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10th Edition of the Master of Lawsin Intellectual Property (WIPO)

Enforcing Copyright against File-Sharers: Copyright

Liability of Intermediaries and Application Providers

Enrico Bonadio

City University London

3rd November 2011 (Turin)

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Summary• (i) File sharing (many cases)• (ii) role and liability of Internet Service Providers (ISPs) • … exemptions from copyright liability available under

EU and US law• … many cases (eg US, Europe, Australia)• (iii) legislative actions aimed at fighting unauthorized file

sharing• (iv) relationship between copyright and free speech (in

the case of file sharing)• (v) issues related to “disconnection” of Internet access

(as penalty)

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Introduction• All manner of works can be stored and made

available electronically• Eg: literature, music, works of art, etc. can be

represented in digital form• … and they can be copied, manipulated or

transmitted anywhere in the world …• … at “the touch of a button”• The ease with which all these forms of creative

expression can be exploited digitally …• … has prompted the “global information village”

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Introduction

• On the one hand: Internet and tangible media (eg CDs, DVDs, etc) benefit publishers …

• … as they can expose their works to a massive worldwide consumer audience and generate revenues for copyright owners

• On the other hand: Internet facilitates piracy, unauthorized copying and dissemination of works

• … it thus can be detrimental to copyright owners

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Introduction• Computational neuroscientist Sandberg:

in the on-line environment it is “hard to maintain the social and emphatic constraints that keep us from taking each other’s things”

• In other terms: we respect IP when it comes to books and other off line supports

• We forget it when IP assets are in digital form

• Survey from Pew Internet / American Life Project: 75% of respondents aged 12-to-17: “file sharing is so easy to do; it is unrealistic to expect people not do it

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File sharing

• Recently file sharing has become very popular …• eg for music• eg video/movie and video games lovers• Files containing such works can be uploaded,

downloaded and generally exchanged on the Internet

• Copyright holders are worried and angry• Eg: phonograms’ producers sell less CDs, as many

songs (especially from pop stars) are available on the Internet (for “sharing”)

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File sharing

• Technically: what is “file sharing”?

• It refers to the sharing of computer data or space on a network

• It allows multiple users to access the same file stored in a central server

• … giving the user the ability to read, modify, print or copy

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P2P file sharing

• What about “peer-to-peer” (P2P) file sharing?

• It is sharing of files by a direct exchange between end-users’ PCs

• Files are not stored on a central server

• Certain software are installed in users’ PCs (eg Kazaa) to act as a mini-server

• … from which other P2P users can download files

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P2P file sharing

• P2P is popular as is user-friendly and convenient

• It has empowered informal networks of file-sharers around the world ready to make available files to others (without any authorization from © holders)

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P2P file sharing

• So, one aspect of P2P always involve unauthorized reproduction on the downloader

• … ie the receiving part• This is usually considered as a violation of the

reproduction right (one exclusive right)• What about up-loaders?• Indeed, they make available works to the public• © owners rely on certain rules which reserve to them:• (i) the act of “communicating to the public” • (ii) the act of “making available” the work to others

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WIPO Treaties

• Said rights are now protected in many countries (US, EU, etc.)

• Article 8 WIPO Copyright Treaty (WCT)

• Articles 10 and 14 WIPO Performances and Phonograms Treaty (WPPT)

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WIPO Treaties

• Article 8 WIPO Copyright Treaty (WCT): “[…] authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them”

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WIPO Treaties

• Articles 10 WIPO Performances and Phonograms Treaty (WPTT): “Performers shall enjoy the exclusive right of authorizing the making available to the public of their performances fixed in phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them”

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WIPO Treaties

• Article 14 WIPO Performances and Phonograms Treaty (WPTT): “Producers of phonograms shall enjoy the exclusive right of authorizing the making available to the public of their phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them”

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Enforcing copyright

• Later we’ll see that use/offer of file sharing technologies (which allow the making available of copyright protected works) …

• … has been held a violation of the above rules• Courts have also considered use/offer of file sharing

technologies as:• (i) contributory/vicarious/inducement copyright

infringement (US Napster and Grokster cases)• (ii) authorization of copyright infringement (UK Polydor

case, Australia Kazaa case) • (iii) general tort rule (civil law countries)

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Enforcing copyright

• In the last years © owners have taken advantage of legislation and regularly taken action

• … against down-loaders, up-loaders and generally against people who shared files with peers (especially music/video files)

• The above are “primary infringers”

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Enforcing against ISPs

• Actions are also taken against Internet Service Providers (ISPs)

• … ie companies/individuals allowing or encouraging file sharers to exchange files

• … or provide technical means• … or make possible • ISPs are deemed gatekeepers• Liability is thus not limited to

uploaders/downloaders/ primary infringers

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Enforcing copyright

• The same occurs with other kinds of tort• Liable is also who encourages, facilitates,

helps or anyhow benefits from unlawful acts

• Copyright makes no exception• National legislations consider liable for

copyright infringement whoever is connected with copyright infringement …

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Enforcing copyright

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Enforcing copyright

• Use/offering file sharing technologies is considered by courts as:

• (i) Authorizing copyright infringement (UK / Australia):

• Amstrad UK 1986• Kazaa case Australia (2005)• eg failing to inform users of a library with copying

machines about copyright law and failing to control/supervise …

• … was considered unlawful “authorization of copyright infringement”

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Enforcing copyright

• (ii) Contributory infringement:• … when a third party assists in the commission of the

unlawful act which causes injury• In order to prove infringement • … the claimant must show that the infringer knew (or

had reason to know) the direct/primary infringement• … provided that (a) the direct infringement occurs and

