Last week, the U.S. Seventh Circuit Court of Appeals released its opinion in the Flava Works, Inc, v Gunter dba myVidster 2012 WL 3124826 (7th.Cir. Aug 2, 2012) case. The central issue was whether Flava Works, the owner of copyrights in videos, was entitled to a preliminary injunction against the social video bookmarking service myVidster. The injunction which had been granted by the District Court was vacated.
Some commentators have construed the decision as a ruling that embedding or inline linking to a copyright-infringing video on another web site does not infringe copyright. Mike Masnick of Techdirt, for example, says that judge Posner, who wrote the opinion for the panel, “goes into great detail about how MyVidster’s linking and embedding features don’t even come close to infringing.” “This ruling makes it clear that watching embedded videos is not infringing and then neither is hosting the embed code.”
The decision is a difficult one to follow, as Prof. Eric Goldman pointed out. However, as Terry Hart noted in his post Flava Works v Gunter: Injunction Vacated, much of the commentary on the case ranges from “slightly incorrect” to “wildly inaccurate”. The Court did not make the sweeping ruling that embedding or inline linking to a copyright-infringing video on another Web site is always legal. In fact, the Court ruled that a user that uploads and bookmarks a video on the myVidster website infringes copyright when the video is watched by members of the public. The Court also ruled that a website operator that creates an inline link to an infringing video can be liable as a contributory infringer for facilitating its public performance. The preliminary injunction against myVidster was not vacated because copyright does not create liability for inline linking to infringing files. Rather, it was vacated because there was no admissible evidence of infringement before the Court.
The plaintiff Flava specializes in the production and distribution of gay porn videos. It makes its videos available on websites that are behind a pay wall. Some users, however, make unauthorized copies of these videos. In some cases they post them directly onto myVidster’s website or another location on the Internet.
Users who want to make available streams of Flava’s videos using myVidster can do so by “bookmarking” the videos at the myVidster website. Upon receiving the bookmark myVidster automatically requests the video’s embed code from the server that hosts the video. The embed code contains the video’s web address plus technical instructions for how to display the video. Armed with that code, myVidster automatically creates a web page that makes the video appear to be on myVidster’s site.
When another user visits the site, that video and other videos appear, each in the form of a “thumbnail,” a miniature picture of a video’s opening screen shot. A click on a thumbnail activates the embed code that connects the visitor’s computer to the server; the connection made, the visitor is now watching the video. The visitor watches the video through a frame that myVidster has put around it, containing ads. The visitor may think that he/she is seeing the video on myVidster’s website. But actually the video is being transmitted directly from the server on which the video is stored to the viewer’s computer.
The operation of the site was described by the District Court which granted the preliminary injunction against myVidster as follows:
When a user bookmarks or posts a video on myVidster, he essentially directs myVidster to “embed” a video clip on its site. When a user submits a video to be posted on myVidster, myVidster “crawls” the website that hosts the video, gets information about that video file, and creates a thumbnail image of the video if one is not already available. MyVidster then “embeds” the video on its site, allowing it to be displayed there. MyVidster does not simply link to video files displayed on another site; it embeds the files on its own site at the direction of users. In other words, when a visitor to myVidster clicks on a video that is posted there, the video plays directly on myVidster, and the visitor remains on the myVidster site; he or she is not taken to the site that hosts the video file.
Some of the videos that appear on myVidster are hosted on myVidster’s own servers—the “backup copy” videos—but the vast majority of them are hosted on third-party websites. MyVidster displays information about its embedded videos, such as the username of the user who posted the video, the date the user posted the video, the “source link,” and the “embed” code. The “source link” displays the URL (uniform resource locator, a unique address for a file accessible on the internet) where the user bookmarked the video. In cases where a myVidster user bookmarks another user’s bookmark, the “source code” will be a myVidster URL even though the original file of the video may be hosted elsewhere. As for the “embed” code, it enables the display of the video and signifies its “true source”—the site where the video is hosted. Some videos that appear on myVidster have an associated “download” button; by clicking the button, users can download a copy of the video to their own computer or storage device.
