The potential liability of ISPs and other online intermediaries for copyright infringement has been discussed in the context of ‘authorisation liability’ in cases relating to deeplinking and framing, a subset of hyperlinking.
The liability of Internet Service Providers (ISPs) and another online intermediaries for infringing acts committed by users, sometimes referred to as ‘authorisation liability’ in Australia and ‘contributory infringement’ in the US has been the subject of ongoing controversy.
Last year the issue of the liability of online intermediaries such as ISPs was subject to worldwide litigation. Decisions were arrived at by US Courts in UMG v Veoh, EMI v MP3Tunes, in England in Newzbin2, and the European Court of Justice in Scarlet v SABAM. Meanwhile in Australia, the iiNet case has wound it’s way up to the High Court of Australia after an appeal was launched by AFACT against the decision of the Full Court of the Federal Court in Roadshow Films Pty Ltd & Ors v iiNet Ltd  FCAFC 23, whilst Grooveshark has been sued for copyright infringement in relation to its online music subscription and sharing service.
In March, the Australian Federation Against Copyright Theft (AFACT), had argued that Australian copyright laws obliged ISPs to take a proactive role in policing online copyright infringement, in an effort to hold the ISPs liable for authorising the downloading of illegal content by its users. Australian courts had previously found that Kazaa (Universal Music Australia Pty Ltd v Sharman License Holdings) was liable for authorising copyright infringement. AFACT were relying on the courts to further extend copyright law so that ISPs come under a positive duty to monitor and filter illegal content flowing through their networks.
A majority of judges in the Full Court of the Federal Court dismissed the appeal, finding that although iiNet was somewhat dismissive of copyright infringement complaints notified to it, that fact alone did not result in them being held legally responsible for authorising copyright infringement. However all Judges held that in appropriate circumstances, the ISP would have been justified in disconnecting subscribers. Justice Jagot, in a dissenting judgement, was prepared to hold iiNet liable for authorising users’ acts of copyright infringement. As stated, AFACT has appealed to the High Court and the Court has already heard submissions on the matter last December.
In Newzbin 2, Justice Arnold arrived at a decision after the Motion Picture Association had successfully taken action against ISP, BT telecommunications, which was ordered to block subscribers access to Newzbin 2, as well as any other sites or end points it uses. Justice Arnold had earlier delivered a judgement under s97A of the Copyright, Designs and Patents Act 1988 (UK). The Judge had held that BT had actual knowledge of other persons using its service to infringe copyright, as it knew users and operators of Newzbin2 were involved in large scale copyright infringement of the Studios’ rights in their films and television programmes. He found it also knew the users of Newzbin2 included BT subscribers, who were using its service to receive infringing copies of copyright works Newzbin made available to them.
Grooveshark, an online music subscription and network sharing service was also confronted by legal action by music companies for allowing users to post their own tracks to their website whilst sharing them with others. Users post music files to the Grooveshark server and can set up playlists to share with other users, uploading purchased copies of songs to Grooveshark for this purpose. Songwriters and music publishers initiated legal action in the US District Court in Tennessee, alleging the violation of copyright laws by users (direct infringement), whilst accusing Grooveshark of liability for contributory infringement, copyright infringement and vicarious infringement.
Grooveshark lets people stream tracks from an online library of millions of songs, some licensed from EMI and other independent labels uploaded by Grooveshark. The balance include thousands of unauthorised works owned by Universal, Warner and Sony, uploaded by the service’s users in violation of the site’s terms of service. Grooveshark is accused of being involved in promoting and encouraging copyright infringement via e-mail,distribution and through social networking sites.
Grooveshark maintains it complies with the provisions of the Digital Millennium Copyright Act (DCMA) and is eligible for safe harbour protection offered in relation to any acts of infringement committed by users. It maintains that it gives the public a place to store or share material online and that they take down infringing material when notified of it. However e-mails and other internal documents suggest Grooveshark executives were aware of and profited from the infringements, in a similar way in which internal documents which surfaced had a damaging effect on Grokster and Limewire.
The New York District Court, in a major decision in EMI v MP3Tunes, ruled that digital music lockers don’t require licences from record labels to store recorded music and operators of digital locker services fall within the protection of the safe harbour provisions of the DCMA. MP3Tunes provides access to a locker service, whereby users are able to sync their personal digital music and video up to the cloud, making it accessible through a browser or mobile and other devices. Recording giant EMI claimed that MP3Tunes should be held responsible for infringing content stored in the lockers of some of its users.
MP3Tunes argued it was immune from liability as it doesn’t engage in, encourage or profit from copyright infringement and removes material identified as infringing in compliance with safe harbour provisions under the DMCA. Cloud-based music storage lockers now appear to be legal after the decision.
