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The Motion Picture Association of America, Hollywood's copyright lobby, wants the Seventh Circuit Court of Appeals to uphold a ruling from last year that made embedding videos as guilty as uploading and hosting infringing content.

The controversial decision was made by Judge John F. Grady in the case 'Flava Works, Inc v. Gunter', and has already been criticized by tech companies and Internet rights groups as overreaching.

In his ruling, Grady admonished Marques Gunter, the owners of myVidster, for not doing enough to combat copyright infringement. myVidster operated as a video bookmarking websites, allowing others to embed videos and share with others. myVidster did not allow the uploading of videos, instead, the videos must have been already uploaded to hosting websites, such as YouTube.

Despite the lack of hosting, and despite the fact that myVidster has a working DMCA take-down system, adult entertainment company Flava Works sued myVidster for direct infringement, and Judge Grady ruled in Flava's favour and denied myVidster DMCA protection under "safe harbor".

"Safe Harbor" protects services providers and Internet intermediaries from liability as long as they have a working take-down system and deal with repeat offenders appropriately.

In his ruling, Grady did not feel there was a distinction between embedding and hosting, and also that myVidster did not deal with repeat infringers in a meaningful manner. Gunter's argument was that since external websites were hosting the content, the repeat offence isn't occuring on myVidster, but on the websites that were hosting the content.

Following the court decision, and the subsequent appeal, web giants Google, Facebook, the Electronic Frontier Foundation and Public Knowledge all submitted amicus briefs to the court arguing that the decision was indeed overreaching.

In their brief, Google and Facebook said that precedent set in Perfect 10 v. Amazon means that only direct infringement can only occur with hosted content, not with linked content. Both Google and Facebook rely on this distinction to function, as for example, Google Images may link to many infringing photos, while Facebook allows users to freely share links.

" ... this Court should make clear that the server transmitting a video,not a server which merely provides a link to that video, is the server involved in the performance of that video," the brief stated.

On the issue of repeat infringers, the EFF and Public Knowledge's briefs also outlined where Grady may have gone too far. Even taking at face value that embedding is the same as hosting, when it comes to repeat offenders, EFF and Public Knowledge say the law " ... does not say when and how service providers must terminate the accounts of 'repeat infringers,' nor does it define 'repeat infringer'."

The vagueness of the "repeat infringer" clause under the DMCA, which requires service providers to "adopt and reasonably implement" a repeat infringer policy, has caused a lot of confusion. So much so that the EFF has had to publishes a page that tries to clarify just what it actually means.

This week, the MPAA submitted their own amicus brief, unsurprisingly fully supporting Grady's decision. The MPAA believes that Grady was right to rule that myVidster did not quality for protection under "safe harbor", because myVidster was guilty of "failing to identify and stop infringers who repeatedly embedded links to unauthorized video streams and displays."

On the issue of embedding, the MPAA was adamant that it can be counted as direct infringement. "myVidster users who posted links to infringing videos and images participated in the process by which those videos were streamed and shown to the public," the brief further stated.

Such an interpretation could make embedding and linking just as liable as direct hosting, an interpretation that would have a huge impact on the business models of websites like Twitter, Google, and Facebook. And according to the latter two's amicus brief, if Brady's decision is not overturned, it could also have a "devastating effect" on future innovations that could help create the "next Google or the next Facebook."