Update 53: December 12, 2007
1. Spain: Complaints over mixing search results and
The Australian Competition and Consumer Commission
(ACCC) accuses Google of inadequately distinguishing between
its sponsored links and the normal "organic" search results (see
Update 51). The
case will be heard in the Federal Court June 23, 2008.
Same problem in Spain: The
Federation of Consumers in Action (FACUA) filed complaints with several
government ministries (the National Consumer Institute, the Spanish Office of
Patents and Trademarks, the Ministry of Health and Consumer Affairs ministry of
the region of Madrid) against Yahoo and Google claiming that the ads aren't
adequately distinguishable from the search results.
The group also criticizes the use of trademark
protected terms as keywords. According to the group, one third of
telecommunications companies, two thirds of travel agencies and 20 percent of
the banking entities studied used the names of their competitors to advertise on
November 19, 2007:
Australia sets date for Google keyword case, ZDNet:
"The Australian Federal Court has set a
hearing date for the Australian Competition and Consumer Commission's
allegations against Google of misleading and deceptive conduct."
Austrian study: Google is creating dangerous monopolies and has to be stopped!
According to an Austrian university study (187-pages
PDF) Google is creating unacceptable monopolies that will allow it to
control information flows and invade privacy.
Two of the conclusions of the study are:
"Google can use its almost universal knowledge
of what is happening in the world to play the stock market without risk: in
certain areas Google KNOWS what will happen, and does not have to rely on
educated guesses as other players in stock market have to. This is endangering
trading on markets: by game theory, trading is based on the fact that nobody has
complete information (i.e. will win sometimes, but also loose sometimes). Any
entity that never looses rattles the basic foundations of stock exchanges!"
"Google’s open aim is to “know everything there
is to know on Earth”. It cannot be tolerated that a private company has that
much power: it can extort, control, and dominate the world at will."
to Theage.com, a Google spokesman said in a statement: "These
allegations are premised on numerous inaccuracies, conspiracy
theories and fundamental misunderstandings about Google's products
and services. They're completely without foundation and, frankly, a
3. USA - Search Engines and the Global Online Freedom Act
Global Online Freedom Act of 2007 was approved in a unanimous voice vote by
the Foreign Affairs Committee. The bill seeks to "prohibit
US internet companies from cooperating with repressive regimes that restrict
information about human rights and democracy on the internet and use personally
identifiable information to track down and punish democracy activists."
Under § 202 of The
Global Online Freedom Act of 2006, businesses that provide search engine
services would be prohibited from altering the operation of the search engine
with respect to “protected filter terms” at the request of the governments of
designated Internet-restricting countries like China, or in a manner that would
be likely to produce different search results for users accessing the service
from within the designated countries.This requirement was removed from GOFA in
Under § 203 of The Global Online Freedom Act of 2007, businesses providing
search engine services would only be required to report to a newly-created Office of
Global Internet Freedom the terms and requirements for filtering that are
specified to them by the governments of designated countries.
SEC. 203. Transparency
regarding search engine filtering (Global Online Freedom Act of 2007)
Any United States business that creates, provides, or hosts an Internet
search engine shall provide the Office of Global Internet Freedom, in a
format and with a frequency to be specified by the Office, with all terms
and parameters used to filter, limit, or otherwise affect the results
provided by the search engine that are implemented--
(1) at the request of, or by reason of any other direct or indirect
communication by, any foreign official of an Internet-restricting
(2) to comply with a policy or practice of restrictions on Internet
freedom in an Internet-restricting country.
SEC. 202. Integrity of search
engines (Global Online Freedom Act of 2006)
Any United States business that creates, provides, or hosts any Internet
search engine may not alter the operation of such search engine with respect
to protected filter terms either--
(1) at the request of, or by reason of any other direct or indirect
communication by, of a foreign official of an Internet-restricting
(2) in a manner intended or likely to produce different search engine
results for users accessing the search engine from within an
Internet-restricting country as compared to users elsewhere.