The District Court in granting the preliminary injunction held that myVidster users had directly infringed Flava’s copyrights by posting and making back-up copies of its videos on myVidster and by displaying its videos on myVidster without Flava’s permission. The Court also concluded that myVidster materially contributed to and was liable for that infringing activity.
After losing the injunction motion, myVidster applied to have the decision reconsidered by the District Court. In its motion, myVidster contended that users could not be liable for direct infringement for the display of the videos from its site. Relying on the decision of the Ninth Circuit in Perfect 10, Inc. v. Amazon.com, Inc., 508 F. 3d 1146 (9th.Cir.2007), it argued that users who bookmark a video on myVidster to create an embedded link from which it can be viewed do not thereby display it from that site. The District Court disagreed holding that they do. The District Court gave the following reasons for coming to this conclusion.
To establish contributory copyright infringement, the first element that a plaintiff must prove is that a third party directly infringed its copyrighted work. We held that Flava demonstrated a likelihood of success on this element by submitting uncontradicted evidence that it owns the copyrights for works that myVidster users have, without authorization, copied and/or posted on myVidster. The vast majority of myVidster users have not created backup copies of videos on the site, but have directed myVidster to “embed” video clips on the site through the posting/bookmarking process. It is this action, to which defendants also refer as “inline linking,” that is the focus of the instant motion to reconsider.
According to defendants, Perfect 10 instructs that “the critical factual inquiry is the location of the infringing image.” Defendants argue that the videos posted to myVidster are hosted on third-party servers, as were the full-size images in Perfect 10, and “the way the videos are linked and displayed is the same as in Perfect 10.” (Defs.’ Br. at 5.) The video links, or “embeds,” that appear on myVidster are shown to the viewer as if they are part of the myVidster site, even though the videos are hosted by (stored on) a third-party server.
We decline to apply Perfect 10 to this case. The Ninth Circuit’s decision is not binding on this court; moreover, it is highly fact-specific and distinguishable. Defendants assert that the cases involve “essentially the same technology.” Both cases may involve inline linking,but the processes are quite different. The relevant comparison is between the conduct of Google and the conduct of myVidster’s users, not between Google and myVidster. In response to a search query, Google’s image search engine uses an automated process to display search results through inline linking. In contrast, myVidster’s users do not employ any sort of automation to determine which videos they bookmark; rather, they personally select and submit videos for inline linking/embedding on myVidster. (And many of those hand-picked videos are infringing.) Google’s use of inline linking is neutral to the content of the images; that of myVidster’s users is not.
To the extent that Perfect 10 can be read to stand for the proposition that inline linking can never cause a display of images or videos that would give rise to a claim of direct copyright infringement, we respectfully disagree. In our view, a website’s servers need not actually store a copy of a work in order to “display” it. The fact that the majority of the videos displayed on myVidster reside on a third-party server does not mean that myVidster users are not causing a “display” to be made by bookmarking those videos. The display of a video on myVidster can be initiated by going to a myVidster URL and clicking “play”; that is the point of bookmarking videos on myVidster—a user can navigate to a collection of myVidster videos and does not have to go to each separate source site to view them.
The focus of the District Court was on whether users of myVidster were liable for direct infringement by uploading and bookmarking videos and causing myVidster to create inline links to the videos and whether myVidster was liable for contributing to this infringement. The court held it was.
Ruling of the Seventh Circuit
In view of the misunderstandings about what the Seventh Circuit decided, it is useful to examine in detail what the Court said about myVidster’s users’ direct liability for copyright infringement, myVidster’s liability for direct infringement, and myVidster’s liability for contributory infringement and inducement.
myVidster’s users’ direct liability for copyright infringement
The Court’s examination of the liability of myVidster’s users was restricted to their liability for uploading copies of videos to the myVidster website and for publicly performing the videos by uploading and bookmarking them. Inexplicably in light of the decisions of the District Court, the Court did not discuss whether users were liable for direct infringement of the display right by posting and bookmarking videos at the myVidster site.
The Court had little difficulty concluding that users who upload copies of Flava’s videos to the Internet without authorization infringe the exclusive right to make copies. According to the Court:
The Court also ruled that myVidster’s users were liable for infringing the public performance right by uploading and bookmarking videos at the myVidster site. The Court ascribed three possible grounds for this liability.
