These Shoes are Made for Selling - AG Szpunar Opines on Intermediary Liability and the 'Use' of a Trademark for Online Marketplaces

Intermediaries in e-commerce are a near necessity for many online sellers of products, but they can produce headaches and issues where potentially unauthorized goods are sold through them that infringe a company's IP rights. The status of intermediaries' liability has been slowly evolving in the courts, and a hotly anticipated decision by the CJEU on the issues is very close in the horizon that should clear matters up significantly in Europe. Before this, however, Attorney General Szpunar has had their say and issued their opinion earlier this Summer (the opinion only being available in English very recently). The opinion sets the scene for the CJEU and could be a glimpse into the CJEU's position on the matter in the near future. 

The case of Christian Louboutin v Amazon Europe Core Sàrl concerned infringement proceedings launched by Christian Louboutin against Amazon, under which they alleged that: (i) Amazon is liable for infringement of his trade mark; (ii) it should cease the use, in the course of trade, of signs identical to that trade mark in the EU; and (iii) he is entitled to damages for the harm caused by the unlawful use at issue. Amazon unsurprisingly challenged this position, arguing that it is merely an operator of an online marketplace and cannot be held liable for the actions of its sellers. The Luxembourg courts referred the matter to the CJEU for clarification, which is closing in on the crescendo of the decision itself following AG Szpunar's opinion.

The case combines two separate actions in Luxembourg and Belgium involving the two parties. 

AG Szpunar noted that they both concerned the interpretation of the concept of ‘use’ for the purposes of Article 9(2) of Regulation 2017/1001. In essence the referring courts are asking "…whether Article 9(2)… must be interpreted as meaning that the operator of an online sales platform must be regarded as using a trade mark in an offer for sale published by a third party on that platform on account of the fact that, first, it publishes both its own commercial offerings and those of third parties uniformly without distinguishing them as to their origin in the way in which they are displayed, by allowing its own logo as a renowned distributor to appear on those advertisements, and, secondly, it offers third-party sellers the additional services of stocking and shipping goods posted on its platform by informing potential purchasers that it will be responsible for those activities". The courts also asked "...whether the perception of a reasonably well-informed and reasonably observant internet user has an impact on the interpretation of the concept of ‘use’". 

As a primer, Article 9(2) provides that the proprietor of an EU trademark is entitled to prevent all third parties not having their consent from using, in the course of trade, any sign which is identical with the trademark. However, what amounts to 'use' in this context is paramount to determining potential liability under the provision for any would-be infringer. 

AG Szpunar then moved on to discussing the current definition of 'use' under Article 9. Some of the main decisions here are Daimler AG v Együd Garage Gépjárműjavító és Értékesítő Kft, Coty Germany GmbH v Amazon Services Europe Sàrl, Google France SARL and Google Inc. v Louis Vuitton Malletier SA and L’Oréal SA v eBay International AG. 

The CJEU has found that the term 'using' in terms of intermediaries involves active behavior and direct or indirect control of the act constituting the use, and that the act of use presupposes, at the very least, that that third party uses the sign in its own commercial communication. The latter point was key in this according to the AG and without it any such use would be lacking.

In terms of the commercial communication aspect, the CJEU has determined that a referencing service provider does not use a sign in its own commercial communication since it only allows its clients themselves to use the relevant signs, with the result that it "…merely creates the technical conditions necessary for the use of a sign". 

Similarly, a marketplace operator would not be using a sign in its own commercial communication when it provides a service consisting in enabling its customers to display that sign in their commercial activities, and that the stocking of goods bearing the relevant sign is not a use of that sign in a third party’s own commercial communication since it has not itself offered the goods for sale or put them on the market. 

The AG does highlight that this set of definitions is not a clear one and needs to be more specific and focused to make better sense. 

The AG very cleverly shifted the definition towards the recipient away from the actual communicator, i.e. the platforms. He discussed that the commercial communication of an undertaking would be to promote goods or services to third parties. To put simply, the intermediary adopts the sign to such an extent that that sign appears to be part of its activity.

The adoption condition still has to be looked at from the perspective of the recipient, i.e. the user of the marketplace, to determine whether the sign is perceived by that user as being integrated into that commercial communication. The user that this would be assessed against is a "reasonably well-informed and reasonably observant internet user". 

AG Szpunar then moved on to discussing Amazon's particular business model and whether they would be 'using' a trademark in the course of their business. 

The first question referred to the CJEU concerned, primarily, if "…the activity of a marketplace operator of publishing commercial offerings from third-party sellers on its website where those offers for sale display a sign which is identical with a trade mark". 

As noted above, this activity would not constitute a 'use' of a trademark (specifically decided in the eBay case), however, Amazon operates differently to eBay as a marketplace. Amazon provides a much more comprehensive offering, where third party sellers can post their own advertisements for goods in addition to Amazon's own. In those instances, the Amazon logo is merely present to indicate to consumers that the ad was posted by a third party seller. 

In that instances the AG noted that that would not lead to a reasonably well-informed and reasonably observant internet user to perceive the signs displayed on the advertisements of third-party sellers as part of Amazon’s commercial communication. The same would apply to the integration of third-party ads by Amazon into specific shops on the platform, which is the type of organization that is integral to the functioning of these types of online platforms. 

The referring courts also asked whether "…the fact that Amazon offers a ‘comprehensive’ service, including providing assistance in preparing advertisements and the stocking and shipment of certain goods, has an impact on the classification of the use of a sign displayed on those advertisements by Amazon". 

To properly consider this the AG highlighted that you must consider Amazon’s activities as a whole to determine whether the involvement of that company might be classified as use of that sign. The AG thought that this would not be the case. 

Amazon's involvement, while able to give them more control over the sale of a product that may infringe a trademark, but that involvement was only for the benefit of the consumer so that they could ensure prompt and guaranteed delivery after a product is purchased. In the AG's view this is not sufficient to establish that Amazon has used the sign at issue in its own commercial communication. 

This position ties in with the decision in Coty, where the CJEU determined that "…a sign cannot be regarded as having been used in the marketplace operator’s own commercial communication where that operator stocks goods bearing a sign on behalf of a third-party seller without itself pursuing the aim of offering those goods or putting them on the market". 

The AG also noted that Amazon's posting of the ads in question would not be 'using' the sign in question either. 

To round things off, the AG summarized their position as answering the questions that "…Article 9(2)… must be interpreted as meaning that the operator of an online sales platform cannot be regarded as using a trade mark in an offer for sale published by a third party on that platform on account of the fact that, first, it publishes both its own commercial offerings and those of third parties uniformly, without distinguishing them as to their origin in the way in which they are displayed, by allowing its own logo as a renowned distributor to appear on those advertisements, both on its website and in the advertising categories of third-party websites and, secondly, it offers third-party sellers the additional services of assistance, stocking and shipping of goods posted on its platform by informing potential purchasers that it will be responsible for the provision of those services, provided that such elements do not lead the reasonably well-informed and reasonably observant internet user to perceive the trade mark in question as an integral part of the operator’s commercial communication".

The AG's opinion really sets the scene for the CJEU and seems very sensible in protecting the functionality of online marketplaces, like Amazon. If the courts would see things otherwise, this would clearly massively impede the functionality of these services, and in fact, without heavy moderation by the platforms themselves, would make them impossible to operate. This should not be seen as carte blanche for the platforms either, but could set sensible, clearer boundaries for both platforms, brands and third party sellers, but it remains to be seen what the CJEU's position will be. 

Challenger Defeated - Article 17 of the Digital Single Market Directive remains valid in light of the Freedom Expression

The EU is currently working on, or passing, big legislative changes in order to address issues within the digital marketplace and in relation to "Big Tech". This includes the Digital Single Market Directive and the forthcoming Digital Services Act, which will make sweeping changes to how companies operate in the digital space. One hotly contested point within this package is Article 17 of the DSM, which was challenged by Poland in a hotly awaited case within the CJEU. Following an opinion from Advocate General Øe as far back as July last year, the Court handed down its decision very recently on this, which sets the scene for the application of the DSM in the near future.

