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Internet Intermediaries Liability


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Talk at a seminar organized by the IPR University Center in Helsinki on April 26, 2012

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Internet Intermediaries Liability

  1. 1. Internet intermediaries liability: the road ahead IPR University Center seminar, Helsinki, April 26, 2012 Cédric Manara, PhD Associate Professor of Law, EDHEC Business School <>
  2. 2. Definition ―Internet intermediaries bring together or facilitate transactions between third parties on the Internet. They give access to, host, transmit and index content, products and services originated by third parties on the Internet or provide Internet-based services to third parties‖ • OECD, The economic and social role of internet intermediaries, 2010 2
  3. 3. More concretely Intermediaries reduce • search • transaction • communication • investment & operating costs 3
  4. 4. Who? [Electricity provider] Internet Access Providers • Elisa, TeliaSonera, DNA, Finnet… • Libraries / Companies / Administration / Universities… Registries / Registrars Internet Service Providers (hosts) • Search tools • Transactions tools ─ Visa, MasterCard, PayPal • Amateur platforms ─ Forums, blogs, wikis • Commercial platforms ─ eBay,… • Generative platforms ─ open: YouTube, SL… ─ v. proprietary: Facebook, App Store 4
  5. 5. What? Trademark (commercial) reputation Copyright D. Ardia, An empirical study of intermediary Business secrets immunity under section 230 of the False stock Communications Decency Act, 2010 information Privacy / Personal data Hate speech (Child) pornography 5
  6. 6. It’s not (only) about IP!D. Ardia, An empirical study of intermediary immunity under section 230 of the Communications Decency Act, 2010 6
  7. 7. D. Ardia, An empiricalstudy of intermediaryimmunity under section230 of theCommunicationsDecency Act, 2010 7
  8. 8. What? At stake Legal system Trademark  USA • U.S.C.. 1125 (d) (2) (D) Copyright (ii) Defamation • US Copyright Act, Section Business secrets 512 (c) • Communications Decency False financial Act, 230 information • Communications Decency Act, 223 Rights of personality, personal data  EU • EC/31/2000 (art. 12-15) Hate speech • Directive 2011/92/EU on child Child pornography pornography (Dec. 13, 2011) 8
  9. 9. ISP: Legal categories (EU) Transmission of information • mere conduit Caching • Intermediate storage to accelerate data transmission Hosting • Storage of information Other (?) • Search engines 9
  10. 10. Outline Principle: exemption of liability [1] From principle to practice [2] Towards surveillance? [3] Future developments [4] 10
  11. 11. 1. Principle:Exemption of liability 11
  12. 12. ISP: Legal categories & regimes Categories Directive 2000/31/EC Transmission of  Article 12 information • mere conduit Caching  Article 13 • Intermediate storage to accelerate data transmission Hosting  Article 14 • Storage of information Other  n/a 12
  13. 13. Why a specific liability regime? Needed for the smooth functioning of the internal market • No data heaven • Enables development of cross-border services and prevents distortions of competition 13
  14. 14. Rationale Exemptions from liability cover only cases where the activity of the ISP is limited to • the technical process of operating • and giving access to a communication network over which – information made available by third parties is – transmitted – or temporarily stored, – for the sole purpose of making the transmission more efficient 14
  15. 15. Rationale (bis) This activity is of a mere • technical, • automatic • and passive nature which implies that the information society service provider has neither • knowledge of • nor control over the information which is transmitted or stored 15
  16. 16. Limitations of the liability of ISPs Conditions • Duty to act, under certain circumstances, with a view to preventing or stopping illegal activities • They have to act expeditiously to remove or to disable access to the information concerned • This does not affect the possibility of administrative or judicial injunctions 16
  17. 17. Mere conduit (article 12) No liability for the information transmitted in a communication network on condition that the provider: • does not initiate the transmission • does not select the receiver of the transmission, and • does not select or modify the information contained in the transmission This extends to the automatic, intermediate and transient storage of the information transmitted in so far as this takes place for the sole purpose of carrying out the transmission in the communication network, and provided that the information is not stored for any period longer than is reasonably necessary for the transmission. 17
