Higher Regional Court of Düsseldorf applies CJEU Mc Fadden decision

1709 Blog readers will recall that last September the Court of Justice of the European Union (CJEU) issued its decision in the important Mc Fadden case [here and here], a reference for a preliminary ruling from Germany.

The CJEU ruled that the provider of a password-free, free WiFi can be requested to have his internet connection secured by means of a password. 

Via 1709 Blog friend Mirko Brüß (Waldorf Frommer Rechtsanwälte) comes the news that a German court (though not the one that had made the Mc Fadden reference) has recently applied the CJEU judgment, and the principles laid down therein [Mirko also wishes to let readers know that a new reference on the right of communication to the public and filesharing was made by the Regional Court of Munich on 17 March last (Case No. 21 S 24454/14): details are not yet available on the Curia website, but as soon as they are this blog will provide relevant information].

Here’s what Mirko writes:

In a judgment on 16 March 2017 the Higher Regional Court of Düsseldorf requested the operator of an open WiFi (and a TOR exit node) to take action against repeated copyright infringements by users of his IP-addresses (case no. I-20 U 17/16). 

This appears to be the first time a German court has dealt with such a case after the CJEU handed down its Mc Fadden decision on 15 September 2016 ... At least, this is the first publicly available decision. 

The ruling of the court does have wide implications for the operators of open WiFi networks, so-called hotspots.

Tobias McFadden

Factual background

The defendant was an operator of five so-called hotspots, ie access points that can be used by anybody to log into the internet using the defendant‘s internet connection. It remained disputed between the parties whether the defendant operated his network commercially or privately, and whether or how users needed to register themselves to be able to use the network. The defendant claimed that users were asked to refrain from ‘illegal activities’, but did not explicitly ask users to refrain from sharing copyright-protected material via peer-to-peer networks. The defendant also operated a ‘TOR exit-node’ on his IP-address, thus enabling anonymous users to access the internet via his IP address (see this infographic on general TOR functionality).

The claimant is the owner of copyright in a computer game. He had noticed the defendant’s IP-address on several occasions as being the source of an infringing download offer of other works via a BitTorrent network. After obtaining knowledge of the defendant‘s name and address via the court proceedings provided for such cases in Germany (§ 101 Abs. 2, 9 Urheberrechtsgesetz, = UrhG, German copyright code), the claimant sent several cease-and-desist letters to the defendant in 2011, asking him to stop the infringing activities.

However, further infringements were found in 2013, even after the cease-and-desist letters were served to the defendant. At this point, the claimant took matters to court, and obtained a judgment of the District Court of Düsseldorf, that enjoined the defendant from aiding third parties to make available to the public the claimant’s game via peer-to-peer networks and via his own IP-addresses. The court also ordered the defendant to pay the claimant's out-of-court costs for EUR 651,80 (judgment on 13 January, 2016, case no. 12 O 101/15).

The defendant appealed the decision. He claimed that unknown users of his network were the culprits, and he had no way to identify them and no obligation to stop their activities.

View of Düsseldorf

The Higher Regional Court‘s decision

The Higher Regional court of Düsseldorf rejected the appeal and upheld the first decision. While the Regional Court’s judgment was issued before the CJEU decided Mc Fadden, the Higher Regional Court had knowledge of this decision and applied it to the case.

In so doing, the court found that it did not matter whether the defendant operated the hotspots commercially or privately. Furthermore, it did not matter to the court whether the copyright infringements were committed by users of the Hotspots or users of the TOR exit-node.

In all scenarios, the defendant was liable for the infringements and was requested to take reasonable measures to prevent further infringements. To justify this, the court cited Mc Fadden, especially paras 80 – 96. The judges found that, because of the earlier infringements, the operator should have taken reasonable measures to ensure that his users would not continue to infringe third-party copyrights. With regards to the WiFi network, the court sided with the CJEU and ruled that password-protecting the internet connection may dissuade the users of that connection from infringing copyright, provided that such users are required to reveal their identity in order to obtain the required password and may not therefore act anonymously. If this could have been asked of the defendant irrespective of earlier infringements was left undecided by the court.

With regards to the TOR exit-node being the possible source of the infringements, the court found that the defendant could have and should have taken measures against copyright infringements by disabling peer-to-peer communication via the TOR network. It remained undisputed between the parties whether this is technically possible, so the court took such a measure for granted.” 

