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.