Online 'free' newspapers also subject to national libel and defamation rules - CJEU in Papasavvas and Others (C-291/13)

11 September 2014: CJEU judgment in case Papasavvas and Others (C-291/13)

Over a week ago the CJEU issued an important judgment in this case concerning interpretation of the e-Commerce Directive (2000/31/EC). While e-Commerce Directive is not per se a consumer protection measure, its provisions regulating the legal aspects of electronic commerce have a significant impact on European consumers, as well.

In this case from Cyprus Mr Papasavvas claimed damages against a newspaper company for what he considered to be defamation through articles published in the daily newspaper, which were published online on two websites. One of the questions raised was whether the e-Commerce Directive should apply at all in this case, since the websites of the newspaper were free for Mr Papasavvas to access and peruse and they only generated income from the advertisements placed on them. The question was whether the Directive should only apply to such 'information society services' that have been provided against a remuneration from the recipient? The positive answer to this question would significantly lower the level of protection granted online to internet users since many websites nowadays earn their money through advertisements rather than through financial contributors of their readers. The CJEU confirms that the 'service' does not need to be paid by the person for whom it is performed (Par. 28-30) to fall under the scope of the e-Commerce Directive, even if the definition refers to a service 'normally provided for remuneration' (Par. 27). It is sufficient that this remuneration is being paid by someone else than the recipient.

This broader scope of application could allow the online newspaper to rely on Articles 12 and 14 of the Directive in order to escape liability for the posted content (incl. defamation) if it could prove that it was 'merely' a 'conduit'. In this case the online newspaper could not be qualified as such. For these articles to apply the service provider would have to have no knowledge or control over the information that was transmitted or stored, which was not the case here. (Par. 40) (this and following articles refer also to the Google France case)

The e-Commerce Directive allows for the Member States to keep on applying their rules on civil liability (incl. for defamation) to information society service providers, as long as this does not restrict the freedom to provide them from another MS. (Par. 33-34) Since in the given case the services originated in Cyprus, the rules on civil liability for defamation could be applicable.

However, if the Cyprus did not implement the provisions of the Directive in time its provisions may not be directly invoked by the parties. The Directive does not have a direct horizontal effect, which means that the national service providers could only rely on the national provisions implementing it and not on the rights granted to them by the Directive itself. Failing the timely interpretation, the national court is obliged to the consistent interpretation of the national law with the EU law. (Par. 54-56)

Fake it and you won't make it

While many EU consumers travel more during the summer months they tend to bring souvenirs back home. Maybe that is the reason why EU Customs publishes its yearly reports on counterfeit products during the summer holidays. (see last year's EU helps to keep it real) Last year almost 40 million products were detained on EU borders under suspicion of violating IP rights (last year it was 115 million products, but while less products were stopped from entering the EU this year their value didn't change much from 1,3 billion to 1 billion euro). This time it was mostly cigarettes that were intercepted (medicines two years ago), followed by miscellaneous goods (e.g., batteries, washing powder), and packaging material. Most of the detained goods arrived in the EU through postal and courier packages. China still remains the main source of fake goods. (Custom detain 1 billion euro worth of fake goods at EU borders in 2012) (FAQ)

Who pays the bill for private copies? - CJEU judgment in Case C-521/11 Amazon v Austro-Mechana

Last Thursday, 11 July 2013, the Court of Justice of the EU handed down its judgment in Case C-521/11 Amazon v Austro-Mechana. The case concerned the 'fair compensation' to be paid to authors of copyrighted works (such as music, books and films) through a private copying levy on the first sale of recording media such as blank CDs and DVDs. For a summary of the case and of the Opinion of A-G Mengozzi, I refer to an earlier post on this blog ('Fair compensation for copying').

The CJEU holds that the indiscriminate collection of a private copying levy on the first sale of recording media may, under conditions, be compatible with EU law. Accordingly:

'34 It is for the national court to verify, in the light of the particular circumstances of each national system and the limits imposed by Directive 2001/29, whether the practical difficulties justify such a system of financing fair compensation and, if so, whether the right to reimbursement of any levies paid in cases other than that under Article 5(2)(b) of Directive 2001/29 is effective and does not make repayment of those levies excessively difficult.

35 In the present case, the referring court must verify, first of all, whether the indiscriminate application of a private copying levy on the placing on the market, for commercial purposes and for consideration, of recording media suitable for reproduction is warranted by sufficient practical difficulties in all cases. In that context, account must be taken of the scope, the effectiveness, the availability, the publicisation and the simplicity of use of the a priori exemption mentioned by Austro-Mechana in its written observations and at the hearing.