  18. 18. Caching (article 13) A service provider is not liable for the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the information‘s onward transmission to other recipients of the service upon their request, on condition that the provider • does not modify the information; • complies with conditions on access to the information; • complies with rules regarding the updating of the information, specified in a manner widely recognized and used by industry; • does not interfere with the lawful use of technology, widely recognized and used by industry, to obtain data on the use of the information; and • acts expeditiously to remove or to disable access to the information it has stored upon obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or an administrative authority has ordered such removal or disablement. 18
  19. 19. Hosting (article 14) The provider of storage of information is not liable for the information stored at the request of a recipient of the service, on condition that the provider • does not have actual knowledge of illegal activity or information and • is not aware of facts or circumstances from which the illegal activity or information is apparent; or or • upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information. Exemption does not apply when the recipient of the service is acting under the authority or the control of the provider. 19
  20. 20. Legal issues in a nutshell Hosting providers will not be held liable in cases they • unknowingly (?) 1 host • illegal material (?) 2 provided they • act in an (undefined) expeditious way 3 • after having received (undefined) actual knowledge of the infringement 4 20
  21. 21. 1 "Actual knowledge"… …of the allegedly infringing material? …or of the illegality of the material? It is unclear what an authority would consider sufficient to provide ―actual‖ knowledge – Except in Finland (upon notification… but only for ©) ~12 years after the adoption of the legislation, we still wonder whether a notification or formal legal order for removal would be considered adequate • except in States where guidelines for notification exist 21
  22. 22. Recent case in UK An allegation of defamation does not constitute actual notice of unlawful activity • ―It cannot be right that any provider is required, in the light of the strict terms of Regulation 19 [ Art. 14], to take [complainant’s notification] at face value. Clearly more is required for a provider to acquire a sufficient state of knowledge to be deprived of the statutory protection‖ – Tamiz v Google [2012] EWHC 449 (QB) (Mar. 2, 2012) 22
  23. 23. Case study Dec. 2010: a Wikileaks mirror is hosted in France The French ISP discovers it in the press Does it have to take it down? The ISP itself went before courts to know what it must do! 23
  24. 24. 2 "Illegal material"… …to the eyes of the rights owner? …to the eyes of someone else? …to the opinion of the hosting provider? contrary to • State laws – which one? • or to any private rule? 24
  25. 25. 3Act in an "expeditious way"? Within • Minutes? • Hours? • Days? 25
  26. 26. 4 "notice"? Formalities • Example of France – Wikipedia (CFI, Oct. 29, 2007) – Amen (Court of cassation, Feb. 17, 2011) • In practice, providers have their own rules & procedures – Not always transparent though 26
  27. 27. 2. From principle to practice 27
  28. 28. 28
  29. 29. 29
  30. 30. Lessons learnedwhen in doubt, take it down‘• remov material that doesn‘t violate the law 30
  31. 31. 31
  32. 32. Lessons learned Private intermediaries are risk averse • when in doubt, take it down‘ • remove material that doesn‘t violate the law 32
  33. 33. Selection of cases France Germany Italy Spain 33
  34. 34. Germany Federal Supreme Court, April 19, 2007 • eBay – an online auction platform may be liable for trademark infringement caused by the seller‘s offers under the concept of liability as a ―disturber‖ (―Störer‖) – the defendant not only has to delete the specific offers whenever its attention is drawn to a trademark infringement – but also is obliged to take (specific) action to prevent further infringing offers [ discussed below at § 3] 34
  35. 35. Italy Milan Tribunal, April 16, 2010 • Italy v. Google (‗Vivi Down‘ case) • 3 Google executives – acquitted with regard to the charge of defamation – convicted for violating data protection in connection with the on-line posting of a video showing a disabled person being bullied and insulted 35
  36. 36. Spain Court of Madrid, September 20, 2010 • Telecinco v. YouTube • A video sharing platform is a hosting provider • it is exempted from liability for the copyright infringement committed by its users 36