Password-free internet access, free services and a belated bundle of questions

This is the McFadden Tartan, registered under
the Scottish Register of Tartans Act 2008 

This blogger has just realised that one of the copyright references to the Court of Justice of the European Union for a preliminary ruling has slipped through the 1709 Blog's net: it's Case C-484/14 McFadden, a reference from the Landgericht München I (Germany).  Alas, this blogger has no immediate information concerning the background to this reference, though he knows that McFadden is a Scottish and Irish surname shared largely between creatives and politicians.

The questions referred to the CJEU -- and there are rather a lot of them -- are being posted here for the record, so that anyone doing a search of this blog's posts will easily find them, and with big apologies for not doing so earlier. They are as follows:

1. Is the first half-sentence of Article 12(1) of Directive 2000/31 ... on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'), in conjunction with Article 2(a) of Directive 2000/31 ... on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'), in conjunction with Article 1 point 2 of Directive 98/34..., as amended by Directive 98/48..., to be interpreted as meaning that 'normally provided for remuneration' means that the national court must establish whether a. the person specifically concerned, who claims the status of service provider, normally provides this specific service for remuneration, or b. there are on the market any providers at all who provide this service or similar services for remuneration, or c. the majority of these or similar services are provided for remuneration?

2. Is the first half-sentence of Article 12(1) of Directive 2000/31 ... to be interpreted as meaning that 'provision of access to a communication network' means that the only criterion for provision in conformity with the Directive is that access to a communication network (for example, the internet) should be successfully provided?

3. Is the first half-sentence of Article 12(1) of Directive 2000/31 ..., in conjunction with Article 2(b) of Directive 2000/31 ..., to be interpreted as meaning that, for the purposes of 'provision' within the meaning of Article 2(b) ..., the mere fact that the information society service is made available, that is to say, in this particular instance, that an open Wireless Local Area Network is put in place, is sufficient, or must the service be 'actively promoted', for example?

4. Is the first half-sentence of Article 12(1) of Directive 2000/31 ... to be interpreted as meaning that 'not liable for the information transmitted' precludes as a matter of principle, or in any event in relation to a first established copyright infringement, any claims for injunctive relief, damages or payment of the costs of the warning notice and court proceedings which the person affected by a copyright infringement pursues against the access provider?

5. Is the first half-sentence of Article 12(1) in conjunction with Article 12(3) of Directive 2000/31 ... to be interpreted as meaning that the Member States must not to allow the national court, in substantive proceedings against the access provider, to make an order requiring the access provider to refrain in future from enabling third parties to make a particular copyright-protected work available for electronic retrieval from online exchange platforms via a specific internet connection?

6. Is the first half-sentence of Article 12(1) of Directive 2000/31 ... to be interpreted as meaning that, in the circumstances of the main proceedings, the provision contained in Article 14(1)(b) of Directive 2000/31/EC is to be applied mutatis mutandis to a claim for a prohibitory injunction?

7. Is the first half-sentence of Article 12(1) of Directive 2000/31 ... in conjunction with Article 2(b) ... to be interpreted as meaning that the requirements applicable to a service provider are confined to the condition that a service provider is any natural or legal person providing an information society service?

8. If Question 7 is answered in the negative, what additional requirements must be imposed on a service provider for the purposes of interpreting Article 2(b) ...?

9. (a) Is the first half-sentence of Article 12(1) of Directive 2000/31 ..., taking into account the existing protection of intellectual property as a fundamental right forming part of the right to property (Article 17(2) of the Charter of Fundamental Rights of the European Union) and the provisions of the following directives on the protection of intellectual property, in particular copyright:

- Directive 2001/29 ... on the harmonisation of certain aspects of copyright and related rights in the information society;

- Directive 2004/48 ... on the enforcement of intellectual property rights, and taking into account the freedom of information and the fundamental right under EU law of the freedom to conduct a business (Article 16 of the Charter of Fundamental Rights of the European Union), to be interpreted as meaning that it does not preclude a decision of the national court, in substantive proceedings, whereby the access provider is ordered, with costs, to refrain in future from enabling third parties to make a particular copyright-protected work or parts thereof available for electronic retrieval from online exchange platforms via a specific internet connection and it is left to the access provider to determine what specific measures he will take in order to comply with that order?

(b) Does this also apply where the access provider is in fact able to comply with the prohibition imposed by the court only by terminating or password-protecting the internet connection or examining all communications passing through it in order to ascertain whether the particular copyright-protected work is unlawfully transmitted again, and this fact is apparent from the outset rather than coming to light only in the course of enforcement or penalty proceedings?

Further background plus readers' comments of varied quality can be found on an earlier IPKat post by Eleonora here.

