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from www.paidcontent.org – Updated: It’s finally happened. In a case with big implications for the booming market in photo-sharing, a publisher is suing popular blogging site Tumblr for copyright infringement.

In a complaint filed Friday in Manhattan, Perfect 10 claims Tumblr failed to remove unauthorized photos posted by its users. The company, which sells nude model photographs through a magazine and website, says Tumblr not only turned a blind eye to copyright infringement but that its staff uploaded images themselves to jumpstart the business.

Update: Perfect 10 President Norm Zada claims the company has sent 6 detailed takedown requests to Tumblr but did not receive any response.

“I’m not sure anyone’s checking that email,” said Zada. “Twenty-five other Internet Service Providers have taken down material that Perfect 10 has identified in our DMCA notices, Tumblr did not.”

The case is significant because lawyers have been waiting for a case to test the legality of popular new image sharing sites like Tumblr and Pinterest. It is also important because of the companies involved.

Tumblr is one of the web’s hottest social sites while Perfect 10 has a long history of fighting in court to control its images. The company sued Google in 2004 for using thumbnail images in its search results. In a famous 2006 decision, a court ruled that the search giant’s use of thumbnails was fair use under copyright law.

A similar fair use ruling is unlikely in the Tumblr case because pictures on the site are typically not thumbnails but full size images.

Ordinarily, sites that host user-uploaded content are protected from copyright lawsuits under “safe harbor” laws (these make a user liable but not the site itself).

Perfect 10′s complaint, however, appears crafted to attack a safe harbor defense by Tumblr. Websites can lose the safe harbor protection if they fail to remove infringing material or if they have an active role in hosting unauthorized images:

Upon information and belief, Tumblr employees have posted infringing content to Tumblr servers, to help start the business, including content which infringes upon Perfect 10′s Copyrighted Works […] Tumblr’s services also permit its subscribers to search for images. An example of the search results of a Tumblr search for model Luba Shumeyko, which includes infringing copies of Perfect 10 Copyrighted Works […] Tumblr turns a blind eye to the extensive copyright infringement taking place through its services.

As Tumblr has gained prominence, some have argued that it must shake up its business model to rely less on pornography and unauthorized photos.

Others have directed similar questions at female-dominated Pinterest, another darling of the start-up set. Pinterest doesn’t have a reputation for porn but is being pressured by Getty Images and photographers to pay royalties.

The Tumblr lawsuit and the $1 billion acquisition of Instagram by Facebook are indications of how popular image sharing has become in recent years.

Tumblr did not immediately respond to an email request for comment.