The case of Republic of Poland v European Parliament concerned an action for annulment brought by Poland in relation to Article 17. What the provision does is introduce liability for platforms that allow users to upload digital content onto the platform, such as YouTube, for copyright infringement if that user-uploaded material infringes copyright. However, platforms can avoid liability by making "best efforts" to either acquire a license or block the infringing content, and an obligation is placed on the platforms to act expeditiously following any notification by rightsholders to remove or disable the content and to use "best efforts" to prevent any future uploads, for example through the use of content filtering.

As is clear, Article 17 is set to change the landscape for platforms like YouTube and introduces strict measures and steps that need to be taken by the same in relation to infringing content. Poland challenged the provision on the grounds that it infringed Article 11 of the Charter of Fundamental Rights of the European Union, which enshrines the freedom of expression in EU law. 

What they specifically argue is that in order to be exempted from all liability for giving the public access to copyright-protected works or other protected subject-matter uploaded by their users in breach of copyright, online content-sharing service providers are required to carry out preventive monitoring of all the content which their users upload. This imposition of these mandatory measures, without appropriate safeguards put in place, would breach the right to freedom of expression.

The Court discussed their decision in YouTube and Cyando, which sets out that "the operator of a video-sharing platform or a file-hosting and ‑sharing platform, on which users can illegally make protected content available to the public, does not make a ‘communication to the public’ of that content, within the meaning of that provision, unless it contributes, beyond merely making that platform available, to giving access to such content to the public in breach of copyright". In addition, the same service providers will be specifically exempt from infringement provided that they do not play an active role of such a kind as to give it knowledge of or control over the content uploaded to its platform.

Article 17, as discussed above, is set to change this position and introduce new liability provisions and obligations on platforms. 

As set out by the Court, Article 11 of the Charter and Article 10 of the European Convention on Human Rights guarantee the freedom of expression and information for everyone, including in relation to the dissemination of information which encompasses the Internet as a key means of dissemination. Therefore, courts have to take due account the particular importance of the internet to freedom of expression and information and ensure that those rights are respected in any applicable legislation. 

In considering whether Article 17 has an impact on peoples' freedom of expression, they initially noted that the provision assumes that some platforms will not be able to get licenses from rightsholders for the content that is uploaded by users, and the rightsholders are free to determine whether and under what conditions their works and other protected subject matter are used. If no authorization is received the platforms will only have to "...demonstrate that they have made their best efforts... to obtain such an authorisation and that they fulfil all the other conditions for exemption" in order to avoid liability.

The conditions include acting expeditiously when notified by rightsholders in order to disable access to, or to remove the potentially offending content, to put in place appropriate measures to prevent the uploading of infringing content (e.g. through the use of automatic recognition and filtering tools), and to prevent future uploads. The Court does accept that these early measures can restrict an important means of disseminating online content and thus constitute a limitation on the right guaranteed by Article 11 of the Charter. They, therefore, concluded that "the specific liability regime [under] Article 17(4)... in respect of online content-sharing service providers, entails a limitation on the exercise of the right to freedom of expression and information of users of those content-sharing services".

However, the next piece of the puzzle the Court addressed was whether the limitation could be justified. 

The Charter does allow for legislation to impact the freedoms it contains, however, any limitations of those rights must be proportionate and made "... only if they are necessary and genuinely meet objectives of general interest recognised by the [EU] or the need to protect the rights and freedoms of others". If there is a choice between several different measures the least onerous one has to be chosen over the others and the disadvantages caused must not be disproportionate to the aims pursued. Finally, adequate safeguards need to be put in place within the legislation to guarantee the protection of those rights from abuse. 

The Directive and Article 17(4) do specify the limitations placed on the freedom of expression, it does not specify the means through which it should be done, only that they need to use their 'best efforts' in doing so. Although, as set out above, the Charter does require that these need to be specified, the Court noted that the limitations can be formulated in terms that are sufficiently open to be able to keep pace with changing circumstances. 

The Court also mentioned that the legislation, in Article 17(7) (and similarly in Article 17(9)), requires that other expression not be limited if it does not infringe copyright, so it is specific well beyond mere "best efforts". The Court accepted that both Articles 17(7) and (9) protected the right to freedom of expression and information of users of online content-sharing services adequately. They confirmed that this struck an adequate balance between both parties' interests. Looking at the liability mechanism itself, the Court agreed that it was not only appropriate but also appears necessary to meet the need to protect intellectual property rights. 

Also, the platforms are protected by the provision somewhat due to the notification requirements it sets, and without notification, broadly speaking, they would not be held liable for any infringing contents. Article 17(8) also specifically excludes a general monitoring obligation on the platforms. Any notification also has to contain sufficient information to remove the infringing contents easily. Article 17(9) contains several other procedural safeguards that should protect the right to freedom of expression and information of users where the service providers erroneously or unjustifiably block lawful content.

In summary, the Court set out that "...the obligation on online content-sharing service providers to review, prior to its dissemination to the public, the content that users wish to upload to their platforms, resulting from the specific liability regime established in Article 17(4)... and in particular from the conditions for exemption from liability... has been accompanied by appropriate safeguards by the EU legislature in order to ensure... respect for the right to freedom of expression and information of the users of those services... and a fair balance between that right, on the one hand, and the right to intellectual property, protected by Article 17(2) of the Charter".

The decision is undoubtedly correct and, although a bitter pill to swallow for many platforms that will be impacted by it, the aim of the legislation seems to not be to unduly burden them with monitoring obligations and to stifle the freedom of expression, but attempts to balance that with the protection of legitimate copyrights held by other parties. It will remain to be seen what filtering measures will be considered adequate by the EU courts in the future if they are challenged, but one can imagine sufficient measures already exist, such as Content ID for YouTube. The DSM is the first big step in the new IP regime in Europe, with more changes set to be made in the near future. 

Just in the Middle - CJEU Decides on Intermediary Liability for Copyright Infringing User Content

The issue of intermediary liability for copyright infringement has been a thorny issue in recent years, and the case involving YouTube (discussed more here) in this regard has been trundling through the EU courts for what feels like decades (exacerbated by the pandemic no doubt). However, the European courts have reached their decision last summer, giving some needed guidance on the matter and setting the scene for intermediary liability for the future. This writer is woefully behind the times in writing about this decision, but it does merit belated discussion and is a very important decision to keep in mind in relation to intermediaries.

The case of Frank Peterson v Google LLC (along with another case; Elsevier v Cyando) concerns Nemo Studio, a company owned by Mr Peterson who is a music producer. In 1996, Nemo Studio entered into a worldwide artist contract with Sarah Brightman covering the use of her audio and video recordings. Further agreements were entered into in the subsequent years, including one with Capitol Records for the exclusive distribution of Ms Brightman's recordings and performances. One of her albums, "A Winter Symphony", was released in 2008 along with an accompanying tour that year. The same year her album and private recordings from her tour were uploaded onto YouTube. Mr Peterson attempted to have the materials removed from the platform, including through cease-and-desist letters, and Google subsequently blocked access to the offending videos. However, even after this the content could be accessed on YouTube again, and Mr Peterson initiated legal proceedings against Google in Germany for copyright infringement, with the matter ultimately ending up with the CJEU.

The other combined case, very briefly put, dealt with at the same time involved Elsevier, an international specialist publisher and Cyando, a website where users could upload files for hosting and sharing. Users had uploaded copies of three works for which Elsevier owns the copyright onto the Cyando website, which were then shared on other websites via web links. Elsevier also brought legal proceedings against Cyando in Germany for copyright infringement, after which the CJEU combined both actions into one.

The first question posed to the court concerned "…whether Article 3(1) of the Copyright Directive must be interpreted as meaning that the operator of a video-sharing platform or a file-hosting and ‑sharing platform, on which users can illegally make protected content available to the public, itself makes a ‘communication to the public’ of that content".

