Web 2.0 liability hits Europe - delete those borrowed cartoons fast, folks..

Rather more sensibly, via my dear colleague Judith Rauhofer.. interesting case reports of two summer French decisions on Web 2.0 liability, summarised by Bird and Bird in their EU IT law bulletin. I have been meaning to note these, so am indebted to both sources.

MySpace

In the first decision, on 22 June 2007, a French humorist successfully sued MySpace before the Paris first instance tribunal for infringement of his author’s rights and personality rights, as his name, image and some of his sketches were published on a MySpace webpage without his authorisation.

The court found that MySpace performed the role of an Internet host. However it also did other things: it provided "a presentation structure with frames, which is made available to its members" and significantly, it also "broadcasts advertising upon each visit of the webpage, from which it profits".

As a result MySpace did not benefit from the hosting immunity of the EC Electronic Commerce Directive, Art 14 , implemented in Article 6.I.2 of the French law “on Confidence in the Digital Economy” (dated 21st June 2004) . The French law provides that a hosting provider:

“may not be held civilly liable for the activities or information stored at the request of a recipient of these services if they are effectively unaware of the illegal nature thereof or of the facts and circumstances revealing this illegality or if, as soon as they become aware of them, they have acted promptly to remove these data or make access to them impossible"

MySpace were however deemed not a host but a "publisher". Lacking immunity, MySpace were thus ordered to pay substantial damages.

Dailymotion

The second decision concerns Dailymotion, who appear to be a kind of You Tube equivalent site.

In April 2007, the director and the producer of a French film entitled “Joyeux Noel” sued Dailymotion on the ground of copyright infringement, because their film could be viewed on Dailymotion’s website.

In a decision dated 13 July 2007, the Tribunal de Grande Instance of Paris ruled that Dailymotion, although classed as a hosting provider, under the French law quoted above, was still liable for providing internet users with the means to commit copyright infringement.

On the plus side for Dailymotion, the court agreed that it was a hosting provider, and so in principle entitled to the immunity above. This was so even though it operated a commercial activity supported by advertising revenues - factors which had lead earlier French courts (as in the MySpace case, above) to declare sites like Dailymotion, not hosts , but "publishers".

On the down side however, the court held that DM

"had still acted unlawfully in providing internet users with the means to commit copyright infringement. Indeed, the Tribunal de Grande Instance considered that the success of Dailymotion’s website depended upon the broadcast of famous works because, according to the judge, these works captured larger audiences and ensured greater advertising revenues. Moreover, the court specified that even if there is no general obligation for hosting providers to actively seek out illegal activities, this limitation does not apply where these activities are created or induced by the provider."

The Bird and Bird report also suggests the court found that DM were "necessarily aware" of the copyright infringing material on their site.

As a result the court appears to have found that DM should have exerted prior restraint on giving access to copyright infringing works - in other words, installed effective filtering tools. Since they had not, they were liable. DM has appealed.

Pangloss sez

The Bird and Bird commentaries by (one asumes) French lawyers, suggest that the two cases are incompatible. This is formally true, in that MySpace were found to be a publisher, while DM was, it seems , not.

However from a UK/ECD perspective the two cases can be seen as pretty much on all fours at least as relating to liability and immunity. ECD Art 14 immunity from civil law liability requires three elements

• being a host
• not having actual notice (or taking down on receiving such notice)
• not having constructive notice (awareness of fact and circumstances such that they should have known copyright infringement was going on)(or take down as above)
  

Whether this analysis makes Daily Motion and MySpace "hosts", who nonetheless fail to gain immunity because of having constructive notice; or not hosts at all, but "publishers" , seems to Pangloss to not be of the essence (though no doubt the French do not feel that way).

The real and very exciting or worrying aspects of the case (depending on whether you are a content industry maven or a web 2.0 entrepeneur) are two fold.

First, these are judgments on the interpretation of a transposition of Art 14 of the ECD which seem to indicate (as Pangloss has suspected for some while) that a European court - perhaps even a UK court - would take one look at the My Space/You Tube etc business model, and fail to apply hosting immunity to them.

It seems more and more unreasonable that these sites' business model should be built around content much of which is clearly known to be infringing, and that they nonetheless escape all liability because that content was provided by third parties. This model was reasonable when applied to ISPs in the old days, who genuinely had little or no financial interest in what their users stuck on their server as long as it wasn't virus-ridden - it is not when applied to Web 2.0 and the user generated content business model.

Since these sites undoubtedly do perform a function as Internet hosts (tho quare how significant the streaming vs downloading model is here) a court thinking as above has to find a way to disapply the hosting immunity. And that way is via constructive knowledge - "they should have known".

Second and perhaps even more important, is the suggestion of the Dailymotion court that DM's knowledge or awareness was such that anti-infringement filters should have been installed.

This is now becoming familar as a remedy that has been ordered in P2P infringement cases: in the US in the Grokster case, and in Australia in the Kazaa case. But as many commentators have noted, in Europe, it seems to fly in the face of the ECD Art 15 injunction that service providers (including hosts and ISPs) cannot have obligations of prior active monitoring imposed on them.

The Dailymotion court was not unaware of this : the Bird and Bird report says that

"the court specified that even if there is no general obligation for hosting providers to actively seek out illegal activities, this limitation does not apply where these activities are created or induced by the provider." [Pangloss's bold added]

Leaving aside translational coincidences, this also has a ring of familiarity. In Grokster, the US Supreme Court, unlike the Court of Appeals, decided effectively that a Sony defense of "capable of substantial non infringing use" , even where there was no actual knowledge of infringement by the site, could not stand as a complete defence where there was out and out inducement of copyright infringement by the site. Thus Grokster was eventually found liable.

So where does this leave us in the UK? Interestingly, Art 15 was never transposed into UK law. This leaves it potentially even more open to the UK courts to come up with a formulation such as the French court did in Dailymotion. That leaves the normative question : should a finding of constructive knowledge also entitle a court to run against the clear words of the ECD in Article 15?

Clearly copyright owners would rather have proactive filtering than retrospect damages. But they want something even more: a share of the cake. The whole argument may thus soon become moot. As heavily covered on this blog, perhaps the technologically leading web 2.0 site, You Tube, has finally rolled its out long awaited copyright content filtering solution, Video Identification (RIP Claim Your Content?)

Instead of suing You Tube, or endlessly issuing take down notices, copyright owners can now ask YT to put their works onto its proactive filter database, or better still, leave its copyright content available on the YT site, but ask for a share of the revenue from the ads surrounding it.

The possible demise of Art 15 leaves other worries however. The UK government has been dropping hints hither and thither about imposing general obligations on ISPs in the UK to filter out everything from child porn, to terrorist material, to P2P traffic. If Art 15 is to be interpreted out of existence - or quietly ignored - there will be nothing to stop this. And although Google and You Tube may have come up with a tentative solution which may work for them (it is not yet tested) , there is no real evidence that rolling out large scale filters at ISP level is either technically feasible, or constitutionally desirable.

Let's face it, the law on hosting liability, as Trev Callaghan of Google put in the summer, is simply broken. It is time to reconsider everything in the upcoming review of the ECD.

In fact I very much doubt we will see a root and branch re-analysis. But that is clearly what is needed if Web 2.0 is not to entirely founder in Europe.