|9th Circuit Reverses in
Kelly v. Arriba
|2/6. The U.S.
Court of Appeals (9thCir) issued its opinion
[PDF] in Kelly
v. Arriba Soft, a case involving the fair use
exception to copyright infringement in the context of online
digital images, hyperlinking and search engines. The Appeals
Court reversed in part the District Court's holding that
Arriba's (Ditto.com's) actions constituted fair use.
Background. Leslie Kelly is a professional photographer
who has copyrighted and published many of his images of the
American west. See, for example, California's Gold Rush
Country. Arriba Soft, which is now known as Ditto.com, operates an
Internet search engine for images. It placed in its web site
reduced size copies of images, called thumbnails. This search
engine produced thumbnail images, rather than text, in
response to queries. Arriba placed thumbnail copies of Kelly's
images in its web site, without permission from Kelly. It also
used hyperlinks to files on the servers of others to display
the full sized pictures.
Arriba operated by using a crawler that copied images from
other web sites, including those of Kelly and third parties
which published Kelly's pictures under license. Arriba then
used these copies to generate reduced size, lower resolution,
thumbnail pictures, which it kept in its database. Arriba then
deleted the original, full size, images. When someone used
Arriba's search engine to search for images on the Internet,
Arriba served web pages that included thumbnails, which
resided on its servers. Then, if the user clicked on the
thumbnail image, a second page was served, which displayed the
full sized image, drawn from the server of the originating web
site, along with, among other things, advertisements purchased
from Arriba. A hyperlink to the originating web site was also
displayed. (Now, if the user clicks on a thumbnail in a
Ditto.com results page, the original web page in the
originating site is served.)
District Court. Kelly filed a complaint in U.S.
District Court (CDCal) against Arriba alleging copyright
infringement. Arriba asserted that its actions constituted
fair use within the meaning of 17 U.S.C.
§ 107. The District Court held that that Kelly had
established a prima facie case of copyright infringement based
on Arriba's unauthorized reproduction and display of Kelly's
works, but that this reproduction and display constituted a
non-infringing fair use. See, opinion
at 77 F. Supp.2d 1116 (C.D. Cal. 1999).
Section 107. The relevant language of the fair use
exception provides: "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
Appeals Court. The three judge panel of the Ninth
Circuit reasoned that "two distinct actions by Arriba ...
warrant analysis. The first action consists of the
reproduction of Kelly's images to create the thumbnails and
the use of those thumbnails in Arriba's search engine. The
second action involves the display of Kelly's images through
the inline linking and framing processes when the user clicks
on the thumbnails." The Appeals Court applied the four
prong analysis of Section 107 for each action.
Copying of Images, and Reproduction of Thumbnails. The
Appeals Court held that Arriba's copying of copyrighted
images, and creation and use of thumbnails, constituted fair
use. On the first factor of fair use, the Appeals Court
analyzed the commercial nature of the use, and the
transformativeness. It found that "Because the use of
Kelly's images was not highly exploitative, the commercial
nature of the use only slightly weighs against a finding of
fair use." It also found that "Arriba's use of
Kelly's images for its thumbnails was transformative."
That is, "the thumbnails were much smaller, lower
resolution images that served an entirely different function
than Kelly's original images." Moreover, the Appeals
Court found that there was a "public benefit of the
search engine and the minimal loss of integrity to Kelly's
images." Hence, the first factor weighs in Arriba's
The Appeals Court found that the second factor -- nature of
the copyrighted work -- weighed slightly in favor of Kelly. It
held that the third factor was neutral. It wrote that
"This factor will neither weigh for nor against either
party because, although Arriba did copy each of Kelly's images
as a whole, it was reasonable to do so in light of Arriba's
use of the images. It 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 web site." Finally, the Appeals Court found
that the fourth factor weighed in favor of Arriba, because
"Kelly's images in its thumbnails does not harm the
market for Kelly's images or the value of his images." In
conclusion, the Appeals Court found that the four factor test
weighed in favor of Arriba.