The U.S. Copyright Act gives copyright owners of works an exclusive right “to perform the copyrighted work publicly” which includes the right “to transmit or otherwise communicate a performance … of the work … to the public … whether the members of the public capable of receiving the performance … receive it in the same place or in separate places and at the same time or at different times.”
The Court initially posited two possible interpretations of the public performance right, each of which would make users liable for uploading videos to the Internet and bookmarking them at the myVidster site. The first is that uploading plus bookmarking a video is a public performance. The second, is that uploading and bookmarking a video is a public performance only after a visitor to the website receives the performance.
One possible interpretation is that uploading plus bookmarking a video is a public performance because it enables a visitor to the website to receive (watch) the performance at will, and the fact that he will be watching it at a different time or in a different place from the other viewers does not affect its “publicness,” as the statute makes clear. We’ll call this interpretation, for simplicity, “performance by uploading.”
An alternative interpretation, however—call it “performance by receiving”—is that the performance occurs only when the work (Flava’s video) is transmitted to the viewer’s computer—in other words when it is “communicated to the public in a form in which the public can visually or aurally comprehend the work.” William F. Patry, Patry on Copyright § 14:21, p. 14–41 (2012).
On the first interpretation, performance by uploading, the performance of a movie in a movie theater might by analogy be said to begin not when the audience is seated and the movie begins but a bit earlier, when the operator of the projector loads the film and puts his finger on the start button; while on the second interpretation, performance by receiving, it begins when he presses the button and the reel begins to unwind. The second interpretation is certainly more plausible in the movie-theater setting. But in the setting of our case the viewer rather than the sender (the latter being the uploader of the copyrighted video) determines when the performance begins, and it is odd to think that every transmission of an uploaded video is a public performance. The first interpretation—public performance occurs when the video is uploaded and the public becomes capable of viewing it—is better at giving meaning to “public” in public performance but worse at giving meaning to “performance.” Legislative clarification of the public-performance provision of the Copyright Act would therefore be most welcome.
The Court did not consider a third alternative-that either making the video available through bookmarking it, the videos’ actual reception following its bookmarking, or both create liability. On the Court’s assessment of the facts and law it wasn’t necessary for the court to resolve the exact reasons for the users’ liability.
The Court did, however, suggest a fourth basis for users’ direct liability for the public performance of Flava’s videos-simply bookmarking them on myVidster’s website. The Court, in discussing myVidster’s potential liability for inducement stated that myVidster could have been liable if it “invited people to post copyrighted videos on the Internet without authorization or to bookmark them on its website”. It thus suggested that myVidster users become liable for publically performing Flava’s videos simply by bookmarking them on the site.
myVidster’s direct infringement liability
The Court also examined myVidster’s liability for copying videos uploaded to its web site as part of a backup service. The Court had little difficulty in concluding that the backup service “infringed Flava’s copyrights directly—it didn’t just abet others’ infringements”.
myVidster’s liability for contributory infringement and inducement
The Court considered several grounds on which myVidster could be liable for contributory infringement. One claim put forward by Flava was that myVidster was liable because by permitting users to bookmark videos on the site and by creating inline links to the videos it aided or encouraged individuals to copy the videos. The Court rejected this liability theory. First, because users who merely view videos by clicking on bookmarks do not reproduce the videos. Second, there was no evidence that by providing a connection to websites that contain illegal copies of its copyrighted videos, myVidster was encouraging its subscribers to circumvent Flava’s pay wall to upload and thereby copy the videos onto the Internet.
Is myVidster therefore a contributory infringer if a visitor to its website bookmarks the video and later someone clicks on the bookmark and views the video? myVidster is not just adding a frame around the video screen that the visitor is watching. Like a telephone exchange connecting two telephones, it is providing a connection between the server that hosts the video and the computer of myVidster’s visitor. But as long as the visitor makes no copy of the copyrighted video that he is watching, he is not violating the copyright owner’s exclusive right, conferred by the Copyright Act, “to reproduce the copyrighted work in copies” and “distribute copies … of the copyrighted work to the public.” 17 U.S.C. §§ 106(1), (3). His bypassing Flava’s pay wall by viewing the uploaded copy is equivalent to stealing a copyrighted book from a bookstore and reading it. That is a bad thing to do (in either case) but it is not copyright infringement. The infringer is the customer of Flava who copied Flava’s copyrighted video by up-loading it to the Internet..