  37. 37. France Court of cassation, February 17, 2011 • DailyMotion (YouTube-like) • Fuzz (Digg-like) • Amen 37
  38. 38. Across the EU: Conflicting caselaw Lack of legal certainty 38
  39. 39. EU CJEU, March 23, 2010, C-236/08 to C- 238/08, Vuitton v. Google • A referencing service provider – stores information supplied by the advertiser – transmits information from the advertiser, over a communications network accessible to internet users and stores – holds in memory on its server, certain data, such as the keywords selected by the advertiser, the advertising link and the accompanying commercial message, as well as the address of the advertiser‘s site 39
  40. 40. EU [2] In order to establish whether the liability of a referencing service provider may be limited under Article 14 of Directive 2000/31, it is necessary • to examine whether the role played by that service provider is neutral, – in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores Is it a concept sufficiently clear to be interpreted in a homogeneous way? 40
  41. 41. L’Oréal v. eBay C-324/09, July 12, 2011 § 115 • the mere fact that the operator of an online marketplace – stores offers for sale on its server, – sets the terms of its service, – is remunerated for that service – and provides general information to its customers • cannot have the effect of denying it the exemptions from liability provided for by Directive 2000/31 41
  42. 42. L’Oréal v. eBay § 116 • [If] the operator has provided assistance which entails, – in particular, optimizing the presentation of the offers for sale in question or promoting those offers, • it must be considered – not to have taken a neutral position between the customer- seller concerned and potential buyers – but to have played an active role of such a kind as to give it knowledge of, or control over, the data relating to those offers for sale. • It cannot then rely, in the case of those data, on the exemption from liability referred to in Article 14 42
  43. 43. L’Oréal v. eBay In the absence of an active role, subsidiary question: • Did the hosting provider have ‗actual knowledge of illegal activity or information‘? • Is the hosting provider ‗aware of facts or circumstances from which the illegal activity or information is apparent‘? • If a diligent economic operator would have realized that the content in question is unlawful  Liability if no action 43
  44. 44. New questions Does a notice related to a posting in particular equates to ‗flagging‘ its author? The Court has not elaborated on how an ISP can obtain "actual knowledge" 44
  45. 45. Ladies & gentlemen, please welcome… Bono Ten for the Next Ten, New-York Times, Jan. 2, 2010 45
  46. 46.  Intellectual Property Developers Caution! The only thing protecting the movie and TV industries from the fate that has befallen music and indeed the newspaper business is the size of the files. The immutable laws of bandwidth tell us we‘re just a few years away from being able to download an entire season of ―24‖ in 24 seconds. Many will expect to get it free. A decade‘s worth of music file-sharing and swiping has made clear that the people it hurts are the creators — in this case, the young, fledgling songwriters who can‘t live off ticket and T-shirt sales like the least sympathetic among us — and the people this reverse Robin Hooding benefits are rich service providers, whose swollen profits perfectly mirror the lost receipts of the music business. We‘re the post office, they tell us; who knows what‘s in the brown-paper packages? But we know from America‘s noble effort to stop child pornography, not to mention China‘s ignoble effort to suppress online dissent, that it’s perfectly possible to track content. Perhaps movie moguls will succeed where musicians and their moguls have failed so far, and rally America to defend the most creative economy in the world, where music, film, TV and video games help to account for nearly 4 percent of gross domestic product. 46
  47. 47. 3. Towards surveillance? 47
  48. 48. Directive 2000/31/EC, Article 15 Member States shall not impose a general obligation on providers, – when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity 48
  49. 49. Moving from ex post reaction to ex ante action… 49
  50. 50. 50
  51. 51. L’Oréal v. eBay Can a court order online service providers to take measures to prevent future infringements of intellectual property? – Article 11 of Directive 2004/48 Courts are ―able to order [an intermediary] to take measures which contribute, not only to bringing to an end infringements of those rights […], but also to preventing further infringements […]. Those injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade‖ (§ 144) 51
