18 Global Media and Communications Quarterly Autumn Issue 2012

Europe: Measures to Limit Online Infringement

The creative industries argue that piracy costs the other forms of computer memory. Consequently some industry £400m a year in lost revenue. However, argued that individual file sharing should be considered attempts to introduce a legal framework to reduce a form of private copying, covered by an exception to online copyright infringement (‘OCI’) have been copyright and remunerated via the private copy levy. highly controversial and governments are struggling Individual lawsuits against users for file sharing to find the right balance between, on the one hand, in France were in some cases unsuccessful because the intellectual property rights of content owners and judges balked at applying harsh infringement sanctions on the other hand, both the rights of ISPs to freely to teenagers who download music for personal usage. operate their businesses and the fundamental rights It became clear that French copyright law was ill- of individuals. In June of this year, after some set- adapted to the problem of OCI, in part because France’s backs, OFCOM published its draft code governing penalties for copyright infringement were so severe. the obligations imposed on ISPs under the UK Digital Economy Act, which means the UK framework for Ultimately, the DADVSI did not create compulsory dealing with OCI will finally be set in motion. This licencing for private downloading. Instead, the law article focuses on some of the problems which have contained a provision stating that individual peer-to- arisen in Europe and outlines the current framework peer downloads would no longer be considered a for dealing with OCI in France, Spain and the UK. under French copyright law, but would be considered only a misdemeanour subject only to a low-level fine Background equivalent to a parking ticket. France’s Constitutional In 2000 the European E-Commerce Directive Court held that this lightened sanction regime was established the principle of “notice and take down” unconstitutional because it created two different kinds procedures, giving ISPs immunity from liability except of punishment for an act of copyright infringement where they have been notified of infringement and depending solely of the technology used to commit do not promptly take down the content. The following the infringement. The court found that this difference year, the Information Society Directive came into force, in sanctions violated the constitutional principle of which provided that member states must ensure equality of punishment for the same offence. The that rights holders can apply for an injunction against DADVSI also created a new duty of care for Internet internet intermediaries whose services are used by a subscribers to take reasonable measures to ensure third party to infringe a copyright. The IP Enforcement that their Internet access is not used for infringement. Directive also requires member states to ensure But this duty of care was not accompanied by any that measures necessary for the enforcement of sanction and remained a dead letter in practice. Finally, intellectual property rights shall not be unnecessarily the DADVSI permitted courts to prohibit the distribution complicated or costly. The directives had to be of software that is principally used for infringement. implemented through national legislation and this has led to inconsistencies in the national legislation The DADVSI created a new regulatory authority, then of member states. This is particularly problematic called the “ARMT,” to regulate questions linked to for large ISPs operating in several jurisdictions. interoperability of technical protection measures. The ARMT was supposed to strike a balance between France copyright and freedom of expression by ensuring In 2006, France transposed into national law the that technical protection measures do not frustrate Information Society Directive. The French law, called legitimate uses of the protected work, or prevent the “DADVSI” in French, crystallized debates regarding interoperability. However, the ARMT was not given the appropriate measures that should be taken to limit any rulemaking authority. The ARMT was to intervene OCI. A number of French parliamentarians argued that solely in individual cases, either as a mediator or as an the individual downloading of copyrighted content for arbitrator to order access to interoperability information private purposes should be covered by a compulsory in appropriate cases. The ARMT was inactive, in part licence for private copying and not considered as because music labels did not end up making extensive infringement. In France, copyright owners already use of anti-copy measures on CDs. The ARMT receive remuneration from blank tape levies, and those survived, however, and ultimately became the French levies have been extended to apply to blank CDs and regulatory authority today known as the “HADOPI.” Global Media and Communications Quarterly Autumn Issue 2012 19

Following adoption of the DADVSI, the French The first version of the HADOPI law was adopted by President urged right holders, ISPs and several both houses of , but invalidated large hosting platforms to sign a charter pursuant to in part by the French Constitutional Court. The first which right holders undertook to make more content version of the law had given the HADOPI administrative available for legal online offers, ISPs and other Internet agency the power to order the suspension of Internet platforms agreed to implement graduated response access for certain repeat infringers after a procedure and to experiment with filtering, and the government in which the suspected infringer could present his or agreed to put into place a legal framework that her defence. The Constitutional Court found that the would support both the development of legal offers suspension of Internet access constituted a serious and the implementation of a graduated response restriction on freedom of expression and that such a regime. After signature of the Elysée Agreement, serious measure should only be ordered by a judicial neither right holders nor ISPs took action, and authority, and not by an administrative agency. After waited for the government to take the first step by invalidation of this portion of the HADOPI law, the putting into place the promised new legal framework government introduced an amended version that for graduated response. The government then provided for an expedited procedure pursuant to which proposed the controversial HADOPI law, which would a court would make the ultimate decision as to whether introduce the graduated response regime in France, to suspend Internet access for repeat infringers. a regime that could ultimately lead to the temporary It is this version of the law that is in effect today. suspension of Internet access for repeat infringers.