As a primer, Article 3(1) provides the exclusive right to copyright holders to communicate their works to the public, which also gives them the right to prevent said communications by other parties without authorization. Additionally, what amounts to a 'communication to the public' includes all communication to the public not present at the place where the communication originates, so giving a very broad right to copyright holders. However, a balance has to be struck between the interests of the copyright holder and the interests and fundamental rights of users, in particular their freedom of expression and of information.

To dive a bit deeper into the meaning of the phrase 'communication to the public', this encompasses two specific criteria, namely: (i) an act of communication of a work; and (ii) the communication of that work to a public. 

In terms of the first criterion, an online platform performs and 'act of communication' where "…it intervenes, in full knowledge of the consequences of its action, to give its customers access to a protected work, particularly where, in the absence of that intervention, those customers would not, in principle, be able to enjoy the broadcast work". For the second criterion, a 'public' comprises "…an indeterminate number of potential recipients and implies, moreover, a fairly large number of people".

Finally, in addition to the above criteria, the courts have determined that for an act to be a 'communication to the public' "…a protected work must be communicated using specific technical means, different from those previously used or, failing that, to a ‘new public’, that is to say, to a public that was not already taken into account by the copyright holder when it authorised the initial communication of its work to the public". 

One thing to note in the context of both YouTube and Cyando is that both platforms operate through user uploads, who act autonomously from the platform, decide whether the content will be publicly available and are responsible for their own actions. For file-hosting services, like Cyando, there is the additional requirement that the users have to share a link to the content for it to be accessed and/or downloaded, which is up to them to do. While the users might very well be doing an 'act of communication to the public', it remains unclear whether the intermediaries are doing the same through this.

The Court noted that the platforms play an indispensable part in making potentially illegal content available, but this is not the only criterion that you need to concern yourself with; the intervention of the platform needs to be deliberate and not just incidental. This means that the platforms have to intervene in full knowledge of the consequences of doing so, with the aim of giving the public access to protected works for there to be an infringement.

The Court highlighted that, in order to determine this, one has to "…take into account all the factors characterising the situation at issue which make it possible to draw, directly or indirectly, conclusions as to whether or not its intervention in the illegal communication of that content was deliberate". These circumstances can include: "...[i] the circumstance that such an operator, despite the fact that it knows or ought to know that users of its platform are making protected content available to the public illegally via its platform, refrains from putting in place the appropriate technological measures that can be expected from a reasonably diligent operator in its situation in order to counter credibly and effectively copyright infringements on that platform; and [ii] the circumstance that that operator participates in selecting protected content illegally communicated to the public, that it provides tools on its platform specifically intended for the illegal sharing of such content or that it knowingly promotes such sharing, which may be attested by the fact that that operator has adopted a financial model that encourages users of its platform illegally to communicate protected content to the public via that platform".

In short this means that platforms will have to take positive steps to prevent the sharing of infringing content. Mere knowledge that this is being done isn't sufficient to conclude that a platform intervenes with the purpose of giving internet users access to that content unless they have been specifically warned by rightsholders of this activity. Making a profit from this activity will also not, in itself, make a platform liable. 

The Court summarized its answer to the question as: "… Article 3(1)… must be interpreted as meaning that the operator of a video-sharing platform or a file-hosting and ‑sharing platform, on which users can illegally make protected content available to the public, does not make a ‘communication to the public’ of that content… unless it contributes, beyond merely making that platform available, to giving access to such content to the public in breach of copyright. That is the case, inter alia, where that operator has specific knowledge that protected content is available illegally on its platform and refrains from expeditiously deleting it or blocking access to it, or where that operator, despite the fact that it knows or ought to know, in a general sense, that users of its platform are making protected content available to the public illegally via its platform, refrains from putting in place the appropriate technological measures that can be expected from a reasonably diligent operator in its situation in order to counter credibly and effectively copyright infringements on that platform, or where that operator participates in selecting protected content illegally communicated to the public, provides tools on its platform specifically intended for the illegal sharing of such content or knowingly promotes such sharing, which may be attested by the fact that that operator has adopted a financial model that encourages users of its platform illegally to communicate protected content to the public via that platform".

The Court then turned to the second and third questions together, which it posed as asking: "…whether Article 14(1) of the Directive on Electronic Commerce must be interpreted as meaning that the activity of the operator of a video‑sharing platform or a file-hosting and -sharing platform falls within the scope of that provision, to the extent that that activity covers content uploaded to its platform by platform users. If that is the case, that court wishes to know, in essence, whether Article 14(1)(a) of that directive must be interpreted as meaning that, for that operator to be excluded, under that provision, from the exemption from liability provided for in Article 14(1), it must have knowledge of specific illegal acts committed by its users relating to protected content that was uploaded to its platform". 

Under Article 14(1) Member States have to ensure that service providers of information society services are not liable for the information stored at the request of the recipient of the services, i.e. users, provided 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 that the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove the information or to disable access to it. What is key here is that the provider has to be an ‘intermediary service provider’, meaning one that they are "…of a mere technical, automatic and passive nature, [i.e.] that service provider has neither knowledge of nor control over the information which is transmitted or stored".

The above assessment can be made considering Article 3(1), and if a provider contributes, beyond merely providing its platform, to giving the public access to protected content in breach of copyright, they won't be able to rely on the above exemption (but this isn't the sole determination on the exemption). Also, the technological measures that a provider takes to prevent copyright infringement, as discussed above, doesn't give the provider active knowledge of the infringing activity, and bring them outside the scope of Article 14(1). Knowledge or awareness, however, can be derived through internal investigations by the providers or through notifications by third parties.

Summarizing its position in relation to the questions the Court determined that "…Article 14(1)… must be interpreted as meaning that the activity of the operator of a video-sharing platform or a file-hosting and -sharing platform falls within the scope of that provision, provided that that operator does not play an active role of such a kind as to give it knowledge of or control over the content uploaded to its platform". 

The Court then moved on to the fourth question, which asked "…whether Article 8(3) of the Copyright Directive must be interpreted as precluding a situation where the rightholder is not able to obtain an injunction against an intermediary whose services are used by a third party to infringe the rights of that rightholder unless that infringement has previously been notified to that intermediary and that infringement is repeated".

To put in simpler terms, the question asks if rightsholders are prevented from seeking an injunction against an intermediary if their services are used to infringe their rights, unless they have been notified of the infringement previously. 

The Court considered that national courts have to be able to stop current and/or future infringements under the Article. The process and any requirements are up to Member States to determine (but must not interfere with other adjacent EU provisions), which includes a potential requirement of notification before an injunction can be granted. However, this isn't the case strictly under the relevant Article. 

The Court did note that, pursuant to Article 15(1) of the E-Commerce Directive, Member States cannot impose a monitoring obligation on service providers over the data that they store. With that in mind, any obligation to monitor content in order to prevent any future infringement of intellectual property rights is incompatible with this Article.

In light of its considerations on the question, the Court summarized its position as: "…Article 8(3) of the Copyright Directive must be interpreted as not precluding a situation under national law whereby a copyright holder or holder of a related right may not obtain an injunction against an intermediary whose service has been used by a third party to infringe his or her right, that intermediary having had no knowledge or awareness of that infringement, within the meaning of Article 14(1)(a) of the Directive on Electronic Commerce, unless, before court proceedings are commenced, that infringement has first been notified to that intermediary and the latter has failed to intervene expeditiously in order to remove the content in question or to block access to it and to ensure that such infringements do not recur. It is, however, for the national courts to satisfy themselves, when applying such a condition, that that condition does not result in the actual cessation of the infringement being delayed in such a way as to cause disproportionate damage to the rightholder".

The fifth and sixth questions were the only ones remaining, but the Court decided that they didn't need to be answered as the first and second questions were answered in the negative.