(b) there is a material contribution to such infringement• Affirmed in Sony Betamax (1984 US Supreme Court)

and applied in Napster 2001 (US)

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Enforcing copyright

• (iii) Vicarious infringement occurs …• (a) if the third party had the “right and

ability to control” the infringer’s activity• (b) if the third party received some

financial benefit from the unlawful act• Napster case 2001 (US)

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Sony Betamax case

• Sony Corp. of America v. Universal City Studios, Inc. (1984)

• US Supreme Court• also known as the

“Betamax case”• No contributory

infringement

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Enforcing copyright

• (iv) recently the category of inducement of copyright infringement emerged

• affirmed in Grokster 2005 (US Supreme Court)• It has been borrowed from patent law• It occurs when a 3rd party • … distributes a device with the aim of promoting

its use to infringe copyright …• in that case the 3rd party is liable for the user’s

resulting infringement

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Enforcing copyright

• In civil law countries?• (v) general tort rule (eg responsabilite’ civile in

France)• (vi) duty of care to avoid damages to others

(another tort rule) (affirmed in Mininova NL 2009)

• (vii) injunctive relief against third parties• certain civil law countries allow injunctions

against persons involved in someone else’s tort

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Amstrad case

• Amstrad Electronics plc v The British Phonograph Industry Ltd 

• UK 1986• No authorization of

infringement

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Napster case

• A&M v Napster (2001)

• US Court of Appeal

• Contributory and vicarious liability

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MGM v Grokster

• MGM v Grokster (2005)

• US Supreme Court

• Inducement liability

• (borrowed from patent law)

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Polydor v. Brown

• Polydor v. Brown [2005] UK

• “making available to the public”:

• copyright infringement

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Dutch case law

• (i) Stichting BREIN v Techno Design ‘Internet Programming’ BV (2006): tortious act

• (ii) Brein v Mininova 2009 (tortious act)

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Pirate Bay case

• Pirate Bay case (2009)

• Swedish joint criminal and civil proceedings

• Guilty!

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Kazaa case

• Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2005]

• Federal Court of Australia

• Authorization of copyright infringement

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SGAE v Guerra

• SGAE v Jesus Guerra (2010)

• Court of Barcelona:• Offering links to P2P

services is not copyright infringement

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Limewire case• Limewire case [2010]• NY Court:• (i) copyright infringement• (ii) unfair competition• (iii) inducement of copyright

infringement• 26 October 2010: it was ordered to

disable the "searching, downloading, uploading, file trading and/or file distribution functionality”

• May 2011: settlement: LimeWire agrees to pay $105 million in damages

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Internet Service Providers (ISPs)

• What is an ISP?• It facilitates access to

material in Internet and also provides services:

• Eg email, bulletin boards, chat rooms, DSL services, web search engines, hosting websites, etc.

• Such services have serious copyright implications

• In certain cases they can trigger liability for ISPs

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ISPs liability

• ISPs have tried to minimize risks of liability• … by requiring the persons to whom they

provide services to undertake to respect © • … and not to make infringing material

available to others• ISPs may also seek indemnities from their

subscribers for copyright infringement attributable to their actions

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ISPs liability

• Yet, you can easily understand that the above is not enough

• some exemptions from copyright liability are needed and should be made available to ISPs

• Rationale: recognizing the important role played by ISPs in the “new economy”

• eg facilitating the use of Internet • Exemption from copyright liability for ISPs:• (i) E-Commerce Directive (2000/31) (EU)• (ii) US Digital Millennium Copyright Act 1998 (DMCA)

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ISPs – exemptions from liability (EU)

• 1st important exemption:• Art. 14 E-Commerce Directive:

storing/hosting• eg: hosting websites, bulletin

boards, blogs, chat rooms and file sharing platforms (eg YouTube)

• ISPs are exempted from liability stemming from hosting any material

• … including material infringing 3rd parties’ ©

• Thus: ISPs are not liable for the info stored/hosted

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ISP - hosting exemption

• Art. 14 Dir: storing – 2 alternative requirements :• a) ISP does not have actual knowledge of illegal activity and is

not aware of facts from which the illegal activity or information is apparent; or

• b) ISP, upon obtaining knowledge or awareness, acts expeditiously to remove or to disable access to the information.

• This exemption does not apply when ISP exerts authority and control over users (Art. 14.2 Dir.)

• Recital 42 Dir. confirms that services that can be exempted must be of “mere technical, automatic and passive nature”, which means that such services do not entail any involvement on the part of ISP with reference to contents

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ISP – mere conduit exemption

• 2nd exemption: mere conduit (Art. 12 Dir.)• ISP is not liable where it is “intermediate

transmitter”, i.e. when it: • (a) does not initiate the transmission;• (b) does not select the receiver of the

transmission; and• (c) does not select or modify the information

contained in the transmission

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ISP – mere conduit exemption• no liability attaches where the

transmission is nothing more than as a “conduit”

• … and takes place for the sole purpose of carrying out the transmission

• … and provided the information is not stored for any period longer than is reasonably necessary

• eg: facsimile transmission, telex, or telephonic transmission or Internet connection, and generally temporary transmissions over which ISPs have no control, eg P2P file sharing (not e-mail services, which entail storage and thus falls within storage exemption)

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ISP – caching exemption

• 3rd exemption: caching (Art. 13 Dir.)• In relation to all three exemptions:• no general obligation on ISP “to monitor the

information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity” (Art. 15 Dir.)

• Remember:• the exemption usable by ISPs for escaping copyright

liability is storage/hosting exemption under Art. 14 Dir.

