Rules on Copyright Infringement for Inline Linking Developing in the United States and Abroad

As the relationship between copyright and the internet continues to develop and technical distinctions are increasingly cast aside for more practical perspectives, new licensing opportunities are becoming available for content owners and creators. Two recent developments concerning online service providers’ use of so-called “inline linking” and those providers’ potential liability for publicly displaying unlicensed content from third-party websites open the way for this new vein of potential income.

Inline linking occurs when a service provider “embeds” on the provider’s website content that is hosted at another location or “destination URL” on the internet. This is achieved using HTML coding, which retrieves content from the destination URL and shows that content to visitors on the service provider’s site. The inline link in the code of the service provider’s website thus constitutes a sort of window or “frame” to content maintained at another location on the internet. This is in contrast to the use of a standard text hyperlink, which, after a click, simply directs users to a destination without showing the content hosted there.

A new European Union copyright law and recent decisions from the Southern District of New York and the Northern District of California suggest that what was once thought to be non-infringing inline linking may now require service providers to obtain licenses or face claims of infringement.

The European Union’s “Link Tax”

In April 2019, the European Union passed a sweeping new copyright law: The Directive on Copyright in the Digital Single Market. The Directive came into effect on June 7, 2019, giving the European Union member states two years to pass local laws complying with its terms. One component of the Directive seeks to cut publishers in on internet service providers’ income from websites that use inline linking.

Specifically, Article 15 of the Directive – termed the “link tax” – provides new copyright protection to “online use of [publisher’s] press publications by information society service providers” and requires European Union member states to provide publishers a right to negotiate licenses with online service providers for inline linking to publisher content, excluding only “hyperlinking” or “use of individual words or very short extracts of a press publication.”

As a result of this change, where an internet service provider in the European Union has previously embedded a publisher’s news story on its website without fear of liability, now it must negotiate a license for the inline linking use.

France has already put a law on its books, which came into effect in October, implementing Article 15 of the Directive. In response, Google has stated it will no longer embed previews of news articles from other websites using inline linking unless the relevant publisher directs it to, stating: When the French law comes into force, we will no longer display an overview of the content in France for European press publishers, unless the publisher has made the arrangements to indicate that it is his wish. This will be the case for search results from all Google services.

It remains to be seen what specific laws will be implemented in other European Union member states, and whether other service providers will respond by striking deals with publishers or attempt to avoid license obligations like Google has done in France. While publishers hope to obtain more profits from inline linking uses under the new regime, they also risk less traffic and ad revenue should other providers follow Google’s lead.

A similar recognition that inline linking can constitute actionable misappropriation of intellectual property is reflected in two recent decisions in the United States, one in New York and one in California.

The Perfect 10 Server Test and the Goldman and Menzel Decisions

For many years, internet service providers using inline linking in the United States have relied on the “server test” set forth by a 2007 decision from the Ninth Circuit, Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007). In Perfect 10, the Ninth Circuit held that embedded photos that appeared on Google did not implicate the Copyright Act’s right of display where, as a result of inline linking, the copyrighted images resided on a third-party server rather than the provider’s server. In other words, under the server test, where a provider’s site uses inline linking code to frame an image hosted on another website, the provider’s potential liability for direct copyright infringement depended entirely on whether the image is maintained on the provider’s server or a third-party server.

Last year in Goldman v. Breitbart News Network, LLC, 302 F. Supp. 3d 585, 590 (S.D.N.Y. 2018), Judge Katherine Forrest presided over a dispute in the Southern District of New York where the plaintiff sued several media outlets alleging that by “embedding” from Twitter a photo he originally posted to Snapchat of New England Patriots quarterback Tom Brady recruiting NBA superstar Kevin Durant to the Boston Celtics, these content providers infringed his exclusive right of display as the author of the photo.

In her opinion denying the defendants’ motion for summary judgment, Judge Forrest rejected application of the server test to the display right, writing that “outside of the Ninth Circuit” the server test “has not been widely adopted” to the right of public display. Id. at 591-92. In declining to apply the server test to the right of display, the court made a critical distinction between content that is shown on a service provider’s website using inline linking, which implicates the display right, and content that was merely distributed to users from a text hyperlink’s destination URL, which does not. Following a failed attempt by the defendants to immediately appeal the decision to the Second Circuit, the case was settled in May 2019.

In June 2019, a decision from the Northern District of California, Free Speech Sys., LLC v. Menzel, 390 F. Supp. 3d 1162 (N.D. Cal. 2019), cast further doubt on the applicability of the Server Test to the display right outside of the context of an internet search engine, even within the Ninth Circuit. The Northern District Court acknowledged that the server test was precedential authority in the Ninth Circuit, but elaborated that “subsequent cases have refused to apply the Perfect 10 server test outside of [the search engine] context…” and that “[plaintiff] has not provided any case within the Ninth Circuit applying the server test outside of the search engine context….”  Id. at 1172. The trend in both cases is to elevate the substance of the user experience over the coding architecture behind the presented content.

Stay Aware

As more of the copyrighted content we consume is delivered through an increasingly connected internet, the rules service providers face for unauthorized linking will continue to evolve. The growing trend in both the Goldman and Menzel cases in the United States and the Directive’s “link tax” in the European Union is more opportunity for owners and creators to monetize content that drives traffic to online service providers’ websites. As content aggregation continues to flourish, content owners/creators and service providers alike should stay aware of developments that may create opportunities for licensing, or carry the risk of liability from inline linking.

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