Stephen A. Kennedy Intellectual Property Law Blog on Lawyers.com

            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.