A US Court of Appeals overturned a District Court decision, and ruled that Google's display of thumbnail images of Perfect 10's porn photos does not constitute copyright infringement. The court ruled that Google enjoys the "fair use" defense against the claim for direct copyright infringement. However, the court left an "open" question as to Google's potential liability for contributory copyright infringement, which shall be factually determined by the lower court.
Following is a link to the decision:
http://www.ca9.uscourts.gov/ca9/newopinions.nsf/DE8297F56287C0BC882572DC007DACC6/$file/0655405.pdf?openelement