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Stanford – Vienna Transatlantic Technology Law Forum A joint initiative of Stanford Law School and the University of Vienna School of Law TTLF Working Papers No. 14 Internet Intermediaries’ Liability for Copyright and Trademark Infringement: Reconciling the EU and U.S. Approaches Béatrice Martinet Farano 2012 TTLF Working Papers About the TTLF Working Papers TTLF’s Working Paper Series presents original research on technology, and business- related law and policy issues of the European Union and the US. The objective of TTLF’s Working Paper Series is to share “work in progress”. The authors of the papers are solely responsible for the content of their contributions and may use the citation standards of their home country. The TTLF Working Papers can be found at http://ttlf.stanford.edu. Please also visit this website to learn more about TTLF’s mission and activities. If you should have any questions regarding the TTLF’s Working Paper Series, please contact Vienna Law Professor Siegfried Fina, Stanford Law Professor Mark Lemley or Stanford LST Executive Director Roland Vogl at the Stanford-Vienna Transatlantic Technology Law Forum http://ttlf.stanford.edu Stanford Law School University of Vienna School of Law Crown Quadrangle Department of Business Law 559 Nathan Abbott Way Schottenbastei 10-16 Stanford, CA 94305-8610 1010 Vienna, Austria Sponsors This project was co-sponsored by the Stanford-Vienna Transatlantic Technology Law Forum (Stanford Law School/University of Vienna School of Law) and the Stanford Center for E-Commerce. Acknowledgements I am very grateful to the Stanford-Vienna Transatlantic Technology Law Forum and to all the people I met at Stanford Law School and during my stays in Paris who made this research possible. In particular, I would like to thank for their invaluable support, advice and encouragement: Richard Bennett, Senior Research Fellow, Information Technology and Innovation Foundation; Gérard Delile, Partner, Salans; Siegfried Fina, Co-Director, Stanford-Vienna Transatlantic Technology Law Forum; Paul Goldstein, Stella W. and Ira S. Lillick Professor of Law, Stanford Law School; Xavier Herfroy, Head, Legal/Travel Retail Worldwide, L'Oréal; Isabelle Leroux, Partner, Salans; José Monteiro, Chief Trademark Counsel, L'Oréal; Chetuan Shaffer, Intellectual Property/Licensing Consultant; Daniel Siegel, Owner, Derwin & Siegel LLP; Pierre Sirinelli, Professor, Université Paris I Panthéon-Sorbonne; Roland Vogl, Executive Director, Stanford Program in Law, Science & Technology, Stanford Law School; and Fred von Lohmann, Senior Copyright Counsel, Google. Finally, I am profoundly indebted to Daniel Seng for his patient work of editing and for his great advice. This paper was completed on April 30, 2012. About the Author Béatrice Martinet Farano has been a Research Fellow of the Stanford-Vienna Transatlantic Technology Law Forum since January 2011, where she focused her research on IP law, particularly on the issue of Internet intermediaries' liability for third party content. Béatrice graduated from University Jean Moulin Lyon III, LUISS Guido Carli (Rome, Italy) and Paris II Pantheon-Assas University (France). She has a Masters in Business Law from University Jean-Moulin Lyon III and a Masters in Intellectual Property from University Paris II Pantheon-Assas. Béatrice has been practicing as an Intellectual Property lawyer for 8 years in the Paris office of two international leading law firms, Salans and Bird & Bird LLP, where she handled major IP litigations and arbitrations. She can be reached at [email protected] or contacted via LinkedIn. General Note about the Content The opinions expressed in this paper are those of the author and not necessarily those of the Transatlantic Technology Law Forum, any of its partner institutions, or the sponsors of this research project Suggested Citation Suggested Citation for this TTLF Working Paper: Béatrice Martinet Farano, Internet Intermediaries’ Liability for Copyright and Trademark Infringement: Reconciling the EU and U.S. Approaches, TTLF Working Paper No. 14, http://www.law.stanford.edu/organizations/programs-and-centers/ transatlantic-technology-law-forum/ttlfs-working-paper-series. Copyright © 2012 Béatrice Martinet Farano Abstract Over the past ten years, the potential liability of online service providers for third party content has raised one of the most spirited and fascinating debates in the legal arena, putting right holders, service providers and Internet users at loggerheads. In the United States and in Europe, lawmakers have endeavored to resolve this tension by enacting, more than ten years ago, a set of essentially consistent regulations – most notably the U.S. D.M.C.A. and the EU E-commerce Directive – aimed at