search results directly to Amazon.com's users. Amazon.com routed users' search queries to Google and automatically transmitted Google's responses (i.e., HTML instructions for linking to Google's search results) back to its users.

      35

      Perfect 10 markets and sells copyrighted images of nude models. Among other enterprises, it operates a subscription website on the Internet. Subscribers pay a monthly fee to view Perfect 10 images in a "members' area" of the site. Subscribers must use a password to log into the members' area. Google does not include these password-protected images from the members' area in Google's index or database. Perfect 10 has also licensed Fonestarz Media Limited to sell and distribute Perfect 10's reduced-size copyrighted images for download and use on cell phones.

      36

      Some website publishers republish Perfect 10's images on the Internet without authorization. Once this occurs, Google's search engine may automatically index the webpages containing these images and provide thumbnail versions of images in response to user inquiries. When a user clicks on the thumbnail image returned by Google's search engine, the user's browser accesses the third-party webpage and in-line links to the full-sized infringing image stored on the website publisher's computer. This image appears, in its original context, on the lower portion of the window on the user's computer screen framed by information from Google's webpage.

      37

      Procedural History. In May 2001, Perfect 10 began notifying Google that its thumbnail images and in-line linking to the full-size images infringed Perfect 10's copyright. Perfect 10 continued to send these notices through 2005.

      38

      On November 19, 2004, Perfect 10 filed an action against Google that included copyright infringement claims. This was followed by a similar action against Amazon.com on June 29, 2005. On July 1, 2005 and August 24, 2005, Perfect 10 sought a preliminary injunction to prevent Amazon.com and Google, respectively, from "copying, reproducing, distributing, publicly displaying, adapting or otherwise infringing, or contributing to the infringement" of Perfect 10's photographs; linking to websites that provide full-size infringing versions of Perfect 10's photographs; and infringing Perfect 10's username/password combinations.

      39

      The district court consolidated the two actions and heard both preliminary injunction motions on November 7, 2005. The district court issued orders granting in part and denying in part the preliminary injunction against Google and denying the preliminary injunction against Amazon.com. Perfect 10 and Google cross-appealed the partial grant and partial denial of the preliminary injunction motion, and Perfect 10 appealed the denial of the preliminary injunction against Amazon.com. On June 15, 2006, the district court temporarily stayed the preliminary injunction.

      40
      II
      41
      Standard of Review
      42

      We review the district court's grant or denial of a preliminary injunction for an abuse of discretion. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir.2001). The district court must support a preliminary injunction with findings of fact, which we review for clear error. Earth Island Inst. v. U.S. Forest Serv., 442 F.3d 1147, 1156 (9th Cir.2006). We review the district court's conclusions of law de novo. Napster, 239 F.3d at 1013.

      43

      [1158] Section 502(a) of the Copyright Act authorizes a court to grant injunctive relief "on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a). "Preliminary injunctive relief is available to a party who demonstrates either: (1) a combination of probable success on the merits and the possibility of irreparable harm; or (2) that serious questions are raised and the balance of hardships tips in its favor. These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Napster, 239 F.3d at 1013 (internal quotation and citation omitted).

      44

      Because Perfect 10 has the burden of showing a likelihood of success on the merits, the district court held that Perfect 10 also had the burden of demonstrating a likelihood of overcoming Google's fair use defense under 17 U.S.C. § 107. Perfect 10, 416 F.Supp.2d at 836-37. This ruling was erroneous. At trial, the defendant in an infringement action bears the burden of proving fair use. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). Because "the burdens at the preliminary injunction stage track the burdens at trial," once the moving party has carried its burden of showing a likelihood of success on the merits, the burden shifts to the non-moving party to show a likelihood that its affirmative defense will succeed. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429, 126 S.Ct. 1211, 163 L.Ed.2d 1017 (2006); see also Abbott Labs. v. Andrx Pharms., Inc., 473 F.3d 1196, 1201 (Fed. Cir.2007) (to defeat a motion for preliminary injunctive relief in a patent infringement case, the non-moving party must establish a likelihood of success in proving its defenses of invalidity or unenforceability); PHG Techs., LLC v. St. John Cos., 469 F.3d 1361, 1365 (Fed.Cir.2006). Accordingly, once Perfect 10 has shown a likelihood of success on the merits, the burden shifts to Google to show a likelihood that its affirmative defenses will succeed.

      45

      In addition to its fair use defense, Google also raises an affirmative defense under title II of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 512. Congress enacted title II of the DMCA "to provide greater certainty to service providers concerning their legal exposure for infringements that may occur in the course of their activities." Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004) (internal quotation omitted). Sections 512(a) through (d) limit liability for (respectively): "(1) transitory digital network communications; (2) system caching; (3) information residing on systems or networks at the direction of users; and (4) information location tools." Id. at 1077. A service provider that qualifies for such protection is not liable for monetary relief and may be subject only to the narrow injunctive relief set forth in section 512(j). 17 U.S.C. § 512(a). If Perfect 10 demonstrates a likelihood of success on the merits, Google must show a likelihood of succeeding in its claim that it qualifies for protection under title II of the DMCA.[4][1159]

      46
      III
      47
      Direct Infringement
      48

      Perfect 10 claims that Google's search engine program directly infringes two exclusive rights granted to copyright holders: its display rights and its distribution rights.[5] "Plaintiffs must satisfy two requirements to present a prima facie case of direct infringement: (1) they must show ownership of the allegedly infringed material and (2) they must demonstrate that the alleged infringers violate at least one exclusive right granted to copyright holders under 17 U.S.C. § 106." Napster, 239 F.3d at 1013; see 17 U.S.C. § 501(a). Even if a plaintiff satisfies these two requirements and makes a prima facie case of direct infringement, the defendant may avoid liability if it can establish that its use of the images is a "fair use" as set forth in 17 U.S.C. § 107. See Kelly, 336 F.3d at 817.

      49

      Perfect 10's ownership of at least some of the images at issue is not disputed. See Perfect 10, 416 F.Supp.2d at 836.

      50

      The district court held that Perfect 10 was likely to prevail in its claim that Google violated Perfect 10's display right with respect to the infringing thumbnails. Id. at 844. However, the district court concluded that Perfect 10 was not likely to prevail on its claim that Google violated either Perfect 10's display or distribution right with respect to its full-size infringing images. Id. at 844-45. We review these rulings for an abuse of discretion. Napster, 239 F.3d at 1013.

      51
      A. Display Right
      52

      In considering whether Perfect 10 made a prima facie case of violation of its display right, the district court reasoned that a computer owner that stores an image as electronic information and serves that electronic information directly to the user ("i.e., physically sending ones and zeroes over the [I]nternet to the user's browser," Perfect 10, 416 F.Supp.2d at 839) is displaying the electronic information in violation of a copyright holder's exclusive display right. Id. at 843-45; see 17 U.S.C. § 106(5). Conversely, the owner of a computer that does not store and serve the electronic information to a user is not displaying that information, even if such owner in-line links to or frames the electronic information. Perfect 10, 416 F.Supp.2d at 843-45. The district court referred to this test as the "server test." Id. at 838-39.

