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The judicial focus in Germany is particularly on video platforms such as YouTube or file hosting services such as RapidShare (which has been closed in the meantime) or Uploaded.
This article in particular deals with the decisions of the German Federal Court of Justice (Bundesgerichtshof, BGH) of 13 September 2018 - I ZR 140/15 regarding YouTube and of 20 September 2018 - I ZR 53/17 regarding Uploaded, in which the BGH referred various questions to the European Court of Justice (ECJ) to clarify the liability of such platforms under current EU law. The ECJ consolidated both cases (C-682/18 and C-683/18) in order to be jointly heard and decided.
Special Features of Video Platforms and File Hosting Services
Platforms such as YouTube or Uploaded have special features and characteristics that have to be taken into account when assessing their liability and which distinguish such platforms from other services such as simple web space providers, but also from cloud services such as Dropbox.
Platforms such as YouTube or Uploaded contain large amounts of content that has been unlawfully (i.e. without license or permission from the rights holders) uploaded by their users (the “uploaders”) and is available for other users to access or download. The operators of these platforms are, in general, aware of this circumstance.
In order to encourage as many uploaders as possible to upload content to the platform, the platforms maintain an incentive system that promotes the uploading of particularly attractive content, which does usually mean copyrighted content.
YouTube, for example, gives uploaders a percentage share in the generated advertising revenue, while Uploaded offers remuneration depending on the number of downloads. Uploading content to such a platform is generally free of charge and anonymous.
The uploaded content is then monetised by the platforms, i.e. used to generate revenue. The platform acts in its own name and on its own account. It decides on the business model, on whether or not revenue is generated and how, as well as on the payment model - e.g. by advertising or by a subscription fee. It is particularly noteworthy that revenue is mainly generated from users who are interested in accessing or downloading content, not from uploaders for storing it.
What's the Problem?
Due to the large amounts of content on such platforms, they actually compete with providers such as
Spotify or Netflix. However, while the rights holders participate in the revenue of Spotify or Netflix (or
similar providers) on the basis of license agreements, this is not always the case with YouTube or file hosting services.
Such platforms generate revenue from the provision of content without having to spend “acquisition costs” (i.e. license fees). Obviously, this gives the platforms a competitive advantage over providers who acquire licenses from rights holders.
Accordingly, rights holders have a substantial interest in ensuring that such platforms do not make unlicensed use of their content, or at least that they receive compensation for such uses.
In the enforcement of their rights, however, rights holders face the problem that uploaders usually cannot be identified and thus prosecuted. Furthermore, due to the large number of uploaders and their international locations, legal action against individual uploaders is not very effective and involves a great deal of effort. It is much more effective to use the platform as a “central contact” for this purpose.
However, the platforms claim that they would merely provide a technical infrastructure for the uploader - in their view the actual and sole infringer - and would, therefore, not be responsible for infringements, or only after the specific infringement is brought to their knowledge, due to safe harbor privileges provided by law for host providers.
The infringing content would, therefore, have to be deleted only after a respective notification. Thus, rights holders face significant obstacles in their possibilities of effectively enforcing their rights against infringements on such online platforms.
Claiming Damages from Platforms
Some rights holders try to counter this enforcement deficit, which results in the so called “value gap” on an economic level, by claiming that the platforms would not only be indirectly involved in the infringements as intermediaries, but as (co-)perpetrators or as abettors to copyright infringement. Thus, it could be the case that a platform would be liable for damages and that the rights holder would at least be compensated for the use of its content subsequently.
Such attempts have, so far, been only partially successful in Germany. While the first instance courts (Regional Courts) in the YouTube and Uploaded proceedings had mainly assumed such liability, it was rejected by the Higher Regional Courts (Oberlandesgericht, OLG) in Hamburg and Munich (for YouTube: OLG München, judgment of 28 January 2016 - 29 U 2798/15; OLG Hamburg, judgments of 1 July 2015 - 5 U 175/10 and 5 U 87/12; for Uploaded: OLG München, judgments of 2 March 2017 - 29 U 3735/16 et al.).
The BGH to which the rights holders appealed decided to refer a number of questions to the ECJ which, in the court’s view, are relevant to the legal cases. These questions concern the interpretation of various EU directives and their relationship to each other, namely the InfoSoc Directive (Directive 2001/29/EC), the E-Commerce-Directive (Directive 2000/31/EC) and the Enforcement Directive (Directive 2004/48/EC).