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Mininova case

• Brein v Mininova Court of Utrecht (2009)

• No Art. 14 hosting exemption recognized

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Pirate Bay case

• Pirate Bay case (2009)

• No Art. 14 hosting exemption recognized

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Dailymotion case

• Dailymotion v Carion, Nord-Ouest Production et al.

• Court of Appeal of Paris [2009]

• Art. 14 exemption recognized!

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Telecinco v YouTube

• Telecinco v YouTube• Court of Madrid

(2005)• Article 14 hosting

exemption recognized

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Telecinco v YouTube

• RTI v IOL• RTI v Yahoo! • Court of Milan

(2011)• Creation of

active “hosting”• No exemption

available

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ISPs – exemptions from liability (USA)

• Also US legislation provide ISPs with shields from copyright liability

• Sec. 512 Digital Millennium Copyright Act (DMCA)• so-called “safe harbor” provisions• Thus: if ISPs qualify for such an exception …• … only individual infringing customers will be

liable for monetary damages (not ISPs)• Aim Sec. 512 DMCA: striking balance between

competing interests of (i) © owners and (ii) users• Four exemptions provided

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Section 512 DMCA

• Two general requirements. All exemptions apply provided:

• (i) ISP “has adopted and reasonably implemented, and informs subscribers and account holders … of a policy that provides for the termination in appropriate circumstances of subscribers and account holders … who are repeated infringers”

• (ii) ISP accommodates and does not interfere with measures necessary to protect copyrighted works (eg encryption)

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Section 512 DMCA

• Four exemptions:• (i) Conduit - Sec. 512(a) DMCA• (ii) Caching – Sec. 512(b) DMCA• (iii) Storage – Sec. 512 (c) DMCA• (iv) Info Location Tools – Sec. 512(d) DMCA (eg search

engines, websites linking to infringing material)• ISPs complying with the requirements (both general

and specific) are not liable for money damages • … but may still be ordered by a court to perform

injunctions

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Sec. 512(c) – online storage

• It applies to ISPs that store infringing material on their networks “at the direction of users”

• eg websites, chat-rooms, blogs, newsgroups and file sharing platforms (eg YouTube)

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Sec. 512(c) – online storage

• In addition to the two general requirements …• … Sec. 512(c) requires that ISP:• a) either does not have the right and ability to control the

infringing activity of its users or – if it does – that it does not receive a financial benefit directly attributable to the infringing activity;

• b) is not aware of the presence of infringing material or know any facts or circumstances that would make infringing material apparent and …

• … upon receiving notice from copyright owners, act expeditiously to remove the purported infringing material

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Sec. 512(c) – online storage

• a) Lack of right and ability to control the infringing activity and direct financial benefit

• So if ISP has the right and ability to control the infringing activity …

• … must “not receive a financial benefit directly attributable to the infringing activity” to qualify for this exemption

• This provision should be interpreted consistently with the similar common law standard for vicarious copyright liability

• … according to which turning a blind eye to detectable acts of infringement for the sake of profit gives rise to liability

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Sec. 512(c) – online storage

• So we have two elements:• (i) ISPs not having the right and ability to control

infringing activity of its users• eg Napster was deemed as having right and ability to

control• (ii) ISP must not receive direct financial element• eg Napster’s system created a draw for users which

resulted in direct benefit …• as its revenue was directly dependent on increases in

user-base• Thus: exemption not available for Napster

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Sec. 512(c) – online storage

• b) lack of knowledge of infringing material:• 1) ISP should not have actual knowledge that it is

hosting infringing material • 2) or not be aware of facts or circumstances from which

infringing activity is apparent• Important: ISPs have no duty to monitor its service or

affirmatively seek infringing material on its system• Sec. 512: two ways an ISP can be put on notice of

infringing material on its system:• 1) notice from the copyright owner• 2) the existence of certain “red flags”

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Sec. 512(c) – online storage

• 1) Notice from the copyright owner (so-called “take-down notices”)

• written notification of claimed infringement to a Copyright Agent designated by the ISP

• It must includermation:• (i) a physical or electronic signature of a person

authorized to act on behalf of the owner of an exclusive right that is allegedly infringed;

• (ii) identification of the copyrighted work claimed to have been infringed;

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Sec. 512(c) – online storage

• (iii) identification of the material that is claimed to be infringing and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material

• (iv) information reasonably sufficient to permit the service provider to contact the complaining party (such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted);

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Sec. 512(c) – online storage• (v) a statement that the complaining party has a

good faith belief that the use of the material in the manner complained of is not authorized by the copyright owner or the law;

• (vi) a statement that the information in the notification is accurate

• If a notice which complies with these requirements is received …

• … the ISP must expeditiously remove or disable access to the allegedly infringing material

• If the ISP complies with this notification procedures, it is safe from legal liability as a result of taking down the material

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Sec. 512(c) – online storage

• 2) Red flags• It is the second way an

ISP can be put on notice that its system contains infringing material

• “Red flag" test stems from the language in the statute that requires that …

• … an ISP not be “aware of facts or circumstances from which infringing activity is apparent”

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Sec. 512(c) – online storage• Important:• must ISPs follow the “safe harbor” procedures? • Answer: no!• ISPs may choose not to follow the DMCA “takedown

process” and do without the “safe harbor” exemption• If an ISP feels it is not liable under pre-DMCA copyright

law …• … eg because it is not contributorily or vicariously liable

or because there is no underlying copyright infringement …

• … it can still raise said defences if it is sued by © owners

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Sec. 512 – online storage• Counter-notice and put-back procedures• In order to ensure that © owners do not

wrongly insist on the removal of materials that do not infringe their copyrights

• … ISPs can notify subscribers if their materials have been removed and to provide them with an opportunity to send a written notice to the service provider stating that the material has been wrongly removed [512(g)]

