                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

PERFECT 10, INC., a California          
corporation,
                Plaintiff-Appellant,          No. 06-55405
                 v.                            D.C. No.
AMAZON.COM, INC., a corporation;            CV-05-04753-AHM
A9.COM INC., a corporation,
             Defendants-Appellees.
                                        

PERFECT 10, INC., a California          
corporation,
                Plaintiff-Appellant,          No. 06-55406
                 v.                            D.C. No.
                                            CV-04-09484-AHM
GOOGLE INC., a corporation,
               Defendant-Appellee.
                                        

PERFECT 10, INC., a California          
corporation,
                  Plaintiff-Appellee,         No. 06-55425
                 v.                            D.C. No.
                                            CV-04-09484-AHM
GOOGLE INC., a corporation,
              Defendant-Appellant.
                                        




                            15441
15442             PERFECT 10 v. AMAZON.COM



PERFECT 10, INC., a California          
corporation,
                Plaintiff-Appellant,          No. 06-55759
                 v.                            D.C. No.
                                            CV-04-09484-AHM
GOOGLE INC., a corporation,
               Defendant-Appellee.
                                        

PERFECT 10, INC., a California          
corporation,
                  Plaintiff-Appellee,         No. 06-55854
                 v.                            D.C. No.
                                            CV-04-09484-AHM
GOOGLE INC., a corporation,
              Defendant-Appellant.
                                        

PERFECT 10, INC., a California               No. 06-55877
corporation,
                  Plaintiff-Appellee,           D.C. No.
                 v.                        CV-04-09484-AHM
                                               AMENDED
GOOGLE INC., a corporation,
                                                OPINION
              Defendant-Appellant.
                                        
        Appeal from the United States District Court
            for the Central District of California
         A. Howard Matz, District Judge, Presiding

                 Argued and Submitted
         November 15, 2006—Pasadena, California

                   Filed May 16, 2007
                Amended December 3, 2007
               PERFECT 10 v. AMAZON.COM           15443
Before: Cynthia Holcomb Hall, Michael Daly Hawkins, and
             Sandra S. Ikuta, Circuit Judges.

                Opinion by Judge Ikuta
                  PERFECT 10 v. AMAZON.COM                15447


                         COUNSEL

Russell J. Frackman and Jeffrey D. Goldman, Mitchell, Sil-
berberg & Knupp LLP, Los Angeles, California, Jeffrey N.
Mausner, Berman, Mausner & Resser, Los Angeles, Califor-
nia, Daniel J. Cooper, Perfect 10, Inc., Beverly Hills, Califor-
nia, for plaintiff-appellant Perfect 10, Inc.

Andrew P. Bridges and Jennifer A. Golinveaux, Winston &
Strawn LLP, San Francisco, California, Gene C. Schaerr,
Winston & Strawn LLP, Washington, DC, for defendant-
appellee and cross-appellant Google Inc.
15448             PERFECT 10 v. AMAZON.COM
Mark T. Jansen & Anthony J. Malutta, Townsend and Town-
send and Crew LLP, San Francisco, California, for
defendants-appellees Amazon.com and A9.com, Inc.

Fred von Lohmann, Electronic Frontier Foundation, San Fran-
cisco, California, for amicus curiae Electronic Frontier Foun-
dation, American Library Association, Medical Library
Association, American Association of Law Libraries, Associ-
ation of Research Libraries, and Special Libraries Association
in support of Google Inc.

Victor S. Perlman, of counsel, American Society of Media
Photographers; Nancy E. Wolff, of counsel, Cowan, DeBaets,
Abrahams & Sheppard, LLP; Robert W. Clarida and Jason D.
Sanders, Cowan, Liebowitz & Latman, P.C., New York, New
York, for amicus curiae American Society of Media Photog-
raphers, Inc., Picture Archive Council of America, Inc.,
British Association of Picture Libraries and Agencies, Inc.,
Stock Artists Alliance, The Graphic Artists Guild, American
Society of Picture Professionals and National Press Photogra-
phers, in support of Perfect 10 on issue of Google’s liability
for the display of full-size images.

Eric J. Schwartz and Steven J. Metalitz, Smith & Metalitz
LLP, Washington, DC, for amicus curiae Motion Picture
Association of America, Inc. in support of Perfect 10.

Jonathan Band, Jonathan Band PLLC, Washington, DC, for
amicus curiae NetCoalition, Computer and Communications
Industry Association, U.S. Internet Service Provider Associa-
tion, Consumer Electronics Association, Home Recording
Rights Coalition, Information Technology Association of
America, and Internet Commerce Coalition in support of
Google Inc.

Kenneth L. Doroshow and Linda J. Zirkelbach, Recording
Industry Association of America, Washington, DC; Jacque-
line C. Charlesworth, National Music Publishers’ Association,
                      PERFECT 10 v. AMAZON.COM                       15449
Washington, DC; Robert W. Clarida, Richard S. Mandel and
Jonathan Z. King, Cowan, Liebowitz & Latman, P.C., New
York, New York, for amicus curiae Recording Industry Asso-
ciation of America and National Music Publishers’ Associa-
tion in support of neither party.


                               OPINION

IKUTA, Circuit Judge:

   In this appeal, we consider a copyright owner’s efforts to
stop an Internet search engine from facilitating access to
infringing images. Perfect 10, Inc. sued Google Inc., for
infringing Perfect 10’s copyrighted photographs of nude mod-
els, among other claims. Perfect 10 brought a similar action
against Amazon.com and its subsidiary A9.com (collectively,
“Amazon.com”). The district court preliminarily enjoined
Google from creating and publicly displaying thumbnail ver-
sions of Perfect 10’s images, Perfect 10 v. Google, Inc., 416
F. Supp. 2d 828 (C.D. Cal. 2006), but did not enjoin Google
from linking to third-party websites that display infringing
full-size versions of Perfect 10’s images. Nor did the district
court preliminarily enjoin Amazon.com from giving users
access to information provided by Google. Perfect 10 and
Google both appeal the district court’s order. We have juris-
diction pursuant to 28 U.S.C. § 1292(a)(1).1
  1
    Google argues that we lack jurisdiction over the preliminary injunction
to the extent it enforces unregistered copyrights. Registration is generally
a jurisdictional prerequisite to a suit for copyright infringement. See 17
U.S.C. § 411. But section 411 does not limit the remedies a court can
grant. Rather, the Copyright Act gives courts broad authority to issue
injunctive relief. See 17 U.S.C. § 502(a). Once a court has jurisdiction
over an action for copyright infringement under section 411, the court may
grant injunctive relief to restrain infringement of any copyright, whether
registered or unregistered. See, e.g., Olan Mills, Inc. v. Linn Photo Co., 23
F.3d 1345, 1349 (8th Cir. 1994); Pac. & S. Co., Inc. v. Duncan, 744 F.2d
1490, 1499 n.17 (11th Cir. 1984). Because at least some of the Perfect 10
images at issue were registered, the district court did not err in determin-
ing that it could issue an order that covers unregistered works. Therefore,
we have jurisdiction over the district court’s decision and order.
15450             PERFECT 10 v. AMAZON.COM
   The district court handled this complex case in a particu-
larly thoughtful and skillful manner. Nonetheless, the district
court erred on certain issues, as we will further explain below.
We affirm in part, reverse in part, and remand.

                               I

                         Background

   Google’s computers, along with millions of others, are con-
nected to networks known collectively as the “Internet.” “The
Internet is a world-wide network of networks . . . all sharing
a common communications technology.” Religious Tech. Ctr.
v. Netcom On-Line Commc’n Servs., Inc., 923 F. Supp. 1231,
1238 n.1 (N.D. Cal. 1995). Computer owners can provide
information stored on their computers to other users con-
nected to the Internet through a medium called a webpage. A
webpage consists of text interspersed with instructions written
in Hypertext Markup Language (“HTML”) that is stored in a
computer. No images are stored on a webpage; rather, the
HTML instructions on the webpage provide an address for
where the images are stored, whether in the webpage publish-
er’s computer or some other computer. In general, webpages
are publicly available and can be accessed by computers con-
nected to the Internet through the use of a web browser.

  Google operates a search engine, a software program that
automatically accesses thousands of websites (collections of
webpages) and indexes them within a database stored on
Google’s computers. When a Google user accesses the
Google website and types in a search query, Google’s soft-
ware searches its database for websites responsive to that
search query. Google then sends relevant information from its
index of websites to the user’s computer. Google’s search
engines can provide results in the form of text, images, or vid-
eos.

   The Google search engine that provides responses in the
form of images is called “Google Image Search.” In response
                      PERFECT 10 v. AMAZON.COM                       15451
to a search query, Google Image Search identifies text in its
database responsive to the query and then communicates to
users the images associated with the relevant text. Google’s
software cannot recognize and index the images themselves.
Google Image Search provides search results as a webpage of
small images called “thumbnails,” which are stored in
Google’s servers. The thumbnail images are reduced, lower-
resolution versions of full-sized images stored on third-party
computers.

   When a user clicks on a thumbnail image, the user’s
browser program interprets HTML instructions on Google’s
webpage. These HTML instructions direct the user’s browser
to cause a rectangular area (a “window”) to appear on the
user’s computer screen. The window has two separate areas
of information. The browser fills the top section of the screen
with information from the Google webpage, including the
thumbnail image and text. The HTML instructions also give
the user’s browser the address of the website publisher’s com-
puter that stores the full-size version of the thumbnail.2 By
following the HTML instructions to access the third-party
webpage, the user’s browser connects to the website publish-
er’s computer, downloads the full-size image, and makes the
image appear at the bottom of the window on the user’s
screen. Google does not store the images that fill this lower
part of the window and does not communicate the images to
the user; Google simply provides HTML instructions direct-
ing a user’s browser to access a third-party website. However,
the top part of the window (containing the information from
the Google webpage) appears to frame and comment on the
bottom part of the window. Thus, the user’s window appears
  2
    The website publisher may not actually store the photographic images
used on its webpages in its own computer, but may provide HTML
instructions directing the user’s browser to some further computer that
stores the image. Because this distinction does not affect our analysis, for
convenience, we will assume that the website publisher stores all images
used on its webpages in the website publisher’s own computer.
15452                 PERFECT 10 v. AMAZON.COM
to be filled with a single integrated presentation of the full-
size image, but it is actually an image from a third-party web-
site framed by information from Google’s website. The pro-
cess by which the webpage directs a user’s browser to
incorporate content from different computers into a single
window is referred to as “in-line linking.” Kelly v. Arriba Soft
Corp., 336 F.3d 811, 816 (9th Cir. 2003). The term “framing”
refers to the process by which information from one computer
appears to frame and annotate the in-line linked content from
another computer. Perfect 10, 416 F. Supp. 2d at 833-34.

