Recent court cases have sharpened our understanding of the liabilities of internet intermediaries, says lawyer John Wilks.

What do celebrity scandal on Twitter, handbags on eBay and movies in the Seychelles have in common? They are linked by the thorny issue of when and how the courts should step in to control internet intermediaries.

Internet intermediary liability is a hot topic in Europe. Several highly significant recent developments will determine how far intermediaries will be liable for, or can be forced to take steps to prevent, infringements on the internet.

Unlike its equivalent in the US, European legislation on internet intermediary liability has been rarely tested in the 11 years since it first started to be introduced. How it would apply in practice is a source of considerable uncertainty.

eBay, Twitter, Facebook, YouTube

In defending a claim by L’Oréal, eBay argued it was a host and so not liable for counterfeit goods on its sitePhoto: pixelbully

Judgments obtained recently by L’Oréal against eBay and the Motion Picture Association of America against BT have gone some way to reducing that uncertainty, and have been largely in favour of the intellectual property (IP) rights owners.

These developments will probably cause other rights owners to take similar action. But the more significant change is likely to be that it will force intermediaries to revisit their business models, and introduce additional mechanisms to enable rights owners to take down infringing content without having to go to court.

There has always been a delicate balance between the interests of internet intermediaries on the one hand, and rights owners on the other. The intermediaries – be they hosts, search engines, internet marketplaces, file-sharing sites or social networks – have always resisted the burden of monitoring and censuring content provided by their users, who they say are not their responsibility.

The rights owners, desperate to hold back the wave of piracy that the internet unleashed, say there are effective measures that can be taken, and that it is the intermediaries – who have grown rich on the pickings of illicit internet infringement – who should pay.

Why the main perpetrators are too hard to go after

The rights owners’ problem derives from the practical difficulties of seeking to pursue the direct perpetrators of internet infringements. Where they are simply consumers – as with sales of counterfeits on eBay, and P2P file-sharers – they will be too numerous and difficult to locate to pursue economically. The PR perils of pursuing file-sharing teens, who are also your customers, are well documented.

Where the infringers are organised operators, they will be capable of relocating to avoid proceedings. For example, in the UK case brought by the Motion Picture Association, the operator of a website that enabled movie file-sharing was injuncted in the UK in March 2010, and re-emerged defiant in the sunny Seychelles just two months later.

Such evasion of the jurisdiction of European courts could become more commonplace still, should the Court of Justice of the EU (CJEU) decide…

 

…on a case currently before it, Football DataCo vs Sportradar, that copyright infringement via internet transmission takes place where the infringer’s servers are, rather than where the end user is.

We have had European legislation aimed at dealing with this difficult balance since as long ago as 2002. The basic approach is that:

  • Intermediaries that are merely conduits of, or merely host or cache, data will not be liable in respect of information transmitted via their service, and do not have to monitor content actively.
  • But intermediaries that merely host or cache can be liable, in certain situations, if notified of illegal content which they fail to remove.
  • In addition, intermediaries with actual knowledge of infringement can be ordered to take measures to stop their service being used to infringe copyright.

The main exemption from liability applies both to IP rights and other forms of liability. So for example, this legislation would potentially provide a defence for Twitter, in that it was a mere conduit for the tweets about certain celebrities that breached the recent UK privacy super-injunctions.

Online marketplaces

In defending a claim brought by L’Oréal, eBay argued it was a host and so not liable for counterfeit goods sold by users of its website. The CJEU held on 12 July that where an online marketplace operator has provided assistance to the seller of counterfeit goods – for example, by promoting them through the use of Google AdWords – it will be considered not to have taken a “neutral position… but to have played an active role”. In such situations, eBay could be liable for acts of trademark infringement brought about by the users of its site.

The CJEU also found that national courts may impose injunctions on intermediaries such as eBay not only to stop existing infringements, but also to prevent further infringements occurring. So an intermediary could be ordered to identify its users, or deny an infringing user further access to its site. The CJEU stated that such injunctions must be “effective, proportionate and dissuasive, and must not create barriers to legitimate trade”.

Blocking access to a file-sharing site

On 28 July, the Motion Picture Association of America (MPAA), representing the major Hollywood studios, successfully obtained the first ever order from a UK court requiring an ISP – in this case, BT – to block access by UK users to a file-sharing site.

In so doing, the judge heard and rejected numerous arguments run by the ISP on such grounds as proportionality, the fact that the claimants did not own all of the copyright being infringed on the site, and the fundamental human rights of internet users to freedom of expression.

The judge importantly found that the knowledge requirement for this injunction procedure to apply was that the ISP had “actual knowledge of one or more persons using its service to infringe copyright”. It was not, as BT argued, necessary to prove actual knowledge of a particular infringement of a particular copyright work by a particular individual.

The MPAA is jubilant and plans to force all the other major UK ISPs to adopt the same blocking measures.

This case – which follows similar recent applications in respect of file-sharing sites in seven other EU countries, mostly in respect of the infamous Pirate Bay site – provides a clear blueprint for other rights owners.

While the hurdles to obtaining such a court order are not insignificant, and each case will turn on its facts, this example is sure to encourage at least some to follow suit.

John Wilks is an associate at law firm DLA Piper.