      53

      Applying the server test, the district court concluded that Perfect 10 was likely to succeed in its claim that Google's thumbnails constituted direct infringement but was unlikely to succeed in its claim that Google's in-line linking to full-size infringing images constituted a direct infringement. [1160] Id. at 843-45. As explained below, because this analysis comports with the language of the Copyright Act, we agree with the district court's resolution of both these issues.

      54

      We have not previously addressed the question when a computer displays a copyrighted work for purposes of section 106(5). Section 106(5) states that a copyright owner has the exclusive right "to display the copyrighted work publicly." The Copyright Act explains that "display" means "to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process...." 17 U.S.C. § 101. Section 101 defines "copies" as "material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." Id. Finally, the Copyright Act provides that "[a] work is `fixed' in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." Id.

      55

      We must now apply these definitions to the facts of this case. A photographic image is a work that is "`fixed' in a tangible medium of expression," for purposes of the Copyright Act, when embodied (i.e., stored) in a computer's server (or hard disk, or other storage device). The image stored in the computer is the "copy" of the work for purposes of copyright law. See MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 517-18 (9th Cir.1993) (a computer makes a "copy" of a software program when it transfers the program from a third party's computer (or other storage device) into its own memory, because the copy of the program recorded in the computer is "fixed" in a manner that is "sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration" (quoting 17 U.S.C. § 101)). The computer owner shows a copy "by means of a ... device or process" when the owner uses the computer to fill the computer screen with the photographic image stored on that computer, or by communicating the stored image electronically to another person's computer. 17 U.S.C. § 101. In sum, based on the plain language of the statute, a person displays a photographic image by using a computer to fill a computer screen with a copy of the photographic image fixed in the computer's memory. There is no dispute that Google's computers store thumbnail versions of Perfect 10's copyrighted images and communicate copies of those thumbnails to Google's users.[6] Therefore, Perfect 10 has made a prima facie case that Google's communication of its stored thumbnail images directly infringes Perfect 10's display right.

      56

      Google does not, however, display a copy of full-size infringing photographic images for purposes of the Copyright Act when Google frames in-line linked images that appear on a user's computer screen. Because Google's computers do not store the photographic images, Google does not have a copy of the images for purposes of the Copyright Act. In other words, Google does not have any "material objects ... in [1161] which a work is fixed ... and from which the work can be perceived, reproduced, or otherwise communicated" and thus cannot communicate a copy. 17 U.S.C. § 101.

      57

      Instead of communicating a copy of the image, Google provides HTML instructions that direct a user's browser to a website publisher's computer that stores the full-size photographic image. Providing these HTML instructions is not equivalent to showing a copy. First, the HTML instructions are lines of text, not a photographic image. Second, HTML instructions do not themselves cause infringing images to appear on the user's computer screen. The HTML merely gives the address of the image to the user's browser. The browser then interacts with the computer that stores the infringing image. It is this interaction that causes an infringing image to appear on the user's computer screen. Google may facilitate the user's access to infringing images. However, such assistance raises only contributory liability issues, see Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 929-30, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005), Napster, 239 F.3d at 1019, and does not constitute direct infringement of the copyright owner's display rights.

      58

      Perfect 10 argues that Google displays a copy of the full-size images by framing the full-size images, which gives the impression that Google is showing the image within a single Google webpage. While in-line linking and framing may cause some computer users to believe they are viewing a single Google webpage, the Copyright Act, unlike the Trademark Act, does not protect a copyright holder against acts that cause consumer confusion. Cf. 15 U.S.C. § 1114(1) (providing that a person who uses a trademark in a manner likely to cause confusion shall be liable in a civil action to the trademark registrant).[7]

      59

      Nor does our ruling that a computer owner does not display a copy of an image when it communicates only the HTML address of the copy erroneously collapse the display right in section 106(5) into the reproduction right set forth in section 106(1). Nothing in the Copyright Act prevents the various rights protected in section 106 from overlapping. Indeed, under some circumstances, more than one right must be infringed in order for an infringement claim to arise. For example, a "Game Genie" device that allowed a player to alter features of a Nintendo computer game did not infringe Nintendo's right to prepare derivative works because the Game Genie did not incorporate any portion of the game itself. See Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc., 964 F.2d 965, 967 (9th Cir.1992). We held that a copyright holder's right to create derivative works is not infringed unless the alleged derivative work "incorporate[s] a protected work in some concrete or permanent `form.'" Id. In other words, in some contexts, the claimant must be able to claim infringement of its reproduction right in order to claim infringement of its right to prepare derivative works.

      60

      [1162] Because Google's cache merely stores the text of webpages, our analysis of whether Google's search engine program potentially infringes Perfect 10's display and distribution rights is equally applicable to Google's cache. Perfect 10 is not likely to succeed in showing that a cached webpage that in-line links to full-size infringing images violates such rights. For purposes of this analysis, it is irrelevant whether cache copies direct a user's browser to third-party images that are no longer available on the third party's website, because it is the website publisher's computer, rather than Google's computer, that stores and displays the infringing image.

      61
      B. Distribution Right
      62

      The district court also concluded that Perfect 10 would not likely prevail on its claim that Google directly infringed Perfect 10's right to distribute its full-size images. Perfect 10, 416 F.Supp.2d at 844-45. The district court reasoned that distribution requires an "actual dissemination" of a copy. Id. at 844. Because Google did not communicate the full-size images to the user's computer, Google did not distribute these images. Id.

      63

      Again, the district court's conclusion on this point is consistent with the language of the Copyright Act. Section 106(3) provides that the copyright owner has the exclusive right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." 17 U.S.C. § 106(3). As noted, "copies" means "material objects ... in which a work is fixed." 17 U.S.C. § 101. The Supreme Court has indicated that in the electronic context, copies may be distributed electronically. See N.Y. Times Co. v. Tasini, 533 U.S. 483, 498, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001) (a computer database program distributed copies of newspaper articles stored in its computerized database by selling copies of those articles through its database service). Google's search engine communicates HTML instructions that tell a user's browser where to find full-size images on a website publisher's computer, but Google does not itself distribute copies of the infringing photographs. It is the website publisher's computer that distributes copies of the images by transmitting the photographic image electronically to the user's computer. As in Tasini, the user can then obtain copies by downloading the photo or printing it.

      64

      Perfect 10 incorrectly relies on Hotaling v. Church of Jesus Christ of Latter-Day Saints and Napster for the proposition that merely making images "available" violates the copyright owner's distribution right. Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir.1997); Napster, 239 F.3d 1004. Hotaling held that the owner of a collection of works who makes them available to the public may be deemed to have distributed copies of the works. Hotaling, 118 F.3d at 203. Similarly, the distribution rights of the plaintiff copyright owners were infringed by Napster users (private individuals with collections of music files stored on their home computers) when they used the Napster software to make their collections available to all other Napster users. Napster, 239 F.3d at 1011-14.

