So I think it's safe to say that at the present time the legality of image linking is up in the air. While the cases cited above clearly show the law agrees with me in this case I'm sure there are other examples that could show the opposite. So I guess really it comes down to to your ethical beliefs. From an ethical point of view I think it's completely ok to link to picture (call it embedding) as long as you give credit and are not attempting to profit from someone else's work or pass it off as your own. Opinions will vary I respect those who have opinions on the other side of the issue.
There really is some unexplored territory out there! I don't think there's a truly safe route to do anything much on the web. One important principal of web marketing and SEO is to encourage other websites to 'link' through to yours. That encourages the flow of 'link juice' which as you know can increases the rankings of the target website, particularly with Google, who rely heavily on this system of 'voting'. So in that regard most companies are encouraging the display of their company name, or products or some snippet of information on other websites. You could argue that displaying an image is somehow infringing on the intellectual property rights of the image owner and that it might be displayed to directly influence buying decisions on the offending site. But then you could also say the same about hyperlink text, which could be used to give an impression of an association with the target site and thus falsely inflating the reputation of the offending site? Where does it end?
With youtube, I think that's mostly covered in the fact that you can't upload a video without creating an account and you must first agree to the TOC, which emphasizes the requirement that the video copyright must be owned by the uploader. S/he then has the option to make the video public domain, whereupon the embed code is shown and it can be freely distributed (embeded or linked-to). I'm not sure what the case is at Flickr, I presume it's something similar.
But Google images is another story altogether. They scrape together images from websites many of whom have clear copyright statements preventing the use of information on the site without the owners permission. The technicality of where the image is hosted really ought not to be the determining factor in the debate. You could argue that Google are empowering those who partake in copyright theft/infringement, which ought to have some penalty in itself.
On the issue of financial gain, I'm not sure that that is meaningful in this debate. My understanding is that is doesn't absolve a person from the need to observe copyright law (to say that the breach didn't result in financial gain), it merely increases the potential for penalty and 'damages' should a claim be successfully filed. (I tried to have a 'movie night' at a music venue that I owned a few years back, but couldn't do so without a very expensive license. It made absolutely no difference to the need/cost whether I charged people for the viewing or not).
So with all the grey around it's fair to say that one should tread cautiously !! (stating the obvious
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Citing the reference/source with a link and a statement ought to be enough, morally, ethically and in terms of common sense. But I'm not certain that it is. For example, many websites have the text 'Copyright - do not use content / images without the expressed written permission of the site owner' - or some variant of the statement. Would it still be legal to use information even where a back-link and author credit were displayed?
It sure is a murky world. There are software tools you can buy for a few bucks that go out and scrape the web, picking up articles belonging to whomever, and 'spinning' the content so that it looks slightly different to the original. The owner then posts the content on his/her website claiming it to be unique and their property. The whole world of Internet Marketing is evolving like a big black cloud....I wish I'd never gotten involved with it
Good luck with sorting this out