Liability of online intermediaries and duties to cooperate

As we have briefly recalled, the phenomenon of large-scale copyright infringement on the Internet is still rampant, even in those jurisdictions, like the UK, where on-demand offerings of lawful copyright works are well developed and highly diversified in terms of business models and price or subscription fee ranges. Available data show clearly that online ‘piracy’ is no longer based just on peer-to-peer networking (i.e. fully decentralised technologies of communication and data exchange among Internet users).

The development and diffusion of broadband Internet access services and of Cloud-based platforms have made it easy for both large-scale copyright infringers and unauthorised users to access content made available through cyber lockers and other web-based platforms. This entirely new dimension of copyright infringement has inevitably expanded its negative consequences on the business of creative industries targeting sectors such as the film industry, that ‘piracy’ had not affected dramatically before the advent of broadband Internet and of Cloud computing.

In the Task Force debate, copyright owners, and in particular film producers, claimed that, especially in today’s technological context, the provision of Article 8(3) of the 2001 Information Society Directive should be implemented effectively and uniformly throughout the EU. This provision obliges member states to ensure that rights-holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right. Film producers stressed that Recital 59 in the preamble to the Directive clarifies that Article 8(3) should be applicable on the (sole) assumption that online intermediaries are best placed to bring infringing activities to an end. Moreover, the same recital states that the possibility of an injunction should be available even

178 See the Information Society Directive Art. 4.2.

179 See IPRED.

where the acts carried out by an online intermediary are exempted from the scope of exclusive rights under Article 5 of the Information Society Directive. However, as concluded in the recital at issue, “[…] the conditions and modalities relating to such injunctions should be left to the national law of the member states […]”.

Copyright owners claimed that, despite the clarity of this provision, ISPs and online intermediaries such as search engine operators have been very reluctant to effectively cooperate in activities of online copyright enforcement. As a result, rights-holders have been forced to start legal actions before national courts and to request national law-makers to clarify the meaning and scope of application of laws that implemented Article 8(3). Major film producers, who have started many infringement proceedings across Europe, advocated that injunctions (and a subsequent duty to cooperate with online intermediaries) should apply independently of the liability of intermediaries.

The relevant case law of the CJEU and of courts in several member states have made it clear that the requested measures will have to pass a proportionality test, which allows courts to balance fundamental rights (e.g. right to property vs. freedom of expression or the user right to privacy) and justifies the issuance of website blocking measures against

‘structurally infringing’ websites (i.e. those sites that are conceived and designed to infringe copyright and to make profits from infringements). In general, when carrying out the proportionality test, national courts have constantly placed special emphasis on the review of key factual elements such as knowledge of the infringement by the website owner; the profit-making character of the infringement and the active role and the intent of the website owner; and the absence of voluntary measures that are sufficiently effective and dissuasive. In response a claim of ISPs, finally, copyright owners also advocated that website blocking measures in these cases effectively reduce the popularity of structurally infringing websites, even if blockings do not eventually affect end-user conduct.

The policy goals of balancing online copyright enforcement with the protection of other fundamental rights and ensuring proportionate results would ideally require a combined set of measures that all courts throughout the EU should have at their disposal. If courts embraced the approach advocated by copyright holders in the context of online enforcement proceedings, standard ‘notice-and-takedown’ procedures – stemming from the transposition of the well-known liability exemption laid down under Article 14 of the Electronic Commerce Directive for activities

of content hosting – would be complementary to exceptional measures such as website blockings and would apply against websites with relatively modest amounts of illegal content.

In L’Oréal v. eBay, the CJEU recently shed light on the complex interplay of online enforcement measures and of the liability exemption that the law grants to hosting service providers.¹⁸⁰ In that specific case, the online intermediary was a very well-known operator of an online marketplace (eBay) where users of the service were deemed to commit acts of trademark infringement. In assessing the scope of the exemption and considering whether or not eBay was aware of the infringements occurring on its online platform, the CJEU held that the online operator could have benefited from the safe harbour provision in so far as it confined itself to providing that service neutrally by a merely technical and automatic processing of the content provided by its customers. This means that the exemption should not apply when the online intermediary plays an active role that would imply knowledge of (or control over) such content. For instance, in that case the court mentioned, for example, the provision of assistance which entails, in particular, optimising the presentations of the customers’ sale offers or the promotion of these offers. Interestingly, after having reached that conclusion, the CJEU held that injunctions against an online service provider aimed at bringing the infringement of its users to an end, and also at preventing further infringement of the same kind, should be admissible under national law irrespectively of the intermediary’s liability. This conclusion may be very relevant also in the future of online copyright enforcement since the CJEU took such view on the grounds of a provision (i.e. Article 11 of IPRED) that re-states the principle of Article 8(3) of the Information Society Directive with regard to all intellectual property rights.

It goes without saying that the above-mentioned approach and conclusion raise the concerns of telecommunications network operators and Internet companies, which strongly reject an interpretation of EU law provisions that would end up creating a duty for ISPs and online intermediaries to cooperate with rights-holders in bringing copyright infringements to an end and, even more importantly, in preventing further infringements. In the Task Force debate, ISPs advocated that the exemptions embodied into the Electronic Commerce Directive are

180 See C-324/09, L’Oréal v. eBay International, 12 July 2011.

milestones for a correct understanding of their liability regime and should not be subject to any modifications.

From an impartial point of view, it seems fair to observe that the CJEU is currently refining and adapting to a fast-changing technological context the interpretation of potentially conflicting provisions embodied in Directives that the EU adopted a long time ago. The Court’s aim is that of coordinating and making these provisions compatible and, possibly, complementary, without undertaking any legislative changes. It should be borne in mind that, in its recent case law on online enforcement of intellectual property rights, the CJEU has firmly relied on the ‘milestones’

of the Electronic Commerce Directive, in particular the principle embodied in Article 15 of the Directive, according to which member states (and national courts) cannot impose on online intermediaries general obligations to monitor the content they store or transmit. The CJEU has fully recognised and applied this principle in all cases where national courts had to deal with requests of injunctions from copyright holders that, to prevent future infringements, would have required the installation of permanent filtering systems or technologies by ISPs and social network operators.¹⁸¹ In all these cases, the CJEU has constantly held that, in granting online enforcement measures, the protection of intellectual property should be balanced against the protection of fundamental rights of individuals and companies that unlimited filtering measures would inevitably affect (i.e.

the freedom to receive and impart free information, the protection of personal data of Internet users, freedom of ISPs and social network devisers to conduct their online business: see §4.5 below).

4.4.2 IPRED, its additional enforcement tools and blocking