Perfect 10 v. Google, 04-9484 (C.D. Cal Feb 17, 2006). via
Initial reaction from two different leading Internet figures: wow.
The holding turns on the fair use analysis of Google’s display of thumbnail images (the Court held that Google neither displayed nor distributed full size images, as it utilizes inline linking to, and does not nost nor serve, full size images).
An essential fact here is that P10 now sells thumbnail images of its photos for the cellphone market. Thus, Google making such images available for download made its use ‘consumptive’ (in addition to transformative), with a negative effect on P10’s market.
The thought occurs as I read this section that Google makes this go away by cropping a corner off the thumbnail (or perhaps reproduces thumbs using sepia tone).
The second half of the decision discusses P10’s theory of vicarious and contributory infringement. P10 asserted that Google directly benefits from third-party sites that infringe P10’s copyrights, through its Googel AdSense program. However P10 did not substantiate this allegation with sufficent evidence and the Court did not buy the basic premise, noting that adult-oriented websites existed before Googe Image Search, and would likely continue were it to go away.
The decision contains a useful analysis of Google’s indexing activities in a post-Grokster ‘incuding infringing’ context.
Trademark Blog Perfect 10 v. Google archives here.

Australian reaction from Weatherall’s Law here
TechLawAdvisor provides visuals.