That new Spanish law: a tale of fragments, aggregators -- and money

Last week the IPKat hosted this piece by Elena Molina and Sergio Miralles on the controversial new Spanish IP law.  Not to be outdone, the 1709 Blog has commissioned an analysis of its own. The author is our friend Valentina Torelli who, like Elena and Sergio, is currently practising in Spain. Here's Valentina's assessment:

As announced online last week, the Spanish Law no. 21/2014, the highly-publicised intellectual property law reform, was published on 5 November, provoking shock reactions within the world of ISPs. The law comes into force on 1 January 2015, except for some provisions which will be effective one year from publication. 

Among the changes to the previous intellectual property law, a green light has been given to the contested new Article 32(2), which makes the author’s right’s limitation for review subject to a compulsory economic compensation, when content aggregators communicate to the public literally “negligible fragments of contents”, taken from news publications or from latest news websites, which are directed at forming public opinion or have informational or entertainment purposes. 

The modification of Article 32(2) was intended to better comply with Article 5(3)(d) of Directive 2001/29 (the InfoSoc Directive):

“quotations for purposes such as criticism or review, provided that they relate to a work or other subject-matter which has already been lawfully made available to the public, that, unless this turns out to be impossible, the source, including the author's name, is indicated, and that their use is in accordance with fair practice, and to the extent required by the specific purpose.”

The most interesting part of the new Spanish provision is the inalienable nature of the economic compensation – which results to be compulsory collective management right for publishers and authors – in relation to making available negligible parts of publications. This compensation has been nicknamed the “AEDE tax” [tasa de la Asocición Espanola de Editores] as it will go to the benefit of publishers or other “right holders” and will be collected once a year by CEDRO, the Spanish collective society for authors and publishers, according to the Annual Budget Law. 

That said, although news-aggregators are exempted from asking for authorization to recompile periodicals’ and reviews’ irrelevant portions of contents, they will have to pay a predetermined amount of money to make them available to the public, irrespective of whether the legitimate right holder is a member of the Collective Society. This means that the collected compensation could be divided among the Collective Society’s members, without necessarily being paid to the legitimate right holder. Likewise, the publications released under Creative Commons will also be compensated by means of the new provision although their nature is quite the opposite to a ‘compulsory economic right’ philosophy. 

In any event, such limitation for review to author’s rights does not cover the communication to the public involving thumbnail images of images and photographs taken from the previously identified publications. 

From a legislative technique perspective, some perplexities may arise in regard to the criteria whereby the part of publications provided by content aggregators could be considered negligible (fragmentos no significativos) but protectable under copyright law and, therefore, exempted under condition of an economic compensation for the sake of the public interest in access to culture and information (Articles 44 and 20 Spanish Constitution). 

 It seems that the solution would be to carry out an assessment on a case by case basis, assuming that no authorization or compensation is due when the publications’ fragments are originally summarized by the aggregator and then communicated to the public together with the link to its original source. 

Another important point is the identification of the content aggregators, as there is always a tendency to take into consideration the big players in the market, disregarding other smaller operators, providing the same type of services addressed by these legislative measures. In this regard, sooner or later at international level the category of content aggregators should be regulated on its own for the purposes of copyright protection. 

Provided that social networks should not fall under the definition of content aggregators for the purposes of the reform, it would be interesting to analyse whether the limitation provided in Article 32(2) of the new Spanish Intellectual Property Law would apply to blogs, databases or applications, undertaking reviews of news publications. Indeed, Spanish law no. 34/2002 implementing Directive 2000/31 (the E-Commerce Directive) provides no definition of “service providers”, it being necessary to refer to the European legal framework and, in particular, to Article 1(2) of Directive 98/34 as amended by Directive 98/48, which provides the following definition:

“ ‘service’, any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.”

Consequently, emphasis should be on services “normally provided for remuneration”, given that the provision of a service “at distance” “by electronic means” regards the inherent functioning of the Internet and that “at the individual request” involves the active participation of the users querying the internet itself. It follows that the category of providers engaged in content aggregation could be wider than is normally conceived when thinking of internet service providers, just because the concept of remuneration could be differently interpreted. 

In relation to the beneficiaries of the reform, again it is unclear whether the new provision encompasses only the traditional media of communication or also covers other players such as blogs and online reviews to the extent that they engage in news updates. Likewise, it seems that if the publication whose negligible fragments are aggregated was considered a collective work, the fragments’ authors would step back in respect to publishers’ right to the economic compensation. 

