Scandal on Twitter, fakes on eBay: So who's liable?

Legal Eye: The liabilities of internet companies is growing clearer...

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...