• Aim: correcting possible abuses of © owners

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Sec. 512(c) – online storage

• If a subscriber provides a proper “counter-notice” claiming that the material does not infringe ©

• … the ISP must then promptly notify the claiming party of such objection [512(g)(2)]

• If the © owner does not bring a lawsuit in within 14 days, the ISP is required to restore the material to its location on its network [512(g)(2)(C)]

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Sec. 512(c) – online storage• A counter-notice must contain:• (i) subscriber's name, address, phone number and physical

or electronic signature [512(g)(3)(A)]• (ii) identification of the material and its location before

removal [512(g)(3)(B)]• (iii) statement under penalty of perjury that the material was

removed by mistake or misidentification [512(g)(3)(C)]• (iv) subscriber’s consent to local federal court jurisdiction, or

if overseas, to an appropriate judicial body. [512(g)(3)(D)]• If it is determined (by a court) that the copyright holder

misrepresented its claim regarding the infringing material …• … the copyright holder becomes liable to the ISP for any

damages that resulted from the improper removal of the material [512(f)]

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Sec. 512(d) – linking• Subsection 512(d) provides a

safe harbor for ISPs for linking to infringing material, such as for search engines, websites with links, hypertexts links, etc

• ISPs must stop linking the material if it receives notice that the material infringes a copyright, or if it has reason to believe so (take-down procedure)

• Exemption not contained in EU Directive

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Sec. 512 DMCA• Identifying alleged infringers• Sec. 512 allows © owners to request courts to issue a

subpoena to an ISP for identifying the individual allegedly responsible for the infringing activities. [512(h)]

• Subpoena is granted on the condition that the information about the individual's identity will only be used in relation to the protection of the intellectual property rights of the copyright owner. [512(h)(2)(C)]

• Subpoena only applies to users of hosting, caching or linking, for which a takedown notice may be sent (all “storing” activities lato sensu), not for mere conduit

• Thus DMCA subpoenas cannot be used to find the identities of users engaged in P2P file sharing, as ISPs render here a mere conduit for data transferred between Internet users

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Sec. 512 DMCA

• The above was confirmed by US court in

• … RIAA v. Verizon (2003)• Court: subpoena may be

issued only to ISPs engaged in storing, caching or linking

• … not against ISPs merely providing Internet connection for P2P

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Sec. 512(f) DMCA• Misrepresentations:• Sec. 512(f) attempts to limit false and fraudulent claims

under the DMCA• Indeed everybody must behave by the rules, and not

cheat …• … whether you’re copyright holder or user:• (i) anyone who fraudulently claims copyright

infringement … • (ii) or fraudulently claims that non-infringing material

was wrongly removed (or that access to it was wrongfully disabled)

• … is liable to anyone who suffers any damages because of that misrepresentation, including court costs and attorney’s fees

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Sec. 512 DMCA

• These rules do not affect the right of a copyright holder to sue a user who directly infringes copyright

• Thus a copyright owner who believes that a user has infringed or is infringing upon his or her exclusive right

• … may sue the user for infringement• … regardless of whether or not a take-down

notice is sent to the ISP

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Sec. 512 DMCA - case law

• IO Group Inc. v Veoh Networks (2008)

• Veoh exempted under Sec. 512(c)!

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Sec. 512 DMCA – case law

• Universal Music v Veoh (2009)

• again: Veoh exempted under Sec. 512(c)!

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Sec. 512 DMCA – case law

• Viacom v YouTube (2010)

• YouTube exempted under Sec. 512(c)!

• Dec. 2010 appeal filed

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Sec. 512 DMCA – case law

• EMI v P3Tunes(August 2011)

• “digital music cloud lockers”

• Safe Harbour exemption granted

• However, residually contributory liable

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Australian case law

• Roadshow Films Pty Ltd v iiNET Limited (2010)

• (i) no authorization of infringement

• (ii) iiNET can invoke “safe harbor” exemption

• 2011: appeal decision confirmed ISP activity’s lawfulness

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US case law on caching

• Gordon Roy Parker v. Google, Inc. / Civ. No. 04-CV-3918 (E.D. Pa., March 10, 2006)

• Search engine and caching

• Availability of the safe harbor provisions of Section 512(b) DMCA

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French law – online copyright infringement

• France is in the forefront in the battle …

• … against on-line copyright infringement

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French law – online copyright infringement

• France has dealt with file-sharing issues (and generally on-line infringement)

• ... taking into consideration also the position of ISPs

• May 2009: HADOPI law passed

• It provides so-called “3-strikes rule”

• It attempts to control and regulate internet access as a means to encourage compliance with copyright laws

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French law – online copyright infringement

• It creates an ad hoc agency, called "HADOPI" (Haute autorité de diffusion des oeuvres et de protection des droits sur internet)

• … which has the task to control that

• ... "internet subscribers screen their Internet connections in order to prevent the exchange of copyrighted material without prior agreement from the copyright holders"

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French law – online copyright infringement

• “3-strikes rule”• Enforcement method works as follows:• On claim or denunciation of copyright

holders, HADOPI starts the first step:• 1) An email is sent to the ISP involved

in the claim. The ISP is required, on behalf of HADOPI, to warn the user by email

• If a repeated offence is suspected by the copyright holders, by the ISP or by HADOPI, in the 6 months following the first step, the second step of the procedure is started