Moreover, according to the second part of Article 32(2), the new mandatory compensation may also entail browsing ISPs’ activities, when they offer users the search tools for spare words, included in the negligible portions of publications, and they do not comply with the three cumulative requirements provided by the law. Indeed, the review limitation to the author’s rights applies only if the availability of such search tools to the public (i) does not pursue the browsing ISP’s own commercial purpose, (ii) is strictly limited to the offer of search results in accordance to the users’ previous entries in the search engine and (iii) provides the link to the original webpages to which the protected contents belong. 

In this case, the provision has two main points.

·         the fact that the search tool regards spare words included in the publications, without specifying how many words or combination of them can be exempted.
·         such search services cannot be associated with the provider’s own commercial purposes, although it is not clear whether the provision is conceived only for pay-services or if it also embraces indirect revenue sources.

This being said, the reason underlying the introduction of the economic compensation concerns the publishers’ prerogatives to protect the undue exploitation of their intellectual property rights on the internet. In particular, it is aimed at contrasting the direct competition between them and content aggregator ISPs, in relation to access to information without the latter sharing the costs the publishers bear in producing their original content. 

Notwithstanding the argument relating to the anticompetitive effect of content aggregators’ services against both offline and online publishers, the Spanish National Commission for Markets and Competition (CNMC) in its report of 16 May this year took a totally different stand. In the light of the several versions of the Intellectual Property Law’s draft reform, the Commission proposed modification of Article 32(2), recommending that the limitation for review be reconsidered as regards the mandatory nature of the economic compensation and the exclusive assignment of its collection to collective societies. The main points of the report can be summarized as follows: 

1.       The content aggregator ISPs’ and press-clippers’ competitive role affecting publishers could not be confirmed. 

 The Commission observed that website holders could apply technological protection measures, such as the standard program robots.txt, to prohibit or to limit crawling and the aggregation of website content according a tailored degree of availability. However the snippets’ aggregation provides publishers with visits to their websites, as complete access to information is only possible on their pages. This takes into account the huge economic investments that many, if not all, publishers make in order to increase their indexing in search engines. Effectively, the Commission achieved a more favorable result in the contractual balance of interests between all the interested players as regulated by the market. In this regard, as content aggregators have raised concerns all over the European Union, it is worth mentioning that the German Federal intellectual property law had introduced an obligation for them to obtain publishers’ licences to communicate to the public full protected contents, with only the making available of snippets being exempted from such licensing. Moreover, the Commission emphasised that, while the predetermination of economic compensation would be ineffective, since it would not serve the publishers’ different and variable interests, the advertising revenues derived from the linking to their websites from those of content aggregators would be significant. 

 Indeed, that content aggregators could contribute economically to publishers’ adaptation to the online market is not a brand new idea: for instance, in 2013, Google signed an agreement with the French Press Association under the eye of the French Government, whereby a dedicated fund, amounting to 60 million euros, was established to facilitate the press’s transition to the online environment.  

2.       Horizontal competition among content aggregators ISPs would be undermined 

As regards the competition between content aggregators, the CNMC warned about the discriminatory character of the compulsory economic compensation, in that it would be a measure preventing the access to the content aggregators market, which the actual ISPs did not have to get over. 

While waiting for the entry into force of the new Article 32(2) next year, it will not be long before we see how affected content aggregators will deal with the new provision and adapt their business models to the rules of the Spanish web, and whether the Spanish internet will change its mode of operation.

No go for John Doe show

Dominic Purcell as John Doe in the
eponymous 2002-2003 TV series

AF Holdings LLC, which claims to own numerous copyrights to pornographic films, and has been described as an 'arm' of the rather controversial copyright trolling law firm Prenda Law, has been rebuffed in it's bid to obtain subpoenas identifying information on 1,085 allegedly illegal downloaders. The District Court had ruled that AF could subpoena Internet service providers including Verizon Communications Inc. and Comcast Corp for identify information on subscribers whose computers were linked to downloads of the movie via the BitTorrent file-sharing protocol.  

The United States Court of Appeals for the District of Columbia Circuit said that AF was not entitled to contact information for people whose Internet addresses were linked to downloads of the film “Popular Demand” because few of them live in the District of Columbia, where the case was filed, and it’s unlikely any connection exists among all of the Internet addresses subject to the subpoena: “It is quite obvious that AF Holdings could not possibly have had a good faith belief that it could successfully sue the overwhelming majority of the 1,058 John Doe defendants in this district” U.S. Circuit Judge David Tatel wrote, adding that “AF Holdings clearly abused the discovery process” and that the action was "a quintessential example of Prenda Law's modus operandi". The judgment is well worth a read and ends with

"Accordingly, we vacate the district court’s order and remand for further proceedings consistent with this opinion.  We leave it to the district court to determine what sanctions, if  any, are warranted for AF Holdings’s use of a possible  forgery in support of its claim. "