      65

      This "deemed distribution" rule does not apply to Google. Unlike the participants in the Napster system or the library in Hotaling, Google does not own a collection of Perfect 10's full-size images and does not communicate these images to the computers of people using Google's search engine. Though Google indexes these images, it does not have a collection of stored full-size images it makes available to the public. Google therefore cannot be deemed to distribute copies of these images under the reasoning of Napster or [1163] Hotaling. Accordingly, the district court correctly concluded that Perfect 10 does not have a likelihood of success in proving that Google violates Perfect 10's distribution rights with respect to full-size images.

      66
      C. Fair Use Defense
      67

      Because Perfect 10 has succeeded in showing it would prevail in its prima facie case that Google's thumbnail images infringe Perfect 10's display rights, the burden shifts to Google to show that it will likely succeed in establishing an affirmative defense. Google contends that its use of thumbnails is a fair use of the images and therefore does not constitute an infringement of Perfect 10's copyright. See 17 U.S.C. § 107.

      68

      The fair use defense permits the use of copyrighted works without the copyright owner's consent under certain situations. The defense encourages and allows the development of new ideas that build on earlier ones, thus providing a necessary counterbalance to the copyright law's goal of protecting creators' work product. "From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright's very purpose...." Campbell, 510 U.S. at 575, 114 S.Ct. 1164. "The fair use doctrine thus `permits [and requires] courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.'" Id. at 577, 114 S.Ct. 1164 (quoting Stewart v. Abend, 495 U.S. 207, 236, 110 S.Ct. 1750, 109 L.Ed.2d 184 (1990)) (alteration in original).

      69

      Congress codified the common law of fair use in 17 U.S.C. § 107, which provides:

      70

      Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

      (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

      (2) the nature of the copyrighted work;

      (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

      (4) the effect of the use upon the potential market for or value of the copyrighted work.

      The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

      71

      17 U.S.C. § 107.

      72

      We must be flexible in applying a fair use analysis; it "is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis.... Nor may the four statutory factors be treated in isolation, one from another. All are to be explored, and the results weighed together, in light of the purposes of copyright." Campbell, 510 U.S. at 577-78, 114 S.Ct. 1164; see also Kelly, 336 F.3d at 817-18. The purpose of copyright law is "[t]o promote the Progress of Science and useful Arts," U.S. CONST. art. I, § 8, cl. 8, and to serve "`the welfare of the public.'" Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 n. 10, 104 S.Ct. 774, 78 L.Ed.2d 574 (quoting H.R.Rep. No. 2222, 60th Cong., 2d Sess. 7 (1909)).

      73

      [1164] In applying the fair use analysis in this case, we are guided by Kelly v. Arriba Soft Corp., which considered substantially the same use of copyrighted photographic images as is at issue here. See 336 F.3d 811. In Kelly, a photographer brought a direct infringement claim against Arriba, the operator of an Internet search engine. The search engine provided thumbnail versions of the photographer's images in response to search queries. Id. at 815-16. We held that Arriba's use of thumbnail images was a fair use primarily based on the transformative nature of a search engine and its benefit to the public. Id. at 818-22. We also concluded that Arriba's use of the thumbnail images did not harm the photographer's market for his image. Id. at 821-22.

      74

      In this case, the district court determined that Google's use of thumbnails was not a fair use and distinguished Kelly. Perfect 10, 416 F.Supp.2d at 845-51. We consider these distinctions in the context of the four-factor fair use analysis.

      75

      Purpose and character of the use. The first factor, 17 U.S.C. § 107(1), requires a court to consider "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." The central purpose of this inquiry is to determine whether and to what extent the new work is "transformative." Campbell, 510 U.S. at 579, 114 S.Ct. 1164. A work is "transformative" when the new work does not "merely supersede the objects of the original creation" but rather "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." Id. (internal quotation and alteration omitted). Conversely, if the new work "supersede[s] the use of the original," the use is likely not a fair use. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 550-51, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (internal quotation omitted) (publishing the "heart" of an unpublished work and thus supplanting the copyright holder's first publication right was not a fair use); see also Wall Data Inc. v. L.A. County Sheriff's Dep't, 447 F.3d 769, 778-82 (9th Cir.2006) (using a copy to save the cost of buying additional copies of a computer program was not a fair use).[8]

      76

      As noted in Campbell, a "transformative work" is one that alters the original work [1165] "with new expression, meaning, or message." Campbell, 510 U.S. at 579, 114 S.Ct. 1164. "A use is considered transformative only where a defendant changes a plaintiff's copyrighted work or uses the plaintiff's copyrighted work in a different context such that the plaintiff's work is transformed into a new creation." Wall Data, 447 F.3d at 778.

      77

      Google's use of thumbnails is highly transformative. In Kelly, we concluded that Arriba's use of thumbnails was transformative because "Arriba's use of the images serve[d] a different function than Kelly's use—improving access to information on the [I]nternet versus artistic expression." Kelly, 336 F.3d at 819. Although an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information. Just as a "parody has an obvious claim to transformative value" because "it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one," Campbell, 510 U.S. at 579, 114 S.Ct. 1164, a search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool. Indeed, a search engine may be more transformative than a parody because a search engine provides an entirely new use for the original work, while a parody typically has the same entertainment purpose as the original work. See, e.g., id. at 594-96, 114 S.Ct. 1164 (holding that 2 Live Crew's parody of "Oh, Pretty Woman" using the words "hairy woman" or "bald headed woman" was a transformative work, and thus constituted a fair use); Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 796-98, 800-06 (9th Cir.2003) (concluding that photos parodying Barbie by depicting "nude Barbie dolls juxtaposed with vintage kitchen appliances" was a fair use). In other words, a search engine puts images "in a different context" so that they are "transformed into a new creation." Wall Data, 447 F.3d at 778.

      78

      The fact that Google incorporates the entire Perfect 10 image into the search engine results does not diminish the transformative nature of Google's use. As the district court correctly noted, Perfect 10, 416 F.Supp.2d at 848-49, we determined in Kelly that even making an exact copy of a work may be transformative so long as the copy serves a different function than the original work, Kelly, 336 F.3d at 818-19. For example, the First Circuit has held that the republication of photos taken for a modeling portfolio in a newspaper was transformative because the photos served to inform, as well as entertain. See Nunez v. Caribbean Int'l News Corp., 235 F.3d 18, 22-23 (1st Cir.2000). In contrast, duplicating a church's religious book for use by a different church was not transformative. See Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1117 (9th Cir.2000). Nor was a broadcaster's simple retransmission of a radio broadcast over telephone lines transformative, where the original radio shows were given no "new expression, meaning, or message." Infinity Broad. Corp. v. Kirkwood, 150 F.3d 104, 108 (2d Cir.1998). Here, Google uses Perfect 10's images in a new context to serve a different purpose.