   Google also stores webpage content in its cache.3 For each
cached webpage, Google’s cache contains the text of the web-
page as it appeared at the time Google indexed the page, but
does not store images from the webpage. Id. at 833. Google
may provide a link to a cached webpage in response to a
user’s search query. However, Google’s cache version of the
webpage is not automatically updated when the webpage is
revised by its owner. So if the webpage owner updates its
webpage to remove the HTML instructions for finding an
infringing image, a browser communicating directly with the
webpage would not be able to access that image. However,
Google’s cache copy of the webpage would still have the old
HTML instructions for the infringing image. Unless the
owner of the computer changed the HTML address of the
infringing image, or otherwise rendered the image unavail-
able, a browser accessing Google’s cache copy of the website
   3
     Generally, a “cache” is “a computer memory with very short access
time used for storage of frequently or recently used instructions or data.”
United States v. Ziegler, 474 F.3d 1184, 1186 n.3 (9th Cir. 2007) (quoting
MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 171 (11th ed. 2003)). There
are two types of caches at issue in this case. A user’s personal computer
has an internal cache that saves copies of webpages and images that the
user has recently viewed so that the user can more rapidly revisit these
webpages and images. Google’s computers also have a cache which serves
a variety of purposes. Among other things, Google’s cache saves copies
of a large number of webpages so that Google’s search engine can effi-
ciently organize and index these webpages.
                  PERFECT 10 v. AMAZON.COM              15453
could still access the image where it is stored on the website
publisher’s computer. In other words, Google’s cache copy
could provide a user’s browser with valid directions to an
infringing image even though the updated webpage no longer
includes that infringing image.

   In addition to its search engine operations, Google gener-
ates revenue through a business program called “AdSense.”
Under this program, the owner of a website can register with
Google to become an AdSense “partner.” The website owner
then places HTML instructions on its webpages that signal
Google’s server to place advertising on the webpages that is
relevant to the webpages’ content. Google’s computer pro-
gram selects the advertising automatically by means of an
algorithm. AdSense participants agree to share the revenues
that flow from such advertising with Google.

   Google also generated revenues through an agreement with
Amazon.com that allowed Amazon.com to in-line link to
Google’s search results. Amazon.com gave its users the
impression that Amazon.com was providing search results,
but Google communicated the search results directly to Ama-
zon.com’s users. Amazon.com routed users’ search queries to
Google and automatically transmitted Google’s responses
(i.e., HTML instructions for linking to Google’s search
results) back to its users.

   Perfect 10 markets and sells copyrighted images of nude
models. Among other enterprises, it operates a subscription
website on the Internet. Subscribers pay a monthly fee to view
Perfect 10 images in a “members’ area” of the site. Subscrib-
ers must use a password to log into the members’ area.
Google does not include these password-protected images
from the members’ area in Google’s index or database. Per-
fect 10 has also licensed Fonestarz Media Limited to sell and
distribute Perfect 10’s reduced-size copyrighted images for
download and use on cell phones.
15454             PERFECT 10 v. AMAZON.COM
   Some website publishers republish Perfect 10’s images on
the Internet without authorization. Once this occurs, Google’s
search engine may automatically index the webpages contain-
ing these images and provide thumbnail versions of images in
response to user inquiries. When a user clicks on the thumb-
nail image returned by Google’s search engine, the user’s
browser accesses the third-party webpage and in-line links to
the full-sized infringing image stored on the website publish-
er’s computer. This image appears, in its original context, on
the lower portion of the window on the user’s computer
screen framed by information from Google’s webpage.

   Procedural History. In May 2001, Perfect 10 began notify-
ing Google that its thumbnail images and in-line linking to the
full-size images infringed Perfect 10’s copyright. Perfect 10
continued to send these notices through 2005.

   On November 19, 2004, Perfect 10 filed an action against
Google that included copyright infringement claims. This was
followed by a similar action against Amazon.com on June 29,
2005. On July 1, 2005 and August 24, 2005, Perfect 10 sought
a preliminary injunction to prevent Amazon.com and Google,
respectively, from “copying, reproducing, distributing, pub-
licly displaying, adapting or otherwise infringing, or contrib-
uting 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 consolidated the two actions and heard
both preliminary injunction motions on November 7, 2005.
The district court issued orders granting in part and denying
in part the preliminary injunction against Google and denying
the preliminary injunction against Amazon.com. Perfect 10
and Google cross-appealed the partial grant and partial denial
of the preliminary injunction motion, and Perfect 10 appealed
the denial of the preliminary injunction against Amazon.com.
                  PERFECT 10 v. AMAZON.COM                15455
On June 15, 2006, the district court temporarily stayed the
preliminary injunction.

                               II

                     Standard of Review

   We review the district court’s grant or denial of a prelimi-
nary injunction for an abuse of discretion. A&M Records, Inc.
v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). The dis-
trict court must support a preliminary injunction with findings
of fact, which we review for clear error. Earth Island Inst. v.
U.S. Forest Serv., 442 F.3d 1147, 1156 (9th Cir. 2006). We
review the district court’s conclusions of law de novo. Nap-
ster, 239 F.3d at 1013.

   [1] Section 502(a) of the Copyright Act authorizes a court
to grant injunctive relief “on such terms as it may deem rea-
sonable to prevent or restrain infringement of a copyright.” 17
U.S.C. § 502(a). “Preliminary injunctive relief is available to
a party who demonstrates either: (1) a combination of proba-
ble success on the merits and the possibility of irreparable
harm; or (2) that serious questions are raised and the balance
of hardships tips in its favor. These two formulations repre-
sent two points on a sliding scale in which the required degree
of irreparable harm increases as the probability of success
decreases.” Napster, 239 F.3d at 1013 (internal quotation and
citation omitted).

   [2] Because Perfect 10 has the burden of showing a likeli-
hood of success on the merits, the district court held that Per-
fect 10 also had the burden of demonstrating a likelihood of
overcoming Google’s fair use defense under 17 U.S.C. § 107.
Perfect 10, 416 F. Supp. 2d at 836-37. This ruling was errone-
ous. At trial, the defendant in an infringement action bears the
burden of proving fair use. See Campbell v. Acuff-Rose Music,
Inc., 510 U.S. 569, 590 (1994). Because “the burdens at the
preliminary injunction stage track the burdens at trial,” once
15456                PERFECT 10 v. AMAZON.COM
the moving party has carried its burden of showing a likeli-
hood of success on the merits, the burden shifts to the non-
moving party to show a likelihood that its affirmative defense
will succeed. Gonzales v. O Centro Espirita Beneficente
Uniao do Vegetal, 546 U.S. 418, 429 (2006); see also Abbott
Labs. v. Andrx Pharms., Inc., 473 F.3d 1196, 1201 (Fed. Cir.
2007) (to defeat a motion for preliminary injunctive relief in
a patent infringement case, the non-moving party must estab-
lish a likelihood of success in proving its defenses of invalid-
ity or unenforceability); PHG Techs., LLC v. St. John Cos.,
469 F.3d 1361, 1365 (Fed. Cir. 2006). Accordingly, once Per-
fect 10 has shown a likelihood of success on the merits, the
burden shifts to Google to show a likelihood that its affirma-
tive defenses will succeed.

    [3] In addition to its fair use defense, Google also raises an
affirmative defense under title II of the Digital Millennium
Copyright Act (“DMCA”), 17 U.S.C. § 512. Congress
enacted title II of the DMCA “to provide greater certainty to
service providers concerning their legal exposure for infringe-
ments that may occur in the course of their activities.” Ellison
v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004) (internal
quotation omitted). Sections 512(a) through (d) limit liability
for (respectively): “(1) transitory digital network communica-
tions; (2) system caching; (3) information residing on systems
or networks at the direction of users; and (4) information loca-
tion tools.” Id. at 1077. A service provider that qualifies for
such protection is not liable for monetary relief and may be
subject only to the narrow injunctive relief set forth in section
512(j). 17 U.S.C. § 512(a). If Perfect 10 demonstrates a likeli-
hood of success on the merits, Google must show a likelihood
of succeeding in its claim that it qualifies for protection under
title II of the DMCA.4
  4
    Perfect 10 argues that we are bound by the language and structure of
title II of the DMCA in determining Google’s liability for copyright
infringement. We have noted that the DMCA does not change copyright
law; rather, “Congress provided that [the DMCA’s] limitations of liability
                       PERFECT 10 v. AMAZON.COM                       15457
                                     III

                          Direct Infringement

   Perfect 10 claims that Google’s search engine program
directly infringes two exclusive rights granted to copyright
holders: its display rights and its distribution rights.5 “Plain-
tiffs must satisfy two requirements to present a prima facie
case of direct infringement: (1) they must show ownership of
the allegedly infringed material and (2) they must demonstrate

apply if the provider is found to be liable under existing principles of law.”
Ellison, 357 F.3d at 1077 (emphasis and internal quotation omitted). As
a result, “[c]laims against service providers for direct, contributory, or
vicarious copyright infringement, therefore, are generally evaluated just as
they would be in the non-online world.” Id.; see also 17 U.S.C. § 512(l)
(“The failure of a service provider’s conduct to qualify for limitation of
liability under this section shall not bear adversely upon the consideration
of a defense by the service provider that the service provider’s conduct is
not infringing under this title or any other defense.”). Therefore, we must
consider Google’s potential liability under the Copyright Act without ref-
erence to title II of the DMCA.
   5
     17 U.S.C. § 106 states, in pertinent part:
    Subject to sections 107 through 122, the owner of copyright
    under this title has the exclusive rights to do and to authorize any
    of the following:
         (1) to reproduce the copyrighted work in copies or phonore-
         cords;
         ....
         (3) to distribute copies or phonorecords of the copyrighted
         work to the public by sale or other transfer of ownership, or
         by rental, lease, or lending;
         ....
         (5) in the case of literary, musical, dramatic, and choreo-
         graphic works, pantomimes, and pictorial, graphic, or sculp-
         tural works, including the individual images of a motion
         picture or other audiovisual work, to display the copyrighted
         work publicly . . . .
15458              PERFECT 10 v. AMAZON.COM
that the alleged infringers violate at least one exclusive right
granted to copyright holders under 17 U.S.C. § 106.” Napster,
239 F.3d at 1013; see 17 U.S.C. § 501(a). Even if a plaintiff
satisfies these two requirements and makes a prima facie case
of direct infringement, the defendant may avoid liability if it
can establish that its use of the images is a “fair use” as set
forth in 17 U.S.C. § 107. See Kelly, 336 F.3d at 817.