With a headline of "Crushing Blow for Copyright Trolls: Appeals Court Halts AF Holdings' Extortion Scheme" The EFF had this to say: "The case is one of hundreds around the country that follow the same pattern. A copyright troll looks for IP addresses that may have been used to download films (often adult films) via BitTorrent, files a single lawsuit against thousands of "John Doe" defendants based on those IP addresses, then seeks to subpoena the ISPs for the contact information of the account holders associated with those IP addresses. The troll then uses that information to contact the account holders and threatens expensive litigation if they do not settle promptly. Faced with the prospect of hiring an attorney and litigating the issue, often in a distant court, most subscribers-including those who may have done nothing wrong-will choose to settle rather than fight."

And over on the Register under the headline "Smut-spreading copyright trolls lose John Doe case" it's explained that 

"AF Holdings' last smackdown was in November 2013, when the US District Court of Minnesota found that it hadn't demonstrated ownership of the content claimed in a previous shakedown. That court ordered that the company return the money it had obtained from punters, as well as paying their legal costs. That ruling, however, didn't stop one of the two movies, Popular Demand, being the subject of the Columbia and then US Court of Appeals case.


AF Holdings was represented by Paul Duffy, who at the previous lower court hearings as associated with Prenda Law." 

More on the Washington Post here http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/05/27/prenda-law-was-a-porno-trolling-collective/

Fordham Report 2014: Enforcement

The average Fordham copyright enthusiast
getting in the mood
for the enforcement session

The second copyright session of this afternoon at the 22nd Fordham IP Conference [again: do not forget that 6th May is the day of my Post-Fordham Copyright Catch-Up event] was moderated by David Carson (IFPI) and dealt with enforcement issues.

The first speaker was Jane C Ginsburg (Columbia Law School, New York), who examined ISP liability and website-blocking in the EU, following the recent decision of the Court of Justice of the European Union (CJEU) in Telekabel [here], as well as earlier rulings in Scarlet [here] and Netlog [here]. She recalled that Article 8(3) of the InfoSoc Directive must be balanced against Article 3 of the Enforcement Directive and Article 15 of the E-Commerce Directive, and also highlighted the relevance of Charter fundamental rights [see paras 45-47 of the Telekabel decision for some CJEU discussion on this very point] to enforcement discourse. Despite the ambiguities of the Telekabel decision, she concluded that filtering measures would not be compatible with EU law.

Then, Karen R Thorland (MPAA) discussed how different copyright regimes have designed and implemented notice and takedown systems, which she considered as just one means to help reduce infringement. There are statutory regimes, regimes set through case law, and others that are the result of voluntary agreements. Going into details, Thorland reviewed the information that notices must include; obligations of intermediaries upon receipt of notices; the consequences of sending improper notices; and effectiveness of the various systems in actually removing infringing material from the internet. She also mentioned the case of Italy as the first country in Europe to provide for an administrative website blocking procedure [earlier this week, AGCOM issued its first blocking order: see here]. 

#Quentincometoeurope as an enforcement
(or lack thereof) case study?

After that, it was the turn of Alexander Tsoutsanis (Institute for Information Law (IViR), University of Amsterdam, and DLA Piper) to discuss the recent Svensson decision (and prior to this, the opinions of the European Copyright Society and ALAI), and his paper Why copyright and linking can tango.

The presentations were followed by discussion with the audience and panelists Kristina Janušauskaitė (IFPI), Jan Bernd Nordemann (Boehmert & Boehmert, Berlin) and Silke von Lewinski (Max Planck Institute for Intellectual Property and Competition Law, Munich). 

Unexpectedly and without much explanation, at a certain point the IPKat #Quentincometoeurope campaign was displayed on the screen: #Fordhamgetspolitical? 

Blocking orders: fine so long as they're reasonable says CJEU

The Court of Justice of the European Union gave judgment this morning in Case C-314/12 UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbH, a reference for a preliminary ruling from the Oberster Gerichtshof (the Austrian Supreme Court).  Fellow blogger Eleonora has already written an in-depth breaking news item on this ruling for the IPKat, here; for readers who just want an outline, here's the Curia's own media release:

An internet service provider may be ordered to block its customers’ access to a copyright-infringing website

Such an injunction and its enforcement must, however, ensure a fair balance between the fundamental rights concerned