      79

      The district court nevertheless determined that Google's use of thumbnail images was less transformative than Arriba's use of thumbnails in Kelly because Google's use of thumbnails superseded Perfect 10's right to sell its reduced-size images for use on cell phones. See Perfect 10, 416 F.Supp.2d at 849. The district court stated that "mobile users can download and save the thumbnails displayed by Google Image Search onto their phones," and concluded "to the extent that users may choose to download free images to their [1166] phone rather than purchase [Perfect 10's] reduced-size images, Google's use supersedes [Perfect 10's]." Id.

      80

      Additionally, the district court determined that the commercial nature of Google's use weighed against its transformative nature. Id. Although Kelly held that the commercial use of the photographer's images by Arriba's search engine was less exploitative than typical commercial use, and thus weighed only slightly against a finding of fair use, Kelly, 336 F.3d at 818-20, the district court here distinguished Kelly on the ground that some website owners in the AdSense program had infringing Perfect 10 images on their websites, Perfect 10, 416 F.Supp.2d at 846-47. The district court held that because Google's thumbnails "lead users to sites that directly benefit Google's bottom line," the AdSense program increased the commercial nature of Google's use of Perfect 10's images. Id. at 847.

      81

      In conducting our case-specific analysis of fair use in light of the purposes of copyright, Campbell, 510 U.S. at 581, 114 S.Ct. 1164, we must weigh Google's superseding and commercial uses of thumbnail images against Google's significant transformative use, as well as the extent to which Google's search engine promotes the purposes of copyright and serves the interests of the public. Although the district court acknowledged the "truism that search engines such as Google Image Search provide great value to the public," Perfect 10, 416 F.Supp.2d at 848-49, the district court did not expressly consider whether this value outweighed the significance of Google's superseding use or the commercial nature of Google's use. Id. at 849. The Supreme Court, however, has directed us to be mindful of the extent to which a use promotes the purposes of copyright and serves the interests of the public. See Campbell, 510 U.S. at 579, 114 S.Ct. 1164; Harper & Row, 471 U.S. at 556-57, 105 S.Ct. 2218; Sony, 464 U.S. at 431-32, 104 S.Ct. 774.

      82

      We note that the superseding use in this case is not significant at present: the district court did not find that any downloads for mobile phone use had taken place. See Perfect 10, 416 F.Supp.2d at 849. Moreover, while Google's use of thumbnails to direct users to AdSense partners containing infringing content adds a commercial dimension that did not exist in Kelly, the district court did not determine that this commercial element was significant. See id. at 848-49. The district court stated that Google's AdSense programs as a whole contributed "$630 million, or 46% of total revenues" to Google's bottom line, but noted that this figure did not "break down the much smaller amount attributable to websites that contain infringing content." Id. at 847 & n. 12 (internal quotation omitted).

      83

      We conclude that the significantly transformative nature of Google's search engine, particularly in light of its public benefit, outweighs Google's superseding and commercial uses of the thumbnails in this case. In reaching this conclusion, we note the importance of analyzing fair use flexibly in light of new circumstances. Sony, 464 U.S. at 431-32, 104 S.Ct. 774; id. at 448 n. 31, 104 S.Ct. 774 ("`[Section 107] endorses the purpose and general scope of the judicial doctrine of fair use, but there is no disposition to freeze the doctrine in the statute, especially during a period of rapid technological change.'" (quoting H.R.Rep. No. 94-1476, p. 65-66 (1976), U.S.Code Cong. & Admin. News 1976, p. 5680)). We are also mindful of the Supreme Court's direction that "the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use." Campbell, 510 U.S. at 579, 114 S.Ct. 1164.

      84

      [1167] Accordingly, we disagree with the district court's conclusion that because Google's use of the thumbnails could supersede Perfect 10's cell phone download use and because the use was more commercial than Arriba's, this fair use factor weighed "slightly" in favor of Perfect 10. Perfect 10, 416 F.Supp.2d at 849. Instead, we conclude that the transformative nature of Google's use is more significant than any incidental superseding use or the minor commercial aspects of Google's search engine and website. Therefore, this factor weighs heavily in favor of Google.

      85

      The nature of the copyrighted work. With respect to the second factor, "the nature of the copyrighted work," 17 U.S.C. § 107(2), our decision in Kelly is directly on point. There we held that the photographer's images were "creative in nature" and thus "closer to the core of intended copyright protection than are more fact-based works." Kelly, 336 F.3d at 820 (internal quotation omitted). However, because the photos appeared on the Internet before Arriba used thumbnail versions in its search engine results, this factor weighed only slightly in favor of the photographer. Id.

      86

      Here, the district court found that Perfect 10's images were creative but also previously published. Perfect 10, 416 F.Supp.2d at 850. The right of first publication is "the author's right to control the first public appearance of his expression." Harper & Row, 471 U.S. at 564, 105 S.Ct. 2218. Because this right encompasses "the choices of when, where, and in what form first to publish a work," id., an author exercises and exhausts this one-time right by publishing the work in any medium. See, e.g., Batjac Prods. Inc. v. Good-Times Home Video Corp., 160 F.3d 1223, 1235 (9th Cir.1998) (noting, in the context of the common law right of first publication, that such a right "does not entail multiple first publication rights in every available medium"). Once Perfect 10 has exploited this commercially valuable right of first publication by putting its images on the Internet for paid subscribers, Perfect 10 is no longer entitled to the enhanced protection available for an unpublished work. Accordingly the district court did not err in holding that this factor weighed only slightly in favor of Perfect 10.[9] See Perfect 10, 416 F.Supp.2d at 849-50.

      87

      The amount and substantiality of the portion used. "The third factor asks whether the amount and substantiality of the portion used in relation to the copyrighted work as a whole ... are reasonable in relation to the purpose of the copying." Campbell, 510 U.S. at 586, 114 S.Ct. 1164 (internal quotation omitted); see also 17 U.S.C. § 107(3). In Kelly, we held Arriba's use of the entire photographic image was reasonable in light of the purpose of a search engine. Kelly, 336 F.3d at 821. Specifically, we noted, "[i]t was necessary for Arriba to copy the entire image to allow users to recognize the image and decide whether to pursue more information about the image or the originating [website]. If Arriba only copied part of the image, it would be more difficult to identify it, thereby reducing the usefulness of the visual search engine." Id. Accordingly, we concluded that this factor did not weigh in favor of either [1168] party. Id. Because the same analysis applies to Google's use of Perfect 10's image, the district court did not err in finding that this factor favored neither party.

      88

      Effect of use on the market. The fourth factor is "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). In Kelly, we concluded that Arriba's use of the thumbnail images did not harm the market for the photographer's full-size images. See Kelly, 336 F.3d at 821-22. We reasoned that because thumbnails were not a substitute for the full-sized images, they did not harm the photographer's ability to sell or license his full-sized images. Id. The district court here followed Kelly's reasoning, holding that Google's use of thumbnails did not hurt Perfect 10's market for full-size images. See Perfect 10, 416 F.Supp.2d at 850-51. We agree.

      89

      Perfect 10 argues that the district court erred because the likelihood of market harm may be presumed if the intended use of an image is for commercial gain. However, this presumption does not arise when a work is transformative because "market substitution is at least less certain, and market harm may not be so readily inferred." Campbell, 510 U.S. at 591, 114 S.Ct. 1164. As previously discussed, Google's use of thumbnails for search engine purposes is highly transformative, and so market harm cannot be presumed.