   Perfect 10’s ownership of at least some of the images at
issue is not disputed. See Perfect 10, 416 F. Supp. 2d at 836.

   The district court held that Perfect 10 was likely to prevail
in its claim that Google violated Perfect 10’s display right
with respect to the infringing thumbnails. Id. at 844. How-
ever, the district court concluded that Perfect 10 was not
likely to prevail on its claim that Google violated either Per-
fect 10’s display or distribution right with respect to its full-
size infringing images. Id. at 844-45. We review these rulings
for an abuse of discretion. Napster, 239 F.3d at 1013.

  A.    Display Right

   In considering whether Perfect 10 made a prima facie case
of violation of its display right, the district court reasoned that
a computer owner that stores an image as electronic informa-
tion and serves that electronic information directly to the user
(“i.e., physically sending ones and zeroes over the [I]nternet
to the user’s browser,” Perfect 10, 416 F. Supp. 2d at 839) is
displaying the electronic information in violation of a copy-
right holder’s exclusive display right. Id. at 843-45; see 17
U.S.C. § 106(5). Conversely, the owner of a computer that
does not store and serve the electronic information to a user
is not displaying that information, even if such owner in-line
links to or frames the electronic information. Perfect 10, 416
F. Supp. 2d at 843-45. The district court referred to this test
as the “server test.” Id. at 838-39.

  Applying the server test, the district court concluded that
Perfect 10 was likely to succeed in its claim that Google’s
                   PERFECT 10 v. AMAZON.COM                15459
thumbnails constituted direct infringement but was unlikely to
succeed in its claim that Google’s in-line linking to full-size
infringing images constituted a direct infringement. Id. at
843-45. As explained below, because this analysis comports
with the language of the Copyright Act, we agree with the dis-
trict court’s resolution of both these issues.

   [4] We have not previously addressed the question when a
computer displays a copyrighted work for purposes of section
106(5). Section 106(5) states that a copyright owner has the
exclusive right “to display the copyrighted work publicly.”
The Copyright Act explains that “display” means “to show a
copy of it, either directly or by means of a film, slide, televi-
sion image, or any other device or process . . . .” 17 U.S.C.
§ 101. Section 101 defines “copies” as “material objects,
other than phonorecords, in which a work is fixed by any
method now known or later developed, and from which the
work can be perceived, reproduced, or otherwise communi-
cated, either directly or with the aid of a machine or device.”
Id. Finally, the Copyright Act provides that “[a] work is
‘fixed’ in a tangible medium of expression when its embodi-
ment in a copy or phonorecord, by or under the authority of
the author, is sufficiently permanent or stable to permit it to
be perceived, reproduced, or otherwise communicated for a
period of more than transitory duration.” Id.

   [5] We must now apply these definitions to the facts of this
case. A photographic image is a work that is “ ‘fixed’ in a tan-
gible medium of expression,” for purposes of the Copyright
Act, when embodied (i.e., stored) in a computer’s server (or
hard disk, or other storage device). The image stored in the
computer is the “copy” of the work for purposes of copyright
law. See MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d
511, 517-18 (9th Cir. 1993) (a computer makes a “copy” of
a software program when it transfers the program from a third
party’s computer (or other storage device) into its own mem-
ory, because the copy of the program recorded in the com-
puter is “fixed” in a manner that is “sufficiently permanent or
15460                 PERFECT 10 v. AMAZON.COM
stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration”
(quoting 17 U.S.C. § 101)). The computer owner shows a
copy “by means of a . . . device or process” when the owner
uses the computer to fill the computer screen with the photo-
graphic image stored on that computer, or by communicating
the stored image electronically to another person’s computer.
17 U.S.C. § 101. In sum, based on the plain language of the
statute, a person displays a photographic image by using a
computer to fill a computer screen with a copy of the photo-
graphic image fixed in the computer’s memory. There is no
dispute that Google’s computers store thumbnail versions of
Perfect 10’s copyrighted images and communicate copies of
those thumbnails to Google’s users.6 Therefore, Perfect 10 has
made a prima facie case that Google’s communication of its
stored thumbnail images directly infringes Perfect 10’s dis-
play right.

   [6] Google does not, however, display a copy of full-size
infringing photographic images for purposes of the Copyright
Act when Google frames in-line linked images that appear on
a user’s computer screen. Because Google’s computers do not
store the photographic images, Google does not have a copy
of the images for purposes of the Copyright Act. In other
words, Google does not have any “material objects . . . in
which a work is fixed . . . and from which the work can be
perceived, reproduced, or otherwise communicated” and thus
cannot communicate a copy. 17 U.S.C. § 101.

  [7] Instead of communicating a copy of the image, Google
provides HTML instructions that direct a user’s browser to a
  6
   Because Google initiates and controls the storage and communication
of these thumbnail images, we do not address whether an entity that
merely passively owns and manages an Internet bulletin board or similar
system violates a copyright owner’s display and distribution rights when
the users of the bulletin board or similar system post infringing works. Cf.
CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004).
                      PERFECT 10 v. AMAZON.COM                       15461
website publisher’s computer that stores the full-size photo-
graphic image. Providing these HTML instructions is not
equivalent to showing a copy. First, the HTML instructions
are lines of text, not a photographic image. Second, HTML
instructions do not themselves cause infringing images to
appear on the user’s computer screen. The HTML merely
gives the address of the image to the user’s browser. The
browser then interacts with the computer that stores the
infringing image. It is this interaction that causes an infringing
image to appear on the user’s computer screen. Google may
facilitate the user’s access to infringing images. However,
such assistance raises only contributory liability issues, see
Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545
U.S. 913, 929-30 (2005), Napster, 239 F.3d at 1019, and does
not constitute direct infringement of the copyright owner’s
display rights.

   Perfect 10 argues that Google displays a copy of the full-
size images by framing the full-size images, which gives the
impression that Google is showing the image within a single
Google webpage. While in-line linking and framing may
cause some computer users to believe they are viewing a sin-
gle Google webpage, the Copyright Act, unlike the Trade-
mark Act, does not protect a copyright holder against acts that
cause consumer confusion. Cf. 15 U.S.C. § 1114(1) (provid-
ing that a person who uses a trademark in a manner likely to
cause confusion shall be liable in a civil action to the trade-
mark registrant).7
  7
    Perfect 10 also argues that Google violates Perfect 10’s right to display
full-size images because Google’s in-line linking meets the Copyright
Act’s definition of “to perform or display a work ‘publicly.’ ” 17 U.S.C.
§ 101. This phrase means “to transmit or otherwise communicate a perfor-
mance or display of the work to . . . the public, by means of any device
or process, whether the members of the public capable of receiving the
performance or display receive it in the same place or in separate places
and at the same time or at different times.” Id. Perfect 10 is mistaken.
Google’s activities do not meet this definition because Google transmits
or communicates only an address which directs a user’s browser to the
location where a copy of the full-size image is displayed. Google does not
communicate a display of the work itself.
15462              PERFECT 10 v. AMAZON.COM
   Nor does our ruling that a computer owner does not display
a copy of an image when it communicates only the HTML
address of the copy erroneously collapse the display right in
section 106(5) into the reproduction right set forth in section
106(1). Nothing in the Copyright Act prevents the various
rights protected in section 106 from overlapping. Indeed,
under some circumstances, more than one right must be
infringed in order for an infringement claim to arise. For
example, a “Game Genie” device that allowed a player to
alter features of a Nintendo computer game did not infringe
Nintendo’s right to prepare derivative works because the
Game Genie did not incorporate any portion of the game
itself. See Lewis Galoob Toys, Inc. v. Nintendo of Am., Inc.,
964 F.2d 965, 967 (9th Cir. 1992). We held that a copyright
holder’s right to create derivative works is not infringed
unless the alleged derivative work “incorporate[s] a protected
work in some concrete or permanent ‘form.’ ” Id. In other
words, in some contexts, the claimant must be able to claim
infringement of its reproduction right in order to claim
infringement of its right to prepare derivative works.

   [8] Because Google’s cache merely stores the text of web-
pages, our analysis of whether Google’s search engine pro-
gram potentially infringes Perfect 10’s display and
distribution rights is equally applicable to Google’s cache.
Perfect 10 is not likely to succeed in showing that a cached
webpage that in-line links to full-size infringing images vio-
lates such rights. For purposes of this analysis, it is irrelevant
whether cache copies direct a user’s browser to third-party
images that are no longer available on the third party’s web-
site, because it is the website publisher’s computer, rather
than Google’s computer, that stores and displays the infring-
ing image.

  B.    Distribution Right

   The district court also concluded that Perfect 10 would not
likely prevail on its claim that Google directly infringed Per-
                  PERFECT 10 v. AMAZON.COM                15463
fect 10’s right to distribute its full-size images. Perfect 10,
416 F. Supp. 2d at 844-45. The district court reasoned that
distribution requires an “actual dissemination” of a copy. Id.
at 844. Because Google did not communicate the full-size
images to the user’s computer, Google did not distribute these
images. Id.

