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Inline linking (also known as hotlinking, leeching, piggy-backing, direct linking, offsite image grabs and bandwidth theft) is the use of a linked object, often an image, from one site into a web page belonging to a second site. The second site is said to have an inline link to the site where the object is located.
Inline linking and HTTP
The technology behind the World Wide Web, the Hypertext Transfer Protocol (HTTP), does not make any distinction of types of links—all links are functionally equal. Resources may be located on any server at any location.
When a web site is visited, the browser first downloads the textual content in the form of an HTML document. The downloaded HTML document may call for other HTML files, images, scripts and/or stylesheet files to be processed. These files may contain
When a browser downloads an HTML page containing such an image, the browser will contact the remote server to request the image content.
Common uses of linked content
The ability to display content from one site within another is part of the original design of the Web's hypertext medium. Commonly accepted uses include:
Controversial uses of inline linking
The blurring of boundaries between sites can lead to other problems when the site violates users' expectations. Other times, inline linking can be done for malicious purposes.
Most web browsers will blindly follow the URL for inline links, even though it is a frequent security complaint. Embedded images may be used as a web bug to track users or to relay information to a third party. Many ad filtering browser tools will restrict this behavior to varying degrees.
Some servers are programmed to use the HTTP referrer to detect hot-linking and return a condemnatory message, commonly in the same format, in place of the expected image or media clip. Most servers can be configured to partially protect hosted media from inline linking, usually by not serving the media or by serving a different file. 
For Microsoft's Internet Information Services web server software, third party tools may be installed to combat inline linking and hotlinking.
Nearly all of these measures will transmit an alternate content. Most types of electronic media can be redirected this way, including video files, music files, and animations (such as Flash).
Copyright law issues that inline linking raises
The most significant legal fact about inline linking, relative to copyright law considerations, is that the inline linker does not place a copy of the image file on its own Internet server. Rather, the inline linker places a pointer on its Internet server that points to the server on which the proprietor of the image has placed the image file. This pointer causes a user's browser to jump to the proprietor's server and fetch the image file to the user's computer. US courts have considered this a decisive fact in copyright analysis. Thus, in Perfect 10, Inc. v. Amazon.com, Inc., the United States Court of Appeals for the Ninth Circuit explained why inline linking did not violate US copyright law:
Google does not...display a copy of full-size infringing photographic images for purposes of the Copyright Act when Google frames in-line linked images that appear on a user’s computer screen. Because Google’s computers do not store the photographic images, Google does not have a copy of the images for purposes of the Copyright Act. In other words, Google does not have any “material objects...in which a work is fixed...and from which the work can be perceived, reproduced, or otherwise communicated” and thus cannot communicate a copy. Instead of communicating a copy of the image, Google provides HTML instructions that direct a user’s browser to a website publisher’s computer that stores the full-size photographic image. Providing these HTML instructions is not equivalent to showing a copy. First, the HTML instructions are lines of text, not a photographic image. Second, HTML instructions do not themselves cause infringing images to appear on the user’s computer screen. The HTML merely gives the address of the image to the user’s browser. The browser then interacts with the computer that stores the infringing image. It is this interaction that causes an infringing image to appear on the user’s computer screen. Google may facilitate the user’s access to infringing images. However, such assistance raised only contributory liability issues and does not constitute direct infringement of the copyright owner’s display rights. ...While in-line linking and framing may cause some computer users to believe they are viewing a single Google webpage, the Copyright Act...does not protect a copyright holder against [such] acts....