36 Secondly, the referring court must also verify that the scope, the effectiveness, the availability, the publicisation and the simplicity of use of the right to reimbursement allow the correction of any imbalances created by the system in order to respond to the practical difficulties observed.'

See also the Court's press release regarding this case. For a summary and comment on another recent CJEU judgment on private copying levies, i.e. Joined Cases C-457/11 to C-460/11, VG Wort v Kyocera, please consult the blog of our colleagues at the Amsterdam Centre for European Law and Governance.

Does fake equal bad? European Commission thinks so.

Last year we posted about the EU Customs trying to protect consumers from counterfeit goods by strengthening the examination of products entering the EU market etc. (EU helps to keep it real) Now the European Commission published another memo (Too good to be true: the real price of fake products) in which it gives an update on recent data of counterfeit market, as well as calls upon consumers to stop buying such goods. There is a hope that a campaign that would raise consumers awareness about the dangers of counterfeit goods, would deter them from purchasing such products - even if it would have saved them significant money to do so. Despite all the actions taken so far by the EU and national governments, the trade in fake articles grew by 11% between 2010 and 2011. What should scare consumers (or at least make them think twice about buying counterfeit goods) is that almost one third of the articles detained by EU customs in 2011 was found to be potentially dangerous to the health and safety. What other argument is the Commission planning to use? They will try to convince consumers that it is not a bargain to buy a fake product, since the consumer would not get the same quality nor guarantee of durability for less money. Also, even if consumers won't usually think about it, trade in fake goods is likely to lead to the increase of taxes, loss of jobs (in legitimate trade sector that suffers losses), unemployment and higher welfare bills.

Orphan works will find home

Just a short update: the Orphan Works Directive was adopted yesterday by the Council. Upon a publication in the Official Journal of the EU it will enter into force. See more on this in our previous post: EU-wide online access to orphan works soon possible.

EU helps to keep it real

"Got a real bargain when I bought this Louis Vuitton wallet for 10 euro". Well, who doesn't like a bargain? Some bargains are too good to be true, though, and it's unlikely that you would get an original product for price that is not anywhere close to the shop price. With certain products a bargain is also not what consumers should be looking for. Spending more money on a product usually guarantees its better quality, its authenticity, which is crucial for the health and safety of consumers when products such as medicines, food etc. are concerned. In order to protect consumers, as well as to protect intellectual property rights, the EU Customs department diligently examines products entering the EU market in order to comply with the EU's 2020 Strategy. In 2011, they detained almost 115 million products suspected of violating IPR (in 2010 that number was just 103 million) valued at 1,3 billion euro. (Report on EU customs enforcement of IPR) Out of these products 24% were medicines, 21% packaging material, 18% cigarettes, products for daily use that could potentially be dangerous to consumers - 28,6%. The main offender is still China (73% of all infringing articles come from there). Fake foodstuff comes usually from Turkey, alcoholic drinks - Panama, soft drinks - Thailand, mobile phones - Hong Kong. (EU customs detain over 100 million fake goods at EU borders)

Goodbye ACTA!

Yesterday, as it was expected, the European Parliament rejected the ACTA. We have been posting about critical approach of all the commissions who have examined it, so the final verdict was basically just a formality. What may be interesting to notice is that by rejecting the Anti-Counterfeiting Trade Agreement (ACTA), the European Parliament for the first time ever exercised its Lisbon Treaty power to reject an international trade agreement. With only 39 of the MEPs voting for adoption of the ACTA, it had no chance to become law in the EU (165 MEPs abstained in protest of the Parliament deciding to take a vote before the verdict of the CJEU on the constitutionality of the ACTA).

It should be stressed that the possibility of adoption of the ACTA had mobilised many European citizens to actually get involved in the legislation process by starting a heavy lobbying of the MEPs. I wonder whether that means that times are a-changing and that we could expect in the future more citizen involvement in the works of the European institutions. (European Parliament rejects ACTA)

NO to ACTA... almost there

Just a short update on ACTA (see last: ACTA under more fire). Next week the European Parliament will have to decide whether to accept or reject it (on the 4th of July). Last week the International Trade Committee responsible for issuing an official recommendation voted against adoption of ACTA. (Parliament should say NO to ACTA) More here.