Flava contends that by providing a connection to websites that contain illegal copies of its copyrighted videos, myVidster is encouraging its subscribers to circumvent Flava’s pay wall, thus reducing Flava’s income. No doubt. But unless those visitors copy the videos they are viewing on the infringers’ websites, myVidster isn’t increasing the amount of infringement..
As the record stands (a vital qualification, given that the appeal is from the grant of a preliminary injunction and may therefore be incomplete), myVidster is not an infringer, at least in the form of copying or distributing copies of copyrighted work. The infringers are the uploaders of copyrighted work. There is no evidence that myVidster is encouraging them, which would make it a contributory infringer…
The Court next considered whether myVidster could be liable for contributory infringement by aiding or encouraging users to publically perform Flava’s videos. The Court ruled that if the public performance right was triggered when the video is viewed, then myVidster’s inline linking to the infringing videos could make it liable for contributory infringement. Its culpability flowed from assisting the transmission by providing the link between the uploader and the viewer. According to the Court:
The second interpretation—the performance occurs when the video is viewed—is more favorable to Flava, because myVidster plays a role there and not in up-loading. So we’re surprised that Flava doesn’t urge it..
But if the public performance is the transmission of the video when the visitor to myVidster’s website clicks on the video’s thumbnail…and viewing begins, there is an argument that even though the video uploader is responsible for the transmitting and not myVidster, myVidster is assisting the transmission by providing the link between the uploader and the viewer, and is thus facilitating public performance…
The Court held that, on the facts of the case, myVidster was not liable for contributing to the transmissions of Flava’s videos. This was because there was no admissible evidence that users had actually accessed any of Flava’s videos via myVidster, rather than via other websites. Since no videos had actually been accessed by clicking on the inline links created by myVidster, “myVidster is not contributing to their performance”.
The Court ruled that, on the facts of the case, if the public performance right was triggered when a video was uploaded and merely made available to be viewed, myVidster would not be liable for contributory infringement. This conclusion was based on the lack any admissible evidence “that myVidster is contributing to the decision of someone to upload a Flava video to the Internet, where it then becomes available to be book-marked on myVidster’s website.” Curiously, the Court did not consider why aiding or encouraging users to bookmark videos that had been previously been uploaded did not also contribute to their being viewed.
The Court also suggested that myVidster could have been liable for inducing infringement if it “invited people to post copyrighted videos on the Internet without authorization or to bookmark them on its website”. However, this theory wasn’t explored because “inducing infringement was not a ground of the preliminary injunction issued by the district judge in this case and anyway there is no proof that myVidster has issued any such invitations.”
Comments on myVidister’s liability for inline linking
Some US courts have considered whether linking or inline linking to a work without the copyright owner’s consent can implicate the exclusive right to make copies, distribute, or display the work, or result in contributory infringement for causing such acts. But, as far as I am aware, no US case has comprehensively addressed whether inline linking to an infringing work which can be viewed when the link is activated directly infringes the right of public performance.
The myVidster Court did not squarely address whether myVidster could be liable for direct infringement by creating inline links to Flava’s infringing videos. Instead, it addressed the potential liability under the rubrics of contributory and inducement liability stating that to “call the provision of contact information transmission or communication and thus make myVidster a direct infringer would blur the distinction between direct and contributory infringement”. In doing so, the Court did not explain why bookmarking a video at the myVidster site by a user could directly infringe the public performance right, while embedding an inline link should be assessed under secondary infringement doctrines.
