LOS ANGELES, CA – US District Court Judge A. Howard Matz has issued a ruling which “grants in part and denies in part” Perfect 10’s motion for a preliminary injunction against Google, Inc., in Perfect 10’s ongoing lawsuit filed against Google alleging copyright and trademark infringement, and assorted other claims.As noted in Matz’s order, the crux of any decision to grant a preliminary injunction hinges on the likelihood of the plaintiff’s success at trial and the possibility of “irreparable harm” being done to the plaintiff in the interim if no injunction is granted. In considering whether to grant such an injunction, the court can also consider “whether the public interest will be advanced by granting preliminary relief” (Preminger v. Principi)

In his 48 page ruling, Matz delves into great detail concerning a wide range of both legal and technical issues, and while most reports focus on the portions of the decision that cut against Google, there are significant areas in which Matz expressed doubt about Perfect 10’s likelihood of success upon full litigation of the dispute.

In terms of direct Perfect 10’s claim that Google was engaged in “direct infringement,” Matz concluded that “Google’s creation and public display of thumbnails likely do infringe P10’s copyrights.” Matz also wrote, however, that “P10 is not likely to succeed on its vicarious and contributory liability theories.”

Google does not contest the notion that Perfect 10 has established copyright or ownership of their images; Google’s “affirmative defense” is that Perfect 10’s copyright interests have not been directly infringed. Despite creating and storing thumbnails of the Perfect 10’s full-size images and displaying those thumbs as search results within Google Image Search, Google argues that their use of such thumbnails is protected under the fair use doctrine, as the doctrine is codified in 17 USC § 107.

Were it not for a deal that Perfect 10 entered into in 2005 concerning a licensing agreement with Fonestarz Media Limited for the sale and distribution of reduced-size Perfect 10 images via mobile networks and devices, this portion of Perfect 10’s injunction might not have been granted, either.

“Google’s use of thumbnails does supersede this use of P10’s images, because mobile users can download and save the thumbnails displayed by Google Image Search onto their phones,” Matz wrote in his decision. “Google’s thumbnail images are essentially the same quality as the reduced-size images that P10 licenses to Fonestarz. Hence, to the extent that users may choose to download free images to their phone rather than purchase P10’s reduced-size images, Google’s use supersedes P10’s.”

Google’s use of the thumbnails also falls short of being a “transformative” use of the copyrighted images, as opposed to a “consumptive” use, another important point of differentiation between fair use and infringing use of copyrighted materials.

While acknowledging that “Google’s wide-ranging use of thumbnails is highly transformative: their creation and display is designed to, and does, display visual search results quickly and efficiently to users of Google Image Search,” Matz added that this fact “does not end the analysis, because Google’s use is simultaneously consumptive, as well.”

Matz rejected Perfect 10’s claim that Google is involved in direct copyright infringement, which Perfect 10 contends Google does by directing traffic to third-party websites that are directly infringing by reproducing, displaying, and distributing unauthorized copies of Perfect 10 images, and by allowing Google users to download such images, thereby making infringing reproductions.

“P10 has demonstrated only that users of Google search are capable of directly infringing by downloading the underlying webpage or image,” Matz wrote in his ruling. “It is not unlikely that many users do just that, but on this preliminary injunction motion there is no evidence in the record proving so.”

Where third-party sites are concerned, Matz wrote “Google does not necessarily know that any given image on the internet is infringing someone’s copyright merely because the image contains a copyright notice,” adding that “only upon receiving proper notice of alleged infringement can Google determine whether an AdSense partner has violated the terms of the AdSense Program Policies.”

As Perfect 10’s vicarious contributory liability arguments relied heavily on the recent Napster decision, Matz included in his ruling a chart that demarks the differences between Napster and this case and concluded that “P10 overstates Google’s actual conduct and confuses search technology with active encouragement and promotion of infringing activity.”

The upshot of Matz’s ruling is that Perfect 10 and Google must now work together to propose the language of the injunction, one that will be “carefully tailored to balance the competing interests described in the first paragraph of this Order: those of intellectual property rights on the one hand and those promoting access to information on the other.”

Matz’s order gives Google and Perfect 10 until March 8th to submit their proposal.

Comments by the attorneys for each side underscored the split nature of Matz’s order, with neither side exactly claiming victory and both sides suggesting an appeal may be forthcoming.

“We anticipate that any preliminary injunction will have no effect on the vast majority of image searches, and will affect only searches related to Perfect 10,” said Google counsel Michael Kwun, adding that Google will most likely appeal the injunction.

Perfect 10 attorney Daniel Cooper, meanwhile said that Perfect 10 will seek additional evidence to support its various claims against Google.

“Everything that we tried to sell for a living, they were displaying for free,” Cooper said. Cooper added that Perfect 10 is also considering whether to appeal the judge’s decision with regards to Google and infringing third-party sites which appear in its search results.

Perfect 10 has also filed suit against Amazon.com Inc. and its subsidiary, A9.com Inc; Judge Matz indicated he will address the motion for an injunction against Amazon in a separate order.