      90

      Perfect 10 also has a market for reduced-size images, an issue not considered in Kelly. The district court held that "Google's use of thumbnails likely does harm the potential market for the downloading of [Perfect 10's] reduced-size images onto cell phones." Perfect 10, 416 F.Supp.2d at 851 (emphasis omitted). The district court reasoned that persons who can obtain Perfect 10 images free of charge from Google are less likely to pay for a download, and the availability of Google's thumbnail images would harm Perfect 10's market for cell phone downloads. Id. As we discussed above, the district court did not make a finding that Google users have downloaded thumbnail images for cell phone use. This potential harm to Perfect 10's market remains hypothetical. We conclude that this factor favors neither party.

      91

      Having undertaken a case-specific analysis of all four factors, we now weigh these factors together "in light of the purposes of copyright." Campbell, 510 U.S. at 578, 114 S.Ct. 1164; see also Kelly, 336 F.3d at 818 ("We must balance[the section 107] factors in light of the objectives of copyright law, rather than view them as definitive or determinative tests."). In this case, Google has put Perfect 10's thumbnail images (along with millions of other thumbnail images) to a use fundamentally different than the use intended by Perfect 10. In doing so, Google has provided a significant benefit to the public. Weighing this significant transformative use against the unproven use of Google's thumbnails for cell phone downloads, and considering the other fair use factors, all in light of the purpose of copyright, we conclude that Google's use of Perfect 10's thumbnails is a fair use. Because the district court here "found facts sufficient to evaluate each of the statutory factors ... [we] need not remand for further factfinding." Harper & Row, 471 U.S. at 560, 105 S.Ct. 2218 (internal quotation omitted). We conclude that Google is likely to succeed in proving its fair use defense and, accordingly, we vacate the preliminary injunction regarding Google's use of thumbnail images.

      92
      IV
      93
      Secondary Liability for Copyright Infringement
      94

      We now turn to the district court's ruling that Google is unlikely to be secondarily [1169] liable for its in-line linking to infringing full-size images under the doctrines of contributory and vicarious infringement.[10] 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).

      95

      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.").

      96

      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.

      97

      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.

      98

      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 [1170] cache copying constitutes a fair use, Google has established a likelihood of success on this issue. Accordingly, Perfect 10 has not carried its burden of showing that users' cache copies of Perfect 10's full-size images constitute direct infringement.

      99

      Therefore, we must assess Perfect 10's arguments that Google is secondarily liable in light of the direct infringement that is undisputed by the parties: third-party websites' reproducing, displaying, and distributing unauthorized copies of Perfect 10's images on the Internet. Id. at 852.

      100
      A. Contributory Infringement
      101

      In order for Perfect 10 to show it will likely succeed in its contributory liability claim against Google, it must establish that Google's activities meet the definition of contributory liability recently enunciated in Grokster. Within the general rule that "[o]ne infringes contributorily by intentionally inducing or encouraging direct infringement," Grokster, 545 U.S. at 930, 125 S.Ct. 2764, the Court has defined two categories of contributory liability: "Liability under our jurisprudence may be predicated on actively encouraging (or inducing) infringement through specific acts (as the Court's opinion develops) or on distributing a product distributees use to infringe copyrights, if the product is not capable of `substantial' or `commercially significant' noninfringing uses." Id. at 942, 125 S.Ct. 2764 (Ginsburg, J., concurring) (quoting Sony, 464 U.S. at 442, 104 S.Ct. 774); see also id. at 936-37, 125 S.Ct. 2764.

      102

      Looking at the second category of liability identified by the Supreme Court (distributing products), Google relies on Sony, 464 U.S. at 442, 104 S.Ct. 774, to argue that it cannot be held liable for contributory infringement because liability does not arise from the mere sale of a product (even with knowledge that consumers would use the product to infringe) if the product is capable of substantial non-infringing use. Google argues that its search engine service is such a product. Assuming the principle enunciated in Sony is applicable to the operation of Google's search engine, then Google cannot be held liable for contributory infringement solely because the design of its search engine facilitates such infringement. Grokster, 545 U.S. at 931-32, 125 S.Ct. 2764 (discussing Sony, 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574). Nor can Google be held liable solely because it did not develop technology that would enable its search engine to automatically avoid infringing images. See id. at 939 n. 12, 125 S.Ct. 2764. However, Perfect 10 has not based its claim of infringement on the design of Google's search engine and the Sony rule does not immunize Google from other sources of contributory liability. See id. at 933-34, 125 S.Ct. 2764.

      103

      We must next consider whether Google could be held liable under the first category of contributory liability identified by the Supreme Court, that is, the liability that may be imposed for intentionally encouraging infringement through specific acts.[11] Grokster tells us that contribution to infringement must be intentional for liability to arise. Grokster, 545 U.S. at 930, 125 S.Ct. 2764. However, Grokster also directs us to analyze contributory liability in light of "rules of fault-based liability derived from the common law," id. at 934-35, 125 S.Ct. 2764, and [1171] common law principles establish that intent may be imputed. "Tort law ordinarily imputes to an actor the intention to cause the natural and probable consequences of his conduct." DeVoto v. Pac. Fid. Life Ins. Co., 618 F.2d 1340, 1347 (9th Cir. 1980); RESTATEMENT (SECOND) OF TORTS § 8A cmt. b (1965) ("If the actor knows that the consequences are certain, or substantially certain, to result from his act, and still goes ahead, he is treated by the law as if he had in fact desired to produce the result."). When the Supreme Court imported patent law's "staple article of commerce doctrine" into the copyright context, it also adopted these principles of imputed intent. Grokster, 545 U.S. at 932, 125 S.Ct. 2764 ("The [staple article of commerce] doctrine was devised to identify instances in which it may be presumed from distribution of an article in commerce that the distributor intended the article to be used to infringe another's patent, and so may justly be held liable for that infringement."). Therefore, under Grokster, an actor may be contributorily liable for intentionally encouraging direct infringement if the actor knowingly takes steps that are substantially certain to result in such direct infringement.

      104

      Our tests for contributory liability are consistent with the rule set forth in Grokster. We have adopted the general rule set forth in Gershwin Publishing Corp. v. Columbia Artists Management, Inc., namely: "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a `contributory' infringer," 443 F.2d 1159, 1162 (2d Cir.1971). See Ellison, 357 F.3d at 1076; Napster, 239 F.3d at 1019; Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir.1996).

      105

      We have further refined this test in the context of cyberspace[12] to determine when contributory liability can be imposed on a provider of Internet access or services. See Napster, 239 F.3d at 1019-20. In Napster, we considered claims that the operator of an electronic file sharing system was contributorily liable for assisting individual users to swap copyrighted music files stored on their home computers with other users of the system. Napster, 239 F.3d at 1011-13, 1019-22. We stated that "if a computer system operator learns of specific infringing material available on his system and fails to purge such material from the system, the operator knows of and contributes to direct infringement." Id. at 1021. Because Napster knew of the availability of infringing music files, assisted users in accessing such files, and failed to block access to such files, we concluded that Napster materially contributed to infringement. Id. at 1022.