Constantin Film Verleih, a German company which holds, inter alia, the rights to the films ‘Vicky the Viking’ [originally ‘Wickie und die starken Männer’ ...] and ‘Pandorum’, and Wega Filmproduktionsgesellschaft, an Austrian company which holds the rights to the film ‘The White Ribbon’ [... and ‘Das weiße Band’], became aware that their films could be viewed or even downloaded from the website ‘kino.to’ without their consent. At the request of those two companies, the Austrian courts prohibited UPC Telekabel Wien, an internet service provider (‘ISP’) established in Austria, from providing its customers with access to that site. UPC Telekabel considers that such an injunction cannot be addressed to it, because, at the material time, it did not have any business relationship with the operators of kino.to and it was never established that its own customers acted unlawfully. UPC Telekabel also claims that the various blocking measures which may be introduced could, in any event, be technically circumvented. Finally, some of those measures are excessively costly.

... [T]he Oberster Gerichtshof ... asked the Court of Justice to interpret the EU Copyright Directive [Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society -- the InfoSoc Directive] and the fundamental rights recognised by EU law. The directive provides for the possibility for rightholders to apply for an injunction against intermediaries whose services are used by a third party to infringe their rights [a footnote to the media release records that, as regards that possibility, the Court has already held that (i) EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period, citing Case C-70/10 Scarlett Extended and that (ii) that the owner of an online social network cannot be obliged to install a general filtering system, covering all its users, in order to prevent the unlawful use of musical and audio-visual work, citing Case C-360/10 SABAM). UPC Telekabel submits that it cannot be considered to be an intermediary in that sense.

In today’s judgment, the Court replies ... that a person who makes protected subject-matter available to the public on a website without the agreement of the rightholder is using the services of the business which provides internet access to persons accessing that subject-matter. Thus, an ISP, such as ... which allows its customers to access protected subject-matter made available to the public on the internet by a third party is an intermediary whose services are used to infringe a copyright.

The Court notes ... that the directive, which seeks to guarantee a high level of protection of rightholders, does not require a specific relationship between the person infringing copyright and the intermediary against whom an injunction may be issued. Nor is it necessary to prove that the customers of the ISP actually access the protected subject-matter made accessible on the third party’s website, because the directive requires that the measures which the Member States must take in order to conform to that directive are aimed not only at bringing infringements of copyright and of related rights to an end, but also at preventing them.

The Oberster Gerichtshof also seeks to know whether the fundamental rights recognised at EU level preclude a national court from prohibiting an ISP, by means of an injunction, from allowing its customers access to a website which places protected subject-matter online without the agreement of the rightholders, when that injunction does not specify the measures which the ISP must take and when that ISP can avoid incurring coercive penalties for breach of the injunction by showing that it has taken all reasonable measures.

In this connection, the Court notes that, within the framework of such an injunction, copyrights and related rights (which are intellectual property) primarily enter into conflict with the freedom to conduct a business, which economic agents (such as internet service providers) enjoy, and with the freedom of information of internet users. Where several fundamental rights are at issue, Member States must ensure that they rely on an interpretation of EU law and their national law which allows a fair balance to be struck between those fundamental rights.

With regard, more specifically, to the ISP’s freedom to conduct a business, the Court considers that that injunction does not seem to infringe the very substance of that right, given that, first, it leaves its addressee to determine the specific measures to be taken in order to achieve the result sought, with the result that he can choose to put in place measures which are best adapted to the resources and abilities available to him and which are compatible with the other obligations and challenges which he will encounter in the exercise of his activity, and that, secondly, it allows him to avoid liability by proving that he has taken all reasonable measures [so there's plenty of flexibility: the injunction simply identifies the end to be achieved, leaving it up to its addressee to decide what steps are reasonable to achieve that end]. 

The Court therefore holds that the fundamental rights concerned do not preclude such an injunction, on two conditions: (i) that the measures taken by the ISP do not unnecessarily deprive users of the possibility of lawfully accessing the information available [in order to respect the freedom of information of internet users] and (ii) that those measures have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging users from accessing the subject-matter that has been made available to them in breach of the intellectual property right  [in order to respect the intellectual property rights of rights owners]. The Court states that internet users and also, indeed, the ISP must be able to assert their rights before the court. It is a matter for the national authorities and courts to check whether those conditions are satisfied.

Taking a look at the judgment, this blogger notices that the word 'proportionality' is used just once, in the context of implementing the measures transposing the InfoSoc Directive, where

"[46] ... the authorities and courts of the Member States must not only interpret their national law in a manner consistent with that directive but also ensure that they do not rely on an interpretation of it which would be in conflict with those fundamental rights or with the other general principles of EU law, such as the principle of proportionality ..."

while 'reasonable' gets six mentions and is the requisite description of the measures which the injunction's addressee must take. As a common lawyer he feels more at home with the R-word, but he has often mused on the points at which the reasonable and the proportional overlap and the points on which they depart.