Hyperlinking. On the hyperlinking analysis, the Appeals
Court easily found that all four fair use factors weighed in
favor of Kelly. However, the real issue here was whether there
was an infringement in the first place. The Appeals Court
began by stating that "This use of Kelly's images does
not entail copying them but, rather, importing them directly
from Kelly's web site. Therefore, it cannot be copyright
infringement based on the reproduction of copyrighted works as
in the previous discussion. Instead, this use of Kelly's
images infringes upon Kelly's exclusive right to ``display the
copyrighted work publicly.´´"
The Court acknowledged that "No cases have addressed the
issue of whether inline linking or framing violates a
copyright owner's public display rights." The Court
analyzed the language of the statute, its legislative history,
and related cases. It concluded that "Arriba is directly
liable for infringement. Arriba actively participated in
displaying Kelly's images by trolling the web, finding Kelly's
images, and then having its program inline link and frame
those images within its own web site. Without this program,
users would not have been able to view Kelly's images within
the context of Arriba's site. Arriba acted as more than a
passive conduit of the images by establishing a direct link to
the copyrighted images. Therefore, Arriba is liable for
publicly displaying Kelly's copyrighted images without his
The Appeals Court then applied the four factor fair use
analysis to Arriba's linking to and framing of Kelly's full
sized images. On the first factor, the Court found that full
sized exact copies of photos are not transformative, and
hence, this factor favors Kelly. On the second factor, the
Court found again that Kelly was favored. On the third factor
-- the amount and substantiality factor -- the Court easily
concluded that full sized copying was substantial. On the
fourth factor -- effect on the potential market -- the Court
also found that this factor favors Kelly. Hence, all four
factors favored Kelly, and the use was not fair use.
Conclusion. The Appeals Court concluded: "We hold
that Arriba's reproduction of Kelly's images for use as
thumbnails in Arriba's search engine is a fair use under the
Copyright Act. We also hold that Arriba's display of Kelly's
full sized images is not a fair use and thus violates Kelly's
exclusive right to publicly display his copyrighted works. The
district court's opinion is affirmed as to the thumbnails and
reversed as to the display of the full sized images. We remand
with instructions to determine damages for the copyright
infringement and the necessity for an injunction."
|House Committee Holds
Hearing on Abusive Class Action Litigation
|2/6. The House
Judiciary Committee held a hearing on HR 2341,
the Class Action Fairness Act of 2001, sponsored by Rep. Bob Goodlatte
(R-VA). See, prepared statements of Rep.
James Sensenbrenner (R-WI), Hilda
Bankston (former small business owner), John
Beisner (O’Melveny & Myers), Peter
Detkin (Intel), Andrew
Friedman (Bonnett Fairbourn).
Peter Detkin, Assistant General Counsel of Intel, testified on behalf of
the Semiconductor Industry
Association (SIA). He stated that "Intel, the SIA,
and much of the rest of the technology community are hopeful
that you will act during this Congress to address a growing
problem in our legal system: abusive class action
litigation." He said that "we are seeing an
aggressive move by a limited number of plaintiffs’ attorneys
to file class actions against technology companies in areas
such as allegedly defective products. It is obvious that many
of these suits are brought as class actions because the injury
alleged is either trivial, highly speculative, or wholly
He added that there has been a shift to filing class actions
in the state courts. He recited the consequent problems:
"increased forum shopping; manipulation of procedural
rules to avoid federal diversity jurisdiction; displacement of
the laws of some states by local judges in other states; the
resolution of class action cases by ill-equipped state courts;
“strike” suits intended to coerce quick settlements from
defendants; collusive settlements, where plaintiffs’ lawyers
receive large fees while accepting settlements of little or no
value to class members; and grossly inflated “bounties”
being paid to lead plaintiffs."
|Hubbard Addresses New
|2/5. Glenn Hubbard, Chairman of the Council of Economic
Advisors, testified before the Joint Economic Committee
of the U.S. Congress. His testimony
addressed, among other topics, ways to improve the collection
of economic data regarding the new economy.