      106

      The Napster test for contributory liability was modeled on the influential district court decision in Religious Technology Center v. Netcom On-Line Communication Services, Inc. (Netcom), 907 F.Supp. 1361, 1365-66 (N.D.Cal.1995). See Napster, 239 F.3d at 1021. In Netcom, a disgruntled former Scientology minister posted allegedly infringing copies of Scientological works on an electronic bulletin board service. Netcom, 907 F.Supp. at 1365-66. The messages were stored on the bulletin board operator's computer, then automatically copied onto Netcom's computer, and from there copied onto other computers comprising "a worldwide community" of electronic bulletin board systems. Id. at 1366-67 & n. 4 (internal quotation omitted). Netcom held that if plaintiffs [1172] could prove that Netcom knew or should have known that the minister infringed plaintiffs' copyrights, "Netcom [would] be liable for contributory infringement since its failure to simply cancel [the former minister's] infringing message and thereby stop an infringing copy from being distributed worldwide constitute[d] substantial participation in [the former minister's] public distribution of the message." Id. at 1374.

      107

      Although neither Napster nor Netcom expressly required a finding of intent, those cases are consistent with Grokster because both decisions ruled that a service provider's knowing failure to prevent infringing actions could be the basis for imposing contributory liability. Under such circumstances, intent may be imputed. In addition, Napster and Netcom are consistent with the longstanding requirement that an actor's contribution to infringement must be material to warrant the imposition of contributory liability. Gershwin, 443 F.2d at 1162. Both Napster and Netcom acknowledge that services or products that facilitate access to websites throughout the world can significantly magnify the effects of otherwise immaterial infringing activities. See Napster, 239 F.3d at 1022; Netcom, 907 F.Supp. at 1375. The Supreme Court has acknowledged that "[t]he argument for imposing indirect liability" is particularly "powerful" when individuals using the defendant's software could make a huge number of infringing downloads every day. Grokster, 545 U.S. at 929, 125 S.Ct. 2764. Moreover, copyright holders cannot protect their rights in a meaningful way unless they can hold providers of such services or products accountable for their actions pursuant to a test such as that enunciated in Napster. See id. at 929-30, 125 S.Ct. 2764 ("When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative being to go against the distributor of the copying device for secondary liability on a theory of contributory or vicarious infringement."). Accordingly, we hold that a computer system operator can be held contributorily liable if it "has actual knowledge that specific infringing material is available using its system," Napster, 239 F.3d at 1022, and can "take simple measures to prevent further damage" to copyrighted works, Netcom, 907 F.Supp. at 1375, yet continues to provide access to infringing works.

      108

      Here, the district court held that even assuming Google had actual knowledge of infringing material available on its system, Google did not materially contribute to infringing conduct because it did not undertake any substantial promotional or advertising efforts to encourage visits to infringing websites, nor provide a significant revenue stream to the infringing websites. Perfect 10, 416 F.Supp.2d at 854-56. This analysis is erroneous. There is no dispute that Google substantially assists websites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials. We cannot discount the effect of such a service on copyright owners, even though Google's assistance is available to all websites, not just infringing ones. Applying our test, Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10's copyrighted works, and failed to take such steps.

      109

      The district court did not resolve the factual disputes over the adequacy of Perfect 10's notices to Google and Google's responses to these notices. Moreover, there are factual disputes over whether there are reasonable and feasible means for Google to refrain from providing access [1173] to infringing images. Therefore, we must remand this claim to the district court for further consideration whether Perfect 10 would likely succeed in establishing that Google was contributorily liable for in-line linking to full-size infringing images under the test enunciated today.[13]

      110
      B. Vicarious Infringement
      111

      Perfect 10 also challenges the district court's conclusion that it is not likely to prevail on a theory of vicarious liability against Google. Perfect 10, 416 F.Supp.2d at 856-58. Grokster states that one "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. As this formulation indicates, to succeed in imposing vicarious liability, a plaintiff must establish that the defendant exercises the requisite control over the direct infringer and that the defendant derives a direct financial benefit from the direct infringement. See id. Grokster further explains the "control" element of the vicarious liability test as the defendant's "right and ability to supervise the direct infringer." Id. at 930 n. 9, 125 S.Ct. 2764. Thus, under Grokster, a defendant exercises control over a direct infringer when he has both a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.

      112

      We evaluate Perfect 10's arguments that Google is vicariously liable in light of the direct infringement that is undisputed by the parties, namely, the third-party websites' reproduction, display, and distribution of unauthorized copies of Perfect 10's images on the Internet. Perfect 10, 416 F.Supp.2d at 852; see supra Section IV.A. In order to prevail at this preliminary injunction stage, Perfect 10 must demonstrate a likelihood of success in establishing that Google has the right and ability to stop or limit the infringing activities of third party websites. In addition, Perfect 10 must establish a likelihood of proving that Google derives a direct financial benefit from such activities. Perfect 10 has not met this burden.

      113

      With respect to the "control" element set forth in Grokster, Perfect 10 has not demonstrated a likelihood of showing that Google has the legal right to stop or limit the direct infringement of third-party websites. See Grokster, 545 U.S. at 930, 125 S.Ct. 2764. Unlike Fonovisa, where by virtue of a "broad contract" with its vendors the defendant swap meet operators had the right to stop the vendors from selling counterfeit recordings on its premises, Fonovisa, 76 F.3d at 263, Perfect 10 has not shown that Google has contracts with third-party websites that empower Google to stop or limit them from reproducing, displaying, and distributing infringing copies of Perfect 10's images on the Internet. Perfect 10 does point to Google's AdSense agreement, which states that Google reserves "the right to monitor and terminate partnerships with entities that violate others' copyright[s]." Perfect 10, 416 F.Supp.2d at 858. However, Google's right to terminate an AdSense partnership does not give Google the right to [1174] stop direct infringement by third-party websites. An infringing third-party website can continue to reproduce, display, and distribute its infringing copies of Perfect 10 images after its participation in the AdSense program has ended.

      114

      Nor is Google similarly situated to Napster. Napster users infringed the plaintiffs' reproduction and distribution rights through their use of Napster's proprietary music-file sharing system. Napster, 239 F.3d at 1011-14. There, the infringing conduct was the use of Napster's "service to download and upload copyrighted music." Id. at 1014 (internal quotation omitted). Because Napster had a closed system requiring user registration, and could terminate its users' accounts and block their access to the Napster system, Napster had the right and ability to prevent its users from engaging in the infringing activity of uploading file names and downloading Napster users' music files through the Napster system.[14] Id. at 1023-24. By contrast, Google cannot stop any of the third-party websites from reproducing, displaying, and distributing unauthorized copies of Perfect 10's images because that infringing conduct takes place on the third-party websites. Google cannot terminate those third-party websites or block their ability to "host and serve infringing full-size images" on the Internet. Perfect 10, 416 F.Supp.2d at 831.

