Liability of Intermediaries
Liability of Intermediaries
Liability of Intermediaries
5. Liability of intermediaries
1. INTERMEDIARIES AND THE INTERNET
The Internets unique layered structure1 creates three separate relevant
categories of actors or subjects. The first are those who create or post
information. The second are those who this information targets the
recipients. Although the two roles can be blurred in real life (e.g., a home
user can post information on a blog and read other users blogs), legally
the roles are distinct in that legal action would normally target a subject
in one of its roles only.
The third actor, the intermediaries, plays an essential role which
revolves around three points. First, they enable the flow of information
between the two other subjects without contributing to the content.
Second, they act as guardians of the users identity and anonymity. Third,
they are in a unique position to prevent or mitigate the damage that may
be inflicted by the other two categories illegal activity. As such, they
may, under certain circumstances, be liable as contributors.
Internet service providers are commercial entities guided by commercial logic. Their operation, however, is not solely determined by market
forces but is influenced by groups who desire to control the Internet. In
the first place, these are the federal and regional governments2 who
exercise force on ISPs to control undesirable behaviour on the Internet.
The ISP actions, their cooperation or the lack thereof, can influence a
whole range of government policies concerning, among other things,
defamation, sexually explicit speech or copyright infringement. For
corporations, the intermediaries who possess knowledge of possibly
illegal downloading patterns are valuable holders of information concerning potential end-users and their behaviour. This information can be
See Chapter 1.
In the United States, for instance, some states have enacted child protecting legislation. See Center for Democracy and Technology v Pappert, 337 F.
Supp. 606, US District Court for the Eastern District of Pennsylvania.
2
104
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 1 /
Date: 2/11
Liability of intermediaries
105
extracted with relative ease, depending on the court system.3 For individual users, the intermediaries are guardians of their privacy, without
which it would be difficult to trace them, but also guarantors of their
ability to meaningfully exercise free speech.
The choice of the regulatory model applied to the intermediaries may
have important consequences for the development of the Internet.
Economically, there is a direct relationship between regulatory burden
and development. The more exposed the intermediaries are to liability,
the less likely they will invest in the Internets development. The stricter
the regulation, the more restraint it will place on the development of the
medium. Strict liability of providers will result in their withdrawal from
the market and the limitation of the type and range of the services they
provide. Dragging file posters into jurisdictions based on a generously
treated reputation in defamation will cripple the content to the level of
the lowest common denominator as long as there are assets that can be
attached.
This objective is specifically recognized in the preamble of the
American Communication Decency Act 1996, Section 230, the aim of
which is, among other things:
(1) to promote the continued development of the Internet and other interactive computer services and other interactive media;
(2) to preserve the vibrant and competitive free market that presently exists
for the Internet and other interactive computer services, unfettered by
Federal or State regulation;
(3) to encourage the development of technologies which maximize user
control over what information is received by individuals, families, and
schools who use the Internet and other interactive computer services.
The question concerning liability deals with the legal responsibility for
actions on the Internet that cause harm to others. By exposing our actions
worldwide, the borderless instantly accessible Internet poses a challenge
to the traditional notion of civil liability.4 In real life, we are liable for
harm we cause to others. Mostly, this kind of liability is easy to localize:
it happens on the territory of a determined or determinable state(s) and
results from conscious actions of particular individuals or corporations
(such as driving negligently or violating the terms of a contract).
3
The Court of Justice affirmed that rightholders may seek injunctions
against ISPs in file-sharing cases. See C-557/07 LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten [2009] ECR I-01227.
4
See Smith, G., Internet Law and Regulation (Sweet & Maxwell, London
2003).
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 2 /
Date: 17/12
106
EU Internet law
Most such forums today are open. AOL is a typical example of a provider
which until recently charged a subscription fee for the content and services it
provided.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 3 /
Date: 17/12
Liability of intermediaries
107
6
Loi favorisant la diffusion et la protection de la cration sur Internet
[Creation and Internet Law], Loi no. 2009669 du 12 juin 2009, JO no. 135 du
13 juin 2009.
