University of Zagreb
Faculty of Law
Jean Monnet Chair of European Public Law
Filip Kufrin
SHOOTING THE MESSENGER – THE LIABILITY
OF ONLINE INTERMEDIARIES IN THE
EUROPEAN UNION AND THE UNITED STATES
MASTER THESIS
Supervisor: Mislav Mataija, LL.M.
Zagreb, July 2013
TABLE OF CONTENTS:
I.
INTRODUCTION .............................................................................................................. 1
II.
ONLINE INTERMEDIARIES - SETTING OUT THE BASICS ..................................... 4
1. What is an 'online intermediary'? .................................................................................... 4
2.
III.
Possible types of online intermediaries' liability ............................................................ 7
2.1.
The 'strict liability' approach .................................................................................. 8
2.2.
The 'no liability' approach .................................................................................... 10
2.3.
The 'with-fault liability' approach ........................................................................ 12
2.4.
The notion of 'vicarious liability'.......................................................................... 14
ONLINE INTERMEDIARIES IN EUROPEAN UNION LAW ................................. 15
1.
Reasons to adopt Union-level measures .................................................................... 15
2.
'Information society services' .................................................................................... 16
3.
Liability of intermediary service providers ............................................................... 17
3.1.
Article 12 – 'Mere conduit' ................................................................................... 18
3.2.
Article 13 – 'Caching' ........................................................................................... 19
3.3.
Article 14 – 'Hosting' ............................................................................................ 20
3.3.1.
What is a 'hosting' service? .......................................................................... 20
3.3.2.
'Actual knowledge or awareness' of the unlawful content ........................... 22
3.3.3.
What does 'acting expeditiously' mean? ....................................................... 24
3.3.4.
When does a 'hosting' service provider have control over the recipients? ... 25
4.
5.
IV.
The case law of the European Court of Justice ......................................................... 26
4.1.
Google France v Louis Vuitton ............................................................................ 26
4.2.
L'Oréalv eBay ....................................................................................................... 29
4.3.
Scarlet v SABAM .................................................................................................. 31
4.4.
SABAM v Netlog ................................................................................................... 32
Concluding remarks to Chapter III – what can be improved? .................................. 33
COMPARISON WITH UNITED STATES LAW....................................................... 35
1.
The Communications Decency Act ........................................................................... 35
2.
The Digital Millennium Copyright Act ..................................................................... 37
V.
CONCLUSION ............................................................................................................ 39
VI.
BIBLIOGRAPHY AND REFERENCES .................................................................... 40
I.
INTRODUCTION
Over the past twenty years, the internet has propelled into the hub of everyday life. While
the limits of this phenomenon are yet to be seen, a large amount of today's communication
and data share is exchanged online. It was reported earlier this year that e-commerce retail
sales topped one trillion American dollars for the first time in 2012. By the end of this year,
sales are expected to grow a further 18.3%, rising to the staggering sum of 1.298 trillion.1
Naturally, with both business and private communication switching to the online world, a
wide range of legal issues has also emerged. Unlawful activities, most notably copyright
infringement and the transmission of other illegal content, have not failed to follow the trend
of transferring into cyberspace. Among the various legal issues which have appeared, one of
the first to trigger debate back in the 1990s was the problem of online intermediaries' liability
for the content posted by third parties - their users.2 This is not surprising when account is
taken of online intermediaries in the virtual world. Commonly referred to as internet service
providers ('ISPs'), they are in the very heart of every internet-based activity. They include
everything from internet access and cable providers to search engines such as Google and
platforms such as YouTube and Facebook.3
Fiery discussion on intermediary liability of ISPs started after the 1991 judgment of the
U.S. District Court for the Southern District of New York in Cubby v CompuServe,4 which
was one of the first cyberlaw cases of any type to be decided.5 The case concerned a libel
claim against CompuServe, which allegedly hosted defamatory content on one of its forums.
Although the decision was made in favour of the defendant and no liability was imposed, the
Court announced the possibility of holding online intermediaries liable under the traditional
1
'Ecommerce Sales Topped $1 Trillion for First Time in 2012' (eMarketer, 5 February 2013)
<http://www.emarketer.com/Article/Ecommerce-Sales-Topped-1-Trillion-First-Time-2012/1009649> accessed 8
July 2013.
2
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 5.
3
Ashley Hurst, 'ISPs and defamation law: hold fire, Robert Jay' The Guardian (London, 25 January 2013)
<http://www.guardian.co.uk/law/2013/jan/25/defamation-law-robert-jay> accessed 8 July 2013.
4
Cubby, Inc. v CompuServe Inc., 776 F Supp 135 (SDNY 1991).
5
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 4.
1
defamation law rules. Had CompuServe known or had reason to know of the defamatory
nature of the statements, it would have been held liable.6
The debate escalated four years later, when the New York Supreme Court issued its
decision in Stratton Oakmont v Prodigy Services.7 On similar facts to those of Cubby v
CompuServe, a different conclusion was reached. Traditional defamation rules were once
again applied to the online intermediary. However, unlike in Cubby v CompuServe where the
role of the ISP was equated to that of a distributor, in Stratton Oakmont v Prodigy Services
the Court took a stricter view and considered Prodigy to be a publisher of the defamatory
content due to the amount of its editorial control over the messages. Consequently, Prodigy
was held liable as if it had originally posted the defamatory messages itself.
This decision caused much anxiety for online intermediaries, who became worried about
the profitability of their businesses. With cost-motivated arguments, which they are still
pointing out today, they engaged in convincing the national governments to grant them
exemptions from liability for the content posted by third parties. Firstly, the ISP industry
complained that if they were made responsible for the conduct of their users, they would end
up being sued for almost all cases of illegal activity in cyberspace. As they are normally
established as large companies, easily identifiable and with significant funds, the majority of
claims would be aimed at them instead of their law-violating users, who might easily be
anonymous or short of money.
Secondly, online intermediaries insisted that they had no effective control over the
material posted by their users and that it would be impossible in practice to supervise all
information transmitted through their systems. They claimed that the obligation to monitor all
content would require immense expenses and result in either them going out of business,
replacing the jurisdiction for a less restrictive one or passing the increased cost on to the
consumer, ultimately raising the cost of internet use. At that time, few people considered this
to be a reasonable solution – commercial use of the internet had just begun and its potential
6
Under U.S. defamation law, distributors can only be held liable if they pass the 'knowledge hurdle'. In Cubby v
CompuServe, CompuServe was considered to be a distributor, legally equivalent to 'news vendors, book stores
and libraries'. On the other hand, publishers are subject to a stricter test and can be held liable 'as if they had
originally published' the defamatory statements.
7
Stratton Oakmont, Inc. v Prodigy Services Co., 1995 WL 323710 (NY Sup Ct 1995).
2
was enormous. Therefore, in the early 1990s, the discussion was focused on how to regulate
online behaviour while simultaneously boosting the business of online intermediaries.8
The first regulatory acts soon followed. In the U.S.A., the Communications Decency
Act (further: CDA)9 was adopted in 1996, introducing immunity for online intermediaries in
all matters except for intellectual property. It is worth noting that while the early intermediary
liability cases mostly dealt with defamation and child pornography issues, eventually
intellectual property took over as the most discussed topic in ISP regulation. Liability of
online intermediaries in this area of law is regulated in the U.S.A. by the Digital Millennium
Copyright Act (further: DMCA),10 adopted in 1998. Shortly after the CDA and the DMCA
were introduced, the need to regulate the liability of online intermediaries was also recognised
at European Union level. Particular emphasis will be placed in this paper on the E-commerce
Directive,11 adopted in 2000, which (partially) harmonised Union law in this regard. The Ecommerce Directive and the above mentioned U.S. regulatory acts, all of which are still in
force today, will be discussed in more detail in the following chapters.
In the light of the above considerations, this paper focuses on the issue of intermediary
liability of ISPs, trying to set out where the law currently stands and offer some suggestions
for the future. Should online intermediaries be exempted from liability, with laws favouring
their successful business and further development of the internet, or should they be
encouraged to regulate the behaviour of their users, acting as 'the new cyberpolice'? 12 Are the
same policy arguments which inspired the creation of the CDA, the DMCA and the Ecommerce Directive still important, or have they changed during the past decade? At the same
time, should one single legal regime cover all types of online intermediaries and all sorts of
illegal activity in the virtual world?
8
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 15-18; 'Intermediary Liability: Protecting Internet Platforms for
Expression
and Innovation' (Center
for Democracy & Technology,
27
April 2010)
<https://www.cdt.org/files/pdfs/CDT-Intermediary%20Liability_%282010%29.pdf> accessed 8 July 2013, 3.
9
Communications Decency Act, 47 USC § 230.
10
Digital Millennium Copyright Act, 17 USC § 512.
11
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') [2000] OJ L178/1.
Joe
McNamee,
'Internet
intermediaries
–
The
new
cyberpolice?'
(GISWatch)
<http://www.giswatch.org/sites/default/files/gisw_-_internet_intermediaries_-_the_new_cyber_police_.pdf>
accessed 8 July 2013.
12
3
II.
ONLINE INTERMEDIARIES - SETTING OUT THE BASICS
In order to fully understand the analysis and comparison of the online intermediaries'
liability regimes in the European Union and the U.S.A., in this chapter an overview of some
of the general issues will be provided. Firstly, in the following paragraphs the term 'online
intermediary' and its scope will be described. Secondly, a number of policy arguments
supporting and opposing intermediary liability will be given as part of an analysis of the
possible types of ISP liability.
1. What is an 'online intermediary'?
'Internet content is distributed, hosted and located by online intermediaries'.13 Clearly,
their role in the virtual world is essential as none of the features that the internet provides
would be possible without them. As the internet's main functional actors, they provide its
users with the necessary technical support and interactive services through which all online
actions are performed.14 To give a few examples, the services of online intermediaries are
used when connecting to the internet, when browsing through search engines, when using
various platforms to share and obtain information and when making online payments.
As can already be seen from the word 'intermediary', online intermediaries do not
normally perform content-based activities themselves.15 To the contrary, their role is limited
to providing services to third parties, the end-users who engage in disseminating information
online. Accordingly, the Organisation for Economic Co-Operation and Development
('OECD') proposes the following definition of online intermediaries: 'Internet intermediaries
bring together or facilitate transactions between third parties on the internet. They give access
13
Lilian Edwards, 'Role and Responsibility of Internet Intermediaries in the Field of Copyright and Related
Rights (WIPO-ISOC Side-Event on the Role and Responsibility of Internet Intermediaries in the Field of
Copyright, Geneva, June 2011), 3.
14
Dzmitry Miskevich, 'Comparative Analysis of Online Intermediary Liability Regimes in in the US and EU'
(LL.M. Thesis, Central European University 2012), 4.