      115

      Moreover, the district court found that Google lacks the practical ability to police the third-party websites' infringing conduct. Id. at 857-58. Specifically, the court found that Google's supervisory power is limited because "Google's software lacks the ability to analyze every image on the [I]nternet, compare each image to all the other copyrighted images that exist in the world ... and determine whether a certain image on the web infringes someone's copyright." Id. at 858. The district court also concluded that Perfect 10's suggestions regarding measures Google could implement to prevent its web crawler from indexing infringing websites and to block access to infringing images were not workable. Id. at 858 n. 25. Rather, the suggestions suffered from both "imprecision and overbreadth." Id. We hold that these findings are not clearly erroneous. Without image-recognition technology, Google lacks the practical ability to police the infringing activities of third-party websites. This distinguishes Google from the defendants held liable in Napster and Fonovisa. See Napster, 239 F.3d at 1023-24 (Napster had the ability to identify and police infringing conduct by searching its index for song titles); Fonovisa, 76 F.3d at 262 (swap meet operator had the ability to identify and police infringing activity by patrolling its premises).

      116

      Perfect 10 argues that Google could manage its own operations to avoid [1175] indexing websites with infringing content and linking to third-party infringing sites. This is a claim of contributory liability, not vicarious liability. Although "the lines between direct infringement, contributory infringement, and vicarious liability are not clearly drawn," Sony, 464 U.S. at 435 n. 17, 104 S.Ct. 774 (internal quotation omitted), in general, contributory liability is based on the defendant's failure to stop its own actions which facilitate third-party infringement, while vicarious liability is based on the defendant's failure to cause a third party to stop its directly infringing activities. See, e.g., Ellison, 357 F.3d at 1077-78; Fonovisa, 76 F.3d at 261-64. Google's failure to change its operations to avoid assisting websites to distribute their infringing content may constitute contributory liability, see supra Section IV.A. However, this failure is not the same as declining to exercise a right and ability to make third-party websites stop their direct infringement. We reject Perfect 10's efforts to blur this distinction.

      117

      Because we conclude that Perfect 10 has not shown a likelihood of establishing Google's right and ability to stop or limit the directly infringing conduct of third-party websites, we agree with the district court's conclusion that Perfect 10 "has not established a likelihood of proving the [control] prong necessary for vicarious liability." Perfect 10, 416 F.Supp.2d at 858.[15]

      118
      C. Digital Millennium Copyright Act
      119

      Google claims that it qualifies for the limitations on liability set forth in title II of the DMCA, 17 U.S.C. § 512. In particular, section 512(d) limits the liability of a service provider "for infringement of copyright by reason of the provider referring or linking users to an online location containing infringing material or infringing activity, by using information location tools, including a directory, index, reference, pointer, or hypertext link" if the service provider meets certain criteria. We have held that the limitations on liability contained in 17 U.S.C. § 512 protect secondary infringers as well as direct infringers. Napster, 239 F.3d at 1025.

      120

      The parties dispute whether Google meets the specified criteria. Perfect 10 claims that it sent qualifying notices to Google and Google did not act expeditiously to remove the infringing material. Google claims that Perfect 10's notices did not comply with the notice provisions of section 512 and were not adequate to inform Google of the location of the infringing images on the Internet or identify the underlying copyrighted work. Google also claims that it responded to all notices it received by investigating the webpages identified by Perfect 10 and suppressing links to any webpages that Google confirmed were infringing.

      121

      Because the district court determined that Perfect 10 was unlikely to succeed on its contributory and vicarious liability claims, it did not reach Google's arguments under section 512. In revisiting the question of Perfect 10's likelihood of success on its contributory infringement claims, the district court should also consider whether Google would likely succeed in showing that it was entitled to the limitations on injunctive relief provided by title II of the DMCA.

      122
      V
      123
      Amazon.com
      124

      Perfect 10 claims that Amazon.com displays and distributes Perfect 10's copyrighted images and is also secondarily [1176] 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.[16] 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.

      125

      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.

      126

      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.

      127

      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.

      128
      VI
      129

      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 [1177] analysis because it failed to consider whether Google and Amazon.com knew of infringing activities yet failed to take reasonable and feasible steps to refrain from providing access to infringing images. Therefore we must also reverse the district court's holding that Perfect 10 was unlikely to succeed on the merits of its secondary liability claims. Due to this error, the district court did not consider whether Google and Amazon.com are entitled to the limitations on liability set forth in title II of the DMCA. The question whether Google and Amazon.com are secondarily liable, and whether they can limit that liability pursuant to title II of the DMCA, raise fact-intensive inquiries, potentially requiring further fact finding, and thus can best be resolved by the district court on remand. We therefore remand this matter to the district court for further proceedings consistent with this decision.

      130

      Because the district court will need to reconsider the appropriate scope of injunctive relief after addressing these secondary liability issues, we do not address the parties' arguments regarding the scope of the injunction issued by the district court. For the same reason, we do not address the parties' dispute over whether the district court abused its discretion in determining that Perfect 10 satisfied the irreparable harm element of a preliminary injunction.

      131

      Therefore, we reverse the district court's ruling and vacate the preliminary injunction regarding Google's use of thumbnail versions of Perfect 10's images.[17] We reverse the district court's rejection of the claims that Google and Amazon.com are secondarily liable for infringement of Perfect 10's full-size images. We otherwise affirm the rulings of the district court. We remand this matter for further proceedings consistent with this opinion. Each party shall bear its own costs on appeal. See FED. R. APP. P. 39(a)(4).

      132

      AFFIRMED IN PART; REVERSED IN PART; REMANDED.

      133

      [1] Google argues that we lack jurisdiction over the preliminary injunction to the extent it enforces unregistered copyrights. Registration is generally a jurisdictional prerequisite to a suit for copyright infringement. See 17 U.S.C. § 411. But section 411 does not limit the remedies a court can grant. Rather, the Copyright Act gives courts broad authority to issue injunctive relief. See 17 U.S.C. § 502(a). Once a court has jurisdiction over an action for copyright infringement under section 411, the court may grant injunctive relief to restrain infringement of any copyright, whether registered or unregistered. See, e.g., Olan Mills, Inc. v. Linn Photo Co., 23 F.3d 1345, 1349 (8th Cir.1994); Pac. & S. Co., Inc. v. Duncan, 744 F.2d 1490, 1499 n. 17 (11th Cir.1984). Because at least some of the Perfect 10 images at issue were registered, the district court did not err in determining that it could issue an order that covers unregistered works. Therefore, we have jurisdiction over the district court's decision and order.

      134

      [2] The website publisher may not actually store the photographic images used on its webpages in its own computer, but may provide HTML instructions directing the user's browser to some further computer that stores the image. Because this distinction does not affect our analysis, for convenience, we will assume that the website publisher stores all images used on its webpages in the website publisher's own computer.

