Last week, the United States District Court for the Southern District of New York ruled embedding a copyrighted photo that had been posted to Twitter constituted copyright infringement. This ruling may result in a widespread change in licensing practices for online content.

In Goldman v. Breitbart News Network LLC et al., case number 1:17-cv-03144, photographer Justin Goldman took a photo of Tom Brady of the New England Patriots meeting with the Boston Celtics’ General Manager, Danny Ainge, in East Hampton in 2016. Goldman posted the image to Snapchat – the short-term messaging app where posted content disappears after a predetermined period of time. Goldman’s photo, however, did not disappear from the internet. The image was re-posted to various social media outlets, including Twitter. The defendants in the instant litigation – a handful of media outlets – then embedded third party tweets containing the image into articles on their respective websites. Goldman subsequently filed suit for copyright infringement.

In their defense, the media outlets invoked what is known as the “Server Test,” under which the question of liability hinges on whether the offending image is stored on the defendant’s servers. In a previous ruling involving Perfect 10, Inc., the 9th Circuit had applied the Server Test to find that when users clicked on thumbnails generated by Google’s search engine, thus creating a full-sized image to be displayed, those full-sized images were not infringing. The 9th Circuit’s finding of noninfringement was based on the fact that Google did not locally store the images and instead relied on inline linking to the websites where the images were stored. (The Perfect 10 court did find that the thumbnail images stored on Google’s servers were infringing).

In Goldman v. Breitbart, the defendants pointed to the fact that they had embedded the image via Twitter, and that the image – which had been uploaded to Twitter by other parties – was not locally stored on the their own servers.

But in deciding Goldman, the SDNY declined to apply the Server Test. The judge noted that the Server Test had been applied under significantly different facts: Google is a search engine, so a user must make the active choice to click on an image to cause the full-sized image to be displayed. But in the Goldman case, the embedded image was fully visible to the user immediately upon opening the offending webpage. The court noted that in Goldman, “each and every defendant itself took active steps to put a process in place that resulted in a transmission of the photos so that they could be visibly shown” to users upon navigating to the offending webpages.

The SDNY’s ruling also questioned whether Perfect 10 was appropriately decided, voicing skepticism that 9th Circuit had correctly interpreted the display right of the Copyright Act. The judge noted that the court had found no indication in the Copyright Act’s text or legislative history that possession of a copy of the infringing image (i.e. storing it on the defendant’s server) is a prerequisite to displaying that image.

The SDNY’s decision also agreed with the plaintiff’s argument that broadly adopting the server test would have a detrimental effect on the photography and visual art licensing industries by eliminating the incentives for websites to pay licensing fees.

The court was not as swayed by the defendants’ argument that finding infringement in this case would cause a chilling effect on the core functionality of the web. Nor did the judge give credence to the defendant’s amici, who argued that not adopting the Server Test would radically change linking practice and transform the internet as it currently exists. The judge noted that while the act of embedding the image was infringement, several affirmative defenses might be available to the defendants, and the defendants could ultimately prevail on those grounds.

The Goldman case is now a cautionary tale for businesses that include embedded content on their websites. The Server Test was never the law of the land, and had been rejected by at least one federal court, in the Northern District of Texas, prior to this decision. But in practice many saw the Server Test as a practical bright line for whether conduct was infringing: many saw embedding or inline linking as fair game, whereas posting a copy of the content directly to a website was not fair game. Many people categorically treated embedding third-party content as noninfringing conduct. That practice is higher risk after Goldman unless and until a higher court resolves the differing circuit and district court views regarding the Server Test. However, the Goldman case is an outlier, which in many ways goes against ten years of case law. And it will most likely be appealed. However, until the uncertainties caused by this decision are resolved, businesses may want to seek advice from their copyright counsel before engaging in online activities such as embedding, retweeting, regramming, or otherwise sharing content owned by third parties.