   Again, the district court’s conclusion on this point is con-
sistent with the language of the Copyright Act. Section 106(3)
provides that the copyright owner has the exclusive right “to
distribute copies or phonorecords of the copyrighted work to
the public by sale or other transfer of ownership, or by rental,
lease, or lending.” 17 U.S.C. § 106(3). As noted, “copies”
means “material objects . . . in which a work is fixed.” 17
U.S.C. § 101. The Supreme Court has indicated that in the
electronic context, copies may be distributed electronically.
See N.Y. Times Co. v. Tasini, 533 U.S. 483, 498 (2001) (a
computer database program distributed copies of newspaper
articles stored in its computerized database by selling copies
of those articles through its database service). Google’s search
engine communicates HTML instructions that tell a user’s
browser where to find full-size images on a website publish-
er’s computer, but Google does not itself distribute copies of
the infringing photographs. It is the website publisher’s com-
puter that distributes copies of the images by transmitting the
photographic image electronically to the user’s computer. As
in Tasini, the user can then obtain copies by downloading the
photo or printing it.

   Perfect 10 incorrectly relies on Hotaling v. Church of Jesus
Christ of Latter-Day Saints and Napster for the proposition
that merely making images “available” violates the copyright
owner’s distribution right. Hotaling v. Church of Jesus Christ
of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997); Napster,
239 F.3d 1004. Hotaling held that the owner of a collection
of works who makes them available to the public may be
deemed to have distributed copies of the works. Hotaling, 118
F.3d at 203. Similarly, the distribution rights of the plaintiff
15464              PERFECT 10 v. AMAZON.COM
copyright owners were infringed by Napster users (private
individuals with collections of music files stored on their
home computers) when they used the Napster software to
make their collections available to all other Napster users.
Napster, 239 F.3d at 1011-14.

   [9] This “deemed distribution” rule does not apply to
Google. Unlike the participants in the Napster system or the
library in Hotaling, Google does not own a collection of Per-
fect 10’s full-size images and does not communicate these
images to the computers of people using Google’s search
engine. Though Google indexes these images, it does not have
a collection of stored full-size images it makes available to the
public. Google therefore cannot be deemed to distribute cop-
ies of these images under the reasoning of Napster or Hotal-
ing. Accordingly, the district court correctly concluded that
Perfect 10 does not have a likelihood of success in proving
that Google violates Perfect 10’s distribution rights with
respect to full-size images.

  C.    Fair Use Defense

   Because Perfect 10 has succeeded in showing it would pre-
vail in its prima facie case that Google’s thumbnail images
infringe Perfect 10’s display rights, the burden shifts to
Google to show that it will likely succeed in establishing an
affirmative defense. Google contends that its use of thumb-
nails is a fair use of the images and therefore does not consti-
tute an infringement of Perfect 10’s copyright. See 17 U.S.C.
§ 107.

   The fair use defense permits the use of copyrighted works
without the copyright owner’s consent under certain situa-
tions. The defense encourages and allows the development of
new ideas that build on earlier ones, thus providing a neces-
sary counterbalance to the copyright law’s goal of protecting
creators’ work product. “From the infancy of copyright pro-
tection, some opportunity for fair use of copyrighted materials
                  PERFECT 10 v. AMAZON.COM                15465
has been thought necessary to fulfill copyright’s very purpose
. . . .” Campbell, 510 U.S. at 575. “The fair use doctrine thus
‘permits [and requires] courts to avoid rigid application of the
copyright statute when, on occasion, it would stifle the very
creativity which that law is designed to foster.’ ” Id. at 577
(quoting Stewart v. Abend, 495 U.S. 207, 236 (1990)) (alter-
ation in original).

   Congress codified the common law of fair use in 17 U.S.C.
§ 107, which provides:

    Notwithstanding the provisions of sections 106 and
    106A, the fair use of a copyrighted work, including
    such use by reproduction in copies or phonorecords
    or by any other means specified by that section, for
    purposes such as criticism, comment, news report-
    ing, teaching (including multiple copies for class-
    room use), scholarship, or research, is not an
    infringement of copyright. 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 commer-
         cial nature or is for nonprofit educational
         purposes;

         (2) the nature of the copyrighted work;

         (3) the amount and substantiality of the por-
         tion 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
         work.
15466              PERFECT 10 v. AMAZON.COM
    The fact that a work is unpublished shall not itself
    bar a finding of fair use if such finding is made upon
    consideration of all the above factors.

17 U.S.C. § 107.

   We must be flexible in applying a fair use analysis; it “is
not to be simplified with bright-line rules, for the statute, like
the doctrine it recognizes, calls for case-by-case analysis. . . .
Nor may the four statutory factors be treated in isolation, one
from another. All are to be explored, and the results weighed
together, in light of the purposes of copyright.” Campbell, 510
U.S. at 577-78; see also Kelly, 336 F.3d at 817-18. The pur-
pose of copyright law is “[t]o promote the Progress of Science
and useful Arts,” U.S. CONST. art. I, § 8, cl. 8, and to serve
“ ‘the welfare of the public.’ ” Sony Corp. of Am. v. Universal
City Studios, Inc., 464 U.S. 417, 429 n.10 (quoting H.R. Rep.
No. 2222, 60th Cong., 2d Sess. 7 (1909)).

   In applying the fair use analysis in this case, we are guided
by Kelly v. Arriba Soft Corp., which considered substantially
the same use of copyrighted photographic images as is at
issue here. See 336 F.3d 811. In Kelly, a photographer brought
a direct infringement claim against Arriba, the operator of an
Internet search engine. The search engine provided thumbnail
versions of the photographer’s images in response to search
queries. Id. at 815-16. We held that Arriba’s use of thumbnail
images was a fair use primarily based on the transformative
nature of a search engine and its benefit to the public. Id. at
818-22. We also concluded that Arriba’s use of the thumbnail
images did not harm the photographer’s market for his image.
Id. at 821-22.

   In this case, the district court determined that Google’s use
of thumbnails was not a fair use and distinguished Kelly. Per-
fect 10, 416 F. Supp. 2d at 845-51. We consider these distinc-
tions in the context of the four-factor fair use analysis.
                      PERFECT 10 v. AMAZON.COM                      15467
   [10] Purpose and character of the use. The first factor, 17
U.S.C. § 107(1), requires a court to consider “the purpose and
character of the use, including whether such use is of a com-
mercial nature or is for nonprofit educational purposes.” The
central purpose of this inquiry is to determine whether and to
what extent the new work is “transformative.” Campbell, 510
U.S. at 579. A work is “transformative” when the new work
does not “merely supersede the objects of the original cre-
ation” but rather “adds something new, with a further purpose
or different character, altering the first with new expression,
meaning, or message.” Id. (internal quotation and alteration
omitted). Conversely, if the new work “supersede[s] the use
of the original,” the use is likely not a fair use. Harper & Row
Publishers, Inc. v. Nation Enters., 471 U.S. 539, 550-51
(1985) (internal quotation omitted) (publishing the “heart” of
an unpublished work and thus supplanting the copyright hold-
er’s first publication right was not a fair use); see also Wall
Data Inc. v. L.A. County Sheriff’s Dep’t, 447 F.3d 769,
778-82 (9th Cir. 2006) (using a copy to save the cost of buy-
ing additional copies of a computer program was not a fair use).8
  8
    We reject at the outset Perfect 10’s argument that providing access to
infringing websites cannot be deemed transformative and is inherently not
fair use. Perfect 10 relies on Video Pipeline, Inc. v. Buena Vista Home
Entm’t, Inc., 342 F.3d 191 (3d Cir. 2003), and Atari Games Corp. v. Nin-
tendo of Am. Inc., 975 F.2d 832, 843 (Fed. Cir. 1992). But these cases, in
essence, simply apply the general rule that a party claiming fair use must
act in a manner generally compatible with principles of good faith and fair
dealing. See Harper & Row, 471 U.S. at 562-63. For this reason, a com-
pany whose business is based on providing scenes from copyrighted mov-
ies without authorization could not claim that it provided the same public
benefit as the search engine in Kelly. See Video Pipeline, 342 F.3d at
198-200. Similarly, a company whose overriding desire to replicate a com-
petitor’s computer game led it to obtain a copy of the competitor’s source
code from the Copyright Office under false pretenses could not claim fair
use with respect to its purloined copy. Atari Games, 975 F.2d at 843.
   Unlike the alleged infringers in Video Pipeline and Atari Games, who
intentionally misappropriated the copyright owners’ works for the purpose
of commercial exploitation, Google is operating a comprehensive search
engine that only incidentally indexes infringing websites. This incidental
15468                 PERFECT 10 v. AMAZON.COM
   As noted in Campbell, a “transformative work” is one that
alters the original work “with new expression, meaning, or
message.” Campbell, 510 U.S. at 579. “A use is considered
transformative only where a defendant changes a plaintiff’s
copyrighted work or uses the plaintiff’s copyrighted work in
a different context such that the plaintiff’s work is trans-
formed into a new creation.” Wall Data, 447 F.3d at 778.

   [11] Google’s use of thumbnails is highly transformative.
In Kelly, we concluded that Arriba’s use of thumbnails was
transformative because “Arriba’s use of the images serve[d]
a different function than Kelly’s use—improving access to
information on the [I]nternet versus artistic expression.”
Kelly, 336 F.3d at 819. Although an image may have been
created originally to serve an entertainment, aesthetic, or
informative function, a search engine transforms the image
into a pointer directing a user to a source of information. Just
as a “parody has an obvious claim to transformative value”
because “it can provide social benefit, by shedding light on an
earlier work, and, in the process, creating a new one,” Camp-
bell, 510 U.S. at 579, a search engine provides social benefit
by incorporating an original work into a new work, namely,
an electronic reference tool. Indeed, a search engine may be
more transformative than a parody because a search engine
provides an entirely new use for the original work, while a
parody typically has the same entertainment purpose as the
original work. See, e.g., id. at 594-96 (holding that 2 Live
Crew’s parody of “Oh, Pretty Woman” using the words “hairy
woman” or “bald headed woman” was a transformative work,
and thus constituted a fair use); Mattel, Inc. v. Walking Moun-
tain Prods., 353 F.3d 792, 796-98, 800-06 (9th Cir. 2003)

impact does not amount to an abuse of the good faith and fair dealing
underpinnings of the fair use doctrine. Accordingly, we conclude that
Google’s inclusion of thumbnail images derived from infringing websites
in its Internet-wide search engine activities does not preclude Google from
raising a fair use defense.
                  PERFECT 10 v. AMAZON.COM              15469
(concluding that photos parodying Barbie by depicting “nude
Barbie dolls juxtaposed with vintage kitchen appliances” was
a fair use). In other words, a search engine puts images “in a
different context” so that they are “transformed into a new
creation.” Wall Data, 447 F.3d at 778.