15
This distinction has been blurred in the recent years, for instance with the providers of telecommunications
services becoming more deeply involved in the 'content business' (see Lilian Edwards, 'Role and Responsibility
of Internet Intermediaries in the Field of Copyright and Related Rights (WIPO-ISOC Side-Event on the Role and
Responsibility of Internet Intermediaries in the Field of Copyright, Geneva, June 2011), 4). Nevertheless, the
activities of online intermediaries exceeding their 'intermediary capacity' will not be the subject of this paper.
4
to, host, transmit and index content, products and services originated by third parties on the
internet or provide internet-based services to third parties'.16
The definition of online intermediaries provided by the OECD, as well as numerous
other definitions proposed in legal theory, seems rather simple and comprehensive. Problems,
however, arise in practice due to the fact that modern technology is advancing at an extremely
rapid pace with new types of online intermediaries constantly emerging.
Furthermore, although the term 'online intermediary' has been widely accepted (and
will also be used throughout this paper), different regulatory acts have referred to them under
different names. In addition to providing varying definitions, the CDA speaks of an
'interactive computer service',17 the DMCA labels online intermediaries simply as 'service
providers',18 while the E-commerce Directive awkwardly refers to both 'information society
service providers' and 'intermediary service providers'.19
What is, however, common to all of these legal regimes is the fact that the courts have
loosely interpreted the terminology in practice, thereby encompassing newer technological
advancements. For instance, the definition of an 'interactive computer service' provided by the
CDA is seemingly applicable only to internet access providers. 20 However, in cases such as
Carafano v Metrosplash.com21 and Batzel v Smith,22 U.S. courts have expanded the scope of
16
'The Economic and Social Role of Internet Intermediaries' (Organisation for Economic Co-Operation and
Development, April 2010) <http://www.oecd.org/sti/ieconomy/44949023.pdf> accessed 8 July 2013, 6.
17
In section 230(f)(2) of the Communications Decency Act, an 'interactive computer service' is defined as 'any
information service, system, or access software provider that provides or enables computer access by multiple
users to a computer server, including specifically a service or system that provides access to the internet and such
systems operated or services offered by libraries or educational institutions'. This definition is clearly focused on
internet access providers, which is not suprising given the fact that it was created in a very early stage of
internet's commericial usage.
18
In section 512(k)(1)(A) of the Digital Millennium Copyright Act, a 'service provider' is defined as 'an entity
offering the transmission, routing, or providing of connections for digital online communications, between or
among points specified by a user, of material of the user's choosing, without modification to the content of the
material as sent or received'. In section 512(k)(1)(b), a wider definition is provided, under which the term 'means
a provider of online services or network access, or the operator of facilities therefore, and includes an entity
described in subparagraph (A)'. This definition is seemingly wider than the one provided by the CDA.
19
In recital 17 of the preamble to the E-commerce Directive, an 'information society service' is described as 'any
service normally provided for renumeration, at a distance, by means of electronic equipment for the processing
(including digital compression) and storage of data, and at the individual request of a recipient of a service'. The
European regime lays down the widest definition when compared with the two outlined above (see Lilian
Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 11).
20
See footnote 16 (definition of an 'interactive computer service).
21
Carafano v Metrosplash.com, Inc., 207 F Supp 2d 1055 (CD Cal 2002).
22
Batzel v Smith, 333 F 3d 1018 (9th Cir 2003).
5
section 230 immunity to include other online intermediaries. More precisely, in Carafano v
Metrosplash.com, the term 'interactive computer service' was applied to a web-based dating
service, while in Batzel v Smith it was extended to a moderator of a website.23
Another issue that has been causing debate among legal theorists relates to the
classification of online intermediaries into a number of categories. Three significant
shortcomings inevitably arise in every attempt to construe such a division. Firstly, there is a
very large number of services provided online, each with its own distinctive characteristics
and features. Secondly, new online intermediaries, difficult to classify in any of the existing
categories, are rapidly developing and improving. Finally, online intermediaries often engage
in offering multiple services, which could be classified under different categories.24 For
instance, while Google is primarily a search engine, it has also developed various
communication tools, such as Gmail and Google+, and advertising tools, such as AdWords.
When it comes to the classification of online intermediaries, the most confusion has
been caused by the notion of 'internet service providers' (ISPs). While some authors use that
term as a synonym for internet access providers (IAPs),25 others use it with a completely
opposite meaning. Edwards, for example, differentiates two basic groups of online
intermediaries which have emerged in the early stages of the internet's commercial
development. On one hand, she describes internet access providers as businesses offering
'fundamental communications services', such as access to the internet. On the other, internet
service providers are those who offer 'some additional service which facilitates a transaction
between end users, e.g. identifying one of the parties and providing search facilities'.26
Even though this basic division was created before many of the modern online
intermediaries have even seen the light of day, in essence it could still apply today. Modern
online intermediaries, such as social networking platforms (e.g. Twitter, LinkedIn), photo
hosting websites (e.g. Flickr, Instagram) and e-commerce platforms (e.g. eBay, Amazon) all
23
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 10.
24
Dzmitry Miskevich, 'Comparative Analysis of Online Intermediary Liability Regimes in in the US and EU'
(LL.M. Thesis, Central European University 2012), 5.
25
For instance, the Organisation for Economic Co-Operation and Development has accepted this interpretation
(see 'The Economic and Social Role of Internet Intermediaries' (Organisation for Economic Co-Operation and
Development, April 2010) <http://www.oecd.org/sti/ieconomy/44949023.pdf> accessed 8 July 2013, 11). This
also seems to be the interpretation of the European Court of Justice.
26
Lilian Edwards, 'Role and Responsibility of Internet Intermediaries in the Field of Copyright and Related
Rights (WIPO-ISOC Side-Event on the Role and Responsibility of Internet Intermediaries in the Field of
Copyright, Geneva, June 2011), 4.
6
offer 'some additional service' to internet users. Therefore, they could all be considered as
internet service providers in the wider sense.
It is also worth noting that a more detailed classification of online intermediaries can
only be of academic, and not of practical value. It has been widely accepted that internet
access providers should be exempted from liability due to their purely technical involvement
in the activity of the end users, while all other intermediaries – classified above as 'internet
service providers' – are subject to a different set of rules and can be held liable under certain
conditions,27 as will be explained further in this paper.
In addition to internet access providers and internet service providers, from the
liability regime point of view a third group of online intermediaries can be distinguished –
peer to peer networks. Their main feature is the lack of storage of any content on their servers.
Peer to peer technology is based on direct interchange of information between users which
involves three parties – torrent portals, trackers and seeders.28 This type of online
intermediaries has been widely recognised as illegal, since peer to peer networks are normally
set up to enable unlawful exchange of legally protected data. Peer to peer intermediaries are
subject to separate legal regimes, which will not be analysed further in this paper.
2. Possible types of online intermediaries' liability
Global approaches to ISP liability can roughly be divided into three groups: the 'strict
liability' approach, the 'no liability' approach and the 'with-fault liability' approach. Some
authors also add a fourth category - 'vicarious liability', which focuses on the amount of
control that online intermediaries have over the content published by their users.29
The following paragraphs will provide a basic overview of the characteristics of these
types of liability. In addition, the most notable policy arguments which have been put forward
in order to support or oppose their application will be included. The main focus of the debate
27
Ashley Hurst, 'ISPs and defamation law: hold fire, Robert Jay' The Guardian (London, 25 January 2013)
<http://www.guardian.co.uk/law/2013/jan/25/defamation-law-robert-jay> accessed 8 July 2013.
28
Dzmitry Miskevich, 'Comparative Analysis of Online Intermediary Liability Regimes in in the US and EU'
(LL.M. Thesis, Central European University 2012), 30; Lilian Edwards and Charlotte Waelde, 'Online
Intermediaries and Liability for Copyright Infringement' (WIPO Workshop Keynote Paper, Geneva, April 2005),
7.
29
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 478.
7
has been the following: Should the legal regimes be aimed at maintaining a free and open
internet or should online intermediaries be encouraged to enforce the law on their own?
2.1. The 'strict liability' approach
One of the two extremes which could be used when regulating the legal regime of ISPs is
holding online intermediaries liable for every violation of law stored on its facilities,
regardless of their level of knowledge or control over the material posted by the end users.
Clearly, this system is the most unfavourable one for online intermediaries, while it suits
those whose rights have been violated in the virtual world, such as copyright holders and
those claiming to have been defamed online. As already mentioned in the introductory part,
the arguments presented by the ISP industry are primarily cost-motivated. However, they
could be divided into three categories: factual impracticality, equity and public interest.30
With regard to the first of these arguments, it has been claimed by online
intermediaries that they have no effective control over the material posted by their users and
that it would be virtually impossible for them to supervise all content posted on their systems.
They have insisted that this is an overly 'complex and technical task' which would require
extreme expenses and would put an end to the majority of small ISPs.31 Furthermore, online
intermediaries have argued that by monitoring all content stored on their facilities they would
overly invade the privacy and confidentiality of their users.32
Nevertheless, modern technological advancements include software which can
facilitate the supervision of user-generated content.33 As soon as in 2000, the High Court of
Paris (Tribunal de Grande Instance de Paris) instructed Yahoo! to undertake certain
30
Lilian Edwards, 'Role and Responsibility of Internet Intermediaries in the Field of Copyright and Related
Rights (WIPO-ISOC Side-Event on the Role and Responsibility of Internet Intermediaries in the Field of
Copyright, Geneva, June 2011), 5-6.
31
Pablo Baistrocchi, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce'
(2003) 19 Santa Clara Computer & High Technology Law Journal 111, 114; Joe McNamee, 'Internet
intermediaries – The new cyberpolice?' (GISWatch) <http://www.giswatch.org/sites/default/files/gisw__internet_intermediaries_-_the_new_cyber_police_.pdf> accessed 8 July 2013.
32
Lilian Edwards, 'Role and Responsibility of Internet Intermediaries in the Field of Copyright and Related
Rights (WIPO-ISOC Side-Event on the Role and Responsibility of Internet Intermediaries in the Field of
Copyright, Geneva, June 2011), 5; Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement
in the Case of Hosting on the Internet' (2005) 48 Scandinavian Studies in Law 471, 475.
33
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 475.
8
monitoring activities. In LICRA v Yahoo!, a case which concerned an internet auction selling
Nazi memorabilia, the French court concluded on the basis of the evidence submitted that it
was technically feasible for Yahoo! to block access to 90% of the French citizens.34
The second of the three non-liability reasons most often presented by the ISP industry
is the equity argument, based on the 'Don't shoot the messenger!' idea. Online intermediaries
have claimed that they are simply 'innocent disseminators' of user-generated content.35 All the
same, there is also an opposing equity argument in the shape of strong state interest to
encourage online intermediaries to take the role of 'internet watchdogs'. Since they are the
closest link to the online behaviour of internet users, they are also the best suited to control it
and contribute to 'cleaning up' all the undesirable content (child pornography, spam,
defamatory content, copyright and trademark infringement etc.).