US Copyright Alert System to be rolled out in coming weeks

The Center for Copyright Information (CCI) recently revealed its plan to roll out a Copyright Alert System (CAS) in coming weeks.

We have previously reported on the much delayed "six-strike" or "graduated response" system agreed between the major US ISPs (AT&T, Cablevision, Comcast, Time Warner Cable and Verizon) and the music and film industries, which is intended discourage consumers from illegally downloading copyright-protected material (see Eleonora's posts here and here, and Ben's post here).

The CCI has now announced that, after much hard work to ensure that "the program works well for consumers in every way, to ensure accuracy, protect customer privacy and offer resources that answer consumers' questions", the CAS will begin in the coming weeks.

The CCI explains that the CAS is a system which will enable ISPs to send notices from rightsholders to subscribers alleging copyright infringement over peer-to-peer networks. Users who are alleged to infringe copyright will be sent the following notices:

1. Educational alerts.
2. Acknowledgment alerts requiring the user to confirm receipt of the notices to their ISP.
3. If the alleged infringing activity continues, the user will receive enhanced alerts that contain "mitigation measures".  These mitigation measures will vary by ISP and range from requiring the user to review educational materials to a temporary slow-down of internet access speed.

Further detail on the alerts can be found here. 

The CCI is at pains to point out that termination of  consumers' internet service is not a part of any ISP's CAS program. The CCI clarifies that "contrary to many erroneous reports, this is not a "six-strikes-and-you’re-out" system that would result in termination. There's no "strikeout" in this program."

Rather, the alerts are designed to make consumers aware of activity that has occurred on their internet accounts, to educate them on how they can prevent such activity from happening again (the CCI suggests by securing home wireless networks or removing peer-to-peer software) and provide information about how to access digital content legally.  

This is an educational service catering to consumers to whom "it is not always clear on the Web what is legal and what is not". The CAS intends to explain the law and help consumers find legitimate services to access the content they want.

Further the CAS will enable consumers to seek review of alerts they believe were sent in error. An independent review process will be operated by the American Arbitration Association (AAA) which is "a highly respected, neutral organization with deep experience in administering similar programs". The review system "will allow consumers to ask a trained, impartial professional at AAA to review alerts fairly and confidentially, while honoring their expectation of privacy." What the CCI doesn't say in its latest blog post is that consumers will have to pay US$35 to the CAS to initiate a review procedure, which will be refunded if the consumer wins the review.

The CCI appears to have gone to great lengths to ensure that the CAS is consumer friendly and not over the top. Despite this consumers are already wary, and many have picked up on the fee payable to the CAS in the case of review procedures. It will be interesting to see the impact that the CAS will have in practice. Without any ultimate penalty (other than throttling users' internet services) and bearing in mind that many users are very tech savvy (and are already considering VPNs as a work around),does the CAS have the necessary teeth to make an impact on illegal file sharing in the US?

More on file sharing - German ISPs must disclose file sharer details

Germany's Federal Court of Justice, the Bundesgerichtshof, has recently held that internet service providers (ISPs) must disclose the name and address of illegal file sharers when requested by copyright owners.

Tonpool, a German independent music distributor sued in respect of a song entitled "Bitte hör nicht auf zu träumen" by Xavier Naidoo, which was downloaded from a file sharing site in 2011. The copyright owner asked ISP Deutsche Telekom for the name and address of the file sharer however Deutsche Telecom failed to provide the information, causing Tonpool to take the issue to court.

 

Until now ISPs in Germany had only been required to share contact details of users who share files commercially or for profit, however now ISPs can be required to disclose details of ordinary users who distribute copyright protected content.

 

Further to my post earlier this week reporting Donald P Harris' pod cast on file sharing, here are some statistics on the German music industry (according to Billboard) which show that, as many of the comments on my last blog post said, people are still willing to pay for music.

The German Music Industry Association (BVMI) has reported a 0.2% increase in overall revenue for the half of 2012. The strongest growth was in album downloads, which jumped nearly 35 % year-on-year so that online music sales now account for just under 20 % of total revenue in the German market, up from 14.4 % over the same period last year.

The BVMI figures do not include revenue from online streaming services - apparently streaming revenue accounted for about 2% of the German music market last year. Unsurprisingly, physical CD sales continue to fall (by 5.4 % in the first half of 2012), however CDs still account for 72 % of overall revenue.

 

To this blogger the small revenue attributed to downloads compared to CDs is indicative of illegal file sharing, but perhaps the Germans are just a CD loving nation?