7
2010 c 24.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 4 /
Date: 17/12
108
EU Internet law
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 5 /
Date: 2/11
Liability of intermediaries
109
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 6 /
Date: 17/12
110
EU Internet law
CompuServe was not reviewing the contents of the newsletter nor was it
in any way in charge of the publication as it was uploaded. The plaintiffs
were Cubby, Inc. and Robert Blanchard, publishers of Skuttlebut, a
gossip column intended to compete with Rumorville. The plaintiffs
claimed that the defendant published defamatory statements on separate
occasions. CompuServes defence was that it was a distributor and not a
publisher and it did not know and had no reason to know of them. The
court took the view that CompuServe, as a news distributor, may not be
held liable if it neither knew nor had reason to know of the allegedly
defamatory Rumorville statements. In other words, the court took the
view that CompuServe is more like a distributor than like a publisher.
In another case, Stratton Oakmont,15 defamatory statements were made
against the defendants in a bulletin board in 1994. Prodigy was the
owner and operator of the computer network on which these statements
appeared. At the time, Prodigy had two million subscribers and the
bulletin in question, Money Talk, was possibly the most widely read such
publication on the Internet. The plaintiffs alleged that Prodigy should be
considered a publisher and not a distributor. In claiming this, they relied
on Prodigys stated policy which stated that it was a family oriented
network. This policy was widely advertised by its executives who
repeated on many occasions that they exercised editorial control over the
contents on the network.
Zeran v AOL16 confirms that Section 230 creates a federal immunity
to any cause of action that would make service providers liable for
information originating with a third-party user of the service.
In the context of copyright infringement, a number of cases have come
through the American courts. The US Supreme Court case Grokster,17
which held that point-to-point sharing companies could be sued for
inducing copyright infringement, was held in Viacom18 not to apply to
situations involving ISPs, which are normally not aware of infringements
until they receive notice. An ISP which responds to a notice will,
therefore, not be liable.
15
Stratton Oakmont, Inc. v Prodigy Services Co., New York Supreme Court
1995, 1995 WL 323710.
16
Zeran v America Online, Inc. 129 F.3d 327, US Court of Appeals, Fourth
Circuit.
17
MGM Studios, Inc. v Grokster, Ltd. 545 U.S. 913 (2005).
18
Viacom International Inc. v YouTube, Inc. and Google, Inc., No. 07 Civ.
2103, US District Court for the Southern District of New York. See also the
appeal judgment of the Court of Appeals (Second Circuit), 10 Civ 3270.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 7 /
Date: 17/12
Liability of intermediaries
111
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 8 /
Date: 2/11
112
EU Internet law
content or editing. This is typically the case where they exercise a degree
of editorial control. The Court confirmed in the LSG case that access
providers which merely provide users with Internet access, without
offering other services such as email, FTP or file sharing services or
exercising any control must be regarded as intermediaries.20 In
other words, as long as the access provider does not engage in controlling
the content, it retains its status as an access provider. That distinction is
crucial, taking into consideration the fact that many intermediaries give
the users much more than pure access.
Articles 1215 of the E-Commerce Directive, together with some
provisions of the Copyright Directive, establish an EU regime for the
liability of intermediary service providers. The disparities that existed
between Member States in this area were seen as a burden to the smooth
functioning of the Internal Market and removing them was put as one of
the priorities. More importantly, however, insulating the providers from
liability was seen as an encouragement to the development of services
which would otherwise be lacking for fear of legal reprisals. The absence
of the limitation would either prevent the providers from entering the
market or would severely reduce the content they were offering.