Does the Platform Perform its Own Act of Communication to the Public?
The central question is whether or not an internet video platform such as YouTube or a file hosting service such as Uploaded performs its own act of (copyright) usage. If the answer is yes, such a platform would be directly and fully liable, in particular for damages, if any content on the platform was found to be illegal.
As background, it is important to know that the ECJ has recently decided a number of cases dealing with the question if the different persons involved perform a separate act of communication of works to the public on the Internet, like the The Pirate Bay case (judgment of 14 June 2017 - C-610/15) or the Filmspeler case (judgment of 26 April 2017 - C-527/15).
The ECJ has always emphasised that a broad interpretation of the concept of communication to the public is necessary in order to establish the high level of protection required by the InfoSoc Directive.
According to the ECJ, a communication to the public involves two criteria, namely an act of communication of a work and the communication of this work to the public. The question whether there is a public communication or whether the person or platform involved is making a communication to the public requires an individual assessment for which it is necessary to take into account several complementary criteria, which are not autonomous and interdependent.
Regarding the first aspect, the act of communication, the ECJ has always emphasised the indispensable role played by the user and the deliberate nature of its intervention. It is essential that the user acts in full knowledge of the consequences of its action in order to give third parties access to a protected work that they would not be able to enjoy or would it find difficult to enjoy without such action.
This is not precluded by the fact that the works made available on a platform were not put online by the operators themselves, but by an uploader.
An indispensable role and acting in full knowledge of the consequences should be affirmed for both a video platform such as YouTube and a file hosting service such as Uploaded.
The fact that both platforms, knowing in principle that they offer access to a large amount of illegal content, have created an incentive system for uploaders to upload just that kind of content, and then generate revenue from this content on their own account, in which they let the uploaders participate, should be sufficient to assume an indispensable role for the platform in such system.
The BGH expressly stated that it would affirm such indispensable role for the file hosting service Uploaded (BGH, order of 20 September 2018 - I ZR 53/17, paragraph 25), but it would not do so for the video platform YouTube (BGH, order of 13 September 2018 - I ZR 140/15, paragraph 34).
However, the latter is difficult to comprehend, since YouTube even has its own search function, categorises the videos on the platform and even promotes them to its registered users by making recommendations.In any case, this will finally have to be decided by the ECJ.
Regarding the second aspect, it is not difficult to argue that both platforms are indeed communicating to the public. They are both aimed at the general public – or as the ECJ might state: at an indeterminate number of potential viewers and a large number of people who can access the works simultaneously
or successively. In addition, a new public is reached that was not already taken into account by the rights holder when it authorised the initial communication of the work to the public.
Quite simply, the content is available without any authorisation at all. In a situation in which a platform offers content stored on its own servers and delivered by its own users with the intention of making profit, it does also not matter whether or not the operator knew or could have known about the unlawfulness of the content.
Rather, it should have acquired this knowledge and set up its system in a way that infringements do not occur – just as any other content provider (publishers, TV stations, etc.) has to by maintaining appropriate resources.
May the Platform Invoke a Liability Privilege?
In the event that the platform’s own act of communication to the public should be denied, a follow-up question arises of whether or not such platform may benefit from the safe harbor privilege in Art. 14 of the E-Commerce Directive.
The ECJ has already stated that only intermediaries who provide a service of a merely technical, automatic and passive nature can invoke the liability privilege. If the service, however, plays an “active role”, the privilege is not applicable. A service that provides incentives for the upload of copyrighted content cannot be denied to play an active role, so that it should not be able to claim the safe harbor.
If the liability privilege should be deemed applicable, the ECJ has to comment on the controversial question, as to whether the privilege will only lapse if the service provider is aware of the specific infringement (i.e. only if it knows the URL of the infringing content) or whether it is sufficient for the service provider to be aware of the work in question being already unlawfully available on the platform.
Is German Stoererhaftung (Liability of Interferers) in Compliance with EU Law?
This question focusses on whether or not the German Stoererhaftung as developed by the BGH for infringements on the internet is in compliance with EU law, i.e. with the relevant directives.
According to the BGH’s previous case law, Stoererhaftung applies if someone contributes deliberately and adequately to an infringement in any way – as platforms do.