4. Search Engine Law Article: Green light for search engines to use
The times, in which search engines have
only provided a search for text-based websites have long passed. Market leader
Google e.g. provides a sophisticated mix of features, enabling its users to
search for videos, blogs, products, scientific articles and pictures. Especially
the last service has lead to several lawsuits in the USA and in Germany. Users
will only embrace a visual search engine, if they get a good first impression of
the pictures within the search results. As it is not possible to effectively
describe a visual image with plain text to the benefit of a user, thumbnail
images come into play. In a process called crawling search engines automatically
index pictures. They download a copy of each image they find on the internet to
its servers and convert it into a small low resolution version of the full file,
the so called thumbnail. In response to a search engine user's textual query,
the search engine then produces a display of relevant thumbnail images.
Some content owners call this
a violation of their copyright. Search engines should not be permitted to
display their content without their explicit permission. If this view prevails
and courts stop the use of thumbnails, visual search engines would loose all of
their attractivity to users and would practically become useless. So when
considering the legality of thumbnails keep in mind this question puts the whole
business model of visual search engines at stake.
This article outlines the key findings
of courts in the USA and in Germany. From a legal point of view there is no
doubt that in both countries two exclusive copyright holder's rights are
concerned in the thumbnail scenario: The right of reproduction (Section 107 of
the U.S. Copyright Act and § 16 of the German Copyright Act - Search
engines make copies of the images they crawl) and the right to publicly
display (Section 107 of the U.S. Copyright Act) / to make available a work (§ 19
a of the German Copyright Act - Search engines show the thumbnails to their
users). So the main question is whether a search engine can rely on one of the
exemptions to the copyright holder's exclusive rights. While there is a fair use
defense in the U.S. law (and in other common law countries; Great Britain and
Canada e.g. have a fair dealing exemption), most European countries have a
catalog of "public interest" exemptions, that are to be interpreted narrowly. In
Germany it is well established that the creation of thumbnails by search engines
is not privileged by the exemptions laid down in § 44 a ff. of the German
Copyright Act. Search engines in Germany can only rely on one last argument, an
implied consent by the copyright holder to the creation of the thumbnails.
So the decisive questions are: Is the
creation of a thumbnail fair use? And in non common law countries: Does a
copyright holder, who publishes his work on the internet, impliedly consent to
the creation, storage and display of thumbnails by search engines? We will
discover that these questions are connected. Arguments used to justify fair
use will also be of importance when discussing implied consent.
Section 107 of the U.S. Copyright Act
provides that fair use of a copyrighted work "for purposes such as criticism,
comment, news reporting, ... or research" is not a violation of the Copyright
Act. In order to determine what constitutes fair use in a particular case, a
court has to consider four nonexclusive factors:
(1) the purpose and character of the use
including whether it is commercial;
(2) the nature of the work;
(3) the amount and substantiality of the
portion used relative to the work as whole;
(4) the effect of the use upon the
potential market for or value of the work.
No single factor is determinative.
In two cases (Kelly v. Arriba Soft Corp.,
280 F.3d 934 (9th Cir. 2002), full text also available at:
http://www.linksandlaw.com/decisions-106.htm and Perfect 10 v. Google, full
text also available at:
http://www.linksandlaw.com/news-update50-perfect-ten-appeal.htm) the Ninth
Circuit held that seach engines' reproduction of images for use as thumbnails is
fair use under the Copyright Act.
Thumbnails create a different purpose for the images. They are not used in an
aesthetic manner. Instead they help index and improve access to images on the
Internet and thus provide a new and transformative use of the images. The use
does not stifle artistic creativity or in any way supplant the originals.
