November 5, 2019

On 6 November 2018 the German Federal Court of Justice (BGH) made two references to the European Court of Justice (CJEU) concerning the question of whether the platforms YouTube (the well-known video sharing platform) and Uploaded (a cyberlocker) are responsible for copyright infringement by communication to the public.[1] The questions referred in each case are similar and the CJEU has joined the cases. The hearing will take place on 26 November 2019.

The judgment of the CJEU will have far-reaching consequences for the interpretation of the existing legal framework, including on the Copyright in the Digital Single Market Directive, which had not been adopted at the time of the BGH referrals. This has been recognised by the CJEU, which will hear the case as a Grand Chamber and has requested the parties to address Article 17 of Copyright in the DSM Directive. In this context, we also note that Poland has brought a case before the CJEU, seeking an annulment of Article 17.[2]

At a practical level, these rulings will impact the protection and exploitation of creative content online.  Rightholders argue that the CJEU should find that the platform operators communicate works uploaded by users to the public and may not rely on the Article 14 defence for hosting providers.  This position is consistent with their goal of ensuring that content can be effectively licensed and protected online in a world where content-sharing platforms have become part of mainstream daily content consumption.  The platforms will rely on a more restrictive view of communication to the public and a broad interpretation of the hosting privilege.

The facts

In the YouTube case, a record producer brought copyright infringement proceedings against YouTube in relation to uploads onto YouTube of tracks from an album and a concert recording of the soprano Sarah Brightman.  The claimant requested that the content be taken down and YouTube initially complied, but the content reappeared on YouTube a few days later, leading the claimant to commence proceedings which have been ongoing since 2009.  The claimant sought an injunction in relation to the videos, disclosure of information about the uploading users and damages.

In the Uploaded case, the scientific publisher, Elsevier, notified Uploaded that three of its works were accessible on Uploaded’s servers via links on third party websites.  The Uploaded platform stores content uploaded by its users (who can remain anonymous), and automatically provides a “download link” to the file which can be posted in “link collections” elsewhere on the internet.  Downloading users are incentivised to pay for premium accounts as it allows them to have higher download quantities and speeds than non-paying users.  Uploaded also remunerates uploading users by reference to the number of times their files are downloaded, thereby encouraging users to upload content likely to be protected by copyright.  Elsevier brought proceedings against Uploaded in July 2014 as a perpetrator of copyright infringement and alternatively as a participant or a “disquieter”, requesting injunctive relief, the provision of information and seeking damages.

Communication to the public

In each referral the BGH’s first question is whether the operator performs an act of communication to the public within the meaning of Article 3(1) of the InfoSoc Directive (also sometimes known as the Copyright Directive).

In both referrals, the BGH listed a number of characteristics of the platform for the CJEU to take into account in its ruling.  The common factors to each platform were that:

• the upload process is automated without prior checks or control by the operator;
• the terms of use prohibit the upload of copyright infringing content; and
• the operator generates revenue.

Additional factors to consider in YouTube according to the BGH were that:

• the operator provides tools which can help rightholders block infringing videos; and
• the operator organises search results in the form of rankings and categories of content and displays an overview of recommended videos to registered users based on viewing history.

Additional factors for consideration in Uploaded according to the BGH were that:

• the service is used for legal applications but the operator was aware of a significant number of copyright infringing works;
• the operator does not offer a search function but provides unlimited download links which are placed by third parties in link collections, enabling search for specific content;
• by structuring the remuneration for downloads according to demand, the operator creates an incentive to upload copyright content; and
• by allowing users to upload anonymously, the operator increases the likelihood that users will not be held accountable.

The InfoSoc Directive does not define communication to the public but the CJEU has held that it is necessary for there to be (i) an ‘act of communication’ of a work, and (ii) the communication of that work to a ‘public’.  The CJEU has also stated that it is to be construed broadly[3] and with the objective of establishing a high level of protection for rightholders[4].  In addition, the CJEU has developed several complementary, interdependent criteria which emphasise the essential role played by the alleged infringer, who makes an act of communication “when he intervenes, in full knowledge of the consequences of his action, to give access to a protected work to his customer and does so, in particular, where in the absence of that intervention, his customers would not, in principle, be able to enjoy the broadcast work“[5].  This test was developed primarily in cases where the alleged infringer did not host the content but intervened to provide access to a new public through technical means such as television sets, decoding devices or linking.  Therefore, it will be interesting to see how the CJEU applies the test in circumstances where YouTube stores and transmits the content, and Uploaded stores the content and provides links which enable unlimited downloads.