• 2) A certified mail is sent to the connection owner with similar information sent in the first mail

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French law – online copyright infringement

• On failure to comply in the year following the reception of the certified mail, the third step of the procedure is started

• 3) The ISP is required to:• (i) suspend internet access for

between two months and a year (during which the subscriber is prohibited from entering into a service contract with any other internet service provider); or

• (ii) order the subscriber to implement security measures designed to prevent the reoccurrence of illegal downloads, with penalty fees for non-compliance

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French law – online copyright infringement

• HADOPI law was scrutinised by French Constitutional Court

• IN June 2009 it found a portion of the law unconstitutional:

• (i) terminating an individual's Internet access affects that individual's right to free expression (which is a fundamental right)

• (ii) a decision to terminate access should be made by a judicial court after a careful balancing of the two interests at stake (copyright and freedom of speech)

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French law – online copyright infringement

• (iii) as the HADOPI law gave Internet access termination power to an agency (and not to a court), such grant of authority was held as unconstitutional

• (iv) In other terms: HADOPI law was unconstitutional, on the basis that only a judicial authority - and not an administrative body - can order the suspension of Internet access

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French law – online copyright infringement

• September 2009: HADOPI 2 was passed• … to remedy the enforcement gap left by the

court's decision• Only difference: sanctions to be applied to

alleged illegal down-loaders will be decided by a judicial court

• … and not by the Hadopi agency (as indirectly recommended by the Constitutional Court)

• Yet, the entire process is still speeded up by the Hadopi-driven procedure

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French law – online copyright infringement

• October 2009: the French Constitutional Court validated the HADOPI 2 law, with only one minor change

• This amendment stated that the Courts will not be able to decide on civil damages during the same trial

• This means that in order to claim damages the copyright holders will have to bring a separate action to court

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UK Digital Economy Act

• April 2010 UK Digital Economy Act:• aimed at fighting on-line infringement• June 2010: a proposed Code of

practice implementing it was adopted by Ofcom

• It is expected to come into force in early 2012

• The Code sets out inter alia how and when ISPs will send notifications to their subscribers to inform them of allegations that their accounts have been used for copyright infringement (eg uploading songs without the consent of the copyright owners)

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UK Digital Economy Act

• Code proposal: 3-stages notification process

• ISPs should inform subscribers of copyright infringements

• … and proposes that subscribers which have received three notifications within a year (and have not stopped infringing copyright)

• … may be included in a list requested by a copyright owner

• The list would be useful to copyright owners, who will then be able to take legal action

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UK Digital Economy Act• Controversial issue is: • Section 17(1) DEA • … which grants

powers to the Secretary of State to disconnect people from Internet or slow their connections if they ignore warnings in case of alleged infringement

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US Bills• US Senate bill 20.9.2010 Sen.

Patrick Leahy: blacklist of websites (“dedicated to” or “primarily designed” for copyright infringing activities)

• US House Rep. 26.10.2011 Lamar Smith: Stopping Online Piracy Act (SOPA): chasing sites which “facilitate infringement”

• Civil society’s concerns• Possible conflict with DMCA

safe harbor provisions?

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File sharing, copyright v privacy

• Potential tension between copyright and privacy

• This holds true specifically in digital world

• ECJ 2008: Promusicae v Telefónica (C-275/06)

• Similar finding ECJ 2009: LSG v Tele 2 (C-557/07)

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File sharing - copyright v free speech

• It is worthwhile to explore relationship between © and free speech …

• … when it comes to file sharing

• Generally speaking: copyright has the potential to restrict freedom of speech

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File sharing: copyright v free speech

• both copyright and free speech have constitutional dimension

• Free speech: • 1st amendment US Constitut• Art. 19 Univ. Dec. Hum. (UN)• Art. 10 ECHR• and many others acts• Copyright: • eg: Sec. 1.8 US Const: “the Congress

shall have the power to … promote the Progress of Science and Useful Arts, by securing for Limited Times to Authors and Inventors the Exclusive Right to their Respective Writings and Discoveries”

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File sharing: copyright v free speech

• Said that …• what about file sharing?• Do legal actions against file sharers

restrict freedom of speech? • If so, how can copyright enforcement

against file sharers restrict freedom of expression?

• We try now to answer these questions

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File sharing: not only copying music!

• File sharing is not limited to exchange and copying of music or videos

• People also use file sharing to exchange information, ideas, opinions, etc.

• eg: (i) for finding works which would otherwise be unavailable

• (ii) carrying out personalized works after having exchanged ideas

• (iii) posting creative remixes, sequel or new interpretations of existing works (eg parody)

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File sharing: parody (and other opportunities)

• Example of lawful parody created and disseminated thanks to file sharing: http://www.youtube.com/watch?v=gbH9NXfpXic&feature=related

• Therefore, file sharing provides far more opportunities than in the off-line world for artists and authors …

• … to reach, analyze and further develop a great number of existing works

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File sharing: enhancing cultural capabilities

• eg: many universities (especially in the US) use file sharing technologies to facilitate …

• … the sharing of class notes, class assignments and other forms of content

• It is believed that such networks have enhanced the educational and research capabilities

• viewed from this “social” and “educational” perspective, file sharing can be deemed as capable of fostering

• … a number of values underpinning the very protection of free speech

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File sharing: potentiality of P2P

• This is particularly true when it comes to P2P file sharing

• … which enables sharing of files by a direct exchange between end-users’ computers

• Its decentralized feature allows users to create and disseminate countless kinds of resources

• … in manners which have never been possible earlier

• so: the potential exchange of information and ideas is maximised

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File sharing: enhancing cultural capabilities