A court decision in Germany followed shortly after the music industry’s unsuccessful attempt to block digital cloud locker service MP3Tunes in the US. EMI was unsuccessful before a German Court in trying to force a German ISP HanseNet to block access to file-sharing service eDonkey. The court held that HanseNet was not liable for the actions of its users for accessing Russian illegal file swapping services. EMI tried to argue that because HanseNet’s network was used by customers to access the Russian service, the ISP contributed to the copyright violations. The German Court refused to entertain the prospect of blocking customers’ access to other sites, which would effectively mean ISPs would have to control data communications of their customers. Neither would the Court endorse the ISP tracking the traffic of its users.
The European Court of Justice handed down a decision on the liability of ISPs for copyright infringement of subscribers in Scarlet v SABAM case, holding that EU law prohibited the granting of an injunction by a national court requiring an ISP to install a filtering system with a view to stopping illegal downloading of files. The Court was prepared to state that imposing such an injunction does not comply either with the prohibition on imposing a general monitoring obligation on an online provider, or with the requirement to strike a fair balance between the rights holders protection of their intellectual property and the freedom to conduct business, the right to protection of personal data and the freedom to exchange information.
The Ninth Circuit Court of Appeals in the US also delivered its decision in the case of UMG v Veoh. The case concerned the liability of ISPs for hosting infringing copyright works. The court interpreted the DCMA so that safe harbour protection was afforded to Veoh. The result is that the onus of identifying infringing materials rests with the rights holders. The Court was very clear in stating that copyright holders know precisely what materials they own, and are therefore much better positioned to efficiently identify infringing copies of works than service providers such as Veoh who it is unrealistic to expect to ascertain what kinds of material enjoys copyright protection. The precedent may erode Viacom’s prospects of success in the forthcoming appeal against YouTube.
On the legislative front, the Spanish Parliament has introduced legislation which has been characterised as an attempt to enable businesses to censor the internet. The Sinde Law is a step in the direction of censorship of the internet. It will make it easier for content owners to target copyright infringing websites. Sunde has strong parallels to SOPA in providing a fast track mechanism for forcing websites offline, enabling content owners to compel commercial websites which exist mainly for the purpose of facilitating file sharing to be shut down.
The legislation is Spain’s attempt to clamp down on illegal file-sharing, but is being popularly described by its opponents as sinister, and seen as nothing more than web-blocking legislation of the same character as US SOPA proposals. The law is widely believed to have been heavily influenced by the US SOPA proposals, and US officials have been said to have leaned on Spain and even been directly involved in drafting the Sinde Law. Amendments have since been proposed, with many being voted down. As a compromise, minor amendments were approved to facilitate some level of judicial oversight in the shutting down of websites have been made to the legislation. A Court can consider sanctions against copyright infringers, whether they be suspension of internet access by file-sharers, or ordering internet service providers to block access to an entire website. Modifications had been proposed to protect websites which inadvertently host infringing content from being shut down.
In the UK, similar web-blocking provisions in the Digital Economy Act are on hold pending further consideration, although the Government seems to be leaning towards prioritising the three-strikes component of the legislation. Provisions in the Digital Economy Act can force websites that exist primarily to assist others in their illegal file-sharing offline. The British, French and Spanish approaches put too much power in the hands of government agencies to shut down websites on a whim. However the Newzbin injunction arising out of the British High Court decision referred to above, illustrates that similar web-blocking objectives can be achieved, albeit through a much slower judicial copyright process. The Sunde Law however would essentially allow a committee based in the Ministry of Culture to request that an ISP block access to infringing materials hosted online, a much quicker and easier way of obtaining a court mandated web-block injunction.
In France, the Government decided to incorporate legislative provisions into their Hadopi three strike law to make provision for judicial oversight in the process of disconnecting users and shutting down websites.
If this draconian type of legislation along the lines of the Spanish, French and UK proposals becomes the norm under the banner of the anti-piracy movement, the Internet risks becoming bland; little more than one more television, which serves the powers that be.
A more enlightened and progressive Swiss Government, critical of other Government’s legislative approaches to curbing illegal file-sharing, has conducted studies demonstrating that internet downloading actually increases music sales. The Swiss Government has announced that the downloading of music and movies will remain legal, despite the fact that approximately one in three Swiss citizens concede downloading content without authorisation. The Government decided that, as a matter of policy, downloading of content for personal use will be legal, the rationale being that users eventually spend the money they save through downloading on entertainment products when they decide to purchase them.
Web blocks will be be of dubious value to savvy file-sharers who can use proxy and relay servers to disguise their online identity and circumvent such measures which are being proposed. All that will be achieved by the graduated response mechanisms is that freedom of speech and privacy rights of less technologically savvy web users will be damaged.