  52. 52. Cases C-70/10, SABAM v. Scarlet & C-360/10, SABAM v. Netlog European legal framework precludes a national court from issuing an injunction against a hosting service provider which requires it to install a system for filtering • all electronic communications passing via its services [Scarlet] • all or most of the information which is stored on its servers by its service users [Netlog] • which applies indiscriminately to all of those users • as a preventative measure • exclusively at its expense, and • for an unlimited period which is capable of identifying electronic files containing musical, cinematographic or audio-visual work in respect of which the applicant for the injunction claims to hold intellectual property rights, with a view to preventing those works from being made available to the public in breach of copyright 52
  53. 53. Challenges to the 2000 Directive These cases raise the same issue: • can injunctions apply to – future, – unspecified • infringements? L‘Oréal: the Court finds the injunctions proportionate SABAM: the Court finds them incompatible 53
  54. 54. Ex ante applications? Belgium • Belgacom & Telenet must block access to The Pirate Bay – Antwerpen, September 26, 2011 UK • Blocking access to, "a general obligation to monitor, but rather a specific and limited one‖ – [2011] EWHC 1981 (Ch) & [2011] EWHC 2714 (Ch) Finland • Elisa must block access to The Pirate Bay – Helsinki District Court, Oct. 26, 2011 54
  55. 55. Ex post applications? Netherlands • XS4ALL and Ziggo must block access to The Pirate Bay – Hague, Jan. 11, 2012 Germany • A Hamburg Court ruled that RapidShare has to proactively filter the files uploaded by its users – with respect to a list of 4,000 files – March 14, 2012 55
  56. 56. Removing is not enough ―when a website is successfully removed from a host server, it reappears very easily under another name‖ 56
  57. 57. "Streisand effect" Online phenomenon in which an attempt to hide or remove a piece of information has the consequence of publicizing the information more widely • Named after American entertainer Barbra Streisand, whose 2003 attempt to suppress photographs of her residence inadvertently generated further publicity – 57
  58. 58. France, March 29, 2012 58
  59. 59. HIDE, OR FIGHT? Removal  EffectEnforcement  Cause 59
  60. 60. 4. Future developments 60
  61. 61. What the SABAM cases brought to the debate Fair balance with fundamental rights • of the ISPs: freedom to conduct a business – article 16 of the Charter • of ISPs‘s users: right to protection of their personal data and their freedom to receive or impart information – articles 8 and 11 of the Charter 61
  62. 62.  COM (2011) 942 at § 3.1 • « provide clarification, for example concerning the liability of intermediary internet providers » • Action: « The Commission will ensure that the Electronic Commerce Directive [is] correctly applied » 62
  63. 63. Issues Abuse • ISPs opt for the least costly and most legally secure option Neutrality • intermediaries have had little if any interest in adopting devolved law enforcement roles Private police • They increasingly feel obliged to do so as a result of either government pressure or legal uncertainty created by (often) unclear legal provisions – VeRO – Content ID – INA / Signature 63
  64. 64. Notice & take down Low cost, distributed, privatized censorship by private companies Based on business interests Failure to ensure an adequate balance results in restrictions on freedom of expression 64
  65. 65. 65
  66. 66. Where are we going to? 2000: Basis for notice and takedown procedures 2011 (consultation): fragmentation of NTD procedures throughout the EU 2013: regulation of NTDs? 66
  67. 67. Working Paper “Online services, including e-commerce, in the Single Market” Requirements for the notice Possibility to submit a counter-notice by the alleged infringer Timeframe for blocking or taking down the unlawful content Liability for providing wrongful notices or for taking down or blocking legal content Role of the intermediary as a ―private judge‖ Efficiency of a notice and take down procedure 67
  68. 68. 12+ years to Re-invent due process … or introduce it? What we may also need: a European version of 68
  69. 69. 69
  70. 70. 70
  71. 71. It’s not only about commerce! 71
  72. 72. Beyond the EU borders Global war against intermediaries? • ACTA • Trans-Pacific Partnership – narrows down the legal definition of ISPs – imposes a specific behavior • SOPA / PIPA (US) 72
  73. 73. Recent trends Domain names seizure • (Wikileaks &) Megaupload examples • I.C.E. « Operation in Our Sites » Eradicate pointers • Google after the Pirate Bay? Why not… follow the money? • Visa, MasterCard or PayPal are also intermediaries! 73