As is apparent, the case is a huge milestone for the regulation of intermediaries and copyright on the Internet. It sets fairly clear guidelines and expectations on service providers but seems to attempt to strike a proper balance with freedom of expression and the interests of service providers and rightsholders. This, however, is very much subject to change with the introduction of the Digital Copyright Directive, which, under Article 17, now imposes an obligation on service providers to under threat of liability to make 'best efforts' to obtain authorization and act in a similar way when infringing content is present on their services. The case and the new Directive set the scene for service providers, who will have to stay on their toes with the prevalence of infringing content online these days.

None of My Concern - CJEU Looks at TM Infringement on Online Marketplaces and Operators' Liability

Online business, particularly for consumer goods, has exploded in the last ten years, and this writer for one can attest to being one of the most rabid online shoppers. However, with the explosion in popularity comes the legal challenges that often accompany popularity, especially due to the use of third party sales platforms to sell illegitimate goods to unsuspecting consumers. The misuse of trademarks by third-party sellers is not a new thing to be battled over in the courts, but online platforms like Amazon do present new challenges as to the liability of the marketplace itself, which allows for the sale of these goods with relative impunity. Even with this in mind, the CJEU has been set up to answer the question of whether platforms like Amazon can have any liability in relation to the misuse of trademarks by sellers and handed down their judgment on this topic only a few weeks ago.

The case of Coty Germany GmbH v Amazon Services Europe Sàrl concerned the sale of knock-off Davidoff perfume on Amazon. The claimant, Coty, owns the rights to distribute Davidoff perfumes in the EU under the registered trademark (EUTM 876874). After a number of test purchases on the Amazon platform for Davidoff perfumes sold by third parties, with orders being fulfilled by Amazon, Coty pursued the platform itself due to the infringement of the trademark by the third-party sellers. Coty pursued an order that third-party sellers, and Amazon, would not be able to stock the knockoff Davidoff goods - with the matter ultimately ending up with the CJEU through the German courts.

The CJEU only had to look at one question, which asked "...whether Article 9(2)(b) of Regulation No 207/2009 and Article 9(3)(b) of Regulation 2017/1001 must be interpreted as meaning that a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims". In essence, the question concerns liability for the proprietor over the sale of goods on an online marketplace, like Amazon.  

As a part of the prohibitions under Article 9(3)(b), a third-party is prevented from offering trademark protected goods, putting them on the market or stocking them. This could include the proprietors of online marketplaces if they are seen to be doing this through the offering of goods on their website by third-party sellers. 

As a part of the platform's service, Amazon stored the goods of third-party sellers, including the counterfeit perfume, which are sold on the platform and processed by Amazon after sale. The Court therefore had to determine whether such a storage operation may be regarded as 'using' or 'stocking' the trademark goods under the above Regulations. 

According to case law, 'using' a trademark entails active behavior and direct or indirect control of the act constituting the use, which includes the activities under Article 9 of the Regulations. However, the prohibitions only apply to third-parties that have direct or indirect control of the act constituting the use, and can therefore comply with those prohibitions. 

Also, the Court noted that operators of e-commerce platforms are not using trademarks in relation to goods sold by sellers on that platform, and the ultimate 'user' of the trademarks is the seller. Similarly, any warehouse-keeper who is sent goods to be held for sale does not use the trademarks contained in those goods. 

Following an extensive discussion of the above precedent and other cases, the Court determined that "...in order for the storage of goods bearing signs identical, or similar to trade marks to be classified as ‘using’ those signs, it is also necessary... for the economic operator providing the storage itself to pursue the aim... which is offering the goods or putting them on the market". In essence this means that requires Amazon, or other similar operators, to actively offering goods they hold for sale, and not simply allowing for third parties to do so using their platform (and their logistics facilities).

This led the Court to conclude that Amazon was not using the trademarks when third parties sold goods through their platform. 

The Court then summarized the matter as "...a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims". 

The decision makes perfect sense, since Amazon, or any other similar operator, is not actively selling any counterfeit goods on their platform, but merely enable third parties to be doing so. To conclude that the marketplaces themselves would be liable would hinder their effective operation, and potentially cause them to be liable for 'actions' that they have not taken; namely selling goods unknowingly that are counterfeit. The decision does, however, put them on notice, and ensures that marketplaces that do indeed actively sell counterfeit goods can still be pursued for trademark infringement in that event. 

A New Intelligence - UK House of Lords Releases Report on Artificial Intelligence

Artificial intelligence is absolutely a hot button issue these days, particularly with a focus on what's coming in the near and more distant future and AI's potential impact on people's lives (both in the good and the bad).  This writer is very interested in AI, having recently published an article discussed the same in relation to copyright, and in that vein was quite thrilled with the release of the House of Lords' report on AI last month. The report is very detailed and discusses many facets of the technology and its potential impact, but what potential recommendations does the report give from a legal perspective?

The Report (titled AI in the UK: ready, willing and able?) considers the development, implementation and impact of AI in the UK in the future, and recommends that the government take certain actions sooner rather than later. This article will endeavour to focus on some of the more interesting, potentially IP specific issues, and general law considerations.

A big point in the Report is the mitigation of risks associated with AI. Largely this relates to any assumed liability for an AI's actions, negligence or malfunction, which, as the law stands, is not covered. The Report does recommend that "…the Law Commission consider the adequacy of existing legislation to address the legal liability issues of AI and, where appropriate, recommend to Government appropriate remedies to ensure that the law is clear in this area. At the very least, this work should establish clear principles for accountability and intelligibility". Without accountability, one could imagine AI skirting liability, and causing potential issues for those wishing to pursue any damages resulting from an AI's decisions.

The consideration of liability ties into the matter of whether AI should be treated the same as humans, or have separate legal or non-legal entity status. For example, should IP rights be awarded to the AI, or the AI's creators (more on which here)? Both paths have their issues, but the Report fails to address this aspect in detail.

Another point of contention in the Report is the amassing of data by large corporations, which would therefore, in a way, control the development of AI and the marketplace for the same. The Report encourages that "…publicly-held data be made available to AI researchers and developers" to facilitate AI development for smaller players. Even so, it does highlight a need for "…legal and technical mechanisms for strengthening personal control over data, and preserving privacy" in the light of AI; however, this has been, at least arguably, largely achieved through the introduction of the GDPR this month.

A human future without TPS reports

In an attempt to kerb any misuses of data, or its monopolisation, the Report recommends that "…the Government, and the Competition and Markets Authority, to review proactively the use and potential monopolisation of data by the big technology companies operating in the UK". Clearly this might create a data competition framework, where companies with large swathes of data could be prevented from merging due to competition issues, or simply to prevent the centralization of requisite data for AI creation and/or operation.

The Report does discuss the IP issues with the development of AI in university settings, and the commercialization of research. As was discussed in the Hall-Pesenti Report last year, licencing of technologies could be problematic, and both the Report and Hall-Pesenti have sought to mitigate this. In this vein, the Report recommends that "…universities should use clear, accessible and where possible common policies and practices for licensing IP and forming spin-out companies", and that a policy should be drafted for Universities to enforce the same. Even so, Universities should be able to protect the know-how relating to AI, but within a reasonable framework.

Although not discussed in the House of Lords' report, the Hall-Pesenti Report also highlights a need for the reform of copyright in relation to data published in research, which would infringe copyright. This is problematic since "[t]his restricts the use of AI in areas of high potential public value, and lessens the value that can be gained from published research, much of which is funded by the public". In terms of reform the report suggests that "…the UK should move towards establishing by default that for published research the right to read is also the right to mine data, where that does not result in products that substitute for the original works". In terms of the development of AI this makes perfect sense, but when that data relates to human individuals, particularly in the light of the GDPR that just recently came into force, we should be cautious for giving AI free reign over all data. A balance needs to be struck with the interests of individuals, but the robust development of AI, provided the developments are for the public good.