Some courts outside of the US have treated inline linking as acts of direct infringement. For example, in the recent French cases Google France v. Bac Films, the French High Court treated deep linking and framing by Google to documentary films as part of its Google Video service as an act of reproduction and implicitly of public performance, even though the content was hosted on third-party sites. In dismissing the appeal from the Court of Appeal on this point, the court stated:
But the Court of Appeal judgment notes that the Google companies enable Internet users to view the film on their own Google Vidéo France site via links to other sites, and concludes therefrom that they are implementing an active function that enables them to aggregate content stored on third-party websites in order to perform it directly on their pages for their own customers; having established that the companies concerned thereby reproduced the film on their Google Vidéo France site without permission from the film’s rightsholders, which defines criminal copyright infringement in law, and that thereby they did more than implement a simple technical functional feature, the Court of Appeal did substantiate its ruling in law without having to make further examination that would have been unlikely to preclude a finding that the Google companies had committed acts of unlawful performance;
Two Canadian decisions reached the same conclusion. In the Tariff 22 case,the Copyright Board held that a person who creates an automatic or embedded hyperlink to a work authorizes the communication of the work from the site to which the link leads and can be liable for infringement if this is done without permission. The decision of the Board was recently followed by the Federal Court in Warman v. Fournier, 2012 FC 803. In this case, which has also been misunderstood, the court held that a work was communicated to the public through the creation of an inline link to a work posted on a website. However, on the facts of the case liability was not imposed on the person creating the link because the file that was linked to was not infringing and had been posted by the copyright owner. On this basis, the court concluded that the copyright owner had authorized the communication.
It is noteworthy that the Court in the Flava Works case concluded that myVidster could have been liable for contributory infringement even though the embed codes were obtained and created purely by automated means. The District Court had attributed the creation of the inline links to the myVidster users whose actions of bookmarking the videos initiated the creation of the inline links. Some US courts have exonerated service providers from acts they enable through automatic means finding that such conduct lacks volition. The Court, however, recognized that myVidster’s automated action of creating inline links facilitated the transmission and the public performance of the videos, thus implicitly rejecting the “volitional” conduct reasoning. In so holding, the Court joined other courts, such as the Second Circuit in the Viacom case and the Ninth Circuit in the Veoh case, which implicitly recognized that hosting sites can be directly liable for automatically posting infringing videos that are uploaded to websites by individual users, where other defenses such as the DMCA safe harbors are not available.
The approach of the Court on this point is consistent with recent cases decided elsewhere which recognize volition associated with automated computer functions and attribute same to the entity using them in assessing copyright liability. For example, in Syndicat national de l’édition phonographique v. Google, the French High Court recently ruled that the “Google Suggestions” search term function which automatically suggested the keywords “Megaupload,” “Rapidshare,” and “Torrent” in response to user searches for the name of artists, titles of songs or albums, facilitated infringement. Google was found liable for the “systematic” guidance of users toward predominantly infringing sites, even though this was done using Google’s automated algorithms, as measures were available to stop the automatic association of the suggested key words. Similarly, the Full Court of Australia in National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd  FCAFC 59 (April 2012) ruled that the operator of a service which enabled subscribers to make copies of TV programming was liable (or jointly liable with subscribers) for the acts of copying. The court found the service provider liable even though its acts were entirely automated.
The Seventh Circuit’s Court’s discussion of the issue of when a work is publically performed is puzzling. The Court seemed unsure as to whether the infringement occurs when the video is made available or only after it is accessed by members of the public. The US has ratified the WIPO Copyright Treaty (WCT). The treaty requires signatories to provide copyright holders with an exclusive right of making works available to the public. Article 8 of the Treaty states the following:
Without prejudice to the provisions of Articles 11(1)(ii), and 11 bis (1)(i) and (ii), 11 ter (1)(ii), 14(1)(ii) and 14 bis (1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.
Accordingly, in the event the Court thought the right of public performance to be ambiguous, it ought to have at least considered construing the law to be consistent with the treaty which requires that a work be publically performed when it is made available to be accessed as well as when it is accessed. Indeed, one might have contended that the WCT making available right also requires that the public performance right apply to sites that provide inline links that make works located elsewhere on the internet available to the public.
 “Judge Posner drafted this opinion, which means that (as usual for him) it reads like a barely edited first-draft. As usual for Seventh Circuit opinions, it makes a number of questionable and undefended offline analogies, makes assumptions about factual questions that could/should be remanded to the district court, barely engages with or cites to other legal precedent, raises and addresses issues that the litigants never raised, and is filled with gratuitous digressions (e.g., an uncomfortable discussion that gay ethnic pornography might be illegal, a contention neither party advanced; and an odd discussion about the reputational capital benefits of sharing content). If I were Flava Works, I would be hopping mad about the manifest procedural defects in the opinion (and motivated to seek en banc review). As a result of the opinion’s characteristic affectations, parsing this opinion is needlessly difficult, so I can only do so much to deconstruct the legal principles in it.”