Finally, the ISP industry has claimed that not imposing (strict) liability on online
intermediaries is also of public interest. They have pointed out that since it would be
impossible for them to avoid liability, the ultimate increase in expenses would be passed on to
their users, thus raising the cost of internet use.36 Internet enthusiasts have always looked at
this possibility with outrage. The internet as it is today has developed because in the early
stages of its commercial use the most prominent U.S. and European political actors have
advocated a policy framework based on openness and innovation.37 Neither the U.S.
regulatory acts (the CDA and the DMCA) nor the E-commerce Directive have introduced
strict intermediary liability regimes.
More recently, however, governments are 'feeling that the openness that gives the
internet its economic value is now so unbreakable that unfettered meddling by intermediaries
34
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 21; Lilian Edwards, 'Role and Responsibility of Internet
Intermediaries in the Field of Copyright and Related Rights (WIPO-ISOC Side-Event on the Role and
Responsibility of Internet Intermediaries in the Field of Copyright, Geneva, June 2011), 5.
35
Lilian Edwards, 'Role and Responsibility of Internet Intermediaries in the Field of Copyright and Related
Rights (WIPO-ISOC Side-Event on the Role and Responsibility of Internet Intermediaries in the Field of
Copyright, Geneva, June 2011), 6.
36
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 475-476.
37
'Intermediary Liability: Protecting Internet Platforms for Expression and Innovation' (Center for Democracy &
Technology,
27
April
2010)
<https://www.cdt.org/files/pdfs/CDTIntermediary%20Liability_%282010%29.pdf> accessed 8 July 2013, 3.
9
for the protection of (mainly) intellectual property can be actively promoted'. 38 The use of the
internet has become an integral part of everyday life and there is no great fear that tightening
up the rules of the game for the ISP industry would hinder its future development. Although it
cannot be expected that strict liability in the widest sense of that term will be imposed, it is yet
to be seen whether in the coming years stricter liability regimes will be introduced.
In any event, Western countries have always been hesitant to prescribe strict liability
of online intermediaries. This comes as no surprise, as strict liability does set the standard too
high and leads to many unwanted consequences.39 Some other countries, however, have
introduced it as a way of halting the dissemination of politically provocative content. For
example, in China online intermediaries are strictly liable for 'producing, posting or
disseminating pernicious information that may jeopardise state security and disrupt social
stability, contravene laws and regulations and spread superstition and obscenity'.40
2.2. The 'no liability' approach
As the complete opposite of the strict liability regime, the imposition of no liability means
that online intermediaries would never be liable for the unlawful content posted on their
facilities by the end users. In other words, this system gives total immunity to ISPs and as
such has been widely supported by their industry. On the other hand, it has been wholly
criticised by those who have been affected by unlawful activity on the internet.
Out of the three regulatory acts which are the subject of this paper (the CDA, the DMCA
and the E-commerce Directive), this system of regulating online intermediaries' liability has
only been accepted in the CDA. This means that in the U.S.A. the 'no liability' principle is
applicable in all areas of law other than intellectual property, where 'with-fault liability'
Joe
McNamee,
'Internet
intermediaries
–
The
new
cyberpolice?'
(GISWatch)
<http://www.giswatch.org/sites/default/files/gisw_-_internet_intermediaries_-_the_new_cyber_police_.pdf>
accessed 8 July 2013.
38
39
An interesting exception is the Australian Broadcasting Services Amendment (On Line Services) Act 1999
which introduced strict liability for online intermediaries, but only with regard to offensive and violent content.
Its provisions required ISPs to either remove or block access to prohibited content. The sanction for failing to
comply was a fine of no less then 27,500 AUD per day. However, the requirements of this act were later dropped
after the ISP community and computer scientists had proven that an excessive burden had been imposed on
online intermediaries (see Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for
Copyright Infringement' (WIPO Workshop Keynote Paper, Geneva, April 2005), 20-21).
40
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 20.
10
(further described in Section 2.3. of this chapter) has been introduced. In Europe, the Ecommerce Directive has implemented the latter as the general rule.
Total immunity of online intermediaries is the direct result of the adoption of the policy
arguments presented in Section 2.1. of this chapter against the strict liability regime.
Furthermore, it has been suggested that imposing no liability on ISPs would lower the number
of online infringers – they would face legal proceedings more often due to the fact that online
intermediaries could not be sued.41
While this could be true to some extent, it would lead to satisfactory results only in an
ideal world. In reality, online infringers are often anonymous, which makes it difficult to
instigate legal proceedings against them, especially if online intermediaries are given the
possibility to ignore all requests to disclose their identities. Also, legal proceedings against
the law-violating internet users would not automatically lead to the removal (or, at least,
prompt removal) of unlawful material from the servers of online intermediaries. Therefore,
their participation in putting an end to unlawful activity in the virtual world is indispensable.
The principle of no liability is based on the idea that, if given the possibility, online
intermediaries will regulate online behaviour themselves by controlling to a reasonable extent
the content posted by their customers. In practice, however, such liability regimes have led to
opposite results and caused ignorance of online intermediaries towards the requests of their
users to remove harmful and illegal content. This is clearly visible from various U.S.
judgments.42 For instance, in Zeran v America Online,43 the plaintiff was (wrongfully)
defamed on an AOL bulletin board, which ultimately led to extreme harassment, including
death threats. Mr. Zeran argued that the ISP failed to remove the defamatory content within
short notice. Nevertheless, the Court granted immunity to AOL in accordance with the CDA.
The case of Zeran v America Online will be discussed in more detail in Chapter IV.
As the closest link between the internet users and their online infringements, online
intermediaries should not be allowed to avoid even the most rational requests for removing or
blocking access to unlawful material on their facilities. There is no doubt that online
intermediaries have the technological capabilities to react upon obtaining such notices.
41
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 479.
42
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 22.
43
Zeran v America Online, Inc., 129 F 3d 327 (4th Cir 1997).
11
Therefore, while the 'strict liability' approach is undesirable because it does not protect the
interests of the ISP industry, the 'no liability' approach is 'open to abuse from ISPs and poor at
protecting the interests of third party victims'.44 Is it, then, possible to reconcile the two?
2.3. The 'with-fault liability' approach
In the middle of the two approaches described above lies the 'with-fault liability' theory,
which rests on the idea that online intermediaries should normally be immune from liability
insofar as they are not aware of the unlawful content posted on their facilities. This approach
is based on a fair balance between the interests of the ISP industry and the rights of those
affected by online infringements, most notably copyright holders. It acknowledges that, once
informed about unlawful activity on their servers, online intermediaries are able to take the
necessary measures to put an end to such behaviour and protect the rights of those affected.
The 'with-fault liability' approach can be based on two different levels of knowledge actual knowledge and constructive knowledge. Under the actual knowledge test, an online
intermediary will only be held liable when it knows that the content posted on its facilities is
unlawful. Under the latter, the ISP 'must have been in a position to know about the
infringement'.45 This means that the online intermediary 'has certain clues, or should have
reasonably presumed that certain material was infringing someone's rights'.46 Both the Ecommerce Directive and the U.S. DMCA have adopted the 'with-fault liability' approach in
the form of the stricter constructive knowledge test.
Seemingly, this system of intermediary liability is justly balanced between all the
competing interests. However, internet enthusiasts continue to claim that imposing any
liability on online intermediaries is not desirable as it will lead to unwanted side effects. More
precisely, they have been predicting that such legal regimes will produce a counter-effect and
that online intermediaries will start blocking even lawful content upon obtaining requests to
44
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 23.
45
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 476.
46
Pablo Baistrocchi, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce'
(2003) 19 Santa Clara Computer & High Technology Law Journal 111, 114.
12
do so in fear of possible penalties. According to the advocates of a free and open internet, this
could severely impede the freedom of expression in the virtual world as a human right.47
Several studies, undertaken in the Netherlands and the United Kingdom, have proven that
these fears are not groundless and that a large number of online intermediaries 'deleted
innocent material as a result' of false notices sent precisely for that purpose.48 Other examples,
however, have shown otherwise. Facebook, for instance, gives the possibility to its users to
report harassing content, which is followed by its removal. This option has neither affected
the continuous increase in the number of Facebook users nor has it affected in any manner its
successful operation and profitability. To the contrary, its rapid development goes on.
As can be seen from the previous paragraphs, the online intermediaries' knowledge of the
unlawful activity on their servers most commonly comes from other users or third parties. For
this reason, this system of ISP liability is normally linked with the concept of 'notice and take
down', which means that online intermediaries have the obligation to remove illegal and
harassing content upon obtaining a notice requesting from them to do so.
It cannot be denied that the concept of 'notice and take down' does have some apparent
drawbacks and can lead to over-removal of user-generated content. Nevertheless, it is still the
most acceptable solution for intermediary liability which overcomes the majority of the
shortcomings caused by the rivalling interests, especially if cautiously construed.
Kaminski aptly suggests that a number of 'balancing mechanisms' which would enhance
the successful application of this system of ISP liability should be introduced. They include:
notifying the users whose material is taken down; giving them the possibility of counternotice requesting to put the material back up in cases of groundless removal;49 sanctions for
knowing misrepresentation; due attention to privacy concerns; more stringent measures for
47
'Intermediary Liability: Protecting Internet Platforms for Expression and Innovation' (Center for Democracy &
Technology,
27
April
2010)
<https://www.cdt.org/files/pdfs/CDTIntermediary%20Liability_%282010%29.pdf> accessed 8 July 2013, 4.
Joe
McNamee,
'Internet
intermediaries
–
The
new
cyberpolice?'
(GISWatch)
<http://www.giswatch.org/sites/default/files/gisw_-_internet_intermediaries_-_the_new_cyber_police_.pdf>
accessed 8 July 2013.
48
49
A 'notice and take down' procedure combined with a counter-notice option has already been implemented in
Finland and Lithuania (see Thibault Verbeist and others, 'Study on the Liability of Internet Intermediaries' (Study
commissioned by the European Commission, November 2011) <http://ec.europa.eu/internal_market/ecommerce/docs/study/liability/final_report_en.pdf> accessed 8 July 2013, 16).
13
'repeat infringers' and others.50 With the application of such measures, the 'with-fault liability'
approach seems to be by far the most appropriate.
2.4. The notion of 'vicarious liability'
As previously mentioned, 'the prerequisite for vicarious liability is the ability to control'.51
In other words, this means that online intermediaries would be held liable whenever they are
able to supervise the activities of the end users. Vicarious liability has been widely criticised
as it normally presupposes the requirement for online intermediaries to supervise all content
posted on their servers. Therefore, the effects of this type of intermediary liability are in
essence equal to those of the 'strict liability' approach.