He stated that "the quality of existing statistics is far
from perfect and could be enhanced with further investment.
... A number of steps can be taken to improve the accuracy and
timeliness of economic statistics. One cost effective measure
would be to ease the current restrictions on the sharing of
confidential statistical data among Federal statistical
Hubbard also stated that "the Administration is proposing
new and continued funding for the development of better and
more timely measures to reflect recent changes in the economy.
For example, these resources would allow for tracking the
effects of the growth in e-commerce, software, and other key
services, and for developing better estimates of employee
compensation. The latter are increasingly important given the
expansion in the use of stock options as a form of executive
compensation, as well as for tracking the creation and
dissolution of businesses, given the importance of business
turnover in a constantly evolving economy. Improved quality
adjusted price indexes for high technology products are also
an important area for future research. As the economy
continues to change and grow, the need persists to create and
develop such new measures, to provide decision makers with
better tools with which to track the economy as accurately as
|People and Appointments
|2/5. Securities and Exchange
Commission (SEC) General Counsel David Becker will
leave the SEC. He has not yet accepted another position.
Before going to the SEC he was a partner at the law firm of Wilmer Cutler & Pickering.
2/5. The National Cable &
Telecommunications Association (NCTA) announced the
appointments of Joe Waz of Comcast Corporation and Christine
Levesque of Rainbow Media Holdings as co-chairs of the
NCTA Public Affairs Committee. See, release.
2/4. The Senate confirmed Callie Granade to be a U.S.
District Judge for the Southern District of Alabama. See,
Cong. Rec., Feb. 4, 2002, at S309.
2/5. The Senate confirmed Philip Martinez to be a U.S.
District Judge for the Western District of Texas. See, Cong.
Rec., Feb. 5, 2002, at S381.
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|Thursday, Feb 7
|The House will meet at 10:00 AM. It will likely pass HR
3394, the Cyber Security Research and Development Act,
sponsored by Rep. Sherwood
10:00 AM. The House
Ways and Means Committee will hold a hearing on the
President's Trade Agenda for 2002. U.S. Trade Representative (USTR)
Zoellick will testify. Location: Room 1100, Longworth
10:00 AM. The Senate
Judiciary Committee has scheduled an executive business
meeting to consider pending nominations and other matters.
Location: Room 226, Dirksen Building.
12:30 PM. Members of the House Science Committee
will hold a press conference regarding passage of HR
3394, the Cyber Security Research and Development Act.
Location: Room 2325, Rayburn Building.
12:30 PM. Tom Ridge, Director of the Office of Homeland
Security will speak at a luncheon. Location: Ballroom, National Press Club, 529 14th
St. NW, 13th Floor.
|Friday, Feb 8
|The House will not be in session.
9:00 AM - 12:30 PM. The Federal
Trade Commission (FTC) and the Antitrust Division of the
Department of Justice (DOJ) will hold the second in a series
of joint hearings on antitrust and intellectual property.
There will be two concurrent sessions, titled "Patent Law
for Antitrust Lawyers" and "Antitrust Law for Patent
Lawyers". See, FTC
release and DOJ
release. Location: Rooms 432 and 332, respectively, of the
FTC, 600 Pennsylvania Ave., NW.
TO BE DECIDED ON THE BRIEFS.
9:30 AM. The U.S. Court of Appeals (DCCir)
will hear oral argument in Chameleon Radio Corp v. FCC,
No. 00-1546. Judges Edwards, Sentelle and Silberman will
10:00 AM. Chris Murck, Chairman of the American Chamber of
Commerce in China, will speak on the U.S. relationship
with China. He will also comment on China's membership into
the WTO and its likely impact on the global marketplace. For
more information, contact Micaela de Leon Vivero at mdeleon @apcoworldwide.com
or 202 778-1024. Location: Murrow Room, National Press Club, 529 14th
St. NW, 13th Floor.
