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Defining The Boundaries of Fair in Cyberspace

May 1, 2002

In less than one week, the Ninth Circuit Court of Appeals has issued two landmark rulings which take major steps forward in defining the boundaries of what are “fair uses” of others intellectual property over the Internet. On February 1, 2002, the Playboy v. Welles ((9th Cir. 2002) __ F.3d ___; 2002 DJ DAR 1253), Court confirmed that the use of another’s trademarks on web pages and meta tags, under certain circumstances, does not constitute trademark infringement. On February 6, 2002, in Kelly v. Arriba Soft Corporation ((9th Cir. 2002) ___ F.3d ___; 2002 CDOS 1151), the Ninth Circuit ruled that an Internet search engine, which displayed results in “thumbnail” pictures, violated a copyright owner’s rights when it linked the thumbnail results to full-sized versions of the picture. While these cases deal with distinct areas of intellectual property law, together, the decisions mark a significant clarification of the rules that will be applied in the ever-expanding arena of intellectual property rights in cyberspace.

Fair Use Of Another’s Trademark in Web Pages And Meta Tags

Terri Welles was chosen to be the Playboy Playmate of the year for 1981. Welles later registered and opened a website which offered information about Welles, advertised photos for sale and offered memberships in her photo club. A biographical section on the website described Welles’ selection as Playmate of the Year in 1981, the phrase “Playmate of the Year 1981” appeared on the masthead of the website and in various banner ads. The terms “Playboy” and “Playmate” also appeared in typically non-visible hidden code known as meta tags which are used by some search engines to determine the content of websites in order to direct searches to relevant sites.

Playboy Enterprises Inc. filed suit against Welles for trademark infringement. The District Court granted Welles’ motion for summary judgment and Playboy appealed. The Court of Appeal affirmed, holding that Welles’ use of the Playboy trademarks was a permissible, nominative fair use of those trademarks.

Specifically, relying on its decision in New Kids on the Block v. American Publishing Inc. ((9th Cir. 1992) 971 F.2d 302), which involved the use of a singing group’s trademarked named by several newspapers, the Court adopted a three part test for the nominative fair use of another’s trademark in the context of the Internet. In order to meet this test, the party asserting the same must demonstrate that: (1) the product or service in question is one not readily identifiable without the use of the plaintiff’s trademark; (2) that only so much of the mark or marks have been used as is reasonably necessary to identify the product or service; and (3) that the user did nothing that would, in conjunction with the mark, suggests sponsorship or endorsement by the trademark holder.

Turning to the issues at hand, the Court held that Welles’ use of Playboy’s trademarks in headlines and banner advertisements was permissible since the trademark in question also described “… a person, a place or attribute of a product” and since there was no descriptive substitute for the trademark. Agreeing with the District Court’s analysis, the Ninth Circuit held that it would be impractical as well as ineffectual for Welles to describe herself as the “nude model selected by Mr. Hefner’s magazine as its No. - 1 prototypical woman for the year 1981” instead of “Playmate of the Year 1981.” Since Welles could only identify herself as Playmate of the Year 1981 by using Playboy’s trademarks, the first part of the nominative fair use test was met.

Next, just as auto shops are allowed to use the trademarks of automobile manufacturers on signs describing the cars they repair, the Court held that the second part of the nominative use test was met since only so much of the mark was used as was reasonably necessary to identify Welles in the headlines and banner advertisements. Likewise, because nothing within the advertisements or headlines suggested sponsorship or endorsement by Playboy, the third and final prong of these defense was met.

Turning to Welles’ use of the terms “Playboy” and “Playmate” in meta tags, the Court first explained that meta tags describe the contents of a website using keywords. Some search engines search meta tags to identify websites relevant to a search. For example, if a websurfer entered the term “Playmate” into a search engine such as Google or Yahoo!, because the term “Playmate” was included in Welles’ meta tags, the results of that search would include Well’s site.

After noting that the aforementioned terms were not used extensively in Welles’ meta tags, and that her site did not appear at the top of the list of search results, the Court applied the 3-factor test noted above and concluded that the use of the trademark terms was nominative. In the Internet context, the Court noted that searchers “… would have a more much difficult time locating relevant websites if they could only do so by correctly guessing the long phrases necessary to substitute for trademarks.”

Finally, the Court addressed the issue of whether Welles repeated use of the abbreviation “PMOY - ’81,” which stands for “Playmate Of The Year 1981,” in the background or wallpaper, of Welles’ site constituted a fair use of that term. The Court concluded that the abbreviation was not necessary to describe Welles and, therefore, failed the first prong of the nominative fair use test.

FAIR USE OF COPYRIGHTED PICTURES OVER THE INTERNET

Five days after the Playboy decision was filed, the Ninth Circuit issued its opinion in Kelly v. Arriba Soft Corporation. There, Leslie Kelly was a professional photographer who owned many copyrighted images of the American West. Some of these images were located on Kelly’s website or other websites with which Kelly had a license agreement.

