• by Wendy Davis  @wendyndavis, August 8, 2012

In a potentially far-reaching decision, a federal appeals court has said that a social bookmarking site didn't infringe copyright by allowing users to stream pirated clips.

The ruling, issued late last week by the 7th Circuit Court of Appeals, came in a copyright lawsuit filed by the porn company Flava Works against the social bookmarking service myVidster.

Flava keeps its videos behind paywalls, but some clips surfaced on free sites. Some Web users posted links to those free clips on myVidster, which then embedded them on its site. The result was that any of myVidster's users could view the videos.

Flava argued that myVidster encouraged copyright infringement by allowing users to post links to the clips. Last year, a trial judge sided with Flava and issued an injunction requiring myVidster to take steps to proactively police the site.

But the 7th Circuit Court of Appeals ruled that merely enabling people to access pirated clips doesn't induce copyright infringement. "myVidster knows that some of the videos bookmarked on its site infringe copyright, but that doesn’t make it a facilitator of copying," the court wrote in a 20-page order vacating the injunction. "Although visitors who view those videos are viewing infringing material, they are paying nothing for it and therefore not encouraging infringement."

The judges added that the result would be different if myVidster "invited people to post copyrighted videos on the Internet without authorization or to bookmark them on its website."

The ruling, authored by the conservative judge Richard Posner, also says that viewing pirated clips doesn't infringe copyright. Streaming pirated clips "is equivalent to stealing a copyrighted book from a bookstore and reading it," Posner writes. "That is a bad thing to do ... but it is not copyright infringement. The infringer is the customer of Flava who copied Flava’s copyrighted video by uploading it to the Internet."

The dispute drew the attention of the Motion Picture Association of America, which weighed in against myVidster. The MPAA argued in a friend-of-the-court brief that the company "served as an unlicensed on-demand, Internet-video service that generated advertising and other revenues by attracting an audience for infringing content."

The digital rights groups Electronic Frontier Foundation and Public Knowledge also filed papers in the case, arguing that the trial judge shouldn't have issued the injunction.

EFF lawyer Jennifer Granick says in a blog post that the 7th Circuit's decision could affect an attempt by the Department of Justice to extradite the British citizen Richard O'Dwyer for criminal copyright infringement. O'Dwyer allegedly operates TVShack -- which allows users to link to and access television shows.

"England, which initially agreed to extradite O'Dwyer to face trial in the United States, must reconsider that decision in light of this new legal precedent," Granick writes.