The Italian distributor of the movie "About Elly" sued Yahoo in Italy about links to other sites from Yahoo's search engine results. Apparently the decision was against Yahoo.

I am somewhat confused about the details.
Is Yahoo liable for your searches?
Is Yahoo liable for the content of sites referenced on its SERPs?
Is Yahoo liable for content on other sites linked from the sites referenced on its SERPs?

Slashdot has coverage titled "Yahoo! Liable In Italy For Searchable Content".
http://search.slashdot.org/story/11/04/05/0349235/Yahoo-Liable-In-Italy-For-Searchable-Content

"The court actually ordered Yahoo! to remove any link to any site containing unlawful copies of a movie. Under EU Directives 2003/31, liability of search engines is not regulated (save for caching activities). In the case brought to court regarding the film About Elly, it was not the caching activities of Yahoo! that were questioned (or any content hosted on Yahoo!'s servers), but the mere fact that searching for the film made it possible to reach websites allowing the streaming or downloading of the movie (actually, illegal sites got a better ranking then the official one)."

At IPT Italy, DLA Piper has a blog entry titled "Yahoo! Liable for Searchable Contents!".
http://blog.dlapiper.com/IPTitaly/entry/yahoo_liable_for_searchable_contents

"The court dismissed the case in relation to Google Italy S.r.l. and Microsoft S.r.l. because the Italian companies of such groups did not have an active role in the management of the search engines."

At gigaom, Bobbie Johnson has a story titled " Mamma Mia! Italian Ruling on Piracy Puts Websites on Notice".
http://gigaom.com/2011/03/24/mamma-mia-italian-ruling-on-piracy-puts-websites-on-notice/

"According to this report in la Repubblica, one of Italy’s leading newspapers, the complaint centered on the argument that PFA’s right to profit from About Elly was undermined, since Yahoo search results were prioritizing bootlegs over the legitimate version of the film. 'The film’s official website was not even in the top positions,' argued attorneys, who also pointed out, 'it was ranked lower than links to pages that allowed users to illegally download the movie.'"