As one can imagine, AI is a very difficult and potentially thorny subject, and there will be without a doubt many pitfalls we will end up in and will need to play catch-up with. Nonetheless, the potential of the technology could outweigh these issues, but maybe this writer is too optimistic in terms of AI's future.

Limited Harbor Space - When Does an ISP Lose Safe Harbor Protection in the US?

Safe harbor provisions for intermediaries on the Internet are the cornerstone of keeping it functional, open and above all fair. Without protection for intermediaries, including ISPs, many entities could create an environment of monitoring and control by service providers, which would undoubtedly hinder the functionality of the Internet as we know it. Even so, safe harbor provisions should be a shield, and not deflect all responsibility from providers where they could be, arguably, deemed as complicit with illegal activities.  With that in mind, when could an ISP be deemed liable for the copyright infringement of its users? The US Court of Appeals took on this question earlier this month.

The case of BMG Rights Management (US) LLC v Cox Communications dealt with Cox who are an internet service provider for roughly 4.5 million users. Some of these users shared copyright protected files on Cox's service, including music, using the BitTorrent protocol.  Cox's service agreement with their users prevents, among other things, the sharing of infringing content using their service, but has very little by way of automated infringement prevention systems (e.g. through automated notifications and a thirteen-strike policy to suspend a repeat offender's service temporarily). BMG identified that several of their copyright protected works were shared using Cox's service, and used a third-party service provider to send notices to Cox (who had, before this, blocked the third-party provider), with the ISP never receiving those notices. BMG then took Cox to court for copyright infringement via its users.

The Court first dealt with the matter of safe harbor protection for Cox under 17 USC section 512. For an ISP to be covered under the provision, it has to show it "…adopted and reasonably implemented… a policy that provides for the termination in appropriate circumstances of subscribers… who are repeat infringers". This would mean any user who, in short, repeatedly infringes copyrights. Even if those infringements would be mere alleged infringements (i.e. they have not gone to court or been admitted to), the provision would still apply as a requirement.

The need to have a reasonably implemented policy on termination also necessitates the meaningful enforcement of that policy. Cox, through their thirteen-strike policy, never terminated users' accounts even after repeat offenses. Through this they avoided the policy's reasonable implementation. In internal correspondence representatives in the Abuse division at Cox would dismiss the termination of users' accounts, and reinforced their reactivation for DMCA notices.

Even in the light of this, Cox contested that they had no "actual knowledge" of their users' infringing activities. The evidence discussed above contradicted this point, and even though the stance was changed internally later on, the Court still deemed them to have clear knowledge of users' infringements and that they actively ignored correspondence on the same by rightsholders. This also contradicted their stance on active implementation of the policy, as almost no users were terminated. Cox therefore failed to qualify for safe harbor protection.

The matter then turned to jury instructions on contributory infringement, particularly what the jury were instructed to consider. Cox contended that, as the product they sold (Internet service) is "…capable of substantial non-infringing use", it cannot be deemed to be infringing. The Court quickly rejected this, and determined that even if the technology can be substantially used for non-infringing purposes, it doesn't give them immunity from contributory infringement.

Secondly, Cox argued that the instructions issued, to consider the intent necessary for contributory infringement, were wrong. The jury were instructed to impose liability if "…Cox knew or should have known of such infringing activity". The Court agreed with Cox on this point, considering that the instructions were incorrect and the court erred in giving them. To prove contributory infringement one has to, according to the Court, provide proof of "…at least willful blindness [and that] negligence is insufficient". Saying the party 'should have known' is too low of a standard. A note the Court makes is that the wilful blindness has to relate to specific instances of infringement, e.g. where they have been notified of infringement and choose to ignore the notices.

Cox's appeal was dismissed, but due to errors in jury instructions the matter was remanded and sent for a new trial.

The case is very interesting, and amends the standard that juries will have to assess contributory infringement against. Clearly, had Cox responded to notices sent to them, most likely they would have been protected by safe harbour provisions. They wilful ignorance of the notices and issues, in addition to their lack of enforcing their own policy on termination, was their undoing. The case does raise a red flag for all ISPs to ensure that they indeed do implement a policy against infringers and enforce it to enjoy safe harbor protection. While the case is still going to be decided on in the future after remittance, it still is an important consideration ahead of the forthcoming decision.

Source: IPKat

Indexing Free-for-All - US District Court Issues Injunction against Canadian Supreme Court De-indexing Order

After the decision in the Canadian Supreme court in the Equustek case, many, including this writer, raised concerns about the possible abuse of the precedent set by the case. The de-indexing of online content, while well-intentioned in the removal of infringing content, could still be used as a sword more than a shield against legitimate infringement, including against free speech. This writer for one awaited the first application of the case, particularly in a jurisdiction that leans more towards free speech, and seems like the wish has been granted by the District Court of the Northern District of California only a few weeks ago.

The case of Google LLC v Equustek Solutions Inc. concerns the same subject matter as the Canadian case. In short, Equustek sued Google seeking to force Google to block websites selling infringing goods all over the world, not just in Canada where Google had blocked the websites selling the goods. The Supreme Court of Canada ultimately issued the order, and forced Google to block access to the websites all over the world.

Google challenged this ruling in the United States, arguing that the order conflicts with the First Amendment right to free speech, and disregards the Communication Decency Act, which affords immunity to interactive service providers.

Justice Davila first looked at the CDA, which affords immunity from claims to "…providers of interactive computer services against liability arising from content created by third parties". This means that should another publisher, using these services, publish infringing content Google couldn't be sued for that infringement. Even so, to qualify for immunity three criteria need to be satisfied: (1) the company is a "provider or user of an interactive computer service"; (2) the information in question was "provided by another information content provider"; and (3) the Canadian order would hold it liable as the "publisher or speaker" of that information.

Looking at the first criterion, Justice Davila concluded that Google was a 'provider of interactive computer services'. This means that the company provides "…any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server", which encompasses Google's search facility, among other services.

As the content, i.e. the website and the information contained in it (including the infringing goods for sale), was provided by Datalink and not Google, the second criteria was also easily fulfilled. The provision of Google's search facility relies on the company 'crawling' websites on the Internet, which it then indexes and makes available through search results. This allows for users to discover the content, which Google does not post, clearly being provided by 'another information content provider'.

The First Amendment - the best kind of pop-up

Finally, the third criterion looks at whether Google would be held liable for the content provided by another under the order made by the Canadian Supreme Court as the 'publisher or speaker' of that content. According to the order Google has to "…de-index the Datalink websites [from its global search results]… [because it is] the determinative player in allowing the harm to occur".

Per the decision in Barnes v Yahoo!, "…removing content is something publishers do, and to impose liability on the basis of such conduct necessarily involves treating the liable party as a publisher of the content it failed to remove". This liability as a third party for the non-removal of content, should Google not do so when ordered, clearly treats Google as the publisher of that content rather than a mere intermediary with no liability.

Justice Davila therefore considered that Google was immune from the claim under the CDA.

The Court then turned to the question of free speech and irreparable harm. Justice Davila swiftly determined that the Canadian order restricts Google's activity protected by the CDA, and deprives of it of benefits given by US federal law. Similarly an injunction wouldn't serve the public interest, as free speech would be restricted if websites "…were to face tort liability for hosting user-generated content". This has been particularly legislated against through the CDA. As the Internet and other interactive computer services "…offer a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity", the legislature deemed it required protecting for that purpose to flourish.

Justice Davila issued the injunction against the Canadian order as it "…undermines the policy goals of [the CDA] and threatens free speech on the global internet".

The decision is a very interesting one, and strongly advocates for the protection of the Internet from blanket orders requiring the removal of content globally. This writer is very much a proponent of this approach, as, amongst its faults, the Internet is a bastion of freedom and dissemination of information (including this blog as a very example of that). Infringements should be dealt with appropriately, but blanket de-indexing orders might not be the best way; however, with this in mind, third-party service providers do have to take some responsibility on the removal of content when needed.