Interestingly, while it does not allow general monitoring of the user-generated content,
the E-commerce Directive does include a less stringent form of vicarious liability. More
specifically, it prescribes that exemptions from liability apply only in cases where the online
intermediary 'has neither knowledge of nor control over the information which is transmitted
or stored'.52 As will be seen in Chapter III, this has been affirmed in the case law of the
European Court of Justice. Nevertheless, the exact meaning and the extent of this control have
not been properly defined and lack clarity, which may cause significant confusion.
50
Margot E. Kaminski, 'Positive Proposals for Treatment of Online Intermediaries' (PIJIP Research Paper no
2012-05) American University Washington College of Law, 12-16.
51
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 478.
52
See recital 42 in the preamble to the E-commerce Directive.
14
III.
ONLINE INTERMEDIARIES IN EUROPEAN UNION LAW
Directive 2000/31/EC (further: the Directive), most commonly referred to as the Ecommerce Directive, was adopted in June 2000 in order to 'remove obstacles to cross-border
provision of online services in the internal market and to provide legal certainty to businesses
and citizens'.53 In articles 12 to 15,54 which have to be read in conjunction with a number of
recitals to the Directive, it deals with the issue of ISP liability and imposes certain common
rules upon all Member States of the European Union. Naturally, since these rules have been
implemented in the form of a directive, they are binding upon the Member States 'as to the
result to be achieved', leaving space to the national authorities to adapt the specific 'form and
methods' based on what is most efficient and suitable in their specific circumstances.55
The following pages are aimed at clarifying the intermediary liability regime introduced
by the Directive. They will primarily give an overview of its relevant provisions and of the
case law of the European Court of Justice which has emerged in this area of law.
1. Reasons to adopt Union-level measures
Before the E-commerce Directive was adopted, the law governing ISP liability throughout
Europe was characterised by over-diversity, with 'almost as many legal regimes as there were
Member States'. The European Commission recognised the existence of this problem in its
proposal for the Directive by stating that 'there is considerable legal uncertainty within
Member States regarding the application of their existing liability regimes to providers of
information society services when they act as 'intermediaries', i.e. when they transmit or host
third party information (information provided by the users of the service)'.56
53
Thibault Verbeist and others, 'Study on the Liability of Internet Intermediaries' (Study commissioned by the
European
Commission,
November
2011)
<http://ec.europa.eu/internal_market/ecommerce/docs/study/liability/final_report_en.pdf> accessed 8 July 2013, 4.
54
Part of Chapter III, Section 4 of the Directive, named 'Liability of intermediary service providers'.
55
Consolidated Version of the Treaty on the Functioning of the European Union [2012] OJ C326/47, Article
288(3).
56
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 6.
15
This situation was creating a risk that the further development of the internet as a platform
for free speech would be impeded. Furthermore, divergent legal regimes of intermediary
liability were threatening to cause a negative impact on the Union's internal market, since they
would result in unequal economic opportunities within the Member States. The Directive is
aimed at preventing the occurrence of such adverse effects, 'coordinating certain national
laws' and 'clarifying legal concepts at Community level'57 in order to ensure the free
movement of 'information society services' between the Member States.58
This potentially confusing term which the European Union's ISP liability regime uses to
encompass all services offered by online intermediaries – 'information society services' – will
be defined in the following section of the paper.
2. 'Information society services'
As can be seen from recital 17 to the Directive, an 'information society service' is 'any
service normally provided for remuneration, at a distance, by means of electronic equipment
for the processing (including digital compression) and storage of data, and at the individual
request of a recipient of the service'.59 This seems to be a rather comprehensive definition
which includes some of the more problematic activities of online intermediaries, such as
selling goods or services online (e.g. eBay, Amazon) and offering online information or
search tools for revenue (e.g. Google, WestLaw, LexisNexis).60
The most complex part of the definition of 'information society services' is the 'normally
provided for remuneration' requirement. Although seemingly it excludes a large number of
online services, its interpretation has been fairly wide. In Bond van Adverteerders v the
Netherlands,61 a 1988 case concerning the prohibition of advertising and subtitling in
57
See recital 6 in the preamble to the E-commerce Directive.
58
Free movement of 'information society services' is part of the wider 'free movement of services' concept, one
of the European Union's 'four freedoms' (the other three being the free movement of goods, capital and people).
59
Recital 17 to the E-commerce Directive. This definition is equivalent to those used in previous Union
legislation – the concept was introduced in Article 1(2) of Directive 1998/34/EC of the European Parliament and
of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical
standards and regulations and of rules on information society services [now amended by Directive 1998/48/EC].
60
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 11.
61
Case C-352/85 Bond van Adverteerders v the Netherlands [1988] ECR 2085.
16
television programmes transmitted from abroad, the European Court of Justice has clarified
that 'normally provided for remuneration' does not require that the user himself pays.62
Furthermore, recital 18 to the Directive follows the same reasoning and indicates that
payment is not a prerequisite for the service to fall under the scope of the definition, insofar as
it represents an economic activity. A large number of online services are free to the end users
(e.g. Google's search engine, Facebook, Youtube), but can still be qualified as economic
activities as the online intermediaries will receive remuneration from other sources. However,
since there is no precise definition, issues are still likely to arise.63 A broad interpretation of
the 'normally provided for remuneration' criterion is necessary as otherwise ISPs 'might be
tempted by the risk-benefit analysis to stop offering their services for free'.64
3. Liability of intermediary service providers
Throughout the Directive, 'information society service providers' are also referred to as
'intermediary service providers'. The details of their liability are set out in Articles 12 to 15.
The Directive does not prescribe a general ISP liability regime, applicable in the same
manner to all activities of online intermediaries. Instead, it has introduced three specific
liability exemptions – mere conduit (Article 12), caching (Article 13) and hosting (Article
14).65 Therefore, unlike in the U.S.A. where the application of one of the two ISP liability
62
The same reasoning can be applied by analogy to online intermediaries (see DLA Piper, 'Chapter 6. Liability
of online intermediaries' in 'Legal analysis of a Single Market for the Information Society' (Study SMART
2007/0037 commissioned by the European Comission, November 2009) <http://ec.europa.eu/digitalagenda/en/news/legal-analysis-single-market-information-society-smart-20070037> accessed 8 July 2013, 11).
63
Particular debate has been caused by the word 'normally' in 'normally provided for remuneration'. For instance,
many online services are offered in the form of the 'freemium model', where more than 95% of the users do not
pay for the activities, while less than 5% do in order to get access to special features (see DLA Piper, 'Chapter 6.
Liability of online intermediaries' in 'Legal analysis of a Single Market for the Information Society' (Study
SMART 2007/0037 commissioned by the European Comission, November 2009) <http://ec.europa.eu/digitalagenda/en/news/legal-analysis-single-market-information-society-smart-20070037> accessed 8 July 2013, 12).
64
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 12.
65
Article 15(1) applies to all situations covered by either Article 12, 13 or 14, prohibiting general monitoring of
ISP activity. It stipulates that 'Member States shall not impose a general obligation on providers… to monitor the
information which they transmit or store, nor a general obligation actively to seek facts or circumstances
indicating illegal activity'. Article 15(2) does, however, leave space for certain specific monitoring obligations.
17
regimes depends on the content posted by the user, in the European Union the difference in
liability is only based on the type of activity carried out by the online intermediary.66
3.1. Article 12 – 'Mere conduit'
Article 12 of the Directive gives immunity to online intermediaries engaged in 'mere
conduit' activities - those which play a fully passive role in the transmission of the usergenerated content. The immunity given to the providers of such services is based on an
objective exemption from liability, regardless of their knowledge about the information
transmitted through their systems. As provided by Article 12, they will be held liable for the
unlawful content only in cases of initiating the transmission, selecting the receiver of the
transmission and selecting or modifying the information contained in the transmission.
A typical example of online intermediaries performing 'mere conduit' activities are
internet access providers (or in the terms of the Directive, communication network service
providers). As previously mentioned, legal regimes normally grant them immunity, taking
into account that their involvement is normally limited to providing the facilities which enable
other intermediaries to offer online services to the end users.
The Directive adds a second category of 'mere conduit' providers, prescribing the same
liability regime for both the provision of access to the internet and 'the transmission in a
communication network of information provided by a recipient of the service' without
(permanent) storing of the transmitted data.67 This could lead to confusion, since it could be
argued that the operators of chat and instant messaging networks fall within that category of
intermediaries – which may not be what the European legislators originally had in mind.68
Nevertheless, the application of Article 12 has not caused significant problems in practice.69
66
As far as content is concerned, the same rules apply for all types of online violations, including copyright
infringement, defamation and privacy issues.
67
Article 12 of the E-commerce Directive.
68
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 14.
69
Thibault Verbeist and others, 'Study on the Liability of Internet Intermediaries' (Study commissioned by the
European
Commission,
November
2011)
<http://ec.europa.eu/internal_market/ecommerce/docs/study/liability/final_report_en.pdf> accessed 8 July 2013, 12.
18
3.2. Article 13 – 'Caching'
Article 13 of the Directive deals with the 'caching' function of online intermediaries,
defining it as an 'automatic, intermediate and temporary storage of information, performed for
the sole purpose of making more efficient the information's onward transmission to other
recipients of the service upon their request'.
More simply, 'caching' refers to automatic and temporary storing of certain data which
makes the future requests for the same information easier to serve. As Baistrocchi explains, it
involves 'locating of the high demand data on remote servers, then storing copies of the
material on local servers'.70 By doing so, the online intermediaries 'decrease the overloading
demand for some information',71 and as a result improve the efficiency in the use of their
servers and speed up the internet.72 Therefore, 'caching' is in essence a technical process.
The Directive provides that an online intermediary which engages in 'caching' activities
can be held liable for the unlawful content of the data stored on its servers only exceptionally.
Among the conditions laid down in Article 13,73 the key requirements are that the service
provider does not modify the information and that it promptly removes or disables access to
the information it has stored after learning that at the initial source the information has been
removed from the network, or access to it has been disabled, or that a competent authority has
ordered the removal or disablement of the information. Unlike for 'mere conduit' activities,
the Directive here stipulates a subjective requirement in the form of 'actual knowledge'.
70
Pablo Baistrocchi, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce'
(2003) 19 Santa Clara Computer & High Technology Law Journal 111, 120.
71
Dzmitry Miskevich, 'Comparative Analysis of Online Intermediary Liability Regimes in in the US and EU'
(LL.M. Thesis, Central European University 2012), 15.
72
Grunde Svensoy, 'The E-Commerce Directive Article 14: Liability exemptions for hosting third party content'
(LL.M. Thesis, University of Oslo 2011), 13.
