Derivative works of course being protected by fair use.

And if Genius is hosting the page that's annotated, that's one thing. If they're simply proxying it on demand and adding annotations, then I don't see how it violates copyright unless every proxy server violates copyright.

The key difference is that proxy servers don't copy content. They reflect it. You can put any URL on the internet behind a proxy server-- that does not mean that the proxy server has already copied the entire internet. Nor does it mean that once a URL has been proxied by a proxy server does the content remain cached or copied-- since in our case at Hypothesis, and we presume at Genius, it does not.

This is a key distinction that separates proxies from caches and archives.