ACTA under more fire

We have mentioned previously that the European Commission considered referring ACTA to the CJEU as potentially infringing fundamental rights (ACTA referred to the CJEU) and the criticism it has received from the European Data Protection Supervisor (ACTA endangers fundamental rights of the EU citizens). This Monday (5th of June 2012) the fourth committee of the European Parliament rejected the ACTA. Of course, the positions of these committees are not binding, which means that the main committee responsible for giving its recommendation to the EP - the International Trade Committee - can still issue such a recommendation. However, it is a strong sign of the controversies surrounding the adoption of the ACTA which the EP members cannot ignore.

To sum up: the Civil Liberties Committee issued concerns as to the lack of compliance of the ACTA with the EU Charter of Fundamental Rights, since it does not ensure full respect for private life or full protection of sensitive personal information; the Industry Committee pointed out a lack of balance between intellectual property rights, business freedom, protection of personal data and the freedom to receive or provide information; finally also the Legal Affairs Committee and the Development Committee voted against the recommendation. (ACTA now rejected by four EP committees)

ACTA endangers fundamental rights of EU citizens

Today the European Data Protection Supervisor (EDPS) issued another opinion on the threat to the protection of personal data and privacy. Namely, the proposal of the European Council to conclude the Anti-Counterfeiting Trade Agreement (ACTA) was negatively evaluated by the EDPS. We mentioned previously that the European Commission was considering referring ACTA to the CJEU and that there was lots of opposition towards introduction of this agreement. It seems that whichever institution takes a closer look at the content thereof, there is no problem with finding more and more problems within it.

The EDPS sees the lack of precision of ACTA about the measures that could be used in order to fight infringements of IP rights on the Internet as endangering the fundamental rights of EU citizens. Especially, the large scale monitoring of users' behaviour and of their e-communication is perceived as highly intrusive on the EU citizens' privacy, and its application should be limited to situations when it was really necessarily, which the proposal does not specify. Any measures that allow indiscriminate or widespread monitoring of Internet users' behaviour, and e-communications, with regard to trivial, small-scale, not for profit infringements should be seen as disproportionate - infringing Article 8 ECHR, Articles 7 and 8 of the Charter of Fundamental Rights, and Data Protection Directive. Additionally, the EDPS considers that ACTA provides for many voluntary enforcement cooperation measures that would entail a processing of personal data by ISPs, going beyond what is allowed under EU law. Another criticism is directed at the lack of sufficient safeguards in ACTA, e.g., as to due process, effective judicial protection, the principle of the presumption of innocence, the right to privacy and data protection.

"While more international cooperation is needed for the enforcement of IP rights, the means envisaged must not come at the expense of the fundamental rights of individuals. A right balance between the fight against IP infringements and the rights to privacy and data protection must be respected. It appears that ACTA has not been fully successful in this respect." stated the Assistant EDPS - Giovanni Buttarelli (ACTA measures to enforce IP rights in the digital environment could threaten privacy and data protection if not properly implemented)

ACTA referred to the CJEU

Last week the European Commission decided the details of its referral of the Anti-Counterfeiting Trade Agreement (ACTA) to the CJEU in order to clarify whether it does not infringe any fundamental rights (Update on ACTA's referral to the European Court of Justice). The broad scope of the referral question is supposed to allow the CJEU to conduct a detailed examination of the character of the ACTA and to see whether it does not infringe such principles as, e.g., the freedom of expression, freedom of information, data protection rights, as well as the right to property. Taking into account protests of the EU citizens (and, more generally, worldwide online communities) against the introduction of the ACTA and other connected to it acts (see our article: Don't ______ the internet!), it does not come as a surprise that the European Commission wants to alleviate some doubts and fears as to the functioning of the ACTA.

No general obligation to monitor information stored by online social networking platforms - CJEU in Sabam (C-360/10)

16 February 2012: CJEU's judgement in case Sabam (C-360/10)

The CJEU published today a judgement that is important for consumers' use of the online social networking sites. The potential limitation for consumers using such platforms could come due to lowered protection of their personal data, as well as censorship of information that they are allowed to share with their communities. This censorship could, e.g., happen due to the need to protect copyrights. Namely, parties who hold intellectual property rights to musical, cinematographic etc. works may ask national courts for an injunction that would require hosting service providers to install systems that would identify electronic files containing protected artistic works, with a view to prevent them from being made available to the public at large, in breach of copyright.

Pursuant to the judgement the national courts of Member States may not issue an injunction against a hosting service provider that would oblige it to install a certain system for filtering information. This contested system would require the hosting service provider to filter information which is stored on its servers by its service users as a preventative measure. It would be applicable indiscriminately to all users, for an unlimited period and it would have to be installed at the own expense of the hosting service provider. This specific contested filtering system is seen as being able to prevent future infringements of copyrights.