73
Article 13 of the E-commerce Directive provides that 'caching' is exempted from liability, 'on condition that:
a) the provider does not modify the information;
b) the provider complies with conditions on access to the information;
c) the provider complies with rules regarding the updating of the information, specified in a manner
widely recognised and used by industry;
d) the provider does not interfere with lawful use of technology, widely recognised and used by industry,
to obtain data on the use of the information; and
e) the provider acts expeditiously to remove or to disable access to the information it has stored upon
obtaining actual knowledge of the fact that the information at the initial source of transmission has been
removed from the network, or access to it has been disabled, or that a court or an administrative
authority has ordered such removal or disablement'.
19
There has been hardly any problem (and only a few cases reported) concerning the
application of Article 13, as it adequately meets the interests of all stakeholders.74
3.3. Article 14 – 'Hosting'
The most debate in the application of the Directive has been caused by its Article 14
which regulates the liability of online intermediaries providing services that consist of
'hosting', defined as storage of information at the request of a recipient of the service. The
liability of such service providers is governed by the following basic rules:
a) they are immune from liability unless they obtain actual knowledge of the illegal
activity or information (in which case they can face both criminal and civil liability) or
become aware of the facts or circumstances from which the illegal activity or
information is apparent (in which case they will only face civil liability for damages);
b) upon obtaining such notice or awareness, the service providers can still avail
themselves of the immunity provided by the Directive if they 'act expeditiously to
remove or to disable access to the information';75
c) immunity is excluded in cases where the 'recipient of the service is acting under the
authority or the control of the provider'.76
Several elements of this liability regime have caused confusion: the precise scope of
'hosting', the 'actual knowledge or awareness' criterion, the term 'acting expeditiously' and the
exclusion of immunity for service providers which have control over the content posted by the
recipients of the service. The following subsections are aimed at clarifying these uncertainties.
3.3.1. What is a 'hosting' service?
Under Article 14 of the Directive, a 'hosting' service 'consists of the storage of information
provided by a recipient of the service'. Essentially, in the time of its implementation, this
74
Thibault Verbeist and others, 'Study on the Liability of Internet Intermediaries' (Study commissioned by the
European
Commission,
November
2011)
<http://ec.europa.eu/internal_market/ecommerce/docs/study/liability/final_report_en.pdf> accessed 8 July 2013, 14.
75
Article 14(1) of the E-commerce Directive.
76
Article 14(2) of the E-commerce Directive.
20
definition was intended to refer to those service providers which offer to individuals and
companies the rental of internet space and enable them to post data on that space. 77 Typical
examples would be the providers of e-mail services, bulletin boards and blogs.
Since 2000, however, many new forms of online intermediaries have emerged which has
been causing major problems and divergence in case law within the Member States. The two
main questions are whether interactive intermediaries (also known as Web 2.0) can be
qualified as 'hosting' providers or content providers and whether a service provider must be
engaged only in 'hosting' activities in order to fall under the scope of Article 14's immunity.
With regard to the first issue, different courts have taken conflicting views. For instance,
in Telecinco v YouTube, the Commercial Court of Madrid held that YouTube provided
'hosting' services and falls within the scope of Article 14's immunity. Conversely, in Italy v
Google, the Ordinary Court of Milan considered Google Video, a similar online service, not
to be a 'hosting' service because Google provides its platform as part of its economic activity
and encourages users to upload videos. The Italian court concluded that, as a result, the
inclusion of content on Google Video can be regarded as the activity of Google itself, and not
just of its users. Therefore, Google was found to be a content provider.78
The decision of the Ordinary Court of Milan seems rather dubious, as it could not have
been the intention of the European legislators to exclude certain categories of 'information
society service providers' from the scope of the liability regime. The Italian case has still not
come to an end, since Milan's appeal court later quashed the decision and Italy's prosecutor
decided to appeal in April 2013.79 This is just one of many confusing situations where the
wording of the Directive does not seem to be clear enough.80 It should, however, be
77
Pablo Baistrocchi, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce'
(2003) 19 Santa Clara Computer & High Technology Law Journal 111, 122.
78
Grunde Svensoy, 'The E-Commerce Directive Article 14: Liability exemptions for hosting third party content'
(LL.M. Thesis, University of Oslo 2011), 31-34.
79
Loek Essers, 'Google Video trial to continue to Italian supreme court' (PC World, 17 April 2013)
<http://www.pcworld.com/article/2035387/google-video-trial-to-continue-to-italian-supreme-court.html>
accessed 8 July 2013.
80
Another similar example is the French case of Lafesse v MySpace, where the Court of Paris refused to award
immunity to MySpace, by stating that it imposes a certain structure to the profiles of its users closely linked to
the creation of the content itself. In another case, however (Bayard Presse v YouTube LLC), the same court
decided to qualify YouTube as a hosting provider finding its influence on the presentation structure and search
facilities irrelevant (see DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single
Market for the Information Society' (Study SMART 2007/0037 commissioned by the European Comission,
November 2009) <http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-societysmart-20070037> accessed 8 July 2013, 16).
21
interpreted broadly as otherwise many modern online intermediaries would fall into a legal
loophole, causing legal uncertainty and discord in the European Union's internal market.
The second of the two issues concerns the extent to which a service provider must offer
'hosting' activities. For instance, the online auction provider eBay has been the subject of a
heated discussion, since it does not only provide 'hosting' services (in the shape of storing
photos and texts linked with the items offered for sale), but also other activities such as
payment facilities and advertising tools. As a result, some courts have tried to exclude eBay
from the list of 'hosting' service providers.81 The best approach, however, seems to lie in
dividing its activities which fall under the scope of Article 14's immunity and those which do
not. After all, this also follows from the wording of the Directive which, in Article 14, covers
the activity of 'hosting' and not all activities of 'hosting' service providers.
3.3.2. 'Actual knowledge or awareness' of the unlawful content
The Directive's 'hosting' liability regime has adopted the stricter version of the 'with-fault
liability' approach which is based on the 'constructive knowledge' criterion. More precisely, a
'hosting' service provider will normally be immune from liability unless having either 'actual
knowledge' of the unlawful content on its facilities or 'awareness of facts or circumstances
from which the illegal activity or information is apparent'.82 The second part of this definition,
however, seems to add very little in the practical sense and will not be analysed in detail in
this paper. In some countries, such as Germany and the Netherlands, it has been interpreted as
requiring that the service provider does not act with gross negligence.83
81
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 17-18.
82
Article 14(1)(a) of the E-commerce Directive
83
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 18; Thibault Verbeist and others, 'Study on the Liability of Internet Intermediaries' (Study
commissioned by the European Commission, November 2011) <http://ec.europa.eu/internal_market/ecommerce/docs/study/liability/final_report_en.pdf> accessed 8 July 2013, 37.
22
Again, two significant issues need clarification. As Julià-Barceló observes, 'private notices
are likely to be the most common way to obtain the required knowledge'. 84 Are such notices,
then, under the Directive sufficient for the service provider to gain 'actual knowledge'?
Furthermore, if it is so – are online intermediaries qualified enough to determine whether the
information is reliable and whether the content posted on their facilities really is unlawful?
Concerning the first issue, the Directive does not fully establish a detailed and unified
'notice and take down' procedure, as it does not define what the notification should consist of.
However, it leaves discretion and even encourages the Member States to do so.85 Moreover,
Article 21 has announced the possibility of amending the Directive with the aim of
introducing such a procedure. In the meanwhile, it is left to the Member States to prescribe on
their own in which manner the online intermediary acquires the necessary knowledge.
Unfortunately, this has resulted in extreme divergence in the national liability regimes.
While some countries determine 'actual knowledge' on a case-by-case basis, others require an
official notification issued by a state authority. For instance, in the Nethelands 'a simple
notification – like a message by anybody – is insufficient, whereas a court order always meets
the requirements of a notice'.86 Similarly, the Spanish and Italian legislation also require a
notification issued by a relevant authority. 87
Stalla-Bourdillon claims that this approach is the least harmful for freedom of expression
as one of the underlying rationales of the Directive.88 This system should, however, be
avoided because it is too convenient for online intermediaries. Pursuing a court order is timeconsuming and expensive and, as such, makes the intermediary liability system inefficient.
84
Rosa Julià-Barceló and Kamiel J. Koelman, 'Intermediary Liability In The E-Commerce Directive: So Far So
Good, But
It's
Not
Enough'
(2000) 4 Computer
Law &
Security Report
231,
<http://www.ivir.nl/publications/koelman/notenough.html> accessed 8 July 2013.
85
See recital 40 in the preamble to the E-commerce Directive; Pablo Baistrocchi, 'Liability of Intermediary
Service Providers in the EU Directive on Electronic Commerce' (2003) 19 Santa Clara Computer & High
Technology Law Journal 111, 124.
86
Thibault Verbeist and others, 'Study on the Liability of Internet Intermediaries' (Study commissioned by the
European
Commission,
November
2011)
<http://ec.europa.eu/internal_market/ecommerce/docs/study/liability/final_report_en.pdf> accessed 8 July 2013, 15.
87
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 20.
88
Sophie Stalla-Bourdillon, 'Sometimes one is not enough! Securing freedom of expression, encouraging private
regulation, or subsidizing Internet intermediaries or all three at the same time: the dilemma of Internet
intermediaries' liability' (2012) 7 Journal of International Commercial Law and Technology 154, 162.
23
On the other hand, the 'simple notification' approach has been heavily criticised by
claiming that it could severely hinder free speech on the internet. As posed in the second of
the two above questions, it is doubtful whether it is appropriate to leave upon the online
intermadiaries to decide whether a private notification is legally grounded or not. As
Baistrocchi says, 'the risk of an unfounded claim cannot be totally ruled out'. 89 Julià-Barceló
further adds that if online intermediaries had to remove content upon every notification
received by private individuals, they would become 'extremely cautious and cut access to
websites or remove the material they believe may be unlawful upon a slight suspicion'.90
The solution seems to lie in the middle of the two extremes. A modified 'notice and take
down' procedure – based on private notifications, but with the option of counter notices aimed
at putting back the content removed upon unfounded requests – takes into account the
interests of all parties involved. Moreover, it could successfully achieve 'a proper balance
between freedom of expression and fair competition'. This system has already been
implemented in Finland and Lithuania.91 Finally, other 'balancing mechanims', such as
sanctions for knowing misrepresentation and more stringent measures for 'repeat infringers',
could also enhance the success of the Directive's system of liability for 'hosting' activities. 92
3.3.3. What does 'acting expeditiously' mean?
The next of the four confusing elements introduced by Article 14 concerns its requirement
that online intermediaries have to act expeditiously to remove or disable access to the
unlawful content on their websites. The Directive fails to address this issue in any detail,
leaving the door for divergent interpretation among national courts wide open.
89
Pablo Baistrocchi, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce'
(2003) 19 Santa Clara Computer & High Technology Law Journal 111, 125.