AM - 12:00 NOON. The American
Enterprise Institute (AEI) will host a panel discussion
titled "Should the Government Promote Open Source
10:30 AM. The Department of
Commerce (DOC) will host a homeland security technology
fair. Location: Main Lobby, DOC, 14th St. and Constitution
12:15 PM. The FCBA's
Wireless Telecommunications Practice Committee will host a
lunch. The topic will be "Hot Wireless Issues on the
Hill". The price to attend is $15.00. RSVP to Wendy
Parish at email@example.com
by 12:00 NOON on February 6. Location: Sidley & Austin,
Room 6-E, 1501 K Street, NW.
Sixth Anniversary of passage of the Telecommunications Act of
|Tuesday, Feb 12
|9:30 AM. The U.S.
Court of Appeals (DCCir) will hear oral argument in WorldCom
v. FCC, No. 01-1218. Judges Tatel, Garland and Williams
9:30 AM. The Senate Governmental Affairs Committee's
Subcommittee on International Security, Proliferation and
Federal Services will hold a hearing to examine multilateral
non-proliferation regimes, weapons of mass destruction
technologies, and the war on terrorism. Location: Room 342,
10:00 AM. The Senate
Banking Committee will hold a hearing on accounting and
investor protection issues surrounding the problems with Enron
and other public companies. The witnesses will be five former
Chairmen of the Securities and
Exchange Commission (SEC), Roderick Hills (1975-77),
Harold Williams (1977-81), David Ruder (1987-89), Richard
Breeden (1989-93), and Arthur Levitt (1993-2000). Location:
Room 538, Dirksen Building.
12:15 PM. The FCBA's
Common Carrier Committee will host a brown bag lunch. Kathleen
Abernathy (FCC Commissioner) and Nanette
Thompson (Chair of the Regulatory Commission of
Alaska) will speak about universal service. RSVP to
Rhe Brighthaupt at firstname.lastname@example.org.
Location: Wiley Rein &
Fielding, 1750 K St., NW, 10th Floor.
12:15 PM. The FCBA's
Transactional Practice Brown Committee will host a brown bag
lunch on wireless transactions. RSVP to Tina Screven at 202
383-3337. Location: Wilkinson
Barker & Knauer, 2300 N Street NW.
2:30 PM. The Senate
Foreign Relations Committee will hold a hearing to examine
the theft of American intellectual property at home and
abroad. Location: Room 419, Dirksen Building.
|Wednesday, Feb 13
|Day one of a three day conference titled Biometric
Consortium Conference. The sponsors include the
Information Technology Laboratory (ITL) and the Advanced
Technology Program (ATP) of the National Institute of
Standards and Technology (NIST), the National Security Agency
(NSA), the Department of Defense's Biometric Management Office
(BMO), the General Services Administration (GSA), and the
Federal Technology Service (FTS) Center for Smart Card
Solutions. This conference has been rescheduled from September
12-14, 2001. See, conference
web site. Location: Hyatt Regency Crystal City, Arlington,
11:00 AM. The Cato Institute
will host a panel discussion titled "Trade War or Tax
Reform? The WTO Ruling on Tax Breaks for U.S. Exporters".
The panelists will be Rep.
Phil Crane (R-IL), Chairman of the Trade Subcommittee of
the House Ways and
Means Committee, William Reinsch, National
Foreign Trade Council, John Meagher, Price Waterhouse Coopers,
and Chris Edwards, Cato Institute. Cato will web cast the
event. A luncheon will follow the program. See, Cato event
summary. Location: Cato, 1000 Mass. Ave., NW.
5:00 - 7:00 PM. The Congressional
Internet Caucus Advisory Committee will host an event
titled "Reception and Technology Fair". The
Co-chairs of the Internet Caucus, Sen. Patrick Leahy (D-VT),
Sen. Conrad Burns (R-MT), Rep. Bob Goodlatte (R-VA) and Rep.
Rick Boucher (D-VA), are likely to speak. The Co-chairs of the
Wireless Task Force, Sen. John Ensign (R-NV) and Rep. Mike
Honda (D-CA), are likely to speak also. Location: Room 902,