   The fact that Google incorporates the entire Perfect 10
image into the search engine results does not diminish the
transformative nature of Google’s use. As the district court
correctly noted, Perfect 10, 416 F. Supp. 2d at 848-49, we
determined in Kelly that even making an exact copy of a work
may be transformative so long as the copy serves a different
function than the original work, Kelly, 336 F.3d at 818-19.
For example, the First Circuit has held that the republication
of photos taken for a modeling portfolio in a newspaper was
transformative because the photos served to inform, as well as
entertain. See Nez v. Caribbean Int’l News Corp., 235 F.3d
18, 22-23 (1st Cir. 2000). In contrast, duplicating a church’s
religious book for use by a different church was not transfor-
mative. See Worldwide Church of God v. Phila. Church of
God, Inc., 227 F.3d 1110, 1117 (9th Cir. 2000). Nor was a
broadcaster’s simple retransmission of a radio broadcast over
telephone lines transformative, where the original radio shows
were given no “new expression, meaning, or message.” Infin-
ity Broad. Corp. v. Kirkwood, 150 F.3d 104, 108 (2d Cir.
1998). Here, Google uses Perfect 10’s images in a new con-
text to serve a different purpose.

  The district court nevertheless determined that Google’s
use of thumbnail images was less transformative than Arriba’s
use of thumbnails in Kelly because Google’s use of thumb-
nails superseded Perfect 10’s right to sell its reduced-size
images for use on cell phones. See Perfect 10, 416 F. Supp.
2d at 849. The district court stated that “mobile users can
download and save the thumbnails displayed by Google
Image Search onto their phones,” and concluded “to the
extent that users may choose to download free images to their
15470             PERFECT 10 v. AMAZON.COM
phone rather than purchase [Perfect 10’s] reduced-size
images, Google’s use supersedes [Perfect 10’s].” Id.

   Additionally, the district court determined that the commer-
cial nature of Google’s use weighed against its transformative
nature. Id. Although Kelly held that the commercial use of the
photographer’s images by Arriba’s search engine was less
exploitative than typical commercial use, and thus weighed
only slightly against a finding of fair use, Kelly, 336 F.3d at
818-20, the district court here distinguished Kelly on the
ground that some website owners in the AdSense program
had infringing Perfect 10 images on their websites, Perfect
10, 416 F. Supp. 2d at 846-47. The district court held that
because Google’s thumbnails “lead users to sites that directly
benefit Google’s bottom line,” the AdSense program
increased the commercial nature of Google’s use of Perfect
10’s images. Id. at 847.

   In conducting our case-specific analysis of fair use in light
of the purposes of copyright, Campbell, 510 U.S. at 581, we
must weigh Google’s superseding and commercial uses of
thumbnail images against Google’s significant transformative
use, as well as the extent to which Google’s search engine
promotes the purposes of copyright and serves the interests of
the public. Although the district court acknowledged the “tru-
ism that search engines such as Google Image Search provide
great value to the public,” Perfect 10, 416 F. Supp. 2d at
848-49, the district court did not expressly consider whether
this value outweighed the significance of Google’s supersed-
ing use or the commercial nature of Google’s use. Id. at 849.
The Supreme Court, however, has directed us to be mindful
of the extent to which a use promotes the purposes of copy-
right and serves the interests of the public. See Campbell, 510
U.S. at 579; Harper & Row, 471 U.S. at 556-57; Sony, 464
U.S. at 431-32.

  We note that the superseding use in this case is not signifi-
cant at present: the district court did not find that any down-
                   PERFECT 10 v. AMAZON.COM                15471
loads for mobile phone use had taken place. See Perfect 10,
416 F. Supp. 2d at 849. Moreover, while Google’s use of
thumbnails to direct users to AdSense partners containing
infringing content adds a commercial dimension that did not
exist in Kelly, the district court did not determine that this
commercial element was significant. See id. at 848-49. The
district court stated that Google’s AdSense programs as a
whole contributed “$630 million, or 46% of total revenues”
to Google’s bottom line, but noted that this figure did not
“break down the much smaller amount attributable to web-
sites that contain infringing content.” Id. at 847 & n.12 (inter-
nal quotation omitted).

   [12] We conclude that the significantly transformative
nature of Google’s search engine, particularly in light of its
public benefit, outweighs Google’s superseding and commer-
cial uses of the thumbnails in this case. In reaching this con-
clusion, we note the importance of analyzing fair use flexibly
in light of new circumstances. Sony, 464 U.S. at 431-32; id.
at 448 n.31 (“ ‘[Section 107] endorses the purpose and gen-
eral scope of the judicial doctrine of fair use, but there is no
disposition to freeze the doctrine in the statute, especially dur-
ing a period of rapid technological change.’ ”) (quoting H.R.
Rep. No. 94-1476, p. 65-66 (1976), U.S. Code Cong. &
Admin. News 1976, p. 5680)). We are also mindful of the
Supreme Court’s direction that “the more transformative the
new work, the less will be the significance of other factors,
like commercialism, that may weigh against a finding of fair
use.” Campbell, 510 U.S. at 579.

   Accordingly, we disagree with the district court’s conclu-
sion that because Google’s use of the thumbnails could super-
sede Perfect 10’s cell phone download use and because the
use was more commercial than Arriba’s, this fair use factor
weighed “slightly” in favor of Perfect 10. Perfect 10, 416 F.
Supp. 2d at 849. Instead, we conclude that the transformative
nature of Google’s use is more significant than any incidental
superseding use or the minor commercial aspects of Google’s
15472                PERFECT 10 v. AMAZON.COM
search engine and website. Therefore, this factor weighs heav-
ily in favor of Google.

   The nature of the copyrighted work. With respect to the
second factor, “the nature of the copyrighted work,” 17
U.S.C. § 107(2), our decision in Kelly is directly on point.
There we held that the photographer’s images were “creative
in nature” and thus “closer to the core of intended copyright
protection than are more fact-based works.” Kelly, 336 F.3d
at 820 (internal quotation omitted). However, because the
photos appeared on the Internet before Arriba used thumbnail
versions in its search engine results, this factor weighed only
slightly in favor of the photographer. Id.

   [13] Here, the district court found that Perfect 10’s images
were creative but also previously published. Perfect 10, 416
F. Supp. 2d at 850. The right of first publication is “the
author’s right to control the first public appearance of his
expression.” Harper & Row, 471 U.S. at 564. Because this
right encompasses “the choices of when, where, and in what
form first to publish a work,” id., an author exercises and
exhausts this one-time right by publishing the work in any
medium. See, e.g., Batjac Prods. Inc. v. GoodTimes Home
Video Corp., 160 F.3d 1223, 1235 (9th Cir. 1998) (noting, in
the context of the common law right of first publication, that
such a right “does not entail multiple first publication rights
in every available medium”). Once Perfect 10 has exploited
this commercially valuable right of first publication by putting
its images on the Internet for paid subscribers, Perfect 10 is
no longer entitled to the enhanced protection available for an
unpublished work. Accordingly the district court did not err
in holding that this factor weighed only slightly in favor of
Perfect 10.9 See Perfect 10, 416 F. Supp. 2d at 849-50.
  9
    Google contends that Perfect 10’s photographic images are less cre-
ative and less deserving of protection than the images of the American
West in Kelly because Perfect 10 boasts of its un-retouched photos show-
ing the natural beauty of its models. Having reviewed the record, we con-
                       PERFECT 10 v. AMAZON.COM                       15473
   [14] The amount and substantiality of the portion used.
“The third factor asks whether the amount and substantiality
of the portion used in relation to the copyrighted work as a
whole . . . are reasonable in relation to the purpose of the
copying.” Campbell, 510 U.S. at 586 (internal quotation omit-
ted); see also 17 U.S.C. § 107(3). In Kelly, we held Arriba’s
use of the entire photographic image was reasonable in light
of the purpose of a search engine. Kelly, 336 F.3d at 821. Spe-
cifically, we noted, “[i]t 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 [website]. If Arriba only copied part of the image,
it would be more difficult to identify it, thereby reducing the
usefulness of the visual search engine.” Id. Accordingly, we
concluded that this factor did not weigh in favor of either
party. Id. Because the same analysis applies to Google’s use
of Perfect 10’s image, the district court did not err in finding
that this factor favored neither party.

   Effect of use on the market. The fourth factor is “the effect
of the use upon the potential market for or value of the copy-
righted work.” 17 U.S.C. § 107(4). In Kelly, we concluded
that Arriba’s use of the thumbnail images did not harm the
market for the photographer’s full-size images. See Kelly, 336
F.3d at 821-22. We reasoned that because thumbnails were
not a substitute for the full-sized images, they did not harm
the photographer’s ability to sell or license his full-sized
images. Id. The district court here followed Kelly’s reasoning,
holding that Google’s use of thumbnails did not hurt Perfect
10’s market for full-size images. See Perfect 10, 416 F. Supp.
2d at 850-51. We agree.

clude that the district court’s finding that Perfect 10’s photographs
“consistently reflect professional, skillful, and sometimes tasteful artistry”
is not clearly erroneous. Perfect 10, 416 F. Supp. 2d at 849 n.15. We agree
with the district court that there is no basis for concluding that photos of
the American West are more deserving of protection than photos of nude
models. See id.
15474              PERFECT 10 v. AMAZON.COM
   Perfect 10 argues that the district court erred because the
likelihood of market harm may be presumed if the intended
use of an image is for commercial gain. However, this pre-
sumption does not arise when a work is transformative
because “market substitution is at least less certain, and mar-
ket harm may not be so readily inferred.” Campbell, 510 U.S.
at 591. As previously discussed, Google’s use of thumbnails
for search engine purposes is highly transformative, and so
market harm cannot be presumed.

