YNOT – A Chicago appeals court has ruled that social bookmarking site myVidster.com does not contribute to infringement of intellectual property rights by embedding pirated video hosted by other websites.

The decision by the three-judge appellate panel overturns a preliminary injunction granted in 2011 to gay adult studio Flava Works by a lower court.

The case arose in late 2010, when Flava Works sued MyVister.com, its registered owner and 26 John Does, accusing the defendants of violating Flava Works’ copyrights by displaying a number of the studio’s videos inside frames on the myVidster site. The videos allegedly were pirated from Flava Works and uploaded to file lockers or other online locations, where other users discovered them and “bookmarked” them at myVidster. The bookmarkers may or may not have had a hand in the original infringement. myVidster provided a mechanism by which surfers could view the allegedly pirated materials within a frame surrounded by advertising, though the videos themselves did not reside on myVidster’s servers.

In July 2011, federal judge John F. Grady granted Flava Works a preliminary injunction forbidding the display of any FlavaWorks content on myVidster on the grounds myVidster failed to rein in repeat infringers, thereby voiding its safe-harbor protection under the Digital Millennium Copyright Act.

myVidster appealed the decision, claiming it could not be held liable for contributory infringement, since all it provides is a blank slate on which end-users create their own links. None of the videos at issue in the case resided on myVidster’s servers, the defendant noted, so the plaintiff’s argument didn’t meet the accepted standard for contributory infringement.

The appeals panel agreed.

“myVidster is not an infringer, at least in the form of copying or distributing copies of a copyrighted work,” Judge Richard Posner wrote in the unanimous 7th Circuit Court decision. “The infringers are the uploaders of the copyrighted work. … Like a telephone exchange connecting two telephones, [myVidster] is providing a connection between the server that hosts the video and the computer of myVidster’s visitor.

“[A]s 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…,” the panel concluded.

Although the 7th Circuit vacated the lower court’s injunction, Posner was careful to specify Flava Works could seek legal relief based on a slightly different argument and related proof. The court evidently found a secondary argument in Flava Works’ original case more compelling.

“[Flava Works] seems at least entitled to an injunction against myVidster’s uploading to its website videos in which Flava owns copyrights,” Posner wrote in the decision. “Before it was sued by Flava, myVidster had been doing that — making copies of videos that some of its subscribers had posted, including videos copyrighted by Flava. Although myVidster doesn’t charge for membership in its social network, it charges a fee for a premium membership that included the backup service. That service infringed Flava’s copyrights directly — it didn’t just abet others’ infringements.

“It’s thus a surprise that the preliminary injunction doesn’t enjoin the backup service, especially since the district judge considered it evidence that myVidster was contributing to the infringing activity of its members,” Posner added. “The backup service was direct infringement — myVidster was copying videos, including some of Flava’s, without authorization. Yet as the [district court] judge said, Flava didn’t make a claim for direct infringement a basis for its motion for preliminary relief.”