Revisiting the Supreme Court’s Decision in eBay: The Naked Truth?

A copyright infringement battle that has been ongoing for over a decade may soon find itself at the steps of 1 First Street NE. On December 6, 2011, a petition of certiorari was filed in the case of Perfect 10, Inc. v. Google, Inc. (11-704).

The question presented is whether the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C. overruled established precedent in virtually every circuit, that a showing of likelihood of success on the merits in a copyright infringement claim raises a presumption of irreparable harm for purposes of obtaining a preliminary injunction.

Perfect 10 is a website that sells subscriptions to view its collection of nude photographs. The photographs are in a password protected area of the Perfect 10 website and are not publicly available. Certain third party websites copied Perfect 10's photographs and republished them on the internet without permission. Once the photographs are publicly available on the internet, Google indexes these third party websites and creates thumbnail images of these photographs. Users of Google can then scan these thumbnail images and click through to the third-party websites for full-size photographs.

In 2001, Perfect 10 began notifying Google that its thumbnail images and linking to the full-size images infringed Perfect 10's copyrights. On November 19, 2004, Perfect 10 filed an action against Google that included copyright infringement claims. Shortly thereafter, Perfect 10 filed a motion for a preliminary injunction to prevent Google, 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.

The District Court subsequently issued a preliminary injunction against Google, in part, due to the fact that the creation of the thumbnail images constituted copyright infringement. Google appealed this decision, and the Ninth Circuit vacated the injunction: holding that the District Court did not properly consider Google’s fair use defense in making the thumbnail images.

Back down at the District Court, Perfect 10's injunction was denied after rehearing based on the Ninth Circuit's ruling. Perfect 10 then appealed the case back up to the Ninth Circuit Court of Appeals. Perfect 10 argued that because it had a strong showing that its copyrights had been infringed by third parties, the court was compelled to automatically make a finding of irreparable harm. In support of this position, Perfect 10 cited a long line of Ninth Circuit cases which stated this legal precedent. Specifically, Perfect 10 cited the case of Apple Computer, Inc. v. Formula International, Inc., 725 F.2d 521 (9th Cir. 1984), where the Court held that “[a] showing of a reasonable likelihood of success on the merits in a copyright infringement claim raises a presumption of irreparable harm” for purposes of a preliminary injunction.

The Ninth Circuit, however, disagreed with Perfect 10, and held that the prior line of cases – including the Apple Computer case – were no longer good law in light of the Supreme Court's 2006 decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In that case, the Supreme Court found that, "an injunction in a patent infringement case may issue only in accordance with 'traditional equitable principles' and warned against reliance on presumptions or categorical rules." Id. at 393. The Supreme Court then held that the proper test for injunctive relief was the traditional four factor equitable test requiring a party to demonstrate: "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would be disserved by a permanent injunction." Id. at 394.

Although the eBay case involved patents, the Ninth Circuit pointed out that the Supreme Court also discussed the Copyright statute in reaching its ruling:

In reaching this conclusion, the Court relied on and clarified its prior decisions under the Copyright Act. It noted that the language of the Copyright Act (like the Patent Act), states that courts “may” grant injunctive relief “on such terms as [they] may deem reasonable to prevent or restrain infringement of a copyright.” Id. at 392 (quoting 17 U.S.C. § 502(a)). Again, this permissive language does not evince a congressional intent to depart from traditional equitable principles . . .

Following this reasoning, the Second Circuit concluded that eBay abrogated the longstanding presumption “that a plaintiff likely to prevail on the merits of a copyright claim is also likely to suffer irreparable harm if an injunction does not issue,” because this presumption is “inconsistent with the principles of equity set forth in eBay.” Salinger v. Colting, 607 F.3d 68, 75, 79 (2d Cir. 2010). We agree with the Second Circuit.

653 F.3d 976, 980 (9th Cir. 2011)

Once Perfect 10 lost its presumption that it was automatically entitled to injunctive relief, the Ninth Circuit very quickly disposed of Perfect 10's arguments that without an injunction it would be irreparably harmed.

Although Google waived its right to Respond to Perfect 10’s Petition for Certiorari on December 19, 2011, the Court requested that Google file a response by February 3, 2012. While it may be too early to predict whether the Court will grant Perfect 10’s Petition for Certiorari, the Ninth Circuit’s reinforcement of the traditional four-factor preliminary injunction test as applied to copyright holders – and its severing of the automatic link between likelihood of success on the merits and irreparable harm – could lead to fewer preliminary injunctions being issued in copyright infringement cases, and even fewer copyright infringement suits being filed in situations where irreparable harm is difficult to demonstrate.

ABOUT THE AUTHOR: Stephen A. Kennedy
Stephen Kennedy represents clients in intellectual property disputes involving engineering software, visual works and the Digital Millennium Copyright Act, as well as patent-antitrust and valuation matters. He recently settled two trademark infringement actions and successfully transferred a case trademark from the Southern District of Texas to New Mexico. He has represented a number of international, national and regional corporations in the development and execution of appropriate litigation strategies and IP transactions.

Copyright McDole & Williams, P.C.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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