India: ISPs ordered to block URLs containing film name

Blocking injunctions have been much talked about in the UK over the last year, with the Newzbin II and Pirate Bay cases paving new ground. So far the UK courts have only issued injunctions requiring specific ISPs to block specific sites known to contain infringing content. They have been wary not to overly restrict ISPs, and are mindful that there can  be no general obligation to monitor (Article 15 of the E-Commerce Directive; SABAM v Scarlet).

© Rohanlabs

The Indian courts have taken a different approach to blocking injunctions. Today the Madras High Court passed an interim order prohibiting a dozen ISPs and one named individual from uploading the Tamil film "Mirattal" or any portion of it to the Internet. The order also prohibits facilitating downloads of the film. In addition, the Court granted five "John Doe" orders imposing the same restrictions on persons whose identity is not know at the time that the order is granted.

The first John Doe (or Ashok Kumar) order to be granted in India was in respect of Tamil film "3". It was controversially used to block sites containing pirated material not associated with the film, requiring the courts to clarify that it was only to be used to block URLs containing the name of the film. How this was dealt with in practice, given that the film was called "3", is not clear.

In today's order all URLs containing "Mirattal" are blocked, however the trailer and soundtrack are not protected by the order.

Does anyone know how this type of order works in practice? It seems incredibly broad, making it difficult for ISPs to implement and for rightsholders to enforce. And how does it operate in relation to URLs containing the word "Mirattal" which do not point to sites containing the film, for instance those pointing to sites reviewing the film?

New Zealand three-strike law results in 50% decrease in infringement

Kiwis can't fly, making radar detection tricky

Or should that be a 50% decrease in detection of infringement?

Recent stats from New Zealand's Federation Against Copyright Theft (FACT) claim to show that since New Zealand's "Skynet Act" three-strike law (previously reported on this blog here), was implemented in September 2011, the number of illegally viewed films in the top 200 online has dropped from 110,000 to 50,000, i.e. by just over 50%. However, according to FACT, there has been no discernible progress since. These submissions, made to the Economic Development Ministry were released under the Official Information Act. As promising as a 50% decrease in infringement sounds, this blogger can't help but wonder what it really means: are more Kiwis simply flying under the radar?

How does the three-strike law work?

The three-strike law in New Zealand grants rightsholders the power to request that internet service providers (ISPs) issue up to three warning notices to consumers alleged to be illegally using copyright protected content. Rightsholders are required to pay the ISPs a processing fee of $25 to issue a notice. After the third notice, users face a claim before the New Zealand Copyright Tribunal, which can issue fines of up to $15,000 (approximately GBP 7,500 or USD 12,000).

The law is similar in principle to HADOPI in France, the Ley Sinde in Spain, the Digital Economy Act in the UK and the six-strike law in the US. The practical reach of these laws has been subject of much debate, however the position in New Zealand is looking good.

Impact of the three-strike law

As I have said: the stats so far look good, with FACT alleging a 50% decrease in film download infringement, and P2P file sharing services falling by 18%. However the number of New Zealand internet users accessing "copyright infringing services online" was apparently 41% in February, compared to a global average of 28%. Not so great.

What's next?

Both FACT and the Recording Industry Association of New Zealand (RIANZ) have argued that the $25 processing fee paid to ISPs should be reduced to $2 or less. They want to be able to send more notices (or in FACT's case to be able to send a notice, as it has yet to request one) and thus reduce infringement further.

Predictably the ISPs don't agree: they want to the fee to be increased to $104 to cover their processing costs. One ISP, Telecom, has said that it has spent $534,416 complying with the three-strike law, but that it has only been asked to send 1238 notices.

Further, the submissions apparently show that three of the main ISPs (Telecom, TelstraClear and Vodafone) have each had one customer who has received three notices meaning RIANZ could have brought each of these three users before the Copyright Tribunal. The notices have lapsed and no action has been taken, with no comment from RIANZ.

Statistics are notoriously malleable creatures which can be manipulated in either party's favour, so should be taken with a pinch of salt, however the above stats do seem to indicate that the three-strike law has had some success in New Zealand. The lobbyists want more. It seems however that the ball is in their court: perhaps they should first use the law to its full extent by bringing claims against infringers who have received their three strikes, before the authorities intervene further.

In the meantime, two questions arise which do not seem to have been addressed:

First, how do the changes in New Zealand compare with changes in behaviour in other countries after similar laws have been passed?

Second, have purchases of music and films increased by 50%, or have the Kiwis found a different way of flying under the radar?