   [15] Perfect 10 also has a market for reduced-size images,
an issue not considered in Kelly. The district court held that
“Google’s use of thumbnails likely does harm the potential
market for the downloading of [Perfect 10’s] reduced-size
images onto cell phones.” Perfect 10, 416 F. Supp. 2d at 851
(emphasis omitted). The district court reasoned that persons
who can obtain Perfect 10 images free of charge from Google
are less likely to pay for a download, and the availability of
Google’s thumbnail images would harm Perfect 10’s market
for cell phone downloads. Id. As we discussed above, the dis-
trict court did not make a finding that Google users have
downloaded thumbnail images for cell phone use. This poten-
tial harm to Perfect 10’s market remains hypothetical. We
conclude that this factor favors neither party.

   [16] Having undertaken a case-specific analysis of all four
factors, we now weigh these factors together “in light of the
purposes of copyright.” Campbell, 510 U.S. at 578; see also
Kelly, 336 F.3d at 818 (“We must balance [the section 107]
factors in light of the objectives of copyright law, rather than
view them as definitive or determinative tests.”). In this case,
Google has put Perfect 10’s thumbnail images (along with
millions of other thumbnail images) to a use fundamentally
different than the use intended by Perfect 10. In doing so,
Google has provided a significant benefit to the public.
Weighing this significant transformative use against the
unproven use of Google’s thumbnails for cell phone down-
loads, and considering the other fair use factors, all in light of
                      PERFECT 10 v. AMAZON.COM                       15475
the purpose of copyright, we conclude that Google’s use of
Perfect 10’s thumbnails is a fair use. Because the district court
here “found facts sufficient to evaluate each of the statutory
factors . . . [we] need not remand for further factfinding.”
Harper & Row, 471 U.S. at 560 (internal quotation omitted).
We conclude that Google is likely to succeed in proving its
fair use defense and, accordingly, we vacate the preliminary
injunction regarding Google’s use of thumbnail images.

                                    IV

        Secondary Liability for Copyright Infringement

   [17] We now turn to the district court’s ruling that Google
is unlikely to be secondarily liable for its in-line linking to
infringing full-size images under the doctrines of contributory
and vicarious infringement.10 The district court ruled that Per-
fect 10 did not have a likelihood of proving success on the
merits of either its contributory infringement or vicarious
infringement claims with respect to the full-size images. See
Perfect 10, 416 F. Supp. 2d at 856, 858. In reviewing the dis-
trict court’s conclusions, we are guided by the Supreme
Court’s recent interpretation of secondary liability, namely:
“[o]ne infringes contributorily by intentionally inducing or
encouraging direct infringement, and infringes vicariously by
profiting from direct infringement while declining to exercise
a right to stop or limit it.” Grokster, 545 U.S. at 930 (internal
citations omitted).

   Direct Infringement by Third Parties. As a threshold mat-
ter, before we examine Perfect 10’s claims that Google is sec-
ondarily liable, Perfect 10 must establish that there has been
  10
    Because the district court concluded that Perfect 10 was likely to pre-
vail on its direct infringement claim with respect to Google’s use of
thumbnails, but not with respect to its in-line linking to full-size images,
the district court considered Google’s potential secondary liability only on
the second issue.
15476              PERFECT 10 v. AMAZON.COM
direct infringement by third parties. See Napster, 239 F.3d at
1013 n.2 (“Secondary liability for copyright infringement
does not exist in the absence of direct infringement by a third
party.”).

   Perfect 10 alleges that third parties directly infringed its
images in three ways. First, Perfect 10 claims that third-party
websites directly infringed its copyright by reproducing, dis-
playing, and distributing unauthorized copies of Perfect 10’s
images. Google does not dispute this claim on appeal.

   [18] Second, Perfect 10 claims that individual users of
Google’s search engine directly infringed Perfect 10’s copy-
rights by storing full-size infringing images on their comput-
ers. We agree with the district court’s conclusion that Perfect
10 failed to provide sufficient evidence to support this claim.
See Perfect 10, 416 F. Supp. 2d at 852. There is no evidence
in the record directly establishing that users of Google’s
search engine have stored infringing images on their comput-
ers, and the district court did not err in declining to infer the
existence of such evidence.

   [19] Finally, Perfect 10 contends that users who link to
infringing websites automatically make “cache” copies of
full-size images and thereby directly infringe Perfect 10’s
reproduction right. The district court rejected this argument,
holding that any such reproduction was likely a “fair use.” Id.
at 852 n.17. The district court reasoned that “[l]ocal caching
by the browsers of individual users is noncommercial, trans-
formative, and no more than necessary to achieve the objec-
tives of decreasing network latency and minimizing
unnecessary bandwidth usage (essential to the [I]nternet). It
has a minimal impact on the potential market for the original
work . . . .” Id. We agree; even assuming such automatic
copying could constitute direct infringement, it is a fair use in
this context. The copying function performed automatically
by a user’s computer to assist in accessing the Internet is a
transformative use. Moreover, as noted by the district court,
                   PERFECT 10 v. AMAZON.COM                15477
a cache copies no more than is necessary to assist the user in
Internet use. It is designed to enhance an individual’s com-
puter use, not to supersede the copyright holders’ exploitation
of their works. Such automatic background copying has no
more than a minimal effect on Perfect 10’s rights, but a con-
siderable public benefit. Because the four fair use factors
weigh in favor of concluding that cache copying constitutes
a fair use, Google has established a likelihood of success on
this issue. Accordingly, Perfect 10 has not carried its burden
of showing that users’ cache copies of Perfect 10’s full-size
images constitute direct infringement.

   Therefore, we must assess Perfect 10’s arguments that
Google is secondarily liable in light of the direct infringement
that is undisputed by the parties: third-party websites’ repro-
ducing, displaying, and distributing unauthorized copies of
Perfect 10’s images on the Internet. Id. at 852.

  A.   Contributory Infringement

   In order for Perfect 10 to show it will likely succeed in its
contributory liability claim against Google, it must establish
that Google’s activities meet the definition of contributory lia-
bility recently enunciated in Grokster. Within the general rule
that “[o]ne infringes contributorily by intentionally inducing
or encouraging direct infringement,” Grokster, 545 U.S. at
930, the Court has defined two categories of contributory lia-
bility: “Liability under our jurisprudence may be predicated
on actively encouraging (or inducing) infringement through
specific acts (as the Court’s opinion develops) or on distribut-
ing a product distributees use to infringe copyrights, if the
product is not capable of ‘substantial’ or ‘commercially sig-
nificant’ noninfringing uses.” Id. at 942 (Ginsburg, J., concur-
ring) (quoting Sony, 464 U.S. at 442); see also id. at 936-37.

  Looking at the second category of liability identified by the
Supreme Court (distributing products), Google relies on Sony,
464 U.S. at 442, to argue that it cannot be held liable for con-
15478                PERFECT 10 v. AMAZON.COM
tributory infringement because liability does not arise from
the mere sale of a product (even with knowledge that consum-
ers would use the product to infringe) if the product is capable
of substantial non-infringing use. Google argues that its
search engine service is such a product. Assuming the princi-
ple enunciated in Sony is applicable to the operation of
Google’s search engine, then Google cannot be held liable for
contributory infringement solely because the design of its
search engine facilitates such infringement. Grokster, 545
U.S. at 931-32 (discussing Sony, 464 U.S. 417). Nor can
Google be held liable solely because it did not develop tech-
nology that would enable its search engine to automatically
avoid infringing images. See id. at 939 n.12. However, Perfect
10 has not based its claim of infringement on the design of
Google’s search engine and the Sony rule does not immunize
Google from other sources of contributory liability. See id. at
933-34.

   [20] We must next consider whether Google could be held
liable under the first category of contributory liability identi-
fied by the Supreme Court, that is, the liability that may be
imposed for intentionally encouraging infringement through
specific acts.11 Grokster tells us that contribution to infringe-
ment must be intentional for liability to arise. Grokster, 545
U.S. at 930. However, Grokster also directs us to analyze con-
tributory liability in light of “rules of fault-based liability
derived from the common law,” id. at 934-35, and common
law principles establish that intent may be imputed. “Tort law
ordinarily imputes to an actor the intention to cause the natu-
ral and probable consequences of his conduct.” DeVoto v.
Pac. Fid. Life Ins. Co., 618 F.2d 1340, 1347 (9th Cir. 1980);
  11
    Google’s activities do not meet the “inducement” test explained in
Grokster because Google has not promoted the use of its search engine
specifically to infringe copyrights. See Grokster, 545 U.S. at 935-37.
However, the Supreme Court in Grokster did not suggest that a court must
find inducement in order to impose contributory liability under common
law principles.
                     PERFECT 10 v. AMAZON.COM                    15479
RESTATEMENT (SECOND) OF TORTS § 8A cmt. b (1965) (“If the
actor knows that the consequences are certain, or substantially
certain, to result from his act, and still goes ahead, he is
treated by the law as if he had in fact desired to produce the
result.”). When the Supreme Court imported patent law’s
“staple article of commerce doctrine” into the copyright con-
text, it also adopted these principles of imputed intent.
Grokster, 545 U.S. at 932 (“The [staple article of commerce]
doctrine was devised to identify instances in which it may be
presumed from distribution of an article in commerce that the
distributor intended the article to be used to infringe another’s
patent, and so may justly be held liable for that infringe-
ment.”). Therefore, under Grokster, an actor may be contribu-
torily liable for intentionally encouraging direct infringement
if the actor knowingly takes steps that are substantially certain
to result in such direct infringement.

   Our tests for contributory liability are consistent with the
rule set forth in Grokster. We have adopted the general rule
set forth in Gershwin Publishing Corp. v. Columbia Artists
Management, Inc., namely: “one who, with knowledge of the
infringing activity, induces, causes or materially contributes
to the infringing conduct of another, may be held liable as a
‘contributory’ infringer,” 443 F.2d 1159, 1162 (2d Cir. 1971).
See Ellison, 357 F.3d at 1076; Napster, 239 F.3d at 1019;
Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th
Cir. 1996).