Watch the Fight - Court of Appeal Affirms Blocking Order for Cartier Against ISPs

Just as was discussed last week, the issue of counterfeit goods has plagued many retailers, brand owners and online sellers for years, with the availability of Chinese (or otherwise) manufactured counterfeit items being sold for pennies on many websites. While qualitatively often worse than the real thing, the lost sales and revenues from the counterfeit business are what ultimately matter, and brand owners have tried to combat this issue through various means. One such tool has been to utilize the ISPs as third-party intermediaries in stopping access to these sites, and with a High Court ruling allowing for ISPs to be possibly on the hook for this enforcement (more on which can be found here), the matter seemed all but settled. The providers appealed the case, and the Court of Appeal handed down its decision only a couple of weeks ago.

As a brief primer to those who are not familiar with the case, Cartier International AG & Others v British Sky Broadcasting Ltd & Others dealt with the sale of counterfeit Richemont goods, encompassing the Cartier and Montblanc brands specifically. The goods were sold on a set of specific websites, and the claimant pursued an order to block access to these websites through the ISPs. They contested the application, which was subsequently given to the claimant, for which the ISPs appealed to the Court of Appeal.

The first point of contention discussed by the Court was that of jurisdiction, specifically under Article 8(3) of the InfoSoc Directive, Article 11 of the Enforcement Directive (and the lack of its implementation into UK law) and section 97A of the UK Copyright, Designs and Patents Act 1988, which, arguably, does not allow for the granting of an injunction under domestic law in the UK. Cartier contended the assertion that the lack of implementation of Article 11 of the Enforcement Directive did not preclude jurisdiction, which stemmed from section 37 of the Senior Courts Act 1981.

A blocking order: the red card of the Internet

Lord Justice Kitchin, who delivered the majority judgment, determined that, although the ISPs are not guilty of any wrongdoing (as they did not encourage or participate in the infringement themselves) nor did they owe a duty of care (per CBS Songs v Armstrad) to Richemont, the court's would still have jurisdiction to give the order in the case. The rejection of this would, per his assessment: "...impose a straightjacket on the court and its ability to exercise its equitable powers which is not warranted by principle". The ability to impose injunctions was not restricted to apply to only infringers, and could be used in 'new ways'. This extension was also, in his view, fully covered by Article 11 of the Enforcement Directive.

The law Lord saw no issues with the provision of the order by law, especially in the light of limitations to the rights and freedoms set out in the Charter of Fundamental Rights of the EU.

To be able to issue a blocking order certain threshold conditions have to be observed. These are, as set out by Lord Justice Kitchin: "...First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11 [of the Enforcement Directive]. Secondly, either the users or the operators of the website must be infringing the claimant's trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this". After some discussion (which this writer consciously omits for brevity's sake), the Court did determine that the threshold conditions were indeed satisfied in this instance.

Finally, the Court dealt with the matter of principles to be applied  when considering the imposition of a blocking order. These were set out by Lord Justice Kitchin: "...the relief must (i) be necessary; (ii) be effective; (iii) be dissuasive; (iv) not be unnecessarily complicated or costly; (v) avoid barriers to legitimate trade; (vi) be fair and equitable and strike a "fair balance" between the applicable fundamental rights; and (vii) be proportionate". Primarily what these conditions operate as are a safe-guard for too broad, onerous and one-sided orders, allowing for a certain degree of leniency to be applied in the consideration of any blocking orders. This, however, has to be assessed with the substantiality of the websites in mind (one would think this would encompass user amounts, sales and accessibility, and the number of websites applied for, for example) and the need for remedies to properly function as safeguards to abuse.

Lord Justice Kitchin did see that the order could be justified in the light of the above principles in this instance. The Court ultimately disallowed the appeal and sustained the order.

The decision was by no means without its issues, and one primary concern was raised by Lord Justice Briggs on costs. While the majority agreed that the costs and time should be imposed on the ISPs, Lord Justice Briggs saw that these should be not placed on the ISPs, but the rightsholders (and this writer, agreed with him, as the ISPs, functioning as non-active entities in the infringement process, would be unduly burdened by the possibility of dozens/hundreds of blocking orders and their subsequent costs). Even though the costs are largely modest, as observed by Lord Justices Kitchin and Jackson, burdening the ISPs with them would seem onerous, especially considering they derive no benefit from the exploitation of those rights.

In the end the case is a very interesting example of the law adapting to its new playing field, and while it does provide a great opportunity for rightsholders, it does also cause some concern for ISPs and the automation of enforcement on the Internet.  In any event, this writer does envision the case possibly being appealed to the Supreme Court, who would have the final say in the matter.

A Positive Signal - No Liability for Providers of Free WiFi, Says AG Szpunar

As discussed on this very blog over 6 months ago, free public WiFi is something we all take for granted, even if just a little. Having access to the worldwide web at most restaurants, coffee shops and even the Underground in London is nearly ubiquitous in the developed world, and one that presents both opportunity for its users and liability for those who provide it, especially when it comes to the infringement of intellectual property rights. The CJEU has been slated to answer the question of third-party liability for those who provide free WiFi in the case of copyright infringement, and awaiting that the opinion of Advocate General Szpunar has given their answer as to this highly important question.

The case of Tobias McFadden v Sony Music Entertainment Germany GmbH deals with Tobias McFadden, who owned a business selling and renting lighting and sound systems for various events, and offered free WiFi access at his store for any visiting patrons. The Internet connection offered had no password protection, nor did Mr. McFadden monitor the users taking advantage of the free WiFi. In early September 2010 such a user downloaded a song illegally using his WiFi connection, and Sony Music subsequently took him to court for copyright infringement as a liable third party.

The Regional Court of Munich referred the matter to the CJEU, who had to answer several questions relating to Article 12(1) of the E-Commerce Directive, pertaining to whether the provision of the WiFi would amount to the provider as being a mere conduit, or whether they would be liable for the infringement indirectly.

The Advocate General grouped the questions into two more specific references: "...whether a professional person... who, in the course of business, operates a free, public Wi-Fi network, falls within the scope of application of Article 12 [as a mere conduit]", and therefore is not liable for the infringement of any other parties using that WiFi (questions 1-3); and, if Article 12 does apply, the he needs to interpret the limitation of liability of intermediary service providers in that Article (questions 4-9).

The Scope of Article 12

The scope of Article 12 hinges largely on the potential economic nature of the provision of the service, as defined in Article 2(a) of the same Directive, and the meaning of 'providing' access to a network under Article 12.

A lack of WiFi would cause some issues

The Advocate General addressed the first point by concluding that the provision of free WiFi would indeed be an economic activity, as "...where, in the course of his business, an economic operator offers Internet access to the public, even if not against payment, he is providing a service of an economic nature, even if it is merely ancillary to his principal activity". The Advocate General added onto his point, setting out that the provision of the Internet access necessarily takes place in an economic context, that "[a]ccess to the Internet may constitute a form of marketing designed to attract customers and gain their loyalty. In so far as it contributes to the carrying on of the principal activity, the fact that the service provider may not be directly remunerated by recipients of the service is not decisive.". What remains key here is the ancillary nature of the free WiFi, and this writer agrees, since even if they WiFi is not the focal point of the business, it drives foot traffic and adds value to the provision of the main service, creating a service of economic nature (which is important, since nature does not necessarily mean direct economic benefit)

He then turned to the matter of the meaning of 'providing' access to a network, determining that it means "...that the activity in question enables the public to have access to a network and takes place in an economic context". The intent of projected role of the provider is not relevant, but merely the provision of the service in the above economic context.

The Advocate General then concluded that: "...Articles 2(a) and (b) and 12(1) of [the] Directive... must be interpreted as applying to a person who, as an adjunct to his principal economic activity, operates a Wi-Fi network with an Internet connection that is accessible to the public free of charge".