In the case SABAM - a Belgian management company representing authors, composers and publishers of musical works - asked for such an injunction against Netlog. Netlog runs an online social networking platform where every person who registers acquires a personal space ('profile') which the users fill themselves. Among other data users may also publish musical and audio-visual works in Sabam's repertoire, making them available to the public at large. Netlog itself doesn't pay any fee to Sabam for allowing its users to share Sabam's repertoire, which led Sabam to demand from Netlog ceasing unlawfully making available musical or audio-visual works from Sabam's repertoire. Netlog claimed that in order to comply with such an injunction it would have to install a specific filtering information system.

The CJEU reminded that holders of intellectual property rights may apply for an injunction against operators of online social networking platforms, given that their services may be exploited by users of those platforms to infringe intellectual property rights. (Par. 28) However, the rules adopted by national courts in order to protect intellectual property rights may not require a hosting service provider to carry out general monitoring of the information that it stores. (Par. 33-34) In the case at hand, the injunction would require installation of a filtering system that would require:

"–        first, that the hosting service provider identify, within all of the files stored on its servers by all its service users, the files which are likely to contain works in respect of which holders of intellectual-property rights claim to hold rights;

–        next, that it determine which of those files are being stored and made available to the public unlawfully; and

–        lastly, that it prevent files that it considers to be unlawful from being made available." (Par. 36)

All in all, hosting service provider would have to actively observe files stored by users, and would have to examine almost all of the information thus stored by all of the service users in order to prevent any future infringement of intellectual-property rights. Such general monitoring is prohibited by Article 15(1) of Directive 2000/31 on e-commerce. (Par. 38) 

The CJEU recognizes that the right to intellectual property is enshrined in Article 17(2) of the Charter of Fundamental Rights of the EU. However, it contests that it is not an inviolable right, that would have to be absolutely protected. (Par. 41) Protection of the fundamental right to property has to be balanced against the protection of other fundamental rights. (Par. 42) In the given case a fair balance must be reached between:

"the protection of the intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business enjoyed by operators such as hosting service providers pursuant to Article 16 of the Charter" (Par. 44)

As long as the injunction requires a hosting service provider to install a costly, complicated, permanent computer system at its own expense it has to be seen as seriously infringing the freedom of the hosting service provider to conduct its business. (Par. 46) Moreover, the contested filtering system could infringe also the fundamental rights of service users, namely their right to protection of their personal data and their freedom to receive or impart information (safeguarded by Art. 8 and 11 of the Charter). (Par. 48) Additionally, freedom of information could potentially be infringed, as well, since that filtering system may not distinguish adequately between unlawful and lawful content. As a result, introduction of such a filtering system could lead to the blocking of lawful communication. (Par. 50)

Summing up, it is good news for online social networking sites like MySpace or Facebook, on which consumers may post audio or video files that could potentially infringe someone's copyrights. This judgement confirms that they are not obliged to install general monitoring systems that would filter all information stored by consumers on such platforms.

Don't ____________ the internet!

I mentioned yesterday the controversial project of a bill Protect IP ("Protect IP"). In protest to this bill (as well as the draft of the Stop Online Privacy Act (SOPA) and the European Parliament's initiative Anti-Counterfeiting Trade Agreement (ACTA)) many websites announced that they are 'going dark' in protest today. They object to the intention of the governments and private parties to censor the net in the name of the copyright protection. Among the websites that announced they'd join the process are: Wikipedia, Wordpress.org, Twitpic, La Quadrature du Net etc.

Protect IP

Protect IP (Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011) is a bill that is under discussions now in the US Congress. If passed it would give government and corporations (copyright holders) permission to censor the internet in order to protect the intellectual property rights. If they could prove that a particular website was 'dedicated to copyright infringement' then the American judge would be able to censor that website, even if it was registered outside the US. How it works further you may see on this video:

PROTECT IP / SOPA Breaks The Internet from Fight for the Future on Vimeo.

The vote in the Senate is scheduled for January 24, 2012. The result of this vote may influence also European business and consumers since it is difficult to perceive any such internet content control measures as national only.

Are consumers free to shop for cheapest TV decoders in the EU regardless broadcasting licenses? - ECJ in case Football Association Premier League and Others

4 October 2011: ECJ case C-403/08 Football Association Premier League and Others

Last post for today concerns the ECJ ruling of 4 October 2011 in the case C-403/08 Football Association Premier League and Others. It's strictly speaking not a consumer law case, but it will influence also consumers so it's important to briefly mention it. 

