Internet Service Providers Fear Trend Toward Liability For Content

By Monika Ermert for Intellectual Property Watch
The rising trend of holding Internet service provider (ISPs), host and platform operators liable for third party violations of laws relating to copyright, competition and the protection of minors is of increasing concern to industry associations like the Association of the German Internet Economy, known as Eco.

At Eco’s annual meeting in Cologne last week, Malte Gosau, legal counsel for Easynet (a network and hosting operator owned by BSkyB), said: “Recent court decisions push providers to go abroad to start new business models, as they risk being taken to court over third party violations of the law if they provide a commercial platform, a forum, online games or bets.”

Gosau was bringing the “bad news” to the service providers, said Judge Helmut Hoffmann of the Higher Regional Court of Stuttgart, confirming a trend in German courts to expand the obligations of industry for possible violations by their customers. In a widely discussed decision last summer, the German Federal Court of Justice ruled that eBay had to be judged the “offender” in cases where the platform under its business model allowed third parties to easily violate the legal rights of competitors, rights owners or the law protecting minors from harmful content.

“For the first time the notion of the offending party has been shifted to somebody who in fact had not committed the violation,” said Hoffmann. The case might influence court judgments that so far had very much kept to the model of tiered responsibility for content providers, hosts, and access providers. Content providers supply their own content, host providers provide server space for others to provide content, access providers give access to the Internet.

The platform is required to take down the illegal content immediately after being notified, the Federal Court said in its new decision. But it also must take “reasonable” precautionary steps to avoid any further violations by the same client, be it the same or other content, and it also has to make sure other customers do not offer the very same content, Hoffmann said of the judgement.

The court also ruled that eBay, by creating an Internet marketplace, allowed customers to offer products violating laws on the protection of minors and competition, and therefore could be held liable if it again did not take “reasonable steps” against the possible violations.

“This is the most severe judgement you [could] expect from the Federal Court,” said the judge and who suggested it would be interesting to see how “reasonable steps” for proactively filtering would be defined in the ongoing case.

Hoffman claimed that liability for third party content or communication should be clarified in the EU E-Commerce Directive as soon as it is reviewed. “There is a need to clarify liability for different types of providers, also for search providers, who are not mentioned in the directive right now,” Hoffman said to Intellectual Property Watch. He said it would be a mess if national legislators in the EU started to pass new regulation.

While industry also strongly called for legal certainty, there is concern about a possible extension of liability once the EU E-Commerce Directive is reviewed. Eco lawyer Oliver Sueme warned: “We faced a push by IP rights owners and the [community focused on the protection of minors] to hold hosts and access providers accountable during the first review procedure of the E-Commerce Directive,” he said.

He was satisfied with the regulatory approach of the E-Commerce Directive of tiered responsibility that does not hold access providers and hosts liable. He would recommend distinguishing more clearly between the different obligations in German law, said Sueme.

Preparations for a possible E-Commerce Directive review are underway. A study by German law professor Gerald Spindler is expected to start off the discussion early next year. Annette Kroeber Riel, European policy counsel for Google Germany, put a privileged position as to liability (Haftungsprivileg) for search engine providers on the “Christmas wish list” of her company. Rights owners and protection of minors agencies are expected to have a very different wish list.

In a related development web host Rapidshare is fighting back against the obligation to generally check for pirated content of its customers through a court procedure to take affirmative action against such claims.

Rapidshare had been taken to court by GEMA, collecting rights society for 60,000 lyricists, composers and music publishers, over distribution of copyrighted works. Gema lost an attempt to obtain a preliminary injunction that would have obliged the hosts to check if his users were publishing links to pirated content on Rapidshare’s servers anywhere on the Internet. The links that provide access to the content on Rapidshare are not published by Rapidshare and they do not reveal what content is hidden behind the link. “We hope to get clarity not only for us, but for the whole hosting industry,” said Rapidshare CEO Bobby Chang.

Monika Ermert may be reached at info@ip-watch.ch.