As both YouTube and Uploaded earn revenue from their platforms, per the CJEU, this will create a rebuttable presumption that they were aware of the infringement.  Following GS Media[6] it seems that to rebut the presumption, as a minimum, the operator would need to show that it carried out “necessary checks” which had reasonably led it to believe that the content was published legally.

As regards the prohibition against copyright infringing content in the terms of use, this is unlikely to be decisive[7], and will need to be balanced against other factors, in particular (in the case of Uploaded) the structure of remuneration and ability to remain anonymous, which arguably encourages the sharing of unauthorised copyright content, and (in the case of YouTube) the extent of intervention through processing of content, provision of search and categorisation facilities, and assistance with promotion of videos.

The CJEU is also asked to consider (in YouTube’s case) the provision of tools to enable rightholders to block or monetise videos.  On the one hand these tools show that YouTube is helping rightholders to protect content (unlike some of the more egregious websites), but on the other hand, the provision of such tools demonstrates knowledge of a large number of infringing works and so may be relevant to the essential role of the alleged infringer and whether it “intervenes, in full knowledge of the consequences of his action“.

The hosting privilege

The second question in each referral relates to the scope of Article 14 of the E-Commerce Directive (the so-called “hosting privilege” or “hosting defence”) under which hosting providers are not liable if (a) the provider does not have “actual knowledge” of illegal activity or information and, as regards damages claims, the provider is not aware of facts or circumstances from which the illegal activity or information is apparent, or (b) upon obtaining such knowledge or awareness, acts expeditiously to remove or disable access to the information.  The German court asks the CJEU to clarify whether the platforms fall within the scope of Article 14, and the specificity of knowledge that is required to ‘lose’ the privilege under point (a).

A key requirement of the hosting privilege is that the service provider cannot be “active”.  This is summed up by the CJEU in L’Oréal v eBay: “where the service provider, instead of confining itself to providing that service neutrally by a merely technical and automatic processing of the data provided by its customers, plays an active role of such a kind as to give it knowledge of, or control over, those data“[8].  Relevant factors for the CJEU to consider will include the ways in which YouTube processes and promotes videos, and (as regards Uploaded) the unlimited download links and remuneration structure.  In Google France[9] the CJEU indicated that automated processes may lead to an active role, including the use of software to determine the order of display of ads, and the selection of keywords and a commercial message to assist with ad creation.  National decisions have been divided on the scope of Article 14 so far as YouTube is concerned.  A decision in the Turin Court of First Instance found that YouTube was not active and that only an intervention altering the video itself would lead to such a finding.[10]  However, on 10 January 2019 (according to news reports), the Commercial Court in Rome found the video sharing platform, Vimeo, liable for copyright infringement noting “that service providers who play an “active role” including “cataloging, indexing and commissioning” content cannot benefit from the safe harbor exemptions offered by the [E-Commerce Directive].”[11] Moreover, a recent ruling by the Vienna Commercial Court also supports the position that YouTube is active and cannot benefit from the Article 14 defence, on the basis of activities such as “connections, sorting, filtering and linking, in particular…creating tables of contents according to predefined categories…and creating a tailor-made surfing proposal, offering help etc…”[12]

The CJEU will need to consider the level of knowledge and/or awareness required on the part of the operator for it to ‘lose’ the hosting privilege.  UK case law related to section 97A CDPA (which implements Article 8(3) of the InfoSoc Directive) suggests a more general level of knowledge is sufficient. In Newzbin2[13] Arnold J held that the type of knowledge required was, “actual knowledge of one or more persons using its service to infringe copyright”[14].  Although this finding relates to the UK implementation of Article 8(3), the judge agreed that the knowledge element of s.97A was probably inspired by Article 14 language.  By contrast, other national courts have supported a strict approach.  For example, the Madrid Court of Appeal[15] found that YouTube was entitled to rely on the hosting privilege because it did not have “actual knowledge” where notifications sent by the rightholders did not contain URLs to the infringing content and only listed the titles. 

