A U.S. appeals court ended a preliminary injunction Wednesday against Google (GOOG) Inc.'s . image-search service from displaying thumbnail-sized photos from a sexually explicit site.

Yet it said a lower court should reconsider the issue of whether Google was liable for allowing users to link to sites displaying unauthorized photos.

A lower court had found that Google's thumbnail images violated the copyrights of adult magazine and Web publisher Perfect 10 Inc., but said the Internet search company was probably not responsible for displaying the underlying images from Perfect 10's Web site.

The U.S. 9th Circuit Court of Appeals Wednesday reversed those findings.

"We reverse the district court's ruling and vacate the preliminary injunction regarding Google's use of thumbnail versions of Perfect 10's images," Sandra Ikuta wrote for a three-judge panel.

"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."

Perfect 10 had also named Amazon.com Inc. and its A9.com subsidiary in the complaint.

Perfect 10 first objected to the thumbnail images in 2001, saying Google was linking to Web sites that republished images of their nude models without authorization.

It sued in 2004, alleging copyright infringement, and in 2005, the company filed a similar claim against Amazon.com and sought an injunction against both companies. Hearing both cases in November 2005, a court granted a partial preliminary injunction.

The lower court's ruling had threatened to bar Google from featuring thumbnail pictures — small versions of photos that are linked to a bigger version of the same picture.

In the tangled and growing number of cases related to Internet copyright issues, the 9th Circuit found the thumbnails were not an infringement because they fell under the category of "highly transformative" work.

"We conclude that the significantly transformative nature of Google's search engine, particularly in light of its public benefit, outweighs Google's superseding and commercial uses of the thumbnails in this case," the judge wrote.

"We conclude that Perfect 10 is unlikely to be able to overcome Google's fair use defense and, accordingly, we vacate the preliminary injunction regarding Google's use of thumbnail images."

On the issue of Google's secondary liability for copyright infringement by linking to full-size images, the appeals court left the door open for Perfect 10.

"There is no dispute that Google substantially assists Web sites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials," the ruling found.

"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."