France v eBay, part deux & the future of online intermediary immunity

France continues to be an entertaining source of Internet law. The Guardian reports (13 May 2009) that

"The world's largest online auctioneer, eBay, was today claiming a "victory for consumers" after a court in Paris ruled that it was not liable for counterfeit L'Oreal perfumes for sale on its website.

The perfume and cosmetics company has taken legal action against eBay in four other countries, but today's ruling is a major victory in France for eBay, which was fined €38.6million (£34.7million) in a similar case against the luxury goods manufacturer LVMH (Moet Hennessy Louis Vuitton) group and €20,000 against Hermès. The ruling reflects a Belgian court's decision last August, and a ruling is expected shortly on a similar case being brought in the UK.

L'Oreal has claimed that the eBay website profits from the sale of fake products and that brand owners are expected to help police online auctions. The cosmetics company told the hearing in Paris it believed that as many as 60% of the perfumes sold on eBay under its luxury brand names were fakes.

But the court ruled that eBay was meeting its obligations to combat the sale of fake products, and urged the companies to use mediation to develop a plan which would enable them to work together on the issue."

This is fascinating as yet another example of how completely the hosting immunity provisions of Art 14 of the EC E-Commerce Directive are failing to be interepreted in a harmonised manner across Europe. As the Guardian report notes, only a few months ago we saw a completely opposite ruling emerging from the French courts, which are regarded as the toughest courts in Europe on intermediaries "assisting" in IP violation (see eg previous DailyMotion and MySpace cases).

The problem is also not only about IP; in Italy, Google is being sued for allowing the posting of defamatory videos on its site, while in France also, several cases have held user-generated content sites liable for posting of private photos. Only in the UK, of the large commercial EU countries, are we yet to see a case holding a major web 2.0 intermediary liable in respect of user generated content.

The immunity provisions of the ECD in Arts 12-15 desperately need reviewed and reformed, yet the Comnmission shows no signs of wishing to initiate such a process. Pangloss, suprise, suprise, is currently rewriting her chapter on this whole area for Law and the Internet 3rd edn. My provisional conclusions are that a bright line of no liability on intermediaries for content provided by third party content providers, unless or until notice is given to take down (as in Art 14) can no longer be sustained.

We are seeing instead a move towards a new system, by court if not legislative creation, which

• uncouples the current horizontal scheme of immunities to reflect the very different pressures in the fields of , notably, copyright and pornographic material, as opposed to defamatory or private material
• recognises the increased demands both of IP rightsholders and law enforcement agencies for pre emptive filtering rather than ex ante takedown, possibly by taking advantage of the ECD's exemption of injunctive relief from the immunity provisions
• responds to the increased blurring between the notions of "intermediary" and "content provider", especially in the world of web 2.0 intermediaries such as eBay and YouTube etc, by removing immunity from such hybrid intermediaries, or imposing extra obligations
  
• in particular, relies heavily on looking at what financial gain an intermediary makes from hosting or linking activities, thus moving to a far more case by case assessment of immunity, which will be difficult to predct for intermediaries and hard to implement in automated take down or filtering systems
  
• finally, regulatory intervention may be needed to bolster public interest values like freedom of speech and privacy against defensive or industry-required take down, monitoring and/ or filtering by intermediaries.