   [21] We have further refined this test in the context of cyber-
space12 to determine when contributory liability can be
imposed on a provider of Internet access or services. See
Napster, 239 F.3d at 1019-20. In Napster, we considered
claims that the operator of an electronic file sharing system
was contributorily liable for assisting individual users to swap
  12
    “Cyberspace is a popular term for the world of electronic communica-
tions over computer networks.” Religious Tech. Ctr. v. Netcom On-Line
Commc’n Servs., Inc., 907 F. Supp. 1361, 1365 n.1 (N.D. Cal. 1995).
15480              PERFECT 10 v. AMAZON.COM
copyrighted music files stored on their home computers with
other users of the system. Napster, 239 F.3d at 1011-13,
1019-22. We stated that “if a computer system operator learns
of specific infringing material available on his system and
fails to purge such material from the system, the operator
knows of and contributes to direct infringement.” Id. at 1021.
Because Napster knew of the availability of infringing music
files, assisted users in accessing such files, and failed to block
access to such files, we concluded that Napster materially
contributed to infringement. Id. at 1022.

   The Napster test for contributory liability was modeled on
the influential district court decision in Religious Technology
Center v. Netcom On-Line Communication Services, Inc.
(Netcom), 907 F. Supp. 1361, 1365-66 (N.D. Cal. 1995). See
Napster, 239 F.3d at 1021. In Netcom, a disgruntled former
Scientology minister posted allegedly infringing copies of
Scientological works on an electronic bulletin board service.
Netcom, 907 F. Supp. at 1365-66. The messages were stored
on the bulletin board operator’s computer, then automatically
copied onto Netcom’s computer, and from there copied onto
other computers comprising “a worldwide community” of
electronic bulletin board systems. Id. at 1366-67 & n.4 (inter-
nal quotation omitted). Netcom held that if plaintiffs could
prove that Netcom knew or should have known that the minis-
ter infringed plaintiffs’ copyrights, “Netcom [would] be liable
for contributory infringement since its failure to simply cancel
[the former minister’s] infringing message and thereby stop
an infringing copy from being distributed worldwide consti-
tute[d] substantial participation in [the former minister’s] pub-
lic distribution of the message.” Id. at 1374.

   [22] Although neither Napster nor Netcom expressly
required a finding of intent, those cases are consistent with
Grokster because both decisions ruled that a service provid-
er’s knowing failure to prevent infringing actions could be the
basis for imposing contributory liability. Under such circum-
stances, intent may be imputed. In addition, Napster and Net-
                   PERFECT 10 v. AMAZON.COM                15481
com are consistent with the longstanding requirement that an
actor’s contribution to infringement must be material to war-
rant the imposition of contributory liability. Gershwin, 443
F.2d at 1162. Both Napster and Netcom acknowledge that ser-
vices or products that facilitate access to websites throughout
the world can significantly magnify the effects of otherwise
immaterial infringing activities. See Napster, 239 F.3d at
1022; Netcom, 907 F. Supp. at 1375. The Supreme Court has
acknowledged that “[t]he argument for imposing indirect lia-
bility” is particularly “powerful” when individuals using the
defendant’s software could make a huge number of infringing
downloads every day. Grokster, 545 U.S. at 929. Moreover,
copyright holders cannot protect their rights in a meaningful
way unless they can hold providers of such services or prod-
ucts accountable for their actions pursuant to a test such as
that enunciated in Napster. See id. at 929-30 (“When a widely
shared service or product is used to commit infringement, it
may be impossible to enforce rights in the protected work
effectively against all direct infringers, the only practical
alternative being to go against the distributor of the copying
device for secondary liability on a theory of contributory or
vicarious infringement.”). Accordingly, we hold that a com-
puter system operator can be held contributorily liable if it
“has actual knowledge that specific infringing material is
available using its system,” Napster, 239 F.3d at 1022, and
can “take simple measures to prevent further damage” to
copyrighted works, Netcom, 907 F. Supp. at 1375, yet contin-
ues to provide access to infringing works.

   Here, the district court held that even assuming Google had
actual knowledge of infringing material available on its sys-
tem, Google did not materially contribute to infringing con-
duct because it did not undertake any substantial promotional
or advertising efforts to encourage visits to infringing web-
sites, nor provide a significant revenue stream to the infring-
ing websites. Perfect 10, 416 F. Supp. 2d at 854-56. This
analysis is erroneous. There is no dispute that Google substan-
tially assists websites to distribute their infringing copies to a
15482                 PERFECT 10 v. AMAZON.COM
worldwide market and assists a worldwide audience of users
to access infringing materials. We cannot discount the effect
of such a service on copyright owners, even though Google’s
assistance is available to all websites, not just infringing ones.
Applying our test, Google could be held contributorily liable
if it had knowledge that infringing Perfect 10 images were
available using its search engine, could take simple measures
to prevent further damage to Perfect 10’s copyrighted works,
and failed to take such steps.

   [23] The district court did not resolve the factual disputes
over the adequacy of Perfect 10’s notices to Google and
Google’s responses to these notices. Moreover, there are fac-
tual disputes over whether there are reasonable and feasible
means for Google to refrain from providing access to infring-
ing images. Therefore, we must remand this claim to the dis-
trict court for further consideration whether Perfect 10 would
likely succeed in establishing that Google was contributorily
liable for in-line linking to full-size infringing images under
the test enunciated today.13

  B.    Vicarious Infringement

   [24] Perfect 10 also challenges the district court’s conclu-
sion that it is not likely to prevail on a theory of vicarious lia-
bility against Google. Perfect 10, 416 F. Supp. 2d at 856-58.
Grokster states that one “infringes vicariously by profiting
   13
      Perfect 10 claims that Google materially contributed to infringement
by linking to websites containing unauthorized passwords, which enabled
Google users to access Perfect 10’s website and make infringing copies of
images. However, Perfect 10 points to no evidence that users logging onto
the Perfect 10 site with unauthorized passwords infringed Perfect 10’s
exclusive rights under section 106. In the absence of evidence that
Google’s actions led to any direct infringement, this argument does not
assist Perfect 10 in establishing that it would prevail on the merits of its
contributory liability claim. See Napster, 239 F.3d at 1013 n.2
(“Secondary liability for copyright infringement does not exist in the
absence of direct infringement by a third party.”).
                   PERFECT 10 v. AMAZON.COM                 15483
from direct infringement while declining to exercise a right to
stop or limit it.” Grokster, 545 U.S. at 930. As this formula-
tion indicates, to succeed in imposing vicarious liability, a
plaintiff must establish that the defendant exercises the requi-
site control over the direct infringer and that the defendant
derives a direct financial benefit from the direct infringement.
See id. Grokster further explains the “control” element of the
vicarious liability test as the defendant’s “right and ability to
supervise the direct infringer.” Id. at 930 n.9. Thus, under
Grokster, a defendant exercises control over a direct infringer
when he has both a legal right to stop or limit the directly
infringing conduct, as well as the practical ability to do so.

   We evaluate Perfect 10’s arguments that Google is vicari-
ously liable in light of the direct infringement that is undis-
puted by the parties, namely, the third-party websites’
reproduction, display, and distribution of unauthorized copies
of Perfect 10’s images on the Internet. Perfect 10, 416 F.
Supp. 2d at 852; see supra Section IV.A. In order to prevail
at this preliminary injunction stage, Perfect 10 must demon-
strate a likelihood of success in establishing that Google has
the right and ability to stop or limit the infringing activities of
third party websites. In addition, Perfect 10 must establish a
likelihood of proving that Google derives a direct financial
benefit from such activities. Perfect 10 has not met this bur-
den.

   With respect to the “control” element set forth in Grokster,
Perfect 10 has not demonstrated a likelihood of showing that
Google has the legal right to stop or limit the direct infringe-
ment of third-party websites. See Grokster, 545 U.S. at 930.
Unlike Fonovisa, where by virtue of a “broad contract” with
its vendors the defendant swap meet operators had the right
to stop the vendors from selling counterfeit recordings on its
premises, Fonovisa, 76 F.3d at 263, Perfect 10 has not shown
that Google has contracts with third-party websites that
empower Google to stop or limit them from reproducing, dis-
playing, and distributing infringing copies of Perfect 10’s
15484                 PERFECT 10 v. AMAZON.COM
images on the Internet. Perfect 10 does point to Google’s
AdSense agreement, which states that Google reserves “the
right to monitor and terminate partnerships with entities that
violate others’ copyright[s].” Perfect 10, 416 F. Supp. 2d at
858. However, Google’s right to terminate an AdSense part-
nership does not give Google the right to stop direct infringe-
ment by third-party websites. An infringing third-party
website can continue to reproduce, display, and distribute its
infringing copies of Perfect 10 images after its participation
in the AdSense program has ended.

   [25] Nor is Google similarly situated to Napster. Napster
users infringed the plaintiffs’ reproduction and distribution
rights through their use of Napster’s proprietary music-file
sharing system. Napster, 239 F.3d at 1011-14. There, the
infringing conduct was the use of Napster’s “service to down-
load and upload copyrighted music.” Id. at 1014 (internal
quotation omitted). Because Napster had a closed system
requiring user registration, and could terminate its users’
accounts and block their access to the Napster system, Nap-
ster had the right and ability to prevent its users from engag-
ing in the infringing activity of uploading file names and
downloading Napster users’ music files through the Napster
system.14 Id. at 1023-24. By contrast, Google cannot stop any
  14
     Napster’s system included “Napster’s MusicShare software, available
free of charge from Napster’s Internet site, and Napster’s network servers
and server-side software.” Napster, 239 F.3d at 1011. By downloading
Napster’s MusicShare software to the user’s personal computer, and regis-
tering with the Napster system, a user could both upload and download
music files. Id. at 1011-13. If the Napster user uploaded a list of music
files stored on the user’s personal computer to the Napster system, such
music files would be automatically available to other Napster users when-
ever the user was logged on to the Napster system. Id. at 1012. In addition,
the Napster user could download music files directly from other users’
personal computers. Id. We explained the infringing conduct as “Napster
users who upload file names to the [Napster] search index for others to
copy violate plaintiffs’ distribution rights. Napster users who download
files [through the Napster system] containing copyrighted music violate
plaintiffs’ reproduction rights.” Id. at 1014.
                   PERFECT 10 v. AMAZON.COM                15485
of the third-party websites from reproducing, displaying, and
distributing unauthorized copies of Perfect 10’s images
because that infringing conduct takes place on the third-party
websites. Google cannot terminate those third-party websites
or block their ability to “host and serve infringing full-size
images” on the Internet. Perfect 10, 416 F. Supp. 2d at 831.