Premier League is a professional football league competition for football clubs in England (that explanation shouldn't be necessary, but I'm from time to time surprised by someone who is completely not familiar with sport environment). All of the Premier League matches are filmed, however, the broadcasting thereof is strictly limited, i.e. broadcasting rights for live transmissions are licensed and given to various parties on a territorial basis and for a certain time only (under an open competitive tender procedure, which means that the higher bidder wins). As a result, it's difficult to enjoy a good English football game unless you go to a pub that has a license for broadcasting them or you buy/rent a decoder for the private channel that got the license to broadcast these games yourself. All in all, it's a costly business. In order to make sure that the broadcasting rights are being observed, broadcasters are obliged to ensure that their transmission are being encoded so that they cannot be received outside the territory for which the license was granted and they are prohibited from supplying decoding devices that could be used outside that territory. 

In the past few years in the UK certain bars and restaurants have begun to use foreign decoders to access Premier League matches. The foreign decoders allow access to a satellite channel broadcast in another Member State, the subscription to which is less expensive than the English subscription. The decoders in question were manufactured legally but used in unauthorised manner, since they were never supposed to leave the territory of a given Member State. This, of course, undermines the exclusivity of rights granted by licence in a given territory and the value of those rights. It doesn't come as a surprise that a lawsuit was brought against some owners of pubs and restaurants who used this practice in the UK. The English law prohibited such practices, but the case was directed to the ECJ in order to establish whether such a prohibition was not contrary to inter alia the freedom of provision of services in the European Union. Indeed, it was declared that this was the case. 

The ECJ declared that national laws which prohibit the import, sale or use of foreign decoders are contrary to the freedom of provision of services (Par. 125). This restriction cannot be justified neither by the objective of encouraging the public to attend football stadiums nor by an objective of protecting intellectual property rights. This means that consumers all over Europe may now purchase foreign decoding devices and use them instead of their own ones to receive cheaper services. 

It is unclear, however, whether the same would be applicable to owners of restaurants and bars, since then there are certain copyright issues to be taken into account. For example, the ECJ determined that live football games transmissions are not copyright protected in the EU law (Par. 96-99), but such protection applies to transmission of pre-recorded films showing highlights of recent games or the opening video sequence of the programmes, graphics etc (Par. 149). The ECJ also stated that national legislations are allowed to confer protection (also of copyrights) on sporting events (Par. 102-105). 

There are many other issues that might be interesting to consider, e.g. how this judgement relates to broadcasts of programmes other than football games, or whether and how the permission of the party granting licenses is to be given to use a foreign decoder. I invite you to read the judgement to find out more about it.

Back to the sixties

On 12 September, a Directive was adopted that extends copyright of performing musicians from 50 years to 70 years after recording. The Directive somewhat narrows the gap between composers (who already enjoy copyright protection till 70 years after death) and performers, and is one of the outcomes of the European Commission's strategy on intellectual property rights. Good news for rock stars and for session musicians who were in danger of remaining without a pension? Critics point out that not all arguments in favour of copyright extension seem valid: a large share of the additional royalties are likely to go directly to record companies to which the rights on the recordings have been transferred, and there appears to be no conclusive evidence that an increased copyright term will encourage further investments in new music nor that it will make available more works. In this view, not creativity, but lobbying seems to be rewarded... (The European Commission's term extension proposal: Fair concern or fruit of industry lobbying?)

What does the extension of copyright mean for consumers? It is submitted that the new rules will not affect retail prices, since 'empirical studies show that the price of sound recordings that are out of copyright is not lower than that of sound recordings in copyright' (see the FAQ on the new Directive). Furthermore, according to the Commission, the answer to questions of intellectual property 'is in the single market'. In that context, it will be interesting to see whether rules on IP-protected digital content (e.g. downloaded music) will be included in a proposal for an instrument of European contract law.

Online protection of copyrights

Since the subject of protection of intellectual property rights online came up recently on this blog (see a note on L'Oreal v eBay case), I thought I'd follow up on a similar subject. Did you ever wonder how eBay is supposed to make sure that consumers (and traders) are not placing fake L'Oreal products on eBay's website? Since you are reading this blog post I can assume that you are familiar with at least some information on how the internet works. Our knowledge of all intricacies of the online world differs from person to person, though. Personally, I could not quite imagine a programme that would be able to help eBay out, taking into account thousands of people that use their website every day and who could spam it with illegal content. Until I've discovered how another website that also gets hundreds/thousands of people a day to post content on it (YouTube), controls its content and complies with legal requirements. I've recently watched this TED video ("How YouTube thinks about copyright"), in which Margaret Gould Stewart explained how YouTube operates when people post videos on it and how it is possible to protect copyrights on it. I found it fascinating, both as a consumer and as a lawyer, so I decided to share it.