90
Rosa Julià-Barceló and Kamiel J. Koelman, 'Intermediary Liability In The E-Commerce Directive: So Far So
Good, But
It's
Not
Enough'
(2000) 4 Computer
Law &
Security Report
231,
<http://www.ivir.nl/publications/koelman/notenough.html> accessed 8 July 2013.
91
Finland, however, requires a court order for the removal of copyrighted material (see Thibault Verbeist and
others, 'Study on the Liability of Internet Intermediaries' (Study commissioned by the European Commission,
November 2011) <http://ec.europa.eu/internal_market/e-commerce/docs/study/liability/final_report_en.pdf>
accessed 8 July 2013, 16).
92
Margot E. Kaminski, 'Positive Proposals for Treatment of Online Intermediaries' (PIJIP Research Paper no
2012-05) American University Washington College of Law, 12-16.
24
This may cause (and causes) significant legal uncertainty, primarily with regard to the
speed in which 'hosting' service providers have to act upon obtaining knowledge of illegal
activity. For instance, it remains unknown whether online intermediaries have on their
disposal the time to seek legal assistance in determining the existence of an infringement and
whether technical and administrative issues which may arise would be taken into account.
A possible solution, which still lacks clarity but not to the same extent, may lie in the
German Multimedia Act which stipulates that online intermediaries cannot avail themselves
of the immunity clause unless they take all 'reasonable steps' to stop the infringement.
Australian legislation has also taken the same approach.93
3.3.4. When does a 'hosting' service provider have control over the recipients?
The final element of Article 14's liability regime which needs clarification concerns the
exclusion from immunity of those service providers which exercise control over the recipients
of the service. It is worth noting that this provision directly follows the logic of recital 42 in
the preamble to the Directive, which excludes from immunity those online intermediaries
which have either knowledge or control over the information posted on their websites.
This provision is clearly applicable in situations such as the one where an online
intermediary is acting as the employer hosting unlawful content created by its employee in the
course of the employment and at the intermediary's request. In other cases, however, its
application may be problematic. For instance, Wikipedia is constantly monitored by a group
of content managers responsible for verifying the veracity of the posted information. They
have the authority to modify and remove the published articles.94 Clearly, a certain extent of
control exists – is Wikipedia, then, fully excluded from the scope of immunity? The response
to this question is yet to be unfolded. However, if the extent of the content managers' control
really is as wide as suggested, depriving it of Article 14's immunity would be justified.
93
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO
Workshop Keynote Paper, Geneva, April 2005), 28; Dzmitry Miskevich, 'Comparative Analysis of Online
Intermediary Liability Regimes in in the US and EU' (LL.M. Thesis, Central European University 2012), 19.
94
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 17.
25
4. The case law of the European Court of Justice
Since the implementation of the E-commerce Directive in 2000, four cases have appeared
seeking for a preliminary ruling from the European Court of Justice (further: ECJ, the Court)
in the interpretation of the Directive's intermediary liability regime. In the following
subsections these four cases – Google France v Louis Vuitton,95 L'Oréal v eBay,96 Scarlet v
SABAM97 and SABAM v Netlog98 - will be analysed to the extent to which they clarify the
liability of online intermediaries in the European Union.
It is worth noting that all of these cases have emerged in the area of intellectual property
law (trademark and copyright infringement). The Directive's scope of application, however,
exceeds this area of law and also includes other types of online infringements, such as
invasion of privacy, defamation and other illegal and harmful content (e.g. racist, terrorist).
4.1. Google France v Louis Vuitton
The first of the four cases, Google France v Louis Vuitton, was a joined case of three
separate sets of preliminary questions filed on a similar basis. All three cases concerned the
Google AdWords service, which allows economic operators to obtain a placing within
Google's search results on the basis of one or more keywords. As a result of entering a
keyword, an advertising link appears, followed by a short commercial message. In an
automated process, Google controls the order in which various such links are shown on the
basis of several elements, such as the fee payable by the economic operator.99
At first instance, Google was found guilty in all three cases. In the first one, the
conclusion was that it had infringed the trademarks of Louis Vuitton due to enabling the use
of its name for advertisements of sites offering imitation versions of its products.100 In the
95
Joined Cases C-236/08 to C-238/08 Google France SARL and Google Inc. v Louis Vuitton Malletier SA and
others [2010] ECR I-2417.
96
Case C-324/09 L'Oréal SA and others v eBay International and others [2011] ECR I-6011.
97
Case C-70/10 Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM).
98
Case C-360/10 Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) v Netlog NV.
99
Google France v Louis Vuitton, 22-27.
100
Ibid, 28-32.
26
other two, Google was held liable because it had enabled the use of a travel and a matrimonial
agency's trademarks as keywords for sponsored links of their competitors.101 These cases
reached the ECJ during the appeal proceedings before the French Cassation Court.
As the starting point, the ECJ found that Google is not liable for the trademark
infringements which had occurred via its AdWords service. The rationale of this conclusion is
that 'what Google is doing is effectively no different to selling billboard advertising space to
Adidas next to a Nike shop'.102 The Court, however, clarified that this does not deprive
Google of its intermediary liability as a 'hosting' service provider. Under both the ECJ's and
Advocate General Maduro's interpretation, the Directive was applicable to the AdWords
service as an 'information society service'.103 However, the Court and the Advocate General
disagreed as to whether Google should benefit from the immunity clause in Article 14.
The Advocate General was of the opinion that the AdWords service cannot qualify as
'hosting' because it is linked with Google's (pecuniary and other) interests to show certain
websites under a particular order, making Google more than a mere 'neutral information
vehicle' (the 'neutrality criterion'). In his view, 'hosting' only refers to a purely technical
process and does not include advertising activities such as Google AdWords. As a result, the
Google AdWords service would completely fall outside of Article 14's scope, even though –
as the Advocate General recognised – the activity consisted of storing certain content (which
is precisely what 'hosting' is defined as under Article 14).104
The Advocate General's interpretation can be criticised because it would set apart a large
number of online intermediaries, engaged in the storage of content, from others. In this
manner, those service providers would fall into a legal loophole not covered by the Directive
and would be left completely to the legislature (and case law) of the Member States. This
could not have been the intention of the Directive's legislators, which were inspired by the
need to create legal certainty and harmonisation within the national legal systems.
101
Ibid, 33-41.
'ECJ decision in Google France v Louis Vuitton – a win for Google?' (Pitmans, 23 April 2010)
<http://www.pitmans.com/news/ecj-decision-google-france-v-louis-vuitton-a-win-for-google> accessed 8 July
2013.
102
103
Google France v Louis Vuitton, 110; Opinion of AG Maduro in Google France v Louis Vuitton, 136.
104
Opinion of AG Maduro in Google France v Louis Vuitton, 137-146.
27
In the judgment, the ECJ took a different view to the one of the Advocate General and
interpreted the term 'hosting' widely, announcing a victory for Google.105 Interestingly, same
as the Advocate General, the Court also used a 'neutrality criterion' to determine the scope of
the immunity clause – but with a different outcome for Google AdWords. Basing its decision
on recital 42 to the Directive, the Court held that 'exemptions from liability… cover only
cases in which the activity of the information society service provider is of a mere technical,
automatic and passive nature, which implies that that service provider has neither knowledge
of nor control over the information which is transmitted or stored'.106
Further, the Court left the ultimate decision as to whether Google is more than just a
passive service provider to the French Cassation Court.107 Nevertheless, it gave a clear
message that the fact that Google receives payment for the AdWords service does not make it
more than a neutral intermediary.108 The same conclusion was reached with regard to its
creation of an automated system which suggests search results to users on the basis of the
keywords entered.109 Conversely, the role played by Google in the drafting of the commercial
message which accompanies the sponsored link could deprive it of Article 14's immunity –
but this was not contested by the parties in the proceedings.110
The decision in Google France v Louis Vuitton has been both criticised as a 'setback for
brand owners' and welcomed as a relief for Google and the rest of the ISP industry. 111 Online
intermediaries must, however, remain cautious. As soon as Google becomes involved with the
drafting of the commercial messages or starts helping customers to choose keywords, Article
14 will no longer serve it as a shelter.112
Nevertheless, although the judgment of the ECJ has been highly controversial, the
'neutrality criterion' and the Court's interpretation of it actually add less to Article 14 than
105
Sophie Stalla-Bourdillon, 'Uniformity v Diversity of Internet Intermediaries' Liability Regime: Where does
the ECJ stand?' (2011) 6 Journal of International Commercial Law and Technology 51, 57.
106
Google France v Louis Vuitton, 113.
107
Ibid, 119.
108
Ibid, 116.
109
Ibid, 117.
110
Ibid, 118.
111
Mark Sweney, 'Google wins Louis Vuitton trademark case' The Guardian (London, 23 March 2010)
<http://www.guardian.co.uk/media/2010/mar/23/google-louis-vuitton-search-ads> accessed 8 July 2013.
'ECJ decision in Google France v Louis Vuitton – a win for Google?' (Pitmans, 23 April 2010)
<http://www.pitmans.com/news/ecj-decision-google-france-v-louis-vuitton-a-win-for-google> accessed 8 July
2013.
112
28
what seems at first glance. As Stalla-Bourdillon notices, 'the criteria of knowledge and control
come directly from Article 14'. The 'neutrality criterion' merely excludes, on a general level,
those intermediary activities which in itself imply a certain amount of knowledge or control
over unlawful content. Others, however, who successfully pass that hurdle, can still be
excluded if either knowledge or control is proven on a case-by-case basis. Thus, the 'neutrality
criterion' merely introduces a preliminary step in determining Article 14 immunity.
This seems to be the major advantage of the Court's approach over the one taken by
Advocate General Maduro. Under his interpretation, certain online intermediaries, although
qualified as 'information society services', would neither be 'mere conduits' nor 'caching' or
'hosting' service providers. Consequently, their liability regime would be fully outside of the
scope of the Directive, left to diverse legislation and interpretation of the Member States.
4.2. L'Oréal v eBay
In the following case, L'Oréal v eBay, the ECJ was asked again to clarify Article 14 of the
Directive. The essence of the question posed to the Court was similar to the one in Google
France v Louis Vuitton. However, while the earlier case has been marked as a victory for the
ISP industry, L'Oréal v eBay is considered as good news for brand owners.113 Interestingly,
the Court did not introduce any major novelties – but from its language a change in direction
is apparent. This is a proof that the ECJ is extremely cautious with its judgments, trying to
find a balance between all the competing interests at stake.