 Flava Works, Inc, v Gunter dba myVidster 2011 WL 3205399 (N.D.Ill. July 27, 2011)
 See, Berstein v. J.C. Penny, Inc CCH Copy L.R. 27,824 (C.D. Cal. 1998), Ticketmaster Corp. v. Tickets.com Inc., 2000 WL 525390 (C.D.Cal. March 27, 2000) aff’d 2 Fed. Appx. 741 (9th Cir.2001), Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc., Case No. 2:99-CV-808C (C.D.Utah. December 6, 1999), Kelly v. Arriba Soft Corp. 61 U.S.P.Q. 2d 1564 (9th Cir. 2002), opinion withdrawn July 7, 2003, Perfect 10, Inc. v. Amazon.com, Inc., 508 F. 3d 1146 (9th.Cir.2007).
 The Court stated the following:
The second interpretation—the performance occurs when the video is viewed—is more favorable to Flava, because myVidster plays a role there and not in up-loading. So we’re surprised that Flava doesn’t urge it. The first interpretation is hopeless for Flava. For there is no evidence that myVidster is contributing to the decision of someone to upload a Flava video to the Internet, where it then becomes available to be book-marked on myVidster’s website. myVidster is giving web surfers addresses where they can find entertainment. By listing plays and giving the name and address of the theaters where they are being performed, the New Yorker is not performing them. It is not “transmitting or communicating” them. Cf. Perfect 10, Inc. v. Amazon.com, Inc., supra, 508 F.3d at 1159–61; In re Aimster Copyright Litigation, supra, 334 F.3d at 646–47.
Is myVidster doing anything different? To call the provision of contact information transmission or communication and thus make myVidster a direct infringer would blur the distinction between direct and contributory infringement and by doing so make the provider of such information an infringer even if he didn’t know that the work to which he was directing a visitor to his website was copyrighted. Then he would have to search for a safe harbor in the Digital Millennium Copyright Act. myVidster doesn’t touch the data stream, which flows directly from one computer to another, neither being owned or operated by myVidster. Compare National Football League v. PrimeTime 24 Joint Venture, 211 F.3d 10, 13 (2d Cir.2000), a retransmission case.
 France, Court of Cassation, First civil chamber, Judgment No. 831, decision of July 12, 2012 and Court of Cassation, First civil chamber, Judgment No. 828, decision of July 12, 2012. See summary by Prof. Jane Ginsburg in Take Down/Stay Down: RIP in France? But Little Solace for Google. The media Institute, August 6, 2012. Quotes are from an English translation.
 Public Performance of Musical Works (Re),  CBD No 5
 The case has been misinterpreted by several commentators including Michael Geist who have suggested that the court concluded that inline linking cannot result in infringement. However this is not what the Court ruled. It ruled that the person responsible for the creation of an inline link is responsible for its communication when the link is activated. So an inline link to an infringing file would be an infringement. However, the creation of an inline link would not be an infringement where the copyright owner has consented to its communication via the inline link. The Court’s ruling on this point is set out below:
The application in respect of the Barrera Work must fail because any communication of the Barrera Work by telecommunication was authorized by the applicant. Communication of a work by telecommunication will only constitute infringement if it was unauthorized… The evidence is clear that the Barrera Work was posted on the applicant’s personal website and thus the communication of the Barrera Work occurred by creating a hyperlink to the applicant’s own website. Thus, the applicant authorized communication of the Barrera Work by posting it on his website and therefore there is no infringement.
 See, for example, Cartoon Network LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.2008), Costar Group, Incorporated v. Loopnet, Inc., 373 F.3d 544 (4th. Cir. 2004)
 France, Court of Cassation, First civil chamber, decision no. 832 of July 12, 2012, also summarized by Prof. Jane Ginsburg in Take Down/Stay Down: RIP in France? But Little Solace for Google
 See also, Australian Competition and Consumer Commission v Google Inc  FCAFC 49