CJEU Case C 324/09 L’Oreal v eBay: The end of online auction intermediary liability as we know it.

A nuclear bomb has just exploded in the online auction world that could possibly change the business model adopted by eBay and other Online Auction Intermediaries (AOI) forever. On the 12th July 2011, the Court of Justice of the European Union published its decision concerning the case opposing L’Oreal to eBay (CJEU Case C-324/09).

The liability of eBay has been tested in many European and US courts and until now, the received wisdom was that while eBay could do more to protect IP owners and consumers and eradicate the sale of fake goods on its sites, the law (i.e. the Electronic Commerce Directive 2000/31) was simply not forcing them to do so. This decision from the CJEU is now likely to change all this. The position taken by the court follows in the footsteps of the Google decision (Joined cases C-236/08 and C-238/08) and is unequivocally for a restrictive interpretation of article 14 of the Electronic Commerce Directive, the provision limiting the liability of intermediaries hosting third party content. The Court also clearly sides in favour of Intellectual Property Rights owners, by allowing the use of article 11 of the Enforcement Directive 2004/48 to prevent future infringements of IP right via online auction sales (albeit with some restrictions as we will see below). This may be marking the end of AOI liability as we thought we knew it. This decision is also likely to have an effect on other types of ISPs. It is expected that following the decision of the CJEU, eBay and other competitors will have to shape up and tighten controls on their sites or face many unpleasant consequences.

The decision may be good news for consumers throughout Europe, since tighter controls may mean better piece of mind while buying items on the online auction giant's website. But it also may have unwanted consequences, such as driving costs up and forcing higher commissions being charged, ultimately disturbing the business model that had seen millions flock to the site in search of a bargain. We will for now abandon discussions on the economic impact of the decision to concentrate on the content of the CJEU decision and what is likely to change for ISPs and more particularly Online Auction Intermediaries, since while eBay dominates the market place, it is not the only online auction provider to be affected by the decision.

The referred questions
The decision concerned a number of questions referred to the CJEU by the High Court of England and Wales in the case opposing L'Oreal to eBay. The referral questions concerned the interpretation of:
- Articles 5 and 7 of the Trade Mark Directive and articles 9 and 13 of the Community Trade Mark Regulation on the rights conferred by a trade mark and their exhaustion;
- Article 14 of the Electronic Commerce Directive (ECD thereafter) on the liability of hosts;
- Article 11 of the Enforcement of Intellectual Property Right Directive (EIPRD thereafter) on the ability of national courts to grant injunctions against intermediaries.
The decision is thorny and raises many issues we do not yet feel we had enough time to digest. (We plan to publish a fully fledged commentary soon!) But here is our short reaction to the reading of the decision concerning the questions on article 14 ECD and article 11 EIPRD (namely prejudicial questions 9 and 10 ), leaving to intellectual property experts to react more fully on the intellectual property issues raised by the case, namely:
- The commercialisation on eBay of dramming bottles when those are not normally intended for sale to consumers;
- The possibility for the trade mark owner to oppose further commercialisation of cosmetics products without their original packaging;
- The use of trademarks in the purchase of keywords on search engines to advertise the services of the online auction platform;
- The possibility for trademarks owners to oppose the commercialisation of products not put on the market in the EEA in cases where the advert for such products can be deemed to be targeted at consumers in the territory of the Community.

The Decision of the ECJ on article 14 ECD and the liability of intermediariesOn this point, the CJEU decided the following:

"Article 14(1) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) must be interpreted as applying to the operator of an online marketplace where that operator has not played an active role allowing it to have knowledge or control of the data stored.

The operator plays such a role when it provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting them.