• File sharing networks have thus become necessary components of many global virtual communities

• … where for example information and cultural pieces are shared and discussed in chat rooms or other virtual spaces

• For several of these communities (e.g. academia, defense sector, etc.) file sharing has opened new scenarios and has become an important tool of cultural, scientific and technical collaboration

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File sharing: enhancing cultural capabilities

• In a nutshell: • file sharing may boost the exchange of

information within communities of users, artists and creators (i.e. communities of people who are not just interested in copying music and movie files)

• … and has the potential of dropping individuals’ reliance on traditional mass media market for information and entertainment

• It thus multiplies opportunities to exchange ideas and opinions with a wider range of people

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File sharing: Diebold case (US)

• Said that …• it seems copyright

owners are also keen in enforcing their exclusive rights

• … against such mentioned communities

• Diebold Electronic Systems case (2003)

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File sharing and free speech

• Diebold confirms that file sharing can be used

• … to foster freedom of speech• … to stimulate critical thinking• … to exert leverage on companies,

government officials and politicians • … and that copyright may maliciously be

invoked to stifle and chill said potentialities

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File sharing: copyright v free speech

• The same can occur also when © owners do not actually enforce their rights:

• this happens eg when speakers, artists or authors

• … being aware of the existence of copyright provisions allowing right owners to enforce their exclusive rights

• … prefer to engage in self-censorship rather than running the risk of being sued and paying lots of money as compensation

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File sharing: form of interaction• Thus: file sharing is not limited to musical

works, but also entails the exchange of other kind of information

• In any case: also file sharing of music files does contribute to marketplace of ideas

• It has been said that the exchange of music files is increasingly perceived as a new form of “interest-based social interaction”

• Even the passive sharing of songs with unknown people sitting in front of their PC at the other corner of the globe

• … is to be considered a form of cultural exchange

• eg: YouTube which allows to share videos or other material

• … and permit people to leave comments regarding such material

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File sharing

• Musical (artistic works) are stimulated if there is massive exposure to (and also creative appropriation of) previous works:

• Beethoven• Mozart

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File sharing

• Any author needs access to previous works in order to create new music (eg. jazz, hip-hop)

• such exposure is particularly favored by the use of file sharing technologies

• … and without such access the creation of new music (and generally of new artistic forms) is hindered

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File sharing: copyright v free speech

• Summing up:• file sharing can be instrumental to the system of free

expression • … also because it strongly reduces the traditional copyright-

supported media power of content supply and distribution• Thus: lesser artists, creators and authors who are not

associated to major labels, studios or publishers• … have the potential to access and reach a larger market of

information, contents and ideas …• and carry out creative appropriations and remixes of existing

works• If they are hindered, their right to free speech may be

jeopardized

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Disconnecting Internet access of file sharers

• File sharing is possible thanks to Internet connection

• In general, Internet connection has become very important nowadays

• In some countries it has been declared “fundamental right” (eg France, Estonia, Costarica)

• It is thus interesting to analyse how some legislations face the issue of Internet disconnection in case of on-line copyright infringement

• … including unauthorized file sharing• French, UK and US law are relevant

examples

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Disconnecting Internet access of file sharers

• French Hadopi Law:• Disconnection after three “strikes”• But on June 2009 French Const Court found a

portion of the law unconstitutional• As terminating individuals’ Internet access affects

individuals’ right to free expression• The court held that any decision involving Internet

disconnection should be taken by a court• … after a careful balancing of the two interests at

stake, i.e. copyright protection and freedom of speech

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Disconnecting Internet access of file sharers

• As the HADOPI law gave an administrative agency the power to terminate individuals’ Internet access, the Court held such grant of authority as unconstitutional

• In light of Article 11 Declaration of the Rights of Man and the Citizen of 1789, French Parliament was not at liberty to vest an administrative authority with the power of terminating individuals’ Internet access

• Article 11 of the Declaration of the Rights of Man and the Citizen of 1789: “the free communication of ideas and opinions is one of the most precious rights of man. Every citizen may thus speak, write and publish freely, except when such freedom is misused in cases determined”

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Disconnecting Internet access of file sharers

• According to the Court: freedom of speech entails access to online communications services:

• “in the current state of the means of communication and given the generalized development of public online communication services and the importance of the latter for the participation in democracy and the expression of ideas and opinions, this right (right to free speech) implies freedom to access such services” (para. 12)

• It thus recognizes the importance of the right to have access to Internet in the present era

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Disconnecting Internet access of file sharers

• Other issue faced by French C. Court:• the fact that the burden of proof was placed on

Internet subscribers• that meant that - in order to be successful in the

procedure – Internet subscribers had to prove that they were not liable for the alleged on-line infringement

• Thus, subscribers should have proved that they properly secured their Internet access or that a third party was in fact responsible for the alleged infringement

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Disconnecting Internet access of file sharers

• According to the court, this turned out to be • … a presumption of guilt on Internet subscribers • … which infringed the presumption of innocence, a

principle constitutionally guaranteed under French law• Indeed, Article 9 Declaration of the Rights of Man and the

Citizen of 1789:• “as all persons are held innocent until they shall have

been declared guilty, if arrest shall be deemed indispensable, all harshness not essential to the securing of the prisoner’s person shall be severely repressed by law”

111

Disconnecting Internet access of file sharers

• What about UK?• Controversial Section 17(1), which grants powers to the

Secretary of State • … to disconnect people or slow their connections if they

ignore warnings in case of alleged infringement. This provision states that:

• “The Secretary of State may by regulations make provision about the granting by a court of a blocking injunction in respect of a location on the internet which the court is satisfied has been, is being or is likely to be used for or in connection with an activity that infringes copyright”

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Disconnecting Internet access of file sharers

• Thus also UK DEA provides – at least in principle – the disconnection of Internet in case of on line copyright infringement

• Yet, it also takes for granted that such disconnection is to be decided by a judicial authority

• It might have taken into account the French decision. Indeed Section 17(5) DEA: “in determining whether to grant an injunction, the court must take account of […] (e) the importance of freedom of expression”

• Article 17(5)-d) also states that courts should take into consideration “whether the injunction would be likely to have a disproportionate effect on any person’s legitimate interests”

• However: “likely to be used” is risky and worrying

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Disconnecting Internet access of file sharers

• What about US?• Does the DMCA make reference to Internet disconnection

in case of on line copyright infringement?• It does• Precisely, the DMCA makes reference to such sanction

when dealing with the “safe harbour” exemption• Indeed, this exemption applies to ISPs provided they inter

alia have adopted and reasonably implemented a “policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers” (Section 512(i)(1)(A) DMCA)

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Disconnecting Internet access of file sharers

• Yet, this provision does not clarify who should finally decide to impose such sanction

• The ISP which has adopted the policy in question?• A judicial body?• So far US courts have not given guidelines on that issue,

and particularly on the meaning of “repeat infringers”• David Nimmer has given an interpretation of the term

“repeat infringers”: one may not be considered an infringer unless he has been found as such by a court

• … as in France and UK

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Debate at European Parliament

• Negotiations which led to the “Telecom Package”• Two positions emerged• old “amendment 138”: • “Applying the principle that no restriction may be

imposed on the fundamental rights and freedoms of end-users, without a prior ruling by the judicial authorities, notably in accordance with Article 11 of the Charter of Fundamental Rights of the European Union on freedom of expression and information, save when public security is threatened in which case the ruling may be subsequent”

116

Debate at European Parliament

• New “amendment 138”:• it no longer requires that only judicial authorities be

allowed to cut off Internet access of persistent file sharers

• It just says that any measures aimed at disconnecting Internet access may only be adopted “as a result of a prior, fair and impartial procedure”

• The word “judicial” has been removed from the key sentence of the amendment

• That means that the right to judicial review is guaranteed on appeal, but theoretically the first instance ruling can still be issued by a non-judicial authority

117

Debate at European Parliament

• Resolution, 22 September 2010• unauthorised uploading of copyrighted material

on the Internet is a clear infringement of IPRs prohibited by both the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty

• no substantial difference between counterfeiting and unauthorised file sharing

• risk that ordinary citizens sharing online copyright protected files can be treated like criminal organizations devoted to counterfeiting

118

Disconnecting Internet accessof file sharers – private agreements

• So, it is important that disconnection of Internet access is decided exclusively by courts

• However, recent (private) agreements between © owners and ISPs

• … obliging ISPs to adopt graduated response regimes envisaging the possibility of terminating Internet access of unauthorized file sharers

• It therefore seems that suing file sharers in court is not anymore the solution pursued by right holders to combat on line copyright infringement

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Disconnecting Internet accessof file sharers – private agreements

• Instead a strategy of compelled voluntary collaboration with ISPs is being currently pursued

• public law is not anymore the only vehicle through which graduated response regimes and decisions on Internet disconnection can be taken

• private law mechanisms driven by market forces are more and more used by copyright owners to pursue enforcement measures

• Such agreements are becoming popular, especially in the US• Agreements according to which ISPs undertake to forward

notices of infringement to their subscriber• Consequences: in some cases leading ISPs have suspended

Internet access of persistent file sharers without any court order or other finding of an infringement

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Disconnecting Internet accessof file sharers – private agreements

• Also in Ireland • … a graduate response regime has become a common

rule for over 40% of Irish Internet subscribers • … as a result of a settlement agreement between

major films distributors and the most important Irish ISP (Eircom)

• this regime does not envisage the involvement of any court and Eircom is the only “judge”

• … who decides whether the subscriber deserves or not to have its Internet connection terminated

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Disconnecting Internet accessof file sharers – private agreements

• The “transformation” of ISPs into copyright’ enforcement agents is probably a consequence of a do ut des strategy

• There are signals that ISPs act as entertainment industry enforcement agents in exchange for them acquiring the right to transmit copyright holders’ programs over their Internet networks

• Right holders and ISPs’ interests are therefore becoming more and more convergent and aligned

• eg the ISP Verizon reached an agreement with the company Disney to forward infringement notices to users, in exchange for receiving the right to transmit Disney’s programs

• these agreements may represent a first step in the context of a “more complete private ordering of … online copyright infringement” (Bridy)

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Disconnecting Internet accessof file sharers – private agreements

• These private agreements seem to penalize too much file sharers • eg US scenario: such agreements usually provide that ISPs

merely forward to alleged infringers the “DMCA take down notices”

• These notices are information from the right holder to the user … saying that the former has a good faith belief that the latter has violated its copyright

• Some of these agreements between copyright holders and ISPs provide that – after forwarding these notices and should other alleged violations occur –

• … ISPs are entitled to suspend and even terminate users’ Internet connection

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Disconnecting Internet accessof file sharers – private agreements

• Said provisions are risky for users • … insofar as the collaboration between right holders

and ISPs – and a possible final decision suspending or terminating users’ Internet access – is exclusively based on DMCA take down notices

• Why?• Because such notices are not always precise and

reliable, but just reflect right holders’ point of view: • i.e. what they claim it is an infringement of their

copyright

124

Disconnecting Internet accessof file sharers – private agreements

• These agreements do not require ISPs to find out whether a copyright infringement has really occurred