Injunctions against intermediaries

In the event each platform does benefit from the Article 14 hosting privilege, the fourth question focusses on Article 8(3) of the InfoSoc Directive (under which rightholders are entitled to apply for injunctions against intermediaries whose services are used by a third party to infringe copyright).  The BGH asks whether, in order to obtain an injunction, it is necessary for the rightholder to notify the intermediary of the specific infringement, and for that infringement to have recurred since the notification.  It will be interesting to see whether the CJEU supports a broad interpretation (as per Arnold J’s approach in Newzbin2) or a strict interpretation (following the Madrid Court of Appeal) of the concept of notification, and whether this will align with the type of knowledge required to lose the Article 14 hosting privilege.

A strict approach would require rightholders to notify platforms each time infringing content appears at a different URL, even where a prior notification of a particular work had been sent.   Rightholders would undoubtedly argue that such an approach is burdensome, particularly in view of the sheer number of works made available on platforms such as YouTube and the types of technology available which allow protected works to be identified on a large scale.

Liability for damages

Questions 5 and 6 of each referral ask whether the platform would nevertheless be considered an “infringer” under Article 11 (first sentence) and Article 13(1) of the Enforcement Directive, if the platform (i) does not to communicate to the public, and (ii) does not fall within the hosting privilege.

Article 11 (first sentence) entitles Member States to issue injunctions against infringers aimed at prohibiting the continuation of the infringement and Article 13(1) requires that infringers pay damages where they “knowingly, or with reasonable grounds to know engaged in an infringing activity“.  In formulating these questions the BGH had been looking at the concept of accomplice liability under German national law, so the CJEU may decline to answer the question definitively.  Regarding the level of knowledge required for damages, the BGH indicated in its Uploaded decision that the operator would need to have knowledge relating to specific infringements.  However, a requirement for this level of knowledge may lead to difficulties in protecting and monetising online content effectively.   In Newzbin, Kitchin J ordered an inquiry into damages and additional damages, emphasising that the website operator had “engaged in a deliberate course of conduct well knowing that the vast majority of the materials in the Movies category of Newzbin are commercial and so likely to be protected by copyright and that the users of Newzbin who download those materials are infringing that copyright“[16]. Therefore it seems knowledge of each specific infringement was not a requirement although UK law provides for wider types of damages that those in the Enforcement Directive.

[1] Cases C-628/18 and C-683/18

[2] Case C-401/19

[3] Reha Training v GEMA, Case C-117/15, Judgment of the Court (Grand Chamber) of 31 May 2016

[4] Recital 9 of the InfoSoc Directive

[5] Stichting Brein v Jack Frederik Wullems, also trading under the name Filmspeler, Case C-527/15, Judgment of the Court (Second Chamber) of 26 April 2017

[6] GS Media BV v Sanoma Media Netherlands BV and others, C-160/5 Judgment of the Court (Second Chamber) of 8 September 2016

[7] This type of prohibition was considered by the UK court in the context of the Newzbin website, where it was held to be merely cosmetic: see paragraph 42 of Twentieth Century Fox Film Corporation and others v Newzbin Limited [2010] EWHC 608 (Ch)

[8] Paragraphs 111-113  L’Oréal SA and others v eBay International AG and others, Case C-324/09, Judgment of the Court (Grand Chamber) of 12 July 2011

[9] Google France SARL and Google Inc. v Louis Vuitton Malletier SA and Others, Cases C-236/08 to C-238/8, Judgment of the Court (Grand Chamber) of 23 March 2010

[10] 7 April 2017 No 1928, RG 38113/2013, Delta TV v Google and YouTube. We have not reviewed the specific decision but rather relied on the summary at http://ipkitten.blogspot.com/2017/04/italian-court-finds-google-and-youtube.html

[11] See e.g., https://torrentfreak.com/vimeo-fined-e8-5m-for-failure-to-remove-copyrighted-tv-content/. We have relied on news reports and not reviewed the actual judgment.

[12] http://copyrightblog.kluweriplaw.com/2018/08/28/austrian-tv-broadcaster-puls-4-wins-youtube-first-instance/   and   https://torrentfreak.com/youtube-can-be-liable-for-copyright-infringing-videos-court-rules-180607/

[13] Twentieth Century Fox Film Corporation v British Telecommunications plc [2011] EWHC 1981 (Ch)

[14] Paragraph 148

[15] Telecinco v YouTube (Madrid Court of Appeal 14 January 2014). We have not reviewed the specific decision but rather relied on the summary at http://ipkitten.blogspot.com/2014/02/get-harbour-safe-telecincos-appeal-v.html

[16] Twentieth Century Fox Film Corporation and others v Newzbin Limited [2010] EWHC 608 (Ch)