According to the BGH, however, liability under Stoererhaftung requires that, after notification of a clear infringement, such infringement has occurred again. Accordingly, a platform can only be held liable under Stoererhaftung if there have been two infringements of the work in question on the respective platform.
Article 8 paragraph 3 of the InfoSoc Directive, on the other hand, provides that rights holders may apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.
The provision does not state anything that this should only be the case after an infringement has occurred twice. Furthermore, Article 14 paragraph 3 of the E-Commerce Directive allows injunctions to be issued against intermediaries without their prior knowledge of an infringement.
It can therefore be cautiously anticipated that German Stoererhaftung might have to change after the decision of the ECJ.
Under Which Circumstances Can a Platform be Liable for Damages?
Finally, the BGH asks the ECJ whether or not a platform’s liability for damages could also be considered if the platform has not made an own act of communication to the public, but has played an active role in the act of the uploader. Obviously, these are cases in which a platform has done more than just provide technical facilities to the uploader to commit an infringement.
The key point for this question is that the Enforcement Directive stipulates that claims for damages against an “infringer” must be possible. Against “intermediaries”, on the other hand, only injunctions shall be possible, to prevent further infringements.
Whether a platform whose activity does not result in an own infringement, but whose conduct is also not limited to merely technical, automatic and passive activities has to be regarded as an “infringer” within the meaning of the Enforcement Directive or as an “intermediary” – or whether it is not covered by the Directive at all –, is a question that has hardly ever been discussed so far.
In addition, the ECJ may also have to decide whether or not it is sufficient for a claim for damages that the platform acted negligently. The case law in Germany has, so far, assessed such cases under the concept of liability of an abettor – which, however, requires intent with regard to both the act of aiding and abetting and the main act, and has therefore only rarely been affirmed. However, following the ECJ ruling, German law might also have to provide “liability of negligent abettors”.
Summary and Outlook
Due to the reference by the BGH, the ECJ will have the opportunity to continue its established precedent on communication to the public and to apply it to platforms such as YouTube or Uploaded. On the basis of previous case law, there are strong indications that the ECJ will treat the platforms as actors in their own right and thus assume their direct and full liability.
Even if the ECJ should not decide that way, it has the possibility of establishing the platforms’ liability for damages by answering the further questions referred and thus bridging the “value gap” between the revenue of the platforms and the low participation of the rights holders in them.
The same objective is also pursued at the EU legislative level. The draft Directive on Copyright in the Digital Single Market (as of February 2019) provides that an “online content sharing service provider”, which stores and gives the public access to a large amount of copyright protected works and organises and promotes such content for profit-making purposes, shall perform its own act of communication to the public.
According to the idea of the draft Directive, such provider can, however, relieve itself of liability by making efforts to prevent infringements. However, the EU Parliament has yet to give its final approval to this version of the directive.
The ECJ’s decision in the YouTube and Uploaded case will not be based on the Directive on Copyright in the Digital Single Market. However, it is not out of the question that the ECJ will take into account the legislative will expressed by the Directive. In any case, the question of liability of platforms will continue to be an exciting one even after the ECJ has decided and that the Directive has possibly entered into force.
Liability of Online Platforms: Will the ECJ Finally Rein in YouTube?
Rights holders, platforms and courts have, for some time, debated whether or not online platforms can be held liable for content that is unlawfully uploaded by their users, and to what extent. There has also been an ongoing effort at EU level to legislate on the liability of certain platforms on the critical issue of EU legal policy in a more digitised environment. Other critical issues include the interests of rights holders’ clash with those of free internet advocates and large internet corporations.
Bernhard Buchner studied law and completed his practical legal training in Munich. He worked for a Munich law firm and as a tutor and scientific assistant at the chair for commercial criminal law at the LMU Munich. He has been working with Lausen Rechtsanwälte since 2001, as a partner since 2009, with a focus on copyright law, trademark law and IT law, in particular the pursuit of infringements in the online area (in this role he was partly involved in the proceedings mentioned in the article). He is active as a lecturer and expert for the Akademie der Deutschen Medien. Mr. Buchner is Fachanwalt für Urheber- und Medienrecht (certified specialist for copyright and media law) as well as for Informationstechnologierecht (certified specialist for information technology law).