• It has been argued that take down notices are “flawed, easy to generate, often meritless, and an inadequate substitute for a full trial on the merits” (Murtagh)

• Indeed: they are issued unilaterally by right holders• … without the involvement of neutral adjudicator such

as a court or a panel of arbitrators• … and therefore without a strong proof of actual

infringement

125

File sharing / ECHR

• Article 10(1) ECHR: “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. […]”

• file sharing – by giving users the possibility of exchanging information, ideas and reflections - has the potential to promote and boost freedom of speech

• However, Article 10(2) ECHR states that “the exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society […] for the protection of the reputation or the rights of others”

126

File sharing / ECHR

• Article 10(1) ECHR: “Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. […]”

• file sharing – by giving users the possibility of exchanging information, ideas and reflections - has the potential to promote and boost freedom of speech

• However, Article 10(2) ECHR states that “the exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society […] for the protection of the reputation or the rights of others”

127

File sharing / ECHR

• freedom of speech can be lawfully restricted if the restriction is inter alia “necessary in a democratic society”

• Can copyright enforcement against unauthorized file sharers – which is capable of restricting freedom of expression – be considered “necessary in a democratic society”

• If it cannot be considered as such, it is contrary to Article 10 ECHR

128

File sharing / ECHR

• Robert Danay’s paper (music file sharing)• Danay argues that we should verify whether

such restriction is really useful to meet copyright’s purposes.

• (i) The securing of a reward for the authors;• (ii) the promotion and encouragement of

creativity• is the restriction of freedom of speech useful to

meet the above copyright’s purposes?

129

File sharing / ECHR

• Danay believes that in most cases it might not be useful

• file sharing does not seem to affect music sales

• Thus, copyright enforcement against file sharers does not secure rewards for authors nor promote the diffusion of music

• alternative systems of compensation not involving tough sanctions

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Proposals

• The above issue is important• I believe it is important that disconnection of

Internet access is decided exclusively by courts• Another (final) issue:• are there proposals aims at identifying possible

areas of freedom for unauthorized file sharers?• Several proposals, all based on a “compensation

right” approach …• which should substitute the traditional copyright

paradigm exclusively based on the unconditional enjoyment of hollow exclusive rights

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Proposals

• Such solutions aim at saving the benefits of file sharing technologies (especially in terms of freedom of expression)

• … while at the same time guaranteeing authors’ compensation (Professor Lessig: “compensation without control”)

• transforming copyright from a proprietary right to a compensation right would also serve freedom of expression policy

132

Proposals

• A first solution (Professor Netanel):• Noncommercial Use Levy (NUL)• Such levy would be imposed on the sale of any

consumer product or service whose value is substantially enhanced by P2P file sharing

• … the amount being determined by an ad hoc Copyright Office court

• Which products or services? • eg consumer electronic devices (e.g. MP3 players,

CD burners and digital video recorders) used to copy, store, send or perform shared and downloaded files)

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Proposals

• The levy should be paid by the providers of this products and services

• … and the distribution of the proceeds to copyright holders should be carried out taking into consideration the popularity of the works

• … and the actual use of the contents as measured by technology tracking and monitoring such use

• As a consequence of the payment of such levy, users could freely copy and circulate any works that the right holder has made available on the Internet

• … of course the use of the works should not be a commercial one

134

Proposals

• Professor Netanel:• this system would give users and

creators more freedom to explore, transform and adapt existing works

• … in such a way boosting freedom of expression

• … while at the same time rewarding copyright holders and thus maintaining the main essence and purpose of copyright

135

Proposals

• Netanel’s proposal has its merits• Generally speaking, it is believed that

copyright holders in the Internet age will be soon rewarded by mainly using levies and taxes

• … as exclusive rights traditionally granted by copyright are not easily enforceable in the Internet world or their enforcement would jeopardize the free exchange of information on the Internet

• That is why levy-based proposals could soon become reality in the Internet environment

136

Proposals• Another proposal:• regime of government compensation to right holders

paid out of general tax revenues• … with subsequent freedom to share and copy

copyrighted material available on line• Generally speaking, recommendations to substitute

IPRs regimes with systems of government compensation have been debated for a long time

• Proposal not very different from NUL• … except that right holders would be paid from a

body funded by general tax revenues rather than by levies imposed on certain products and services

137

Proposals

• Another proposal:• compulsory licence to authorize and regulate the P2P

distribution of copyright protected works on the Internet• compulsory licenses are usually granted by

governments, or governmental bodies …• … and oblige IPRs owners to licence the protected

asset to third parties willing to use it• In principle: compulsory licencing schemes • … by permitting users to access and share works on

the Internet …• … would aim at favoring the circulation of copyrighted

works on the Internet and thus boosting freedom of speech

138

Proposals

• Yet: skeptisism about the feasibility of implementing such a system

• … as it is believed that compulsory licences have proved to be unsuccessful in implementing public policy goals

• … this would be proved by the fact that so far

• … no compulsory licences have been granted to authorize the P2P distribution of copyrighted works on the Internet

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Proposals

• All these proposals have common features and purposes

• … i.e. they aim at making the digital environment and particularly the Internet a virtual place

• … where public debate, artistic creativity and cultural diversity should coexist with commercial transactions

• Proposals which do not tend to wipe out copyright • … but try to strike a balance between copyright

and the right to freely access copyrighted works available on the Internet

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10th Edition of the Master of Lawsin Intellectual Property (WIPO)

Thanks for your attention!

Enrico Bonadio

City University London