“As a result of the recent election of François Hollande and the new socialist majority in Parliament, the future of the HADOPI is uncertain” 20 Global Media and Communications Quarterly Autumn Issue 2012

Europe: Measures to Limit Online Copyright Infringement

Under the HADOPI graduated response regime, right letters of this type have been sent. For subscribers holder organizations collect IP addresses of suspected that continue to show evidence of infringing activity, infringers using peer-to-peer networks. The evidence the HADOPI then selects a relatively small number of is then transmitted to the HADOPI regulatory authority, files and asks the relevant subscriber to participate in a who then obtains from Internet access providers the hearing and present his views. The HADOPI then sends names of the subscribers corresponding to the IP certain files to the public prosecutor who can then addresses. The HADOPI then sends an initial e-mail seek an order from a judge to interrupt the subscriber’s to the relevant subscribers informing them of their Internet access. As of the date of publication, no duty to ensure that their Internet access is not used court has ordered the suspension of any Internet for infringing purposes, and reminding the subscriber access, and the HADOPI’s chairperson has indicated of the existence of legal online offers. To date, the that slightly less than 300 files are being reviewed HADOPI has sent out approximately 1,000,000 first for possible transmission to the public prosecutor. warnings. Repeat infringers then receive a registered letter from the HADOPI stating that the subscriber Since the date it was created, the HADOPI has been has been identified again as the source of infringing subject to vocal criticism, particularly from advocates content, and that if the conduct does not cease the of Internet freedom. A number of influential members HADOPI may transmit the file to the public prosecutor of the French criticized the HADOPI as for sanctions, which may include suspension of Internet being a waste of money, an invasion of fundamental access. To date approximately 100,000 registered rights and ineffective. As a result of the recent election

“The UK DEA’s provisions relating to OCI caused widespread controversy” Global Media and Communications Quarterly Autumn Issue 2012 21

of the socialist François Hollande as President of subscribers for the purpose of bringing individual France, and the new socialist majority in Parliament, copyright infringement actions. The second phase of the future of the HADOPI regulatory authority and of regulation consists of technical measures that ISPs the French graduated response regime is uncertain. may be required to implement in order to limit OCI. These technical measures may include the limitation UK of Internet access for certain subscribers, a measure In the Government’s Review of Intellectual Property similar to the French graduated response regime. in the UK in December 2006 (the Gowers Review) Mr Gowers reported that UK legislation, in particular Both phases are contingent on the adoption of detailed s97A of the UK Copyright, Designs and Patents Act implementing rules by OFCOM. The DEA provides 1988, was not providing rights holders with sufficient either that the detailed rules would be developed in the protection against OCI (in particular illegal file-sharing). form of a code of conduct by industry stakeholders, a Under s97A, the High Court has the power to grant an code which would then be approved by OFCOM, or in injunction against a service provider, where that service the absence of agreement by industry stakeholders, provider has actual knowledge of another person using that the code would be adopted directly by OFCOM. their service to infringe copyright. Gowers recognised Shortly after adoption of the DEA, OFCOM launched a that rights holders and ISPs disagreed over the public consultation regarding the draft code of practice interpretation and effect of s97A and it was completely that OFCOM intended to adopt. In the meantime, untested since 2003. Consequently, in February 2008, two ISPs challenged the DEA before the High Court the government said it would consult on legislation that of England on the grounds that the DEA violated would require ISPs and rights holders to co-operate several European directives and also constituted a in taking action on OCI, with a view to implementing disproportionate restriction on the fundamental rights legislation by April 2009. In July 2008 the UK’s six of Internet users. The High Court validated virtually largest ISPs signed a memorandum of understanding all provisions of the DEA. After the High Court’s with industry representatives and government under decision, the two UK ISPs lodged an appeal before which they committed to working towards a significant the Court of Appeal. On March 6, 2012, the Court of reduction in illegal file-sharing. Ultimately, however, Appeal upheld the initial decision of the High Court . the memorandum of understanding failed as rights Consequently it is now possible for OFCOM to adopt holders and the ISPs could not agree how the costs the initial code of obligations that would permit the of any measures to reduce OCI should be borne. first phase of the DEA to go into operation. OFCOM issued a new draft of these regulations on 26 June Consequently, the government was forced to 2012 for public consultation. OFCOM proposes that the legislate in this area and the relevant provisions were costs of the ISPs and OFCOM should be split 75:25 enacted in the UK (‘DEA’). between the copyright owners and the ISPs. There is Throughout the DEA’s passage throughout Parliament, likely to be considerable debate over this proposal. the provisions relating to OCI caused widespread controversy and were heavily amended at each stage. Twelve months after the initial obligations code comes into force (which is now expected to happen To deal with OCI, the DEA foresees two phases of in 2014), OFCOM must prepare a report for the regulation. The first phase consists of a mechanism Secretary of State containing a detailed assessment pursuant to which right holders would detect the IP as to whether the initial phase consisting of the addresses of suspected online infringers and forward sending of notices to subscribers has resulted in a these IP addresses to the relevant ISPs. The ISPs decrease in OCI. The Secretary of State can then would then send warning notices to the suspected instruct OFCOM to conduct further assessment, infringers. The ISPs would also be required to provide including industry consultation, as to whether additional to right holders an anonymous list of subscribers for technical measures should be imposed on ISPs in whom the ISP had previously received a large number order to limit the OCI. OFCOM must then prepare of infringement notices from the right holders. This a report for the Secretary of State assessing the anonymous list would permit right holders to go to effect of various technical measures. Based on that court in order to request the name of the relevant report the Secretary of State may make an order 22 Global Media and Communications Quarterly Autumn Issue 2012

