[x-pubpol] CDT Policy Post 18.2: Copyright Infringement & Intermediaries

[Joly MacFie]

.(via Rudi Vansnick)


<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/43dc23987d>

A Briefing On Public Policy Issues Affecting Civil Liberties Online from
the Center For Democracy and Technology
This Policy Post can be found online
here<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/9e725dc7a2>
.

*Cases Wrestle with Role of Online Intermediaries in Fighting Copyright
Infringement*

1)Determining When a Content Host Enjoys Safe Harbor
2) Permissible Obligations for Both ISPs and Content Hosts
------------------------------

There have been significant decisions on both sides of the Atlantic in the
past several months concerning the legal responsibilities of online
intermediaries to police copyright infringement by users.

In the United States, federal appeals court decisions in cases brought
against YouTube and Veoh rejected efforts to cripple the "safe harbor"
protection that shields user-generated content platforms from monetary
liability for infringement committed by users. In Europe, two decisions by
the Court of Justice of the European Union (ECJ) appeared to limit the
ability of courts to compel intermediaries to filter traffic for infringing
content - but recent cases in Germany and the UK took a narrow view of
those limits and imposed significant blocking/filtering obligations
nonetheless.

Enforcing copyright is a valid and important objective. But enforcement
approaches that would saddle online intermediaries with liability for
users' infringements or with proactive policing obligations would carry
heavy social costs. Safe harbors from liability provide intermediaries such
as social networks, photo- and video-sharing sites, blogging platforms, and
a wide variety of other tools and services the legal certainty necessary to
offer innovative communication services that expand the space for commerce
and free expression online. If intermediaries are discouraged from allowing
users to post content because of concerns about either liability or the
high costs associated with monitoring, preventing, or removing content,
then opportunities for speech will be greatly diminished and the full
benefits of the Internet will go unrealized.

The role of online intermediaries in controlling copyright infringement is
and will likely remain a hotly contested area of law and policy. These
recent cases, however, help clarify some important legal parameters. This
post will review the impact on key legal issues, first with respect to the
applicability of the liability safe harbors for content hosts and then
concerning what affirmative obligations courts may impose on both content
hosts and ISPs.

CDT, Intermediary Liability: Protecting Internet Platforms for Expression
and Innovation<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/4c50b43998>

CDT, Interpreting Grokster: Limits on the Scope of Secondary Liability for
Copyright Infringement (Stanford Technology Law Review
2006)<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/3b9daed7b3>

*1. Determining When a Content Host Enjoys Safe Harbor*

Both the Digital Millennium Copyright Act (DMCA) in the U.S. and the
E-Commerce Directive (ECD) in Europe provide protection for content hosts
from monetary liability for third-party content where they lack actual
knowledge of infringing activity. Consequently, there has been considerable
litigation over what types of hosts qualify for protection, as well as what
level of knowledge can disqualify a host. The recent U.S. cases rejected
interpretations that would have dramatically limited eligibility for safe
harbor protections.

*"Active Hosting"*

Both the *Viacom v. YouTube* and *UMG v. Shelter Capital Partners* (Veoh)
decisions contained good news regarding the degree to which "active hosts"
- services that do more than provide bare-bones content hosting - qualify
for protection.

The plaintiffs in each case had aggressively pursued the argument that
YouTube and Veoh should not qualify for DMCA protection because their
activities went beyond mere hosting. YouTube's efforts to "perform,
distribute, and promote stored videos, and to solicit revenues for
advertising connected with those videos," Viacom claimed, made YouTube
ineligible for protection. UMG argued that Veoh's transcoding of uploaded
video files for display went beyond the act of storage protected by the
DMCA.

Both courts rejected the idea that the safe harbor is only available for
the narrow function of web storage. The ninth circuit, hearing the Veoh
case, saw "no basis for adopting UMG's novel theory that Congress intended
[the relevant section of the DMCA] to protect only web hosting services."
The second circuit likewise rejected almost all of Viacom's arguments,
finding that YouTube's related activities (with the possible exception of
sublicensing videos to other distributors, an issue remanded to the
district court) are closely related to users' initial storage of their
videos with YouTube, and therefore fall within the safe harbor. CDT had
joined amicus briefs in each case arguing that the video platforms (and
other UGC sites) should be protected by the DMCA.

Disallowing protection for platforms that provide services beyond
blank-slate hosting would undermine the purposes of the safe harbor by
stripping protection from most current and emerging hosting sites. Major
sectors of the Internet economy are based on organizing and distributing
user-provided content in compelling ways, and these services rely on the
legal certainty that safe harbors provide in order to operate. It is
therefore encouraging to see U.S. courts make such unequivocal statements
about UGC sites' status under the DMCA.

The issue is less settled in Europe. Some courts, notably in Italy, have
denied protection to services they characterize as "active hosting," which
include video-hosting platforms that organize and display users' videos and
combine them with advertising. One example is the case against Google Video
that resulted in a stunning prison sentence for three Google executives. A
July 2011 preliminary ECJ opinion in *L'Oreal v. EBay* arguably may have
opened the door to "active hosting" analysis by stating that where an
operator has provided assistance which entails optimizing the presentation
of offers for sale or promoting those offers, it must be considered as
non-neutral and thus ineligible for safe harbor. The recent *SABAM v. Netlog
* opinion discussed below expressly held that Netlog qualified as a content
host potentially eligible for protection without considering the "active
hosting" question, but it appears the Netlog's status as a content host was
not contested.