Interpretation of Article 12

Questions 4-9 concerned the specific interpretation of Article 12, and will be dealt with in more brevity below, although discussed quite extensively by the Advocate General. The questions are, specifically, whether a national court could penalize an intermediary service provider, in the event of infringement through their service, awarding damages, costs or an injunction as the form of the penalty (questions 4-5). Additionally, if this would not be generally possible, whether it would be possible to limit the extent of Article 12 (question 6), or through other unwritten requirements (questions 7-8). Finally, the last question asks for the limits of any injunctions that may be awarded against an intermediary service provider (question 9).

In answering question 4 and 5 the Advocate General saw that the limitations of liability for intermediary service provides would extend to damages and pecuniary claims, such as for costs. In his view this is precluded by Article 12(1), and would have an impact on the development of the service provider's business, irrespective of it being damages or punitive costs. He did, however, accepted the possibility of injunctive relief, and any ancillary penalties thereto. In summary to questions 4 and 5, he stated that "Article 12... precludes the making of any order against a provider of mere conduit services that entails a finding of civil liability against that service provider... [it] therefore precludes the making of orders against intermediary service providers not only for the payment of damages, but also for the payment of the costs of giving formal notice or other costs relating to copyright infringements committed by third parties as a result of the information transmitted. It does not preclude the granting of an injunction, non-compliance with which is punishable by a fine".

In relation to questions 6,7 and 8 (seeking to clarify the possible exclusion of actions taken against intermediary service providers), the Advocate General sought to strike a balance per recital 41 of the Directive. In his opinion, the Advocate General saw that there should be no limitations imposed on actions that can be taken against providers, though taking into account their actions when the infringement is brought to their attention. He also observed that the conditions under Article 12(1) are non-exhaustive, and could be added to with additional unwritten requirements.

Finally, he turned to the final 9th question, which asks whether national courts could impose injunctions on service providers against future infringement on their network. He saw that this was indeed possible, but this injunction could not impose a future obligation of monitoring the network or breach any other EU or national legislation (including the basic human rights afforded in the European Convention on Human Rights). He summarized that the injunction can only issued if the provider cannot, or will not, address the infringement in one of three measures: the termination of the internet connection (of the infringer); password-protection of the connection; or the monitoring the connection, but only to ensure the future infringement of rights using the same connection (observing time limitations on said monitoring).

The ultimate decision of the CJEU is pending, and will potentially impact the provision of free WiFi in the EU should they not follow the AG's opinion in this matter. This writer expects them to follow the opinion, as it clearly shows a practical and functional approach to a complex, and sensitive question. Should they not do so, the provision of free WiFi could be severely hindered, or even ended by some providers, which would be a big problem for those who cannot necessarily afford their own connections. Either way, this writer is anticipating the CJEU's decision with great interest.

Source: IPKat

Coffee Shop Conundrum - ECJ Set to Decide on Free WiFi and Third Party Liability

In a time when the internet is nearly always with us, be it in a smartphone, a laptop or other smart devices, you often taken things for granted such as free WiFi. For many travelers it has saved their behinds from being lost, out of money, or in some unfortunate cases, even potential harm, and many of us in bigger cities like London can easily overlook the need for WiFi. But, as Uncle Ben framed it so eloquently: with great power (i.e. Internet connectivity) comes great responsibility. People can be inconsiderate, and at times outright indifferent, to potential liability issues in using other peoples' or organizations' free WiFi, which begs the question: can a third-party be liable for possible infringement on their wireless network?

The answer to the question possible lies in the forthcoming decision of McFadden, faced by the European Court of Justice later this year (this writer hopes). The case, refereed to the ECJ from the Regional Court of Munich (decision in German can be found here), concerned a store owner, Toby McFadden, in Germany who's store specialized in light and acoustic engineering services. To further promote the store and its offerings the owner allowed potential customers to freely access a WiFi connection, with no password protection included. An unknown user used this free network to upload and share an infringing song on an online file-sharing platform, and Mr. McFadden was subsequently sued by Sony Music who argued he is liable for the infringement (among other things) that occurred on his unprotected network.

The case does bring forth several questions concerning Article 12 of Directive 2000/31/EC, more commonly known as the E-Commerce Directive. Although each of the questions merits an assessment in their own right, for the sake of brevity this writer shall endeavor to answer the question above, at least in the light of Article 12.

Wifi can cause some degree of envy

What Article 12 seeks to protect are service providers, or in other words 'mere conduits', who provide a service such as free WiFi, should they remain largely hands-off of the provision of that network (i.e. don't cherry-pick the users accessing the network, don't initiate the transmission of information or alter what is received in some way). This, however, cannot be a service for which the provider is remunerated, per Recital 18 of the Directive, and aims to facilitate the better sharing and access of information within the European Community.

This writer will freely admit his lack of knowledge in German law, but proposes to give a perspective from the UK side of things. Pinsent Masons in their Out-Law blog have set out that, per German law, individuals have to secure their internet connections through reasonable means, such as a password, to avoid liability should a third-party use their connection for nefarious purposes; however, this standard does not extend to commercial entities, which the case aims to settle.

Under the Copyright, Designs and Patents Act 1988 the High Court has the capability to issue an injunction against a service provider, provided that the "...service provider has actual knowledge of another person using their service to infringe copyright". What this has been interpreted in Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc to encompass is true knowledge of one or more infringers using the provided network to do so, and the more detail of knowledge or facts given to the service provider (notices etc.) the less protection the provision offers to them. One could argue that a lack of password protection would not in itself give rise to an actual knowledge of possible infringement, as users, even if filtered through via password protection, could still abuse the network without the knowledge of its provider.

Whether Mr. McFadden was brazenly aware of the infringing acts being committed on his network is unknown to this writer, and he awaits the decision of the ECJ with some interest. Voices have been raised in the protection of open networks and access thereto by entities such as the Electronic Frontier Foundation, and one must agree with them to a certain extent. The 'locking down' of networks does provide a more cumbersome regime through which information and the Internet can be accessed, but one still does have to keep in mind the protection of legitimate rights within that space. What the ECJ decides will undoubtedly have ramifications on our WiFi networks, but one can imagine they'll only remain a login away.

Source: JDSupra

Domain Registrar Faces Infringement Liability in Germany

Internet Service Providers have, for a long time, been the favorite target of copyright holders simply because they are often the conduit between the infringer and the material which is being illegally copied, although their liability as secondary infringers has been rejected since. The Internet provides a web of connectivity between a multitude of actors, such as ISPs, computer manufacturers and others, who in some ways, do enable the infringement of copyright, albeit not as their primary function. As with the former Betamax recorders, the simple function of potentially enabling infringement does not incur liability, arguably at least in most instances, however a new challenge was set against web domain registrars in Germany.

In a recent decision (which can be found here, unfortunately only in German), the German Regional Court of Saarbrücken had to decide on the liability of domain registrars, and whether they could be held liable as secondary infringers should the domain owners facilitate the aforementioned infringement. The case concerned the website h33t.com, which acts as a torrent tracker site, much like the more notorious Pirate Bay. The copyright holders of Robin Thicke's song "Blurred Lines", Universal Music, took on the domain registrar Key-Systems, who registered h33t's domain.

Ed was confused about domains

In their decision the Court saw that domain registrars could face liability if the domains they have registered facilitate the infringement of copyright. If they are notified of the potential infringement of copyright, and choose to do nothing about the infringements, they could face liability. The Court imposed a duty to investigate onto domain registrars; a duty which can be argued to be quite onerous, especially for bigger registrars which manage vast numbers of domains. Key-System's general council, Volker Greimann, commented on the decision: "The courts’ definition of what is obviously violating is however extremely broad and the duty to act is expanded to deactivation of the entire domain even if only one file or link is infringing... If left unchallenged, this decision would constitute an undue expansion of the legal obligations of each registrar based in Germany, endangering the entire business model of registering domain names or performing DNS addressing for third parties". One can agree with Mr. Greimann as to the onerous nature of the new duty imposed on registrars, especially when considering the vagueness of the duty and the potential numbers of websites which might infringe copyright in one way or another.