      135

      [3] Generally, a "cache" is "a computer memory with very short access time used for storage of frequently or recently used instructions or data." United States v. Ziegler, 474 F.3d 1184, 1186 n. 3 (9th Cir.2007) (quoting MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY 171 (11th ed.2003)). There are two types of caches at issue in this case. A user's personal computer has an internal cache that saves copies of webpages and images that the user has recently viewed so that the user can more rapidly revisit these webpages and images. Google's computers also have a cache which serves a variety of purposes. Among other things, Google's cache saves copies of a large number of webpages so that Google's search engine can efficiently organize and index these webpages.

      136

      [4] Perfect 10 argues that we are bound by the language and structure of title II of the DMCA in determining Google's liability for copyright infringement. We have noted that the DMCA does not change copyright law; rather, "Congress provided that [the DMCA's] limitations of liability apply if the provider is found to be liable under existing principles of law." Ellison, 357 F.3d at 1077 (emphasis and internal quotation omitted). As a result, "[c]laims against service providers for direct, contributory, or vicarious copyright infringement, therefore, are generally evaluated just as they would be in the non-online world." Id.; see also 17 U.S.C. § 512(l) ("The failure of a service provider's conduct to qualify for limitation of liability under this section shall not bear adversely upon the consideration of a defense by the service provider that the service provider's conduct is not infringing under this title or any other defense."). Therefore, we must consider Google's potential liability under the Copyright Act without reference to title II of the DMCA.

      137

      [5] 17 U.S.C. § 106 states, in pertinent part:

      138

      Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

      (1) to reproduce the copyrighted work in copies or phonorecords;

      ....

      (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

      ....

      (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly....

      139

      [6] Because Google initiates and controls the storage and communication of these thumbnail images, we do not address whether an entity that merely passively owns and manages an Internet bulletin board or similar system violates a copyright owner's display and distribution rights when the users of the bulletin board or similar system post infringing works. Cf. CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir.2004).

      140

      [7] Perfect 10 also argues that Google violates Perfect 10's right to display full-size images because Google's in-line linking meets the Copyright Act's definition of "to perform or display a work `publicly.'" 17 U.S.C. § 101. This phrase means "to transmit or otherwise communicate a performance or display of the work to ... the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." Id. Perfect 10 is mistaken. Google's activities do not meet this definition because Google transmits or communicates only an address which directs a user's browser to the location where a copy of the full-size image is displayed. Google does not communicate a display of the work itself.

      141

      [8] We reject at the outset Perfect 10's argument that providing access to infringing websites cannot be deemed transformative and is inherently not fair use. Perfect 10 relies on Video Pipeline, Inc. v. Buena Vista Home Entm't, Inc., 342 F.3d 191 (3d Cir.2003), and Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 843 (Fed.Cir.1992). But these cases, in essence, simply apply the general rule that a party claiming fair use must act in a manner generally compatible with principles of good faith and fair dealing. See Harper & Row, 471 U.S. at 562-63, 105 S.Ct. 2218. For this reason, a company whose business is based on providing scenes from copyrighted movies without authorization could not claim that it provided the same public benefit as the search engine in Kelly. See Video Pipeline, 342 F.3d at 198-200. Similarly, a company whose overriding desire to replicate a competitor's computer game led it to obtain a copy of the competitor's source code from the Copyright Office under false pretenses could not claim fair use with respect to its purloined copy. Atari Games, 975 F.2d at 843.

      142

      Unlike the alleged infringers in Video Pipeline and Atari Games, who intentionally misappropriated the copyright owners' works for the purpose of commercial exploitation, Google is operating a comprehensive search engine that only incidentally indexes infringing websites. This incidental impact does not amount to an abuse of the good faith and fair dealing underpinnings of the fair use doctrine. Accordingly, we conclude that Google's inclusion of thumbnail images derived from infringing websites in its Internet-wide search engine activities does not preclude Google from raising a fair use defense.

      143

      [9] Google contends that Perfect 10's photographic images are less creative and less deserving of protection than the images of the American West in Kelly because Perfect 10 boasts of its un-retouched photos showing the natural beauty of its models. Having reviewed the record, we conclude that the district court's finding that Perfect 10's photographs "consistently reflect professional, skillful, and sometimes tasteful artistry" is not clearly erroneous. Perfect 10, 416 F.Supp.2d at 849 n. 15. We agree with the district court that there is no basis for concluding that photos of the American West are more deserving of protection than photos of nude models. See id.

      144

      [10] Because the district court concluded that Perfect 10 was likely to prevail on its direct infringement claim with respect to Google's use of thumbnails, but not with respect to its in-line linking to full-size images, the district court considered Google's potential secondary liability only on the second issue.

      145

      [11] Google's activities do not meet the "inducement" test explained in Grokster because Google has not promoted the use of its search engine specifically to infringe copyrights. See Grokster, 545 U.S. at 935-37, 125 S.Ct. 2764. However, the Supreme Court in Grokster did not suggest that a court must find inducement in order to impose contributory liability under common law principles.

      146

      [12] "Cyberspace is a popular term for the world of electronic communications over computer networks." Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., Inc., 907 F.Supp. 1361, 1365 n. 1 (N.D.Cal.1995).

      147

      [13] Perfect 10 claims that Google materially contributed to infringement by linking to websites containing unauthorized passwords, which enabled Google users to access Perfect 10's website and make infringing copies of images. However, Perfect 10 points to no evidence that users logging onto the Perfect 10 site with unauthorized passwords infringed Perfect 10's exclusive rights under section 106. In the absence of evidence that Google's actions led to any direct infringement, this argument does not assist Perfect 10 in establishing that it would prevail on the merits of its contributory liability claim. 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.").

      148

      [14] Napster's system included "Napster's MusicShare software, available free of charge from Napster's Internet site, and Napster's network servers and server-side software." Napster, 239 F.3d at 1011. By downloading Napster's MusicShare software to the user's personal computer, and registering with the Napster system, a user could both upload and download music files. Id. at 1011-13. If the Napster user uploaded a list of music files stored on the user's personal computer to the Napster system, such music files would be automatically available to other Napster users whenever the user was logged on to the Napster system. Id. at 1012. In addition, the Napster user could download music files directly from other users' personal computers. Id. We explained the infringing conduct as "Napster users who upload file names to the [Napster] search index for others to copy violate plaintiffs' distribution rights. Napster users who download files [through the Napster system] containing copyrighted music violate plaintiffs' reproduction rights." Id. at 1014.

      149

      [15] Having so concluded, we need not reach Perfect 10's argument that Google received a direct financial benefit.

      150

      [16] Amazon.com states that it ended its relationship with Google on April 30, 2006. Perfect 10's action for preliminary injunction against Amazon.com is not moot, however, because Amazon.com has not established "that the allegedly wrongful behavior cannot reasonably be expected to recur." F.T.C. v. Affordable Media, LLC, 179 F.3d 1228, 1238 (9th Cir.1999) (internal quotation omitted).

      151

      [17] Because we vacate the injunction, Google's motion for stay of the injunction is moot.