*Generalized Knowledge versus Specific Knowledge*

Under the U.S. and EU frameworks, content hosts can lose liability
protection if they have actual knowledge of infringement. Unsurprisingly,
exactly what constitutes actual knowledge has been a hotly contested
subject of litigation. Both the YouTube and Veoh plaintiffs argued that the
video sites knew or should have known, in a general sense, that there was
infringing activity on their platforms and that this general knowledge was
enough to disqualify them from protection.

Fortunately, both courts soundly rejected that argument. The courts
recognized that allowing general knowledge to eliminate safe-harbor
protection would render the protection nearly meaningless. Every UGC site,
if it operates at any scale, knows at a generalized level that some users
inevitably will post infringing content. (Indeed, that is precisely why
safe harbor protection is so essential for their ability to operate.) If
general knowledge of infringement were enough to forfeit protection, nobody
would qualify.

Instead, quoting the Second Circuit opinion, "actual knowledge or awareness
of facts or circumstances that indicate*specific* and *identifiable* instances
of infringement" is required in order to invalidate DMCA protection. The
holding is in line with the intent of the DMCA: to allow service providers
to build powerful, scalable hosting functions for users without facing
crippling liability, while at the same time giving rightsholders a means to
address specific infringing content via the notice-and-takedown process. A
contrary holding would have gutted the DMCA safe harbor and eliminated
protection for countless sites that rely on it.

*UMG v. Shelter
Capital<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/cb5949b4f8>
* (Veoh) opinion<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/cb5949b4f8>

*Viacom v. YouTube*
opinion<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/3087ff9260>

CDT amicus brief in *Viacom v.
YouTube*<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/cccb7e6476>

CDT amicus brief in *UMG v.
Veoh*<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/68d616cfb5>

Leslie Harris, "Deep Impact: Italy's Conviction of Google Execs Threatens
Global Internet Freedom," *Huffington
Post*<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/5b0fb571b1>

*2. Permissible Obligations for both ISPs and Content Hosts*

*Mandatory Filtering Disallowed in Europe*

Two recent ECJ opinions considered requests by SABAM, a Belgian copyright
collecting society, for injunctions ordering an ISP and a social-networking
site to install filters to identify and block infringing content. In each
case, the court held that mandating filtering would be inconsistent with
users' fundamental rights and various EU Directives, including the ECD.

Article 15 of the ECD expressly prohibits Member States from obligating
intermediaries to monitor the information they transmit or store, or to
seek out indications of illegal activity. The DMCA (at 47 U.S.C. 512(m))
similarly precludes safe harbor from being contingent on an obligation to
monitor for infringement. These provisions are essential to the ability of
intermediaries to offer robust online services without ongoing, broad-based
surveillance features that would jeopardize user privacy and can be
expensive if not entirely impractical to operate at Internet scale.

In *SABAM v. Scarlet*, the ECJ rejected an injunction ordering an ISP (a
"mere conduit" under the ECD) to filter user traffic so as to identify and
block transmissions of songs in SABAM's catalog. The court reasoned that
such a mandate:

   - constituted a general obligation to monitor traffic (in violation of
   ECD Article 15);
   - was costly and disproportionate (in violation of Article 3 of the
   Intellectual Property Rights Directive); and
   - harmed users' right to personal data protection and right to impart
   information.

Similarly, in *SABAM v. Netlog*, the ECJ refused to approve a filtering
injunction for a social-networking site. Since the proposed filtering
mandate would require the site to scan all content its users posted on an
ongoing basis in order to ferret out songs from SABAM's catalog, the
injunction amounted to a general obligation to monitor prohibited by
Article 15.

Clear guidance on this question has been much needed. Over the last few
years, there have been several attempts in Europe to impose filtering
burdens on UGC platforms. The court of first instance in the *Scarlet* case,
for example, had held that the filtering injunction was consistent with
Article 15 because the order only applied to specific content (the list of
particular musical works supplied by SABAM) and therefore was not a general
obligation. In reversing, the ECJ opinion explained the fault with this
reasoning: A mandate to filter out a finite list of particular content may
be narrower in some respects than a mandate to filter out *all* infringing
content that may be uploaded to the site, but it nonetheless requires
scrutinizing all user traffic. It is this type of general monitoring that
should be precluded by Article 15, no matter how specific the list of
content being filtered.

*SABAM v. Scarlet* opinion, ECJ
C-70/10<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/1020938551/text=&docid=115202&pageIndex=0&doclang=EN&mode=doc&dir=&occ=first&part=1&cid=996022>

*SABAM v. Netlog* opinion, ECJ
C-360/10<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/f441c42e98/text=&docid=119512&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=161927>

*Open Question for Content Hosts: "Notice-and-Stay-Down"*

Despite the opinions in the SABAM cases, so-called "notice and stay down"
remains an unsettled and troubling issue in Europe. Some courts have
imposed duties on content hosts to prevent the reposting of particular
content once the service provider has been notified to remove it.