Where the operator of the online marketplace has not played an active role within the meaning of the preceding paragraph and the service provided falls, as a consequence, within the scope of Article 14(1) of Directive 2000/31, the operator none the less cannot, in a case which may result in an order to pay damages, rely on the exemption from liability provided for in that provision if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b) of Directive 2000/31."What this means in my view is that the CJEU rejected the proposition made by Advocate General Jääskinen to disregard the “Neutrality Test” adopted in Google for a more adequate standard. Instead the Court focussed on the "active role" (as opposed to neutral role) the intermediary plays and placed a low threshold of involvement to trigger liability. Indeed the court mentions assistance in optimising the presentation of adverts and promotion as an active role. This may mean that any web 2.0 operator is now at risk of being seen as active because they all provide some form of assistance in shaping content and promote the site (including its illegal uses as well as legitimate ones). Note however that the CJEU left it to the national court to make the determination on eBay's role, i.e. determining if eBay plays an active or a passive role.

Should the High Court of England and Wales conclude that the role is passive, then eBay will only avoid liability if it reacts promptly to acquiring knowledge about the illegal content or activities.
Here the CJEU seem to raise the bar for claims concerning damages. It is not “actual knowledge” that can trigger liability in those cases. It will be sufficient to be aware of or circumstances on the basis of which a diligent economic operator should have realised that the offers were unlawful. However, the reading of the analysis of the Court is rather confusing.

Indeed, the Court gives an indicative list of situations that would be covered, including uncovering the activity on its own initiative and being notified of the existence of the activity or information by a third party. The question then turns on whether or not a diligent operator will seek out illegal activity on its own accord or only rely on notifications. Turning to notifications, the CJEU explains that as a general rule a notification is a factor to take into account in determining, in the light of the information so transmitted to the operator, whether the latter was actually aware of facts or circumstances on the basis of which a diligent economic operator should have identified the illegality. The CJEU acknowledges that it cannot be a presumption as there can be situations where the notification turns out to be insufficiently precise or inadequately substantiated. So, a notification may therefore be needed and will have two main characteristics:
- be sufficiently precise and
- be adequately substantiated.
If this is the case, then ignoring it will result in the economic operator being branded “not diligent” and thus not benefiting from the exemption of liability. But it is unclear what can be branded as sufficiently precise or adequately substantiated and the court does not provide details in this area. (i.e. in this case, would the letter L’Oreal sent to eBay pass this test, or can only precise notices and take down procedures under the Vero programme be relied on?)

In our view the test to escape liability for not only IP rights infringements, but any other illegal activity as an intermediary has become significantly more onerous than it may have thought to have been in the past because two new factors to consider have come to the fore in this decision: neutrality (active role) and the notion of a diligent economic operator.
Further, it is now confirmed that injunctions to prevent further future IP infringements can be granted, increasing again the burden on online auction intermediaries to police their websites.

The Decision of the ECJ on article 11 EIPRD and the granting of injunctions to prevent future IP infringements

The CJEU decided on this point:

“The third sentence of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade.”
What this means is the injunctions can be granted against online auction intermediary to put a stop to infringements as well as prevent their continuation in future. In effect member States must ensure that such procedures are available to their national courts. Such system was already being used in Germany where in a number of cases against eBay the court imposed an obligation to filter sales to avoid further infringements (see the trilogy of Internet Auction cases: I- Cases I ZR 04/01 [2005] ETMR 25, II- I ZR35/04 [2007] ETMR 70 and III- I ZR 73/05).

The main issue is of course to be able to define the contours of such injunction aimed at preventing the continuation of an infringement of intellectual property right. Those will be carved out of national law.

The CJEU did briefly discuss the potential overlap and contradiction with article 15 ECD which prohibits a general obligation to monitor site activities. It seems here that those injunctions cannot lead to imposing measures that require “active monitoring of all the data of each of its customers in order to prevent any future infringement”. Any general monitoring would also be contrary Directive 2004/48 itself, since all measures must be fair, proportionate and not excessively costly. In addition, the measure must not create barriers to legitimate trade. As a result, an IP owner could not hope for a blanket injunction banning the sale of its product on the site outright, but could seek that the website is asked to monitor similar sales made by the same seller or for a seller account to be closed in order to prevent the same seller, to further infringe rights in respect of the same trademark. Furthermore the court explained that to prevent future infringements, online auction sites may be ordered to take measures to make it easier to identify IP infringers.

Conclusion

Now that the bomb has exploded in the online auction world, it will take months for the ripples of the explosion to reach all shores. In the UK, the High Court, now need, armed with the answers to its preliminary questions, to decide on the facts of the case and render its judgement. Whether it follows the CJEU’s view closely is very likely but not certain. We have already seen in the UK, in the case of Arsenal, how judges could ignore CJEU’s guidance.
However, the only certainty at this point is that this decision does mark the end of ISP’s liability as we knew it. From now on, much of the intricacies of article 14 that had remained unexplained until now (starting with Google) have started to take shape. It appears that electronic commerce has entered a new phase, one where intermediaries, whose activities were at first encouraged by the existence of an exemption of liability, have now to behave much more responsibly in the web 2.0 towards third parties’ activities on their sites.