The Court did mention that the infringements in relation to h33t were "...obvious and easy to identify", potentially presenting registrars with protection in cases where infringements are not obvious or are a result of negligence or ignorance. The Court in this instance ordered Key-Systems to prevent the infringement; however what those measures are remains unclear to this writer. Even though the domain is shut down by Key-Systems, its transition to another service outside of Germany can be said to be quick and painless - making the duty to investigate and take action both onerous, and arguably frivolous, as infringers will merely change service providers if their activities can be said to be illegal. Through this Mr. Greimann's argument of it hurting German domain registrars could be said to carry some merit.

Secondary liability has been a hot question since peer-to-peer services have made infringement much easier, and websites which provide users with, for example, torrent links, have become abundant. Whether liability should be extended to all middle actors can be argued to be potentially damaging to the Internet and its function. This writer does not have much insight into German law specifically, and people who might want to hear Universal Music's general council, Mirko Brüß's, arguments can refer to his opinion post here (again in German only).

Source: Bloomberg

Free Textbooks for All?

Anyone who's ever been in higher education, be it in law or any other subject, will vividly remember just how expensive textbooks are. This applies to both new and used ones, with some easily exceeding the 100 dollar mark. In the course of several years of education this can amount to a very large sum of money. Textbook prices have increased over 80% in the last ten years alone, while continuing to increase at a 6% annual pace. In a negative economic climate it is no surprise students are against this constant increase, and are using every avenue possible to mitigate the financial dent textbooks make. A new movement has emerged on the students' part which seems to make a questionable move to change things.

A familiar sight to most University students

The movement in question is the Textbook Liberation Project, which aims to give access to all students at the University of South Florida to textbooks for free. The project's founder, Tristan Lear, has stated that his aim is to "...take down the publishing industry and replace it with an alternative open source system". While arguably hyperbolic in its goal, the movement can be said to have the right motives, however their approach is wholly wrong from a legal perspective.

What Mr. Lear is doing is providing free PDF copies of textbooks for certain classes, while encouraging others to share their books in an equal fashion. He has also passed on flyers which contain scannable links to copies of textbooks which students can download directly onto their phones, tablets and computers. This, in Mr. Lear's mind, is purely an action against both the publishing industry and the book stores which provide legitimate copies of books both on and off-campus.

So what could Mr. Lear be liable for? Under US copyright legislation there is no particular provision which imposes secondary liability, although there are provisions which protect from it. The courts in Intellectual Reserve v Utah Lighthouse Ministry saw that the situation is not completely black and white even though there are no provisions for secondary liability: "Although the copyright statute does not expressly impose liability for contributory infringement, the absence of such express language in the copyright statute does not preclude the imposition of liability for copyright infringements on certain parties who have not themselves engaged in the infringing activity".

Indeed one could argue that Mr. Lear could be liable for contributory infringement through inducement, due to the fact that he is fully aware that the people he distributes the information and links to can infringe copyright, and arguably do so when presented with the option. He actively participated in his cohorts' infringement, knowing full well that they are using his methods to create infringing copies of textbooks (cases which deal with the subject matter more extensively are Sony Corporation v Universal Studios and Metro-Goldwyn-Mayer Studios v Grokster). In his own words he intends to utilize mass infringement as a means to overthrow the current copyright system for another, clearly presenting a motive to compel others to infringe copyright.

The world of academia is harsh and unforgiving, both financially and intellectually. Although one can be sympathetic to the financial hardship that modern students face, having personally experienced it for the last few years myself, Mr. Lear's approach and mentality are not ones which harbor a healthy and open forum of discussion and change. Should students be able to contravene long-standing copyright laws and practices purely to save money? The answer from a legal stand-point is a simple no, but arguably there is room for improvement on part of both the publishers and institutions of higher education. Whether Mr. Lear will be taken to court remains to be seen, but should his movement start spreading into the wider United States publishers would have incentive to do so to nip the issue at the bud.

Source: TorrentFreak

Retrospective - Linking to Trouble

In the days prior to BitTorrent technology, the primary source for any endeavoring online 'pirate' seeking to get their mitts on copyrighted content, was through direct links on websites leading to copies of any specific materials. Before the discussions over the possible liability of Internet Service Providers here in Australia, the issue of whether a website owner sharing links to infringing material (such as songs) would be authorizing the acts of copying that content by posting those links ended up in the Full Federal Court in late 2006.

An imagining of a potential MP3s4Free user

The case of Cooper v Universal Music Australia dealt with the website owned and operated by Mr. Cooper, aptly named "MP3s4Free.com". The site itself didn't host or contain any infringing materials, such as sound recordings, but did however have direct links (hyperlinks) to other sites providing those copies. The file was automatically downloaded to the user's computer once they had clicked the link on Mr. Cooper's site, transferring it from a different server. Although some of the content linked to on the site was legitimate, however overwhelmingly the content was illegal one way or another. Subsequently a number of record companies, including Universal Music, sued Mr. Cooper under the Copyright Act 1968 for the authorization of copyright infringement. 

The provision for the authorization of infringement hinges on whether the operator (Mr. Cooper in this case) has any power in preventing the infringement; the nature of the relationship between the two parties (Mr. Cooper and the user); and whether the operator (Mr. Cooper) took reasonable steps to prevent or avoid the infringement through his service. 

In deciding whether Mr. Cooper had the power to prevent any infringing acts through his website, the Court saw that he indeed did have the power to do so. The Court reached this conclusion in deciding that a person could be deemed to have had the power to prevent the act should they have had the ability to merely not do what was in their power or abilities to do (the posting or allowing the posting of links for example), yet instead did so through some calculated technical measures. What this means is that Mr. Cooper, in actively linking to infringing content, chose to do so and had the power to simply not to post those links on his site. The Court's reasoning is sound, even in its simplicity. If you have a choice between the knowing facilitation of potentially infringing acts, should you choose to do so, you clearly possess a power to prevent any acts occurring from your actions, yet ignore that ability. The intent and capabilities of the operator are imperative.

Should the relationship be one which does not seek to benefit the operator one way or another, it is more likely that there's no authorization on the face of things. The nature of the relationship between the operator and the users is one which is hard to specifically identify, however the Court did establish a relationship in its findings. At first instance (initial court proceedings in lower courts) the primary judge found that as Mr. Cooper's website was very "friendly" and allowed for easy access to the music files being downloaded, overall being very attractive to potential or current users. The more important aspect of this was the financial gain incurred by Mr. Cooper through advertisements on his website, giving the site a commercial aspect. The Court concluded that the nature was one where Mr. Cooper endeavored to benefit from the links to infringing material.

Don't click! 

Finally, did Mr. Cooper take any reasonable steps to prevent the infringing acts through his website? At the bottom of each page there was a link to a Disclaimer, stating that "when you download a song, you take full responsibility for doing so. None of the files on this site are stored on our servers. We are just providing links to remote files". Aside from the mentioned disclaimer, Mr. Cooper took no active part in preventing any acts; merely attempted to exonerate himself by passing the responsibility onto the users themselves. Rightfully so, the Court found that this was not adequate and the Disclaimer was merely a cosmetic touch and was not intended to have any real legal effect. Mr. Cooper was therefore held liable through the authorization of the copying of infringing material through his website.

Thinking ahead, how could one avoid liability through hyperlinks? Clearly it boils down to content filtration or other means of active or automatic prevention, and the reason for your linking. Should you not take active steps, such as through moderation, and complacently sit back and wait for your monthly AdSense check to fall through the letter box, you might be liable. Links in themselves are not bad and often websites welcome outside links to their content, but this can change according to the various Terms and Conditions set by each site. In the United States websites can potentially be protected under the Safe Harbor provisions (a nice example of which was discussed on this very blog), albeit for unknowing facilitation and potential activeness in the stopping of such acts when notified.