The facts of the case were as follows: L'Oréal brought an action against the electronic
marketplace eBay for the sale of counterfeits of goods bearing its trademarks. The High Court
of Justice of England and Wales stayed the proceedings and referred the case to the ECJ
asking a series of questions, including whether eBay's activities are regarded as 'hosting' and
what exactly the 'awareness' part of the knowledge requirement in Article 14 means.114
Concerning the first issue, the ECJ did not find it problematic to determine that an online
marketplace is an 'information society service' and that eBay stores data supplied by its
113
'L'Oréal v eBay: ECJ Judgment' (SCL, 12 July 2011) <http://www.scl.org/site.aspx?i=ne21303> accessed 8
July 2013.
114
L'Oréal v eBay, 26-50 and 106.
29
users.115 The Court affirmed its decision in Google France v Louis Vuitton, repeating that
such activities will only be excluded from the scope of Article 14 if the intermediary 'plays an
active role of such a kind as to give it knowledge of, or control over those data'.116
The Court, however, slightly toughened its approach. In Google France v Louis Vuitton, it
found that Google's involvement in the drafting of the commercial messages related to the
AdWords service would be considered as active. In L'Oréal v eBay, it expanded on this by
clarifying that active involvement exists where an online marketplace is engaged in
'optimising the presentation of the offers for sale in question or promoting those offers'.117 The
ultimate assessment of whether eBay had acted in this manner was, as always, left to the
national court – but the facts of the case indicated that eBay 'in some cases… assists sellers in
order to enhance their offers for sale, to set up online shops, to promote and increase their
sales. It also advertises some of the products sold on its marketplace using search engine
operators such as Google to trigger the display of advertisements'.118 Furthermore, even if
eBay or any other online marketplace was to pass the first hurdle, their 'knowledge or
awareness' of the unlawful activity would still need to be assessed on a case-by-case basis.
The ECJ's clarification of the second issue – the 'awareness' part of the requirement –
made the situation even more difficult for online intermediaries. In essence, the Court held
that 'an e-platform can be liable for negligently failing to prevent trademark infringement'.119
In its interpretation, the situations in which an intermediary becomes 'aware' of the unlawful
activity inlude 'insufficiently precise or inadequately substantiated' notices and investigations
undertaken on its own initiative.120 It follows that online intermediaries must act with a high
level of diligence (as 'dilligent economic operators') when dealing with private notifications
and maybe even, to some extent, supervise the activity of their users as a means of prevention.
The latter is particularly worrying as it could be regarded as contradicting the wording of
Article 15 of the Directive, under which general monitoring of user activity is prohibited. In
Scarlet v SABAM and SABAM v Netlog, the Court later addressed this issue.
115
Ibid, 109-110.
116
Ibid, 113.
117
Ibid, 116.
118
Ibid, 31.
119
'Were you worth it? L'Oréal v eBay' (GS2 Law), <http://www.gs2law.com/were-you-worth-it-loreal-v-ebay/>
accessed 8 July 2013.
120
L'Oréal v eBay, 122.
30
It is also worth noting that in L'Oréal v eBay the ECJ again refused to follow the
suggestions of the Advocate General, this time Advocate General Jääskinen. Interestingly, his
interpretation completely opposed the view of Advocate General Maduro in Google France v
Louis Vuitton, going to the other extreme. Under Advocate General Jääskinen's view, the
'neutrality criterion' was not applicable to 'hosting' since recital 42 in the preamble to the
Directive directly only referred only to content which is 'transmitted or temporarily stored'.
Therefore, his opinion was that it only applied to 'mere conduit' and 'caching' activities.121
The ECJ, however, was not convinced. While Advocate General Jääskinen primarily
relied on the grammatical interpretation of the preamble to the Directive, the Court was driven
by its teleological meaning. It continued to apply the 'neutrality criterion' to 'hosting' service
providers, which does make sense because its integral elements – knowledge and control – are
also part of Article 14's liability regime. Thus, the Court only uses 'the neutrality criterion' as
an interpretative tool and not as a separate hurdle for online intermediaries.
4.3. Scarlet v SABAM
The importance of the judgment in Scarlet v SABAM relates to the Court's interpretation of
Article 15 of the Directive, under which the Member States are not allowed to impose a
general monitoring obligation upon service providers. Although this provision appears to be
rather clear, it still needed clarification because it seemed to contradict recital 48 in the
preamble to the Directive, which states that Member States are allowed to impose upon online
intermediaries 'a duty of care, which can reasonably be expected from them and which are
specified by national law, in order to detect and prevent certain types of illegal activities'. 122
Furthermore, the decision in L'Oréal v eBay can be read as adding additional confusion –
the Court implied that intermediaries may become 'aware' of unlawful activity by conducting
investigations regardless of private notices. But when do these investigations take place? Can
an intermediary be required to undertake them in certain cases?
121
Grunde Svensoy, 'The E-Commerce Directive Article 14: Liability exemptions for hosting third party content'
(LL.M. Thesis, University of Oslo 2011), 24-31; Opinion of AG Jääskinen in L'Oréal v eBay, 138-142.
122
Rosa Julià-Barceló and Kamiel J. Koelman, 'Intermediary Liability In The E-Commerce Directive: So Far So
Good, But
It's
Not
Enough'
(2000) 4 Computer
Law &
Security Report
231,
<http://www.ivir.nl/publications/koelman/notenough.html> accessed 8 July 2013.
31
In Scarlet v SABAM, a Belgian management company which represents authors,
composers and editors of musical works in the use of their legally protected material
(SABAM) wanted the national court to impose on Scarlet, an internet access provider, an
obligation to monitor the activity of its users in order to prevent copyright infringement. The
ECJ was asked to clarify whether such an obligation would be in accordance with Union law.
The ECJ's answer was simple: no. It held that it derives from Article 15 that 'national
measures which would require an intermediary provider… to actively monitor all the data of
each of its customers in order to prevent any future infringement of intellectual property
rights' are prohibited.123 A monitoring obligation may potentially be imposed upon an
intermediary only to target specific infringements which had already occurred and not as a
measure aimed at preventing all future violations. Therefore, after the burdensome judgment
for online intermediaries in L'Oréal v eBay, the Court now once again balanced in the other
direction, giving them a bit of relief.
The decision rendered by the ECJ logically follows the Directive's underlying values. The
imposition of a general monitoring duty would essentially have the same effect as introducing
a strict system of intermediary liability, which was not the intention of the European
legislators when drafting the Directive. General monitoring would most likely result in overblocking of user-generated content and be extremely expensive for online intermediaries (who
would probably pass the increase in costs on to the internet users).124
4.4. SABAM v Netlog
In SABAM v Netlog, the Court upheld its previous decision in Scarlet v SABAM. The only
significant difference between these two cases is that while the earlier one was decided in the
context of an internet access provider (thus falling within the scope of Article 12), SABAM v
Netlog concerned the possibility of imposing a general monitoring duty upon a social
network. The preliminary issue addressed by the Court was whether a social network is a
'hosting' service provider under Article 14 – and the answer was affirmative.
123
Scarlet v SABAM, 35-36.
124
Maurice Schellekens, 'Liability of Internet Intermediaries: A Slippery Slope?' (2011) 8 SCRIPTed 154, 167169.
32
Therefore, in three of the four cases – Google France v Louis Vuitton, L'Oréal v eBay and
in SABAM v Netlog, the ECJ had the opportunity to comment on the scope of Article 14 and
its application to an advertising service, an online marketplace and a social network.
Fortunately, it sent a message that 'hosting' needs to be interpreted broadly, encompassing all
of these services. In this manner, the Court narrowed the possibility for the Member States to
establish divergent intermediary liability regimes for certain types of online intermediaries.
5. Concluding remarks to Chapter III – what can be improved?
The critics of the Directive's intermediary liability system have primarily been claiming
that by placing on the online intermediaries the burden of examining whether certain material
should be removed, they are likely to start taking down even lawful content in fear of
penalties, 'without hearing the party whose material is removed'. This would have a negative
impact upon the freedom of expression on the internet as a human right.125 Furthermore, it
could discourage the online intermediaries in further developing their businesses.
Indeed, excessive demands and knowing misrepresentation are likely to occur – however,
with a more elaborate system of 'with-fault liability' these criticisms could be successfully
balanced with the interests of those whose rights are affected by online infringements, such as
copyright holders. This could be achieved with the introduction of a more detailed 'notice and
take down procedure', which would leave fewer legal loopholes and ambiguities in its
application. The possibility of counter notices and a 'put back up' procedure would also
improve the efficiency of the Directive's intermediary liability system.
Also, the Directive has been criticised due to the fact that it has not fully reached its goal
of harmonisation. On the contrary, it leaves many issues unresolved and dependent upon the
legislation and the interpretation of the Member States. Fortunately, some of these issues have
been clarified to a certain extent by the European Court of Justice (such as the scope of
'hosting'), but it seems that the national courts have been hesitant in referring their
uncertainties to the Court in Luxembourg, which has resulted in extreme divergences in case
law not only between various Member States but also within a single Member State. Many
125
Rosa Julià-Barceló and Kamiel J. Koelman, 'Intermediary Liability In The E-Commerce Directive: So Far So
Good, But
It's
Not
Enough'
(2000) 4 Computer
Law &
Security Report
231,
<http://www.ivir.nl/publications/koelman/notenough.html> accessed 8 July 2013.
33
issues still remain unresolved, such as those regarding the possible claims for damages that
arise due to unjustified blocking of content by online intermediaries.126
Furthermore, it would also be useful to adjust the text of the Directive to cover all types of
online intermediaries, including those which have emerged only after the Directive had
already been drafted back in 2000. By including online marketplaces, advertising services and
social networks within the scope of 'hosting', the European Court of Justice has already
indicated that the Directive needs to be interpreted broadly in order to encompass all types of
online intermediaries – however, updated definitions would be more than helpful.
Article 21 has already caused much confusion in this regard from the start of the
Directive's application because it states that 'in examining the need for an adaptation of this
Directive, the report shall in particular analyse the need for proposals concerning the liability
o providers of hyperlinks and location tool services'. Are hyperlinks and location tool
services, such as search engines, then, excluded from the scope of the Directive? In Google
France v Louis Vuitton, Advocate General Maduro was of the opinion that they are covered
by the Directive and that Article 21 should only be read as proposing a possible 'adaptation of
the rules to their specific needs'.127 The ECJ's broad interpretation of 'hosting' in its case law
indicates that it would most probably agree with the interpretation of the Advocate General.
126
Jonina S. Larusdottir, 'Liability of Intermediaries for Copyright Infringement in the Case of Hosting on the
Internet' (2005) 48 Scandinavian Studies in Law 471, 480-481.
127
Opinion of AG Maduro in Google France v. Louis Vuitton, 130-136.
34
IV.