'Ahoy!' and 'Aye aye captain!'... on digital piracy

I've recently read an article "E-books drive older women to digital piracy" on The Telegraph. It presents interesting findings about how with e-readers becoming more and more popular and their sale growing, more and more e-books are being downloaded illegally. The interesting part being that digital piracy is often associated with young people downloading music, films, games, etc. from the net since they can either not afford the price of a DVD or CD, or they don't want to wait for official publication. E-readers are more seen as a plaything of a bit more mature generation, who definitely can afford investing in a book, whether it's a printed or an electronic version thereof. Still, survey (conducted by the law firm Wiggin within Digital Entertainment Survey 2011, annual assessment of consumer behaviour online) shows that 1 in 8 women over 35 who bought an e-reader admits to having downloaded an unlicensed e-book (compared to 1 in 20 women in this age category who admit to having downloaded music illegally). One might wonder whether this new trend will 'encourage' more people to digital piracy of all sorts (after all, if you downloaded a book without a license, you might as well get a movie the next time you are online, too...). On the other hand, this new data might just signify to people caring less about whether a book has a license or not being aware that a book should have a license online, and will not influence behaviour as far as other online transactions are concerned (ca 29% of e-reader owners and ca 36% of tablet owners admits to piracy). This remains yet to be seen. However, the news for the publishing industry are definitely worrying since we are talking here about a significant trend (and at least 25% of those who admitted to e-piracy stated they'd continue).

Is this new trend REALLY worrying though? Interestingly, last week I've also stumbled upon a fascinating read that concerns the other side of the coin of the same issue. In an article "Naughty bedtime book shifts focus on privacy" at The Age website a fate of a best-selling book is described. A book that will not be published until June 14, but which has already been leaked online in its PDF-file version and was emailed to most computer users in Australia. We are talking here about a fascinating book: "Go the F... to Sleep" - profane children's book written for suffering moms and dads who struggle with putting their children to bed night by night. The interesting thing is that the digital piracy in this case might have contributed to the success of the book. It is easy to spread a word about this book online and to tell all your friends (and Facebook friends) about it. Since the book is apparently hilarious, it's rather doubtful that its availability online will stop people from purchasing it (also as an ironic gift for young parents - 'look what you'll have to go through'). Leaking of this book online in this case was simply a brilliant PR move.

Quoting online equals plagiarism? - Google v Copiepresse

Are you familiar with Google News? It's a search engine of many of the news sources which means it refers consumers who go online in search for news to related websites that might deliver what they are looking for. If a publisher does not want to be listed on Google News, he has a choice to opt out or limit its listing, so you should not immediately assume on one hand that you will find all the information you are looking for on Google News, and on the other hand that Google News took over content of other publishers for its own use without acknowledging their rights to it. Or did it?

In 2007 Google News lost a suit filed against them by Copiepresse - representative of French and German language newspapers in Belgium. The claim was that Google News infringed copyrights of certain newspapers by placing headlines and quotes from their articles on its index. In the past week, Google News lost an appeal against this ruling.

The BEUC, the European consumers' organisation, said that this ruling creates a dangerous precedent, since it restricts Internet users by enforcing strict exclusive copyrights. After all, what harm may come from Google referring consumers to websites of relevant publishers by using quotes from their publications and giving direct links to the source? Isn't it what most of us does online anyhow? Imagine me referring to you this development. I found an interesting article about it online (on Computerworld website) and now I'm giving you my opinion thereof (enriching it with more data that I found on Computerworld website). Does it mean I'm infringing Computerworld's copyright? Well, if that were true, how are we supposed to benefit from using internet? Plagiarism is wrong, we know that, but if credit is given to the original creator, isn't spreading its/his name (and glory), a desirable thing? You might say that Google News doesn't fill in the missing gaps, like I just did and it just repeats the original content. But isn't that what quotes are for? Again, if you refer it back to the author and don't claim it as your own piece of news, it shouldn't be legally relevant...

It is interesting how this matter will be approached (if it will be approached at all) in the upcoming review of the Directive 2004/48/EC on the enforcement of intellectual property rights. On the 7th of June in Brussels there will be a public hearing on this Directive and the challenges posed by the digital environment. You may find details on this hearing on the EC website.