Europe: Measures to Limit Online Copyright Infringement

that ISPs implement those technical measures. Any online content and service provider may be However, the Secretary of State’s order would first affected by the new notice and takedown procedure. have to be approved by both Houses of Parliament. This includes those providing communication infrastructure and services (e.g. operators giving In addition to granting the Secretary of State the access to the Internet or providing mere hosting power to impose technical measures on ISPs, the DEA or housing services, etc.), to those allowing third empowers the Secretary of State to adopt regulations parties to upload content such as social networks, regarding court injunctions requiring service providers blogs or marketplaces, and other service providers to block access to sites for the purpose of preventing such as the ones providing links to third parties’ OCI. The service providers that could be affected by content. Any individual or company engaged in the injunctions of this type would include publishers of provision of Internet services may be required to websites, hosting providers, and providers of other suspend the connection to illicit content or take down online services. This was the most controversial aspect content that has been uploaded by third parties. of the OCI provisions and was heavily watered down during its passage through Parliament. In its final form, The notice and takedown procedure is applicable industry must be consulted and, as with the order to against alleged copyright infringing activities which impose technical measures, the Secretary of State fulfil the following two cumulative requirements: must gain approval by both Houses of Parliament within a 60 day “super-affirmative” window. Given that Ofcom a) they are carried out with a profit-making has undertaken a review of the way in which the motive, or cause (or are capable of causing) legislation relating to blocking injunctions might work a patrimonial damage (i.e. financial loss) and has concluded that it is likely to be ineffective, in particular as s97A of the UK Copyright, Designs and b) they constitute “information society services”, as Patents Act already provides copyright owners with a this concept is used by the Spanish E-commerce remedy, which has now been tested by rights holders Act implementing the E-commerce Directive. with success, it seems unlikely that the Secretary of State will ever adopt any site-blocking regulations.

Spain “There was a strong debate in On 31 December 2011, the Spanish Official Gazette Spain on whether these websites published the Royal 1889/2011 which develops were mere intermediaries” the functions of the Spanish Copyright Commission (“SCC”) and implements the notice and takedown procedure for the protection of copyright on the Internet that was approved by the controversial Spanish Generally speaking these include most of the activities “Sinde Act”. The SCC was created within the Culture carried out by online content and service providers. Ministry as a national agency for the defence of The only exceptions are the providers of the so-called copyright. It was originally assigned with arbitration and “intermediary services” which, under the Spanish mediation functions. However its role was enhanced E-commerce Act include Internet access, caching, in March 2011 by the controversial anti-Internet piracy hosting and the provision of links and search tools. “Sinde Act”, which provided for a new notice and Although the intermediary services providers are not takedown procedure for the removal of copyright the target of the notice and takedown procedure - as infringing content from the Internet and created a generally speaking, they are not liable for the copyright new division of the SCC (“Section Two”) in charge of infringement - they may be asked to cooperate dealing with such procedure. However, in practice, with the SCC by providing information about the the operation of this new Section Two of the SCC alleged infringer and/or suspending access to the and the possibility of using the notice and takedown information society services which breach copyright. mechanism, was not in force until 29 February 2012. Global Media and Communications Quarterly Autumn Issue 2012 23