Most recently, a German court ruled in April that YouTube has an obligation
to use its Content ID tool to prevent all appearances of videos that
include songs about which it receives a takedown notice. In addition, the
court ordered YouTube to supplement Content ID with a keyword filter. The
court attempted to distinguish its ruling from the *Netlog*case, in
reasoning that echoed the lower court in *Scarlet*, by arguing that since
the obligation only applied to specific music titles following notice from
the rightsholder, it was not general obligation to monitor.

In reality, the notice-and-stay-down requirement imposed by the German
court is no different than the obligations rejected in *Scarlet* and *Netlog
*. No matter how specific the content being targeted, an obligation to
prevent re-uploads means that a service provider must monitor all uploads
on an ongoing basis to be sure to catch re-uploads. It is as much an
obligation to monitor as the filtering at issue in *Netlog*.

Although the ECD leaves some room for injunctions against intermediaries,
notice-and-stay-down contradicts the purpose of establishing safe harbors
in the first place. The German court relied in part on the fact that
YouTube already had its Content ID tool to carry out the order, but not all
platforms - especially startups - will have the resources to develop
sophisticated filtering systems. If new innovators risk having to comply
with onerous filtering obligations in order to operate within the safe
harbor, they may never get off the ground. And that would undo one of the
principal benefits of a liability safe harbor: reducing risk to spur
innovation in Internet technologies.

*GEMA v. YouTube* judgment, Hamburg District Ct, 310 0 461/10 (unofficial
English translation)<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/b0a7f34129>

*DailyMotion v. Zadig Promotions*, Cour d'appel de Paris (in
French)<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/177e66079d/page=jurisprudence-decision&id_article=3076>

*ISPs Increasingly Subject to Site-Blocking Orders*

One final issue that has been increasingly appearing in European courts
involves orders for ISPs to block specific sites. Examples are piling up -
Grooveshark in the Netherlands, The Pirate Bay in several countries - but
two recent decisions in the UK highlight the trend. Courts there have
ordered ISPs to block access to The Pirate Bay and Newzbin2, both
file-sharing sites found by the courts to facilitate infringement on a
massive scale.

UK copyright law, implementing the EU Information Society Directive, allows
for blocking injunctions against Internet intermediaries with actual
knowledge that their services are being used to infringe copyright. This
would seem to be in tension with Article 15 of the ECD, since determining
which user transmissions to block arguably requires monitoring all of them.
Indeed, British Telecom objected to the first injunction (to block
Newzbin2) in part on the basis that it was precluded by Article 15. But the
court ruled the injunction permissible:

"The order sought . . . does not require BT to engage in active monitoring
. . ., but simply to block (or at least impede) access to the Newzbin2
website by automated means that do not involve detailed inspection of the
data of any of BT's subscribers. To the extent that this amounts to
monitoring, it is specific rather than general. Furthermore, it would be
imposed by a case-specific order made under national legislation which
implements Article 8(3) of the Information Society Directive."

This reasoning does little to resolve the legal tension. Forcing an ISP to
inspect all web requests and other traffic to see if they are bound for the
blocked site certainly results in monitoring of the ISP's general traffic
stream. The use of "automated means that do not involve detailed inspection
of data" may render it somewhat less onerous or objectionable from a
privacy standpoint. But it remains the kind of generally applied monitoring
obligation that Article 15 and safe-harbor policies in general have been
enacted to prevent.

Beyond the lawyerly parsing of what constitutes a "general" obligation to
monitor, ISP blocking carries risks to free expression. Some
implementations can be dramatically overbroad, inadvertently blocking more
than just the intended site. Moreover, ISP website blocking is a very blunt
instrument. Rather than enabling targeted action against specific
infringing content, it targets entire platforms, which may well contain a
mix of lawful and infringing content. Issuing blocking orders for such
platforms – even those that may have come to be commonly used for
infringement - can impair the ability of some users to access lawful
expressive material.

There are questions regarding the ultimate effectiveness of ISP blocking as
well. A 2010 study by the UK telecom regulator Ofcom noted that
"[c]ircumvention of a block is technically a relatively trivial matter
irrespective of which of the techniques used."

*Twentieth C. Fox v. BT* (re: Newzbin2) judgment, 2011 EWHC 1981
(Ch)<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/26094247d9>

*Dramatico Entertainment v. British Sky Broadcasting et. al.* (re: The
Pirate Bay) judgment, 2012 EWHC 268
(Ch)<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/a93fa4fd18>

For more on the policy considerations raised by government-mandated ISP
website blocking, see:

CDT, House testimony, March
2011<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/85b8445289>

CDT, The Perils of Using the Domain Name System to Address Unlawful
Internet Content<http://cts.vresp.com/c/?CenterforDemocracyTe/691d9e1ae2/c7c898c6e0/afd088b1fc>

For more information, please contact Andrew McDiarmid <andrew at cdt.org>,
Senior Policy Analyst, or David Sohn <dsohn at cdt.org>, Director of CDT's
Project on Copyright and Technology.



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