Arriba Soft Corporation operated an Internet search engine that displayed its results in the form of small pictures known as “thumbnail” images. Using Arriba’s website, a websurfer would type a search term into the search engine, which then produced a list of results as these thumbnail images. While these lower-resolution images could not be enlarged to a higher resolution, a websurfer who double dash clicked on the thumbnail was taken to a page which contained the original full-sized image that had been imported directly from the originating website, along with text describing size of the image, a link to the originating website, the Arriba banner and Arriba advertising. As a result, the image being viewed by the user appeared as though it came directly from and was part of the Arriba website.

Later, Arriba changed its website such that users could be taken to a full-sized image which did not appear that it came from the Arriba website; i.e., the image was framed such that it was clear that the image in question came from the originating website.

After Arriba’s webcrawler visited sites that contained Kelly’s photographs, and copied 35 of Kelly’s images to Arriba’s database, Kelly filed suit for copyright infringement. The District Court granted Arriba’s motion for summary judgment and the Court of Appeal’s affirmed in part and reversed in part. Specifically, the Court of Appeal focused its analysis on two distinct actions by Arriba: (1) the reproduction of Kelly’s images to create thumbnails in the use of those thumbnails in Arriba’s search engine; and (2) the display of Kelly’s images through the in line linking and framing process when the user clicks on the thumbnails.

As in trademark law, the law of copyright includes a fair use exception so as not to “… stifle the very creativity which the law is designed to foster.” The four factors which are balanced by the Court in determining whether a use in a particular case is a fair use are the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion used and the effect of the use upon the potential market for or value of the copyrighted work.

With respect to Arriba’s use of thumbnail images of Kelly’s works, the Court found that Arriba’s use of Kelly’s images for thumbnails was transformative; that is, the thumbnails were much smaller, lower-resolution images that were unrelated to any aesthetic purpose. Alternatively, Kelly’s images were artistic works used for illustrative purposes. The Court noted that the thumbnails did not stifle artistic creativity because they did not supplant the need for the originals. The Court also noted, “[i]n addition, they benefit the public by enhancing information gathering techniques on the Internet.”

Addressing the other three prongs of the fair use exception, the Ninth Circuit noted that the “nature of the copyrighted work” factor weighed slightly in favor of Kelly because the photographs were creative in nature. The “amount and portion used” factor weighed neither against nor for either party because it was necessary for Arriba to copy the entire image to allow users to recognize the image. Finally, the Court held that, as a transformative work, the fourth factor weighed in favor of Arriba since the thumbnails did not harm the market for Kelly’s images or the value of his images.

In summary, the Court found that two of the four factors weighed in favor of Arriba, one was neutral and one weighed slightly in favor of Kelly. Accordingly, the use of Kelly’s images as thumbnails in an Internet search engine constitutes a fair use of an author’s work.

The second part of the Court’s analysis concerned the linking and framing of Kelly’s full-sized images. Since this use did not entail copying the images but, rather, involved importing them directly from Kelly’s website, the question before the Court was whether Arriba’s actions violated Kelly’s exclusive right of public display of his copyrighted works.

Diverging from a line of several recent cases which have held that operators of Internet bulletin board systems and Internet access providers were not liable for copyright infringement, the Kelly court ruled that Arriba acted as a more than simply a passive conduit of the images at issue. By trolling the web, finding Kelly’s images and then having its program link and frame those images within its own website, Arriba actively participated in displaying Kelly’s images. Since Arriba did so “publicly” through the Internet, and did not have permission to do so, Arriba was liable for violating Kelly’s display rights.

The Court next analyzed the fair use exception in the context of Kelly’s full-sized images. Unlike the use of the images for thumbnails, Arriba’s use of Kelly’s full-sized images was not transformative and the use of those images on Arriba’s website potentially reduced the number of visitors to Kelly’s website as well as the value of the works themselves. Therefore, the fair use doctrine did not sanction Arriba’s display of Kelly’s images through the linking or framing processes that put Kelly’s original images within the context of Arriba’s website.

Conclusion - Balancing Old Law And New Technology

While the Playboy and Kelly decisions involve different areas of intellectual property law, and as a consequence involve different tests for what constitutes a “fair use,” both decisions are similar in that they demonstrate a marked appreciation of and desire to promote the Internet as a medium for the exchange of information and ideas. With respect to the use of trademarks, the Playboy Court noted that “[p]recluding their use would have the unwanted effect of hindering the free flow of information on the Internet, something which is certainly not a goal of trademark law. [footnote omitted]” Likewise, the Kelly Court noted that, with respect to the use of thumbnail images, such images “… benefit the public by enhancing information gathering techniques on the Internet.”

Intellectual property law dates back hundreds of years and has survived numerous technological innovations. Like the radio and television before it, the Internet has crept into numerous aspects of the American life style and has dramatically impacted our means of communication, education and commerce. The two decisions analyzed above are good indications that the courts fully appreciate the benefits of these innovations, yet at the same time are mindful of the historical goals of intellectual property law.