   Moreover, the district court found that Google lacks the
practical ability to police the third-party websites’ infringing
conduct. Id. at 857-58. Specifically, the court found that
Google’s supervisory power is limited because “Google’s
software lacks the ability to analyze every image on the
[I]nternet, compare each image to all the other copyrighted
images that exist in the world . . . and determine whether a
certain image on the web infringes someone’s copyright.” Id.
at 858. The district court also concluded that Perfect 10’s sug-
gestions regarding measures Google could implement to pre-
vent its web crawler from indexing infringing websites and to
block access to infringing images were not workable. Id. at
858 n.25. Rather, the suggestions suffered from both “impre-
cision and overbreadth.” Id. We hold that these findings are
not clearly erroneous. Without image-recognition technology,
Google lacks the practical ability to police the infringing
activities of third-party websites. This distinguishes Google
from the defendants held liable in Napster and Fonovisa. See
Napster, 239 F.3d at 1023-24 (Napster had the ability to iden-
tify and police infringing conduct by searching its index for
song titles); Fonovisa, 76 F.3d at 262 (swap meet operator
had the ability to identify and police infringing activity by
patrolling its premises).

   Perfect 10 argues that Google could manage its own opera-
tions to avoid indexing websites with infringing content and
linking to third-party infringing sites. This is a claim of con-
tributory liability, not vicarious liability. Although “the lines
between direct infringement, contributory infringement, and
vicarious liability are not clearly drawn,” Sony, 464 U.S. at
435 n.17 (internal quotation omitted), in general, contributory
15486               PERFECT 10 v. AMAZON.COM
liability is based on the defendant’s failure to stop its own
actions which facilitate third-party infringement, while vicari-
ous liability is based on the defendant’s failure to cause a
third party to stop its directly infringing activities. See, e.g.,
Ellison, 357 F.3d at 1077-78; Fonovisa, 76 F.3d at 261-64.
Google’s failure to change its operations to avoid assisting
websites to distribute their infringing content may constitute
contributory liability, see supra Section IV.A. However, this
failure is not the same as declining to exercise a right and
ability to make third-party websites stop their direct infringe-
ment. We reject Perfect 10’s efforts to blur this distinction.

   [26] Because we conclude that Perfect 10 has not shown a
likelihood of establishing Google’s right and ability to stop or
limit the directly infringing conduct of third-party websites,
we agree with the district court’s conclusion that Perfect 10
“has not established a likelihood of proving the [control]
prong necessary for vicarious liability.” Perfect 10, 416 F.
Supp. 2d at 858.15

  C. Digital Millennium Copyright Act

   Google claims that it qualifies for the limitations on liabil-
ity set forth in title II of the DMCA, 17 U.S.C. § 512. In par-
ticular, section 512(d) limits the liability of a service provider
“for infringement of copyright by reason of the provider refer-
ring or linking users to an online location containing infring-
ing material or infringing activity, by using information
location tools, including a directory, index, reference, pointer,
or hypertext link” if the service provider meets certain
criteria. We have held that the limitations on liability con-
tained in 17 U.S.C. § 512 protect secondary infringers as well
as direct infringers. Napster, 239 F.3d at 1025.
  15
   Having so concluded, we need not reach Perfect 10’s argument that
Google received a direct financial benefit.
                     PERFECT 10 v. AMAZON.COM                     15487
   [27] The parties dispute whether Google meets the speci-
fied criteria. Perfect 10 claims that it sent qualifying notices
to Google and Google did not act expeditiously to remove the
infringing material. Google claims that Perfect 10’s notices
did not comply with the notice provisions of section 512 and
were not adequate to inform Google of the location of the
infringing images on the Internet or identify the underlying
copyrighted work. Google also claims that it responded to all
notices it received by investigating the webpages identified by
Perfect 10 and suppressing links to any webpages that Google
confirmed were infringing.

   Because the district court determined that Perfect 10 was
unlikely to succeed on its contributory and vicarious liability
claims, it did not reach Google’s arguments under section
512. In revisiting the question of Perfect 10’s likelihood of
success on its contributory infringement claims, the district
court should also consider whether Google would likely suc-
ceed in showing that it was entitled to the limitations on
injunctive relief provided by title II of the DMCA.

                                   V

                            Amazon.com

   Perfect 10 claims that Amazon.com displays and distributes
Perfect 10’s copyrighted images and is also secondarily liable
for the infringements of third-party websites and Ama-
zon.com users. The district court concluded that Perfect 10
was unlikely to succeed in proving that Amazon.com was a
direct infringer, because it merely in-line linked to the thumb-
nails on Google’s servers and to the full-size images on third-
party websites.16 Perfect 10 v. Amazon, No. 05-4753, consoli-
  16
    Amazon.com states that it ended its relationship with Google on April
30, 2006. Perfect 10’s action for preliminary injunction against Ama-
zon.com is not moot, however, because Amazon.com has not established
“that the allegedly wrongful behavior cannot reasonably be expected to
recur.” F.T.C. v. Affordable Media, LLC, 179 F.3d 1228, 1238 (9th Cir.
1999) (internal quotation omitted).
15488              PERFECT 10 v. AMAZON.COM
dated with 04-9484 (C.D. Cal. February 21, 2006) (order
denying preliminary injunction). In addition, the district court
concluded that Perfect 10’s secondary infringement claims
against Amazon.com were likely to fail because Amazon.com
had no program analogous to AdSense, and thus did not pro-
vide any revenues to infringing sites. Id. Finally, the district
court determined that Amazon.com’s right and ability to con-
trol the infringing conduct of third-party websites was sub-
stantially less than Google’s. Id. Therefore, the district court
denied Perfect 10’s motion for a preliminary injunction
against Amazon.com. Id.

   We agree that Perfect 10 has not shown a likelihood that it
would prevail on the merits of its claim that Amazon.com
directly infringed its images. Amazon.com communicates to
its users only the HTML instructions that direct the users’
browsers to Google’s computers (for thumbnail images) or to
a third party’s computer (for full-size infringing images).
Therefore, Amazon.com does not display or distribute a copy
of the thumbnails or full-size images to its users.

   [28] We also agree with the district court’s conclusion that
Amazon.com does not have “the right and ability to supervise
the infringing activity” of Google or third parties. The district
court did not clearly err in concluding that Amazon.com
lacked a direct financial interest in such activities. Therefore,
Perfect 10’s claim that Amazon.com is vicariously liable for
third-party infringement is unlikely to succeed.

   [29] However, the district court did not consider whether
Amazon.com had “actual knowledge that specific infringing
material is available using its system,” Napster, 239 F.3d at
1022 (emphasis in original), and could have “take[n] simple
measures to prevent further damage” to copyrighted works,
Netcom, 907 F. Supp. at 1375, yet continued to provide access
to infringing works. Perfect 10 has presented evidence that it
notified Amazon.com that it was facilitating its users’ access
to infringing material. It is disputed whether the notices gave
                    PERFECT 10 v. AMAZON.COM                  15489
Amazon.com actual knowledge of specific infringing activi-
ties available using its system, and whether Amazon.com
could have taken reasonable and feasible steps to refrain from
providing access to such images, but failed to do so. Nor did
the district court consider whether Amazon.com is entitled to
limit its liability under title II of the DMCA. On remand, the
district court should consider Amazon.com’s potential con-
tributory liability, as well as possible limitations on the scope
of injunctive relief, in light of our rulings today.

                                 VI

   We conclude that Google’s fair use defense is likely to suc-
ceed at trial, and therefore we reverse the district court’s
determination that Google’s thumbnail versions of Perfect
10’s images likely constituted a direct infringement. The dis-
trict court also erred in its secondary liability analysis because
it failed to consider whether Google and Amazon.com knew
of infringing activities yet failed to take reasonable and feasi-
ble steps to refrain from providing access to infringing
images. Therefore we must also reverse the district court’s
holding that Perfect 10 was unlikely to succeed on the merits
of its secondary liability claims. Due to this error, the district
court did not consider whether Google and Amazon.com are
entitled to the limitations on liability set forth in title II of the
DMCA. The question whether Google and Amazon.com are
secondarily liable, and whether they can limit that liability
pursuant to title II of the DMCA, raise fact-intensive inqui-
ries, potentially requiring further fact finding, and thus can
best be resolved by the district court on remand. We therefore
remand this matter to the district court for further proceedings
consistent with this decision.

   Because the district court will need to reconsider the appro-
priate scope of injunctive relief after addressing these second-
ary liability issues, we do not address the parties’ arguments
regarding the scope of the injunction issued by the district
court. For the same reason, we do not address the parties’ dis-
15490               PERFECT 10 v. AMAZON.COM
pute over whether the district court abused its discretion in
determining that Perfect 10 satisfied the irreparable harm ele-
ment of a preliminary injunction.

   Therefore, we reverse the district court’s ruling and vacate
the preliminary injunction regarding Google’s use of thumb-
nail versions of Perfect 10’s images.17 We reverse the district
court’s rejection of the claims that Google and Amazon.com
are secondarily liable for infringement of Perfect 10’s full-
size images. We otherwise affirm the rulings of the district
court. We remand this matter for further proceedings consis-
tent with this opinion. Each party shall bear its own costs on
appeal. See FED. R. APP. P. 39(a)(4).

 AFFIRMED IN PART; REVERSED IN PART;
REMANDED.




  17
    Because we vacate the injunction, Google’s motion for stay of the
injunction is moot.