COMPARISON WITH UNITED STATES LAW
This chapter is aimed at providing a basic overview of the U.S. intermediary liability
regime, primarily through highlighting its similarities and differences to the system in force
within the European Union. At the outset, it is important to point out that the United States
have adopted a 'vertical approach' to intermediary liability, meaning that different legal
regimes apply to different areas of law.128 As previously seen, the European legislators opted
for a system where the same rules apply to all types of online infringements ('horizontal
approach'), including intellectual property violations, defamation and privacy issues. 129
In the United States, the Communications Decency Act ('CDA'), adopted in 1996, applies
to online intermediaries in all matters except for intellectual property. That area of law, but
only with regard to copyright infringements, is regulated by the Digital Millennium Copyright
Act ('DMCA'), adopted in 1998.
Liability of online intermediaries for trademark violations has not been specifically
addressed by the U.S. legislation; as a result, the 1946 Lanham Act, as the primary federal
trademark statute, applies. The Lanham Act contains an 'innocent infringer' defense, which
the U.S. District Court for the Central District of California interpreted in Hendrickson v
eBay130 as largely following the provisions of the DMCA.131 Therefore, any issues which may
arise would most likely be resolved by applying the copyright rules by analogy.
1. The Communications Decency Act
Essentially, the adoption of the CDA in 1996 was a direct response to an ongoing debate
over the exposure of children to internet pornography. The Congress decided to criminalise
the activities which expose minors to offensive, obscene or indecent content. On the other
128
Pablo Baistrocchi, 'Liability of Intermediary Service Providers in the EU Directive on Electronic Commerce'
(2003) 19 Santa Clara Computer & High Technology Law Journal 111, 117; Lilian Edwards and Charlotte
Waelde, 'Online Intermediaries and Liability for Copyright Infringement' (WIPO Workshop Keynote Paper,
Geneva, April 2005), 4.
129
The fact that all of the cases which have appeared before the European Court of Justice dealt with intellectual
property rights (copyright and trademark violations) should not be misleading. The same principles which were
established in those cases would also be applicable to, for instance, defamation and privacy issues.
130
Hendrickson v eBay, 165 F Supp 2d 1082 (CD Cal 2001).
131
Perry Viscounty and others, 'Social Networking and the Law' (2008-2009) 18 Business Law Today 58, 61.
35
hand, it also recognised that the efforts of online intermediaries to police and prevent such
material should, in some manner, be rewarded.132 In the same time, the New York Supreme
Court issued its controversial decision in Stratton Oakmont v Prodigy, where an online
intermediary was held liable as if it had itself originally published certain defamatory
messages on its facilities. This judgment was met with disappointment within the ISP industry
and caused fear that the development of the internet for commercial use could be impeded by
imposing an excessive burden on online intermediaries and potentially chilling free speech.
In order to prevent that from happening, section 230 of the CDA gives total immunity to
online intermediaries for the unlawful content published by their users. Therefore, unlike the
E-commerce Directive, the CDA's intermediary liability regime excludes online
intermediaries from liability regardless of their level of knowledge about the infringements on
their websites. The idea behind this provision is that they will engage in self-regulating the
behaviour of the internet users. For instance, Facebook's terms of use reflect this rationale by
expressly prohibiting any discriminatory, harassing, offensive or other similar conduct.
Nevertheless, section 230 jurisprudence suggests that total immunity may be going too far
in protecting the rights of the ISP industry. The 1997 judgment in Zeran v America Online is a
good indication of how the unconditional exemption of online intermediaries from liability for
the infringements on their websites may be detrimental to certain basic human rights.
The plaintiff in that case, Mr. Zeran, was the subject of an anonymous prank on an AOL
bulletin board – in a couple of posted messages, he was linked to selling t-shirts featuring
offensive and tasteless slogans related to a bombing which had occurred in Oklahoma. Mr.
Zeran, who experienced extreme harassment due to these messages (including death threats!),
sued AOL claiming that they failed to remove them within short notice. The U.S. Court of
Appeals for the Fourth Circuit, however, granted immunity to AOL under section 230.
The Court held that liability upon notice would be contrary to the purposes of section 230
as it would create a chilling effect on online intermediaries, who would face potential liability
each time they receive a request to remove certain content. The Court felt that this would
deter online intermediaries in self-regulating the behaviour of their users and result in
removing all messages upon notification, regardless of actual content (defamatory or not),
132
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 31.
36
since it would be impossible for them to investigate all notices within a short period of time.
The conclusion was that allowing anyone displeased over the speech of another party to ask
for its removal would create an impossible burden for online service providers and chill
freedom of expression among internet users. Therefore, the decision in Zeran v America
Online was clearly motivated by encouraging the development of the ISP industry and aimed
at promoting online speech. On the other hand, however, it ignored Mr. Zeran's call to protect
his personal life and security even though it was apparent that AOL was not overly worried
that at the peak of the harassment he was receiving an abusive phone call approximately every
two minutes and even experienced death threats.
Zeran v America Online and other section 230 cases show that the CDA does not really
encourage online intermediaries to self-regulate the behaviour of their users. Instead, it allows
them to take no action at all and gives them an absolute shield, regardless of their knowledge
about the unlawful activity on their facilities. Moreover, the CDA even allows online service
providers to make minor alterations to the content without having to face liability.133 Even
though some courts have recognised that the protection given to online intermediaries is
overly protective and tried to attack section 230,134 a change in the U.S. policy is not likely.
2. The Digital Millennium Copyright Act
Unlike the CDA, the intermediary liability regime in the DMCA is based on the 'withfault liability' approach, meaning that an online service provider can be held liable after
obtaining knowledge of unlawful activity on its website. As a matter of fact, section 512 of
the DMCA, also known as OCILLA (the Online Copyright Infringement Liability Limitation
Act) has implemented a system which resembles the one from the E-commerce Directive.135
The following paragraphs will not give a detailed overview of section 512, but rather just
133
DLA Piper, 'Chapter 6. Liability of online intermediaries' in 'Legal analysis of a Single Market for the
Information Society' (Study SMART 2007/0037 commissioned by the European Comission, November 2009)
<http://ec.europa.eu/digital-agenda/en/news/legal-analysis-single-market-information-society-smart-20070037>
accessed 8 July 2013, 32.
134
Lilian Edwards and Charlotte Waelde, 'Online Intermediaries and Liability for Copyright Infringement'
(WIPO Workshop Keynote Paper, Geneva, April 2005), 22-23.
135
For instance, the DMCA's intermediary liability regime also makes a distinction between 'mere conduit',
'caching' and 'hosting', with pratically equivalent provisions for each of the three. Differently to the E-commerce
Directive, it adds a fourth category – 'location information tools' (e.g. search engines).
37
briefly describe its two notable differences to the E-commerce Directive's liability system – a
more elaborate 'notice and take down' procedure and a 'put back up' option.
Firstly, an online intermediary will only have the obligation to react upon a notice of
copyright infringement if the notice meets certain formal requirements. For instance, it must
be sent to a designated person, signed by the owner of the work or a person authorised on its
behalf, specify the work which is allegedly infringing his intellectual property rights and
contain a statement that the complaining party is acting in good faith. 136 By stipulating these
conditions, 'the DMCA permits the online intermediary to identify the material, thus, to a
certain extent avoiding errors' and allows online intermediaries to disregard vague notices.'137
Furthermore, in order to avoid knowingly false claims, section 512 also prescribes liability for
damages, including costs and attorneys' fees, in cases of misrepresentation.138
Secondly, the online intermediary has the obligation to inform the alleged infringer that
the material he provided has been removed or disabled access to. The alleged infringer then
has the possibility to issue a counter notification, asking the online intermediary to put the
content back up on its website. In that case, the online service provider must reinstate the
material on its website if the complainant fails to file a lawsuit against the alleged infringer
within 10 to 14 days after the receipt of the counter notice.139
The system of intermediary liability prescribed by section 512 causes fewer problems for
freedom of expression and fair competition that the one implemented by the E-commerce
Directive, since it has introduced additional safeguards aimed at preventing over-blocking of
user-generated content on the internet.140 Therefore, the DMCA could serve as useful
guidance for the E-commerce Directive in case the European legislators finally decide to
amend it and introduce a more harmonised 'notice and take down' procedure. As previously
mentioned, this has already been announced in Article 21 of the Directive.
136
Article 512(c)(2) and (3) of the DMCA.
137
Rosa Julià-Barceló and Kamiel J. Koelman, 'Intermediary Liability In The E-Commerce Directive: So Far So
Good, But
It's
Not
Enough'
(2000) 4 Computer
Law &
Security Report
231,
<http://www.ivir.nl/publications/koelman/notenough.html> accessed 8 July 2013.
138
Article 512(f) of the DMCA.
139
Article 512(g)(2) of the DMCA.
140
Dzmitry Miskevich, 'Comparative Analysis of Online Intermediary Liability Regimes in in the US and EU'
(LL.M. Thesis, Central European University 2012), 26.
38
V.
CONCLUSION
Online intermediaries have become an integral part of our everyday life. Regardless of
whether it's our business and professional ventures or personal communication, a large part of
our activities has switched to the online world – and none of them would be imaginable
without online intermediaries, who offer the platform necessary for their undertaking.
However, the rapid development of online service providers has also created a plethora of
legal issues, the most notable among them being intermediary liability for user-generated
content. Different legal systems have adopted different liability regimes, but none of them has
stopped causing debate and confusion years after its implementation.
The three legislative acts presented in this paper have adopted two systems of
intermediary liability. While the E-commerce Directive and the DMCA have both opted for
'with-fault liability', the CDA has implemented a system based on 'total immunity' of online
intermediaries. The first one seems to be a more favourable option because it creates a subtle
balance between all the competing interests at stake. While the CDA in essence only takes
into account the interests of the ISP industry and the opinion of internet enthusiasts, the Ecommerce Directive and section 512 of the DMCA are also conscious of the rights of those
affected by online infringements. Nevertheless, the 'with-fault liability' system is also
susceptible to criticism as it may cause a negative and overly protective reaction from the ISP
industry. This is particularly true for the European regime, which has not introduced a unified
'notice and take down' procedure – hopefully, this will change in the near future.
An interesting alternative solution for intermediary liability lies in the creation of
specialised bodies, which would be responsible for receiving and examining notices of illegal
activity in the virtual world. A similar system has already been established in the United
Kingdom where the British Internet Watch Foundation acts upon notices of illegal child
pornography on the internet.141 This approach is tempting – while it would have all the
positives of the 'with-fault liability' system, there would be no (or, at least, less) fear that
online intermediaries will over-block the content posted by their users in order to prevent
potential liability. It is yet to be seen, however, whether any country will introduce such
specialised bodies as the principal intermediary liability regime.
141
Rosa Julià-Barceló and Kamiel J. Koelman, 'Intermediary Liability In The E-Commerce Directive: So Far So
Good, But
It's
Not
Enough'
(2000) 4 Computer
Law &
Security Report
231,
<http://www.ivir.nl/publications/koelman/notenough.html> accessed 8 July 2013.
39
VI.
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43