Thumbnails are of poorer quality. They lack the resolution of regular-sized
images. Any enlargement would result in a loss of clarity of the image. Due to
the highly transformative use, the commercial nature of search engines doesn't
warrant another result, no matter of the precise business model (ads on the
result pages in the Arriba case, AdSense on the linked-to-sites in the Google
Even if the images are creative in nature, the second factor only slightly
weighs in favor of the copyright holder, because they have already been
published on a web site. The court noted that published works are more likely to
qualify as fair use because the first appearance of the artist's expression has
Although search engines copy the entirety of each image, this is the amount
necessary in order for its users to recognize the image and to achieve the
objective of providing an effective image search. So this factor favors neither
The use of thumbnail images does not harm the copyright holders ability to sell
or license them. There will be no negative consequences for the market for
full-size images. Much to the contrary: By showing the thumbnails on its result
pages when users enter terms related to a copyright holder's image, a search
engine would guide users to their website rather than away from it.
According to a California court (Perfect 10
v. Google, Inc., 416 F. Supp. 2d 828 (C.D.Cal. 2006), full text at:
factor weighs in favor of a copyright holder, if there is also a market for
smaller sized images. In this case the plaintiff asserted that the reduced size
images had commercial value, because he sells them for display on cell phones.
The Ninth Circuit did not agree: “The district court did not make a finding
that Google users have downloaded thumbnail images for cell phone use. This
potential harm to Perfect 10’s market remains hypothetical.”
So to conclude, the use of thumbnails is
regarded as fair use in the USA.
There have been two major decisions on
thumbnails in Germany, one by the District Court of Hamburg (Case No. 308 O
449/03, full text available at:
http://www.linksandlaw.de/urteil73-thumbnails.htm) and the second by the
District Court of Erfurt (Case No.: 3 O 1108/05, full text available at:
The District Court of Hamburg ruled against
Google's German news service when it found that thumbnail images, that were
displayed beside excerpts from various news stories, were protected under German
copyright law and could not be reproduced without permission. The Court did know
that thumbnails were regarded as fair use in the Kelly v. Arriba case and
discussed the differences between the systems in the USA and in Germany. But
without a fair use defense in Germany, the court found, that it could not
consider several arguments that were relevant in the US cases, e.g. the purpose
of the thumbnails or the great benefit of a visual search engine for the public.
The court did not discuss the possibility of an implied consent by the copyright
holder. In his opinion the defendant could have merely provided a textual link
stating "See image here". So the court issued a preliminary injunction against
Google, ordering the search engine market leader to refrain from copying
pictures or making available thumbnails of the plaintiff’s works. Should Google
not comply with the injunction, the court will impose a fine with a maximum of
The District Court of Erfurt had to decide
on the legality of Google’s picture search engine and reached another result,
arguing that webmasters must brace themselves for other users to link to their
works. Many arguments from the fair use discussion appear in the decision. The
court stressed the fact that the thumbnails cannot be enhanced into high quality
images and that the depiction of thumbnails is beneficial to the copyright
holder, because visual search engines help users to locate them on the internet.
Page owners had one easy way to prevent their pictures from appearing as
thumbnails in search engine results, the court wrote. They can restrict access
to the works on their site, e.g. by the use of a robots.txt file.
In my opinion the Erfurt court decision is
more compelling, although the reasoning that a copyright owner sacrifices some
intellectual property rights by making his work available on the internet, is
troubling. The interests of users and copyright holders are clearly balanced by
the exemptions granted by the German Copyright Act. It is against the law to
introduce a fair use defense through the backdoor "implied consent". But implied
consent can still be assumed under narrow prerequisites that also take into
account the way the internet functions. The decisive factors should be the
The copyright owner has not
made a clear statement against the use of his pictures as thumbnails, e.g. by
the use of a robots.txt file (Please note the difference to a fair use defense:
Even if the copyright owner dissents, it is still fair use!)
The use of the copyrighted
work is also in the interest of the copyright owner.
