Any number of large companies are doing it without being sued, with no better justification. They company is just scammy and going after people too small and scared to resist.

It kind of irritated me that he immediately capitulated in a case that was obviously frivolous. Then posted it; has he no shame?

Kelly v. Arriba Soft Corp. - https://en.wikipedia.org/wiki/Kelly_v._Arriba_Soft_Corp.

Fair Use - Internet Publication - https://en.wikipedia.org/wiki/Fair_use#Internet_publication

  > "... the Ninth Circuit Court of Appeals ... found the purpose of creating the thumbnail images as previews to be sufficiently transformative"

Not exactly the same since this involved a search engine, but would seem to agree that preview thumbnails would be considered fair use.