Written by Leo M. Lichtman

A few weeks ago, we reported on Nicklen v. Sinclair Broad. Co., a case out of the Southern District of New York that expressly rejected the “server test” established by the Ninth Circuit in Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1160 (9th Cir. 2007).  The server test sets forth a limitation for when a copyrighted work is “displayed” on a computer, and provides that the copyright owner’s exclusive public display right under 17 U.S.C. § 106(5) can only be violated if the alleged infringer stores a copy of the work on its own server.  This limitation effectively insulates from liability those who “embed” an image or video online without authorization but who do not store the image or video themselves. The server test has significant implications in the world of social media, where embedding is such a prevalent practice.  The Nicklen court’s express rejection of the server test reflects a trend in recent caselaw that could potentially lead to a circuit split if the issue reaches the Second Circuit.

Only a few weeks after the Nicklen holding however, the Northern District of California confirmed that the server test remains the law in the Ninth Circuit.  In Hunley v. Instagram, LLC, two Instagram users sued the service, claiming that by offering an embedding tool for photographs and videos, Instagram was secondarily liable because it enabled third parties to infringe the users’ uploaded content.  Because secondary liability requires a showing of underlying direct infringement, the dispute hinged on a single, key question: whether third parties that use Instagram’s embedding tool to embed images and videos on their websites, but who do not store the images and videos on their servers, violate the copyright owners’ display right.

In a clear departure from the reasoning of Nicklen, the Northern District of California not only held that it was bound by the Ninth Circuit to apply the server test, but endorsed the Ninth Circuit’s reliance on the “plain language of the statute” in crafting the test (notwithstanding the growing criticism in other courts that the server test departs from this language).

The Hunley court rejected the plaintiffs’ attempt to limit Perfect 10 to the facts because the Perfect 10 court “did not state or indicate that its holding was limited to the unique facts presented there.”  The district court also rejected the plaintiffs’ argument that the server test was effectively contradicted, and therefore implicitly overruled, by the Supreme Court in Am. Broadcasting Co. v. Aereo, Inc., 573 U.S. 431 (2014).  While the Supreme Court held that Aereo committed infringement by transmitting broadcast television signals over the Internet even though Aereo claimed that its equipment simply responded to its subscriber’s directives, the Court was assessing the public performance right under 17 U.S.C. § 106(4), not the public display right under 17 U.S.C. § 106(5), and, according to the Hunley court, relied on the legislative purposes unique to the public performance right.

The Northern District of California is of course bound by Ninth Circuit precedent, so its application of the server test should come as no surprise.  Nonetheless, the court’s clear endorsement of the server test in the context of embedded content, after recent denunciations of the server test in this context by courts in other jurisdictions, suggests that the circuit tension is not going anywhere, and that whether an embedder can face liability as a copyright infringer may depend upon where they are sued.