The use is limited to what is
The copyright owner can not
reasonably be asked for his explicit consent due to the high number of persons
Especially the last argument is of great
importance. It is impossible for search engines to ask every webmaster for his
consent. Google e.g. claims to crawl more than 8 billion web sites. So applying
the test to thumbnails leads to the result that their use in visual search
engines should be legally permissible in Germany as long as the copyright owner
refrains from excluding search engines from his web site completely or
explicitly tells them to exclude his works from the picture search results.
Thumbnails in another context like in news search engines which use pictures to
illustrate articles, would not be covered by the implied consent defense,
because news search engines only use a few sources for their service and it
is reasonable to negotiate licensing agreements. The thumbnails are also not
absolutely necessary for a news search service, they are a mere attachment.
While it is pretty much established in the USA that the creation of thumbnails
is fair use, the situation is far more uncertain in Germany. Differing court
opinions don't give visual search engines the clear guidance that they need to
conduct their business. They depend on the very weak "implied consent" defense.
This argument completely fails when an image has been put on a web site without
the copyright holder's permission. Than there is no longer a basis for an
implied consent. There already have been some authors
CRI 2006, 65, 69) that proposed a European fair use
exemption that would avoid rigid application of copyright law when it would
stifle the creativity it is designed to foster. Given that several features are
provided by search engines with an overwhelming legal uncertainty (not only
thumbnails, but the same can be said about caching for example), this might not
be a bad idea. Our picture from "search engine law" is far from being complete.
It's merely a thumbnail...
5. In short:
Person v. Google (see
45): Person filed an appeal in the Court of Appeals for the 9th Circuit
in San Francisco, California on November 1, 2007. Court documents are
http://www.lawmall.com/google/. Is keyword related Search Advertising
and Non-Search Advertising interchangeable? The United States Disctrict
Court for the Northern District of California, San Jose Division said yes
and found that there is no Google monopoly. It will be interesting to see
how the appeal court will decide on this issue. Even if both forms are
interchangeable, Google could have a monopoly in the online ad market
after purchasing Double Click. Both companies would handle more than 80% of
the advertisements served up to third-party Web sites. But on Nov. 13, the
European Union's antitrust authority held off on approving Google's proposed
acquisition of DoubleClick, opting instead to subject the transaction
to further review.
In July 2007, the Utah sports-floor maker
Connor Sport Court International subpoenaed Google as part of a trademark
lawsuit against a competitor. But Google refused to turn over information
about its "sponsored links" advertising sales. Connor now filed a motion to
compel Google to comply with its discovery request.
Connor Sport Court International, Inc. v. Google Inc., CV-06-3066 PHX JAT //
CV 07-80252 (N.D. Cal.
motion to compel filed Oct. 31, 2007)
Also see Goldman, Eric,
Google Resists Subpoena for Keyword Ad Purchases--Connor Sport Court v.
Google, Technology & Marketing Law Blog
Jennifer A. , "A Right to Reach an Audience: An Approach to Intermediary Bias on
the Internet" . Hofstra Law Review, 2008 Available at SSRN:
Google, American Blind Settlement Leaves AdWords
Controvers Unsettled, Electronic Commerce & Law Report 2007, 818-819
Baars, Wiebke / Schuler, Marc / Lloyd, Charles,
Keyword-Advertising, CRi 2007, 137-142
Tietge, Yorck-Percy, Ist die Verwendung fremder
Marken im Rahmen des Keyword-Advertising nach jüngster Rechtsprechung
zulässig?, K&R 2007, 503-506
Band, Jonathan, The Perfect 10 Trilogy, CRi
Wimmers, Jörg / Schulz, Carsten, Anmerkung zu
OLG München - Verletzung des Rechts am eigenen Bild durch einen Link, K&R
Schubert, Katja / Wilken, Timo,
Markenrechtliche und wettbewerbsrechtliche Probleme bei der Nutzung der
Internetservices Google AdWords und Google AdSense
Stephan, Mashups - Neue rechtliche Herausforderungen im Web 2.0-Zeitalter,
K&R 2007, 623-628