Under the scheme, in order to report the infringement, the existence or the absence of copyright infringement. the copyright holder must fill in an application and If copyright infringement is confirmed the SSC will submit it to the SCC. The application must provide order the online content and service provider to remove the identification of the affected copyrighted works, the illicit content or activity within a maximum period a description of the alleged infringement and evidence of 24 hours. The resolution will also be notified to of the existence of the copyright, of the existence of the providers of the intermediary services and shall the breach and of the damage or potential damage that also state the suspension measures that must be is caused. Moreover, the copyright holder must provide implemented in order to stop the information society any information it has regarding the relevant ISP and service through which the ISP infringes the copyright, the intermediary service providers used by it. The SCC in case a positive decision from the Courts is issued. will then notify the relevant intermediary services providers about the initiation of the procedure on the If, once the order of the SSC is made, the illicit content basis of their condition as a party interested in it and to or activities are not removed within 24 hours the SSC facilitate future cooperation in the identification of the will immediately address the competent Administrative alleged infringer or the removal of the illicit content. The Court and ask it to issue a Court decision that confirms SCC will then proceed to identify the individual or entity or rejects the implementation of the measures responsible for the alleged infringement. If the SCC is proposed by the SSC in the above resolution. If the not capable of identifying the responsible party (e.g. Court authorizes such measures, the Court decision there is not enough information available about the ISP) shall be notified to all the interested parties and the it will immediately refer to the Courts (in this case, the intermediary services provider will have to implement Administrative Courts) and ask them for a Court order the suspension measures proposed by the SSC asking the relevant intermediary services provider to within 72 hours after receipt of the notification of the provide the SCC with any data it has that may help with Court decision, provided that the online content and the identification of the relevant ISP. The intermediary service provider has not removed the illicit content or services provider must fulfil the order within 48 hours. activity itself. The suspension measures applied by the intermediary services provider shall be removed Once the provider for the content has been identified, if the ISP proves that the illicit activity has terminated the SCC will notify the initiation of the notice and or, in any case, one year after their implementation. takedown procedure to the online content and service provider and to the relevant provider of the The implementation of this notice and takedown intermediary services. The online content and service procedure has drawn some criticism in Spain. provider has 48 hours to voluntarily remove the illicit One of the most controversial aspects relates to content or activity or provide evidence in defence of the consequences of the voluntary removal of the the content or activity that is deemed to be illicit. If it illicit content or activity by the online content and voluntarily removes the content, the SCC will terminate service provider. According to the law, such voluntary the procedure and notify the interested parties (in removal is regarded as an implicit recognition of the principle, the copyright holder and the intermediary copyright infringement by the provider. The notice and services providers). If after 48 hours the online content takedown procedure is compatible with civil, criminal and service provider has not voluntary removed and administrative actions that may be filed by the the illicit content or activity, the SSC will have two copyright holders against the relevant provider. In this days to assess all the evidence and notify its result scenario, there is a risk that the implicit recognition to the interested parties together with a proposal. of the copyright infringement that comes with the Such interested parties will have five days to file its voluntary removal of the content, may be used as conclusions regarding the resolution of the SSC. a base for claiming damages against the provider.

Once the five day conclusion period has elapsed, the A controversial aspect of the Spanish notice and take SSC will have three days to issue a reasoned and down procedure was the application of the notice justified final resolution. This resolution will confirm and takedown procedure to websites providing 24 Global Media and Communications Quarterly Autumn Issue 2012

Europe: Measures to Limit Online Copyright Infringement

access to illegal content hosted by third parties. Penelope Thornton There was a strong debate in Spain on whether Senior Associate, London these websites were mere intermediaries - as they T +44 20 7296 5665 do not host the illegal content themselves - or true [email protected] ISP content and service providers directly subject to the notice and takedown procedure. However, in its first decision issued by the SSC in June 2012 Winston Maxwell (case AGEDI vs. uploaded.com), the SSC has Partner, Paris clarified that such links providers (in this case bajui. T +33 (1) 5367 4847 com) are mere intermediaries and, thus, not directly [email protected] regarded as copyright infringers. In any case, as intermediaries, they must supress the access to the illegal content following the order of the SSC. Gonzalo Gallego Partner, London Conclusion T +34 (91) 3498 257 There are multiple European directives governing this [email protected] area, which have all been implemented differently by member states. This has led to quite different approaches to dealing with OCI at national level. In France, the UK and Spain a regulatory authority has been entrusted with responsibility for ensuring that OCI is reduced under a regulatory framework without infringing fundamental rights. However, the obligations on ISPs, and intermediary service providers, to assist and co-operate in the reduction of OCI varies throughout Europe and remains the subject of much criticism and debate, which has stalled and delayed the progress in this area. Sadly, it will be several years before the success of these models will be seen, by which time a pan-European proposal will almost certainly be on the table from the Commission.