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

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
<www.cedricmanara.com/english>

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. More concretely
 Intermediaries reduce
• search
• transaction
• communication
• investment & operating
 costs
3

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, Huuto.net…
• Generative platforms
─ open: YouTube, SL…
─ v. proprietary: Facebook, App Store
4

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. 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. D. Ardia, An empirical
study of intermediary
immunity under section
230 of the
Communications
Decency Act, 2010
7

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. 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. Outline
 Principle: exemption of liability [1]
 From principle to practice [2]
 Towards surveillance? [3]
 Future developments [4]
10

11. 1. Principle:
Exemption of liability
11

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 3
Act in an "expeditious way"?
 Within
• Minutes?
• Hours?
• Days?
25

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. 2. From principle to
practice
27

28. 28

29. 29

30. Lessons learned
'when in doubt, take it down‘
• remov material that doesn‘t violate the law
30

31. 31

32. Lessons learned
 Private intermediaries are risk averse
• 'when in doubt, take it down‘
• remove material that doesn‘t violate the law
32

33. Selection of cases
 France
 Germany
 Italy
 Spain
33

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. 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. 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. France
 Court of cassation, February 17, 2011
• DailyMotion (YouTube-like)
• Fuzz (Digg-like)
• Amen
37

38. Across the EU:
 Conflicting caselaw
 Lack of legal certainty
38

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. 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. 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. 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. 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. 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. Ladies & gentlemen, please
welcome…
 Bono
 Ten for the Next Ten, New-York Times, Jan. 2, 2010
45

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. 3. Towards surveillance?
47

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. Moving from ex post reaction to ex ante action…
49

50. 50

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. 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. 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. Ex ante applications?
 Belgium
• Belgacom & Telenet must block access to The Pirate
Bay
– Antwerpen, September 26, 2011
 UK
• Blocking access to newzbin.com, "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. 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. Removing is not enough
 ―when a website is successfully removed
from a host server, it reappears very easily
under another name‖
56

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
– http://en.wikipedia.org/wiki/Streisand_effect
57

58. France, March 29, 2012
58

59. HIDE, OR FIGHT?
Removal  Effect
Enforcement  Cause
59

60. 4. Future developments
60

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.  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. 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. 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

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. 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. 12+ years to
 Re-invent due process
 … or introduce it?
 What we may also need: a European
version of ChillingEffects.org
68

69. 69

70. 70

71. It’s not only about commerce!
71

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. 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