Rodney A. Smolla, President, Furman University
October 12, 2011

In Perfect 10, Inc. v. Google, Inc.,1. the Internet search engine giant Google managed to score a victory against a company known as “Perfect 10,” a company that created and copyrighted photographic images of nude models for commercial distribution.  Perfect 10 originally featured the nude photos in a magazine, but it went defunct.  It then turned to a password-protected, paid-subscription website.

Perfect 10 sued Google for copyright infringement, arguing that Google’s various services, including its automated software program web crawler, effectively enabled would-be paying customers to view Perfect 10’s salacious images for free, there by violating Perfect 10’s copyright interests and ruining its business model.  Seeking the tremendous litigation and settlement leverage that would result from a preliminary injunction against Google, Perfect 10 argued that it was entitled to a preliminary injunction against Google barring it from continuing to display images over which Perfect 10 possessed the copyright.

The U.S. Court of Appeals for the Ninth Circuit, however, rejected Perfect10’s argument, and sided with Google.  The Ninth Circuit applied the ruling in eBay Inc. v. MercExchange, L.L.C.,2. in which the Supreme Court held that an injunction in a patent infringement case may issue only in accordance with “traditional equitable principles,” admonishing courts to avoid mechanical presumptions or categorical rules.  The Ninth Circuit held that Perfect 10 failed to establish the existence of “irreparable harm,” a traditional threshold predicate for preliminary equitable relief.  The Ninth Circuit held that the claim that Google had caused Perfect 10 financial ruin was not persuasive, since it was quite possible that Perfect 10 was heading for ruin on its own.

While Perfect 10 did appear to be teetering on the verge of bankruptcy, the court noted, that teetering was not necessarily based on anything Google had done.  Perfect 10 lost money from its inception, the court pointed out, and appeared to have never gained its initial loses back.  Moreover, the court noted, it appeared that other Internet search engines, such as Yahoo! and MSN, may also have contributed to making Perfect 10’s images of naked women available for free viewing.

The bottom line, as the court saw it, was that injunctions in copyright infringement cases should no longer be treated as qualifying for automatic preliminary injunctive relief merely upon a colorable showing that a plaintiff’s copyright interests have been violated.  Under the Ninth Circuit’s reasoning, when the underlying business model of the plaintiff appears suspect, the plaintiff will be hard pressed to establish the “irreparable harm” now required under general principles of equity, since the underlying weakness of the plaintiff’s business may render it impossible for the plaintiff to establish that it would have been a going financial concern even in the absence of the defendant’s alleged copyright violation.

Plaintiffs may complain, with some plausibility, that there is a Catch 22 quality to this regime.  A plaintiff cannot prevail in its request for a preliminary injunction if it cannot show that what would otherwise have been economic strength has been diminished by the defendant’s alleged infringement.  The plaintiff may be unable to make this case, however, precisely because the actions of the defendants have rendered its business model intrinsically weak.

For plaintiffs, a Catch-22.  For defendants, nice work if you can get it.

1. __ F.3d __, 2011 WL 3320297 (9th Cir. 2011).
2. 547 U.S. 388, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006).