fostering the growth of the digital economy, while not hampering the protection of IP rights in the digital environment. However, courts in Europe and in the United States are facing increasing difficulties in interpreting these regulations and adapting them to a new economic and technical landscape that involves unprecedented levels of online piracy and new kinds of online intermediaries. As a result, courts in Europe and in the United States have reached contrasting conclusions and have failed to offer consistent guidelines in an increasingly global market. The present study purports to show, after a short introduction (Part 1) that although the legal framework regulating Internet intermediaries’ liability in Europe and in the United States is globally consistent (Part 2), its interpretation by U.S. and different courts in Europe has however been very different (Part 3). The last part of this study offers a brief outline of the recently legislated and draft reforms of copyright law in Europe and in the U.S. (Part 4.1) and concludes that rather than through new legislative reforms, the U.S. and EU approaches to online piracy could be reconciled through a more consistent interpretation of our current legal frameworks and the implementation of a wide range of business-driven solutions (Part 4.2). Table of content 1. INTRODUCTION..............................................................................................................................2 1.1 Outline of the issue ....................................................................................................................2 1.2 Emergence of a consistent legal framework............................................................................3 1.3 Evolution of the economic and technical landscape in the last 10 years. .............................4 1.4 Increasing actions against intermediaries and divergence in their outcomes......................6 1.5 Problems arising from these differences of approaches ........................................................6 1.6 Outline of the present study......................................................................................................7 2. A SIMILAR LEGAL FRAMEWORK IN EUROPE AND IN THE UNITED STATES..................................8 2.1 OSPs’ liability under the DMCA and the e-Commerce Directive: a similar legal framework.................................................................................................................................................10 2.1.1 A broadly consistent legal framework.............................................................................10 2.1.2 Limited impact of the differences existing between the two systems.............................23 2.2 OSPs’ liability outside any special regime of liability: a consistent legal framework.......31 2.2.1 Direct liability for copyright and/or trademark infringement in Europe and in the U.S. 32 2.2.2 Indirect liability for third party infringing activity in Europe and in the United States..47 2.2.3 Exceptions and defences available to the intermediaries targeted by such claims. ........56 3. A DIFFERENT INTERPRETATION OF THIS LEGAL FRAMEWORK BY U.S. AND EU COURTS.........65 3.1 Different interpretation of similar legal concepts.................................................................66 3.1.1 Conditions of eligibility under the hosting (and linking) safe harbors............................66 3.1.2 Conditions triggering liability under these special regimes of liability ..........................77 3.1.3 Standard of liability outside these special regimes of liability........................................98 3.2 Different approaches toward similar Internet intermediaries..........................................100 3.2.1 Search Engines and other linking intermediaries..........................................................101 3.2.2 Online marketplaces and auction websites....................................................................117 3.2.3 Participative networked platforms and other UGC websites ........................................126 3.2.4 Peer-to-peer networks, bitTorrent, cyber-lockers and other file sharing companies ....135 4. SEARCHING FOR A RECONCILIATION OF THE U.S. AND EU APPROACHES...............................147 4.1 Reforms recently introduced in Europe and in the United States to address this issue .148 4.1.1 The goal pursued by U.S. and EU lawmakers...............................................................149 4.1.2 Overview of some of the proposals currently under review .........................................150 4.1.3 A critical approach to these new reforms and proposals...............................................175 4.2 An alternative to legal reforms: harmonizing further the