It is important to understand which situations Articles 1215 of the
Directive exactly apply to. These Articles cover the liability of intermediaries in their role as intermediaries, not as primary publishers. The
First Report on the application of the E-Commerce Directive21 throws
light on the original intentions of the draftsmen:
The Directive does not affect the liability of the person who is at the source of
the content nor does it affect the liability of intermediaries in cases which are
not covered by the limitations defined in the Directive. Furthermore, the
Directive does not affect the possibility of a national court or administrative
authority to require a service provider to terminate or prevent an infringement.
These questions are subject to the national law of the Member States.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 9 /
Date: 2/11
Liability of intermediaries
113
the liability of the primary infringer nor does it prevent Member States
from introducing measures to stop the infringement.
2.2 Mere Conduits
Article 12 covers the liability of passive intermediaries. This refers to the
situation where the Information Society Service Provider (ISSP) has not
produced the information or chosen the intended recipient but acts as a
mere transmitter of the information. Article 12(1) stipulates that the
provider will not be liable where it:
+ does not initiate the transmission;
+ does not select the receiver; and
+ does not select or modify the transmission in transit.
The conditions imposed describe the passive status of the transmitter. The
first condition, that the ISP did not initiate the transmission, relates to the
fact that it is always the users who request information in an Internet
context. The second condition refers to the fact that the intermediary
must not filter the recipients, that is, it must not restrict access to some
but not to others. The final condition describes editorial control, which
must be absent. Any of the actions mentioned in Article 12(1), however,
would equate the intermediary with the creator/poster of information and
expose it to liability.
Transmissions here include temporary storage for the sole purpose of
carrying out the transmission and under the condition that the information is not stored for periods longer than is reasonably necessary. Such
storage is normally automatic and takes place in the course of the
transmission and not for other, data gathering, purposes. A further
condition is the temporary nature of the storage.
The transmission consists of communication of information to a
recipient of the service, defined in Recital 20. The recipients are defined
in that Recital as anybody who seeks information either for private or
professional uses, irrespective of the nature of that information.
The liability in question must be understood to comprise both civil and
criminal liability. The possibility exists22 for courts or administrative
authorities to terminate or prevent the infringement, which is normally
achieved through an interlocutory measure.
22
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 10 /
Date: 17/12
114
EU Internet law
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 11 /
Date: 2/11
Liability of intermediaries
115
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 12 /
Date: 17/12
116
EU Internet law
24
For classification of hosting business models, see Nordeman, J.B.,
Liability for Copyright Infringements on the Internet: Host Providers (Content
Providers) The German Approach, (2011) 2 Journal of Intellectual Property,
Information Technology and E-Commerce Law 37, p. 38.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 13 /
Date: 20/12
Liability of intermediaries
117
The operator of the website, eBay, plays such a role when it optimizes
the presentation of the offers for sale in question or promotes them. eBay,
the Court ruled, is not a passive host but one that arranges the offers and
actively profits from them.
Where the operator of the online marketplace has not played an active
role as explained above, the service provided will fall within the scope of
Article 14(1) of Directive 2000/31. In such cases, the Court ruled, the
operator nevertheless cannot rely on the exemption from liability:
if it was aware of facts or circumstances on the basis of which a diligent
economic operator should have realised that the offers for sale in question
were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b) of Directive 2000/31.
C-324/09 LOral SA, Lancme parfums et beaut & Cie SNC, Laboratoire Garnier & Cie, LOral (UK) Ltd v eBay International AG et al., 12 July
2011, not yet reported.
26
Article 15 of the Electronic Commerce Directive.
27
For instance, the 1998 Somm (Compuserve) case in Germany, File No:
8340 Ds 465 Js 173158/95, Local Court Munich.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 14 /
Date: 17/12
118
EU Internet law
Case C-275/06 Productores de Msica de Espaa (Promusicae) v Telefnica de Espaa SAU [2008] ECR I-271.
29
See footnote 17.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 15 /
Date: 2/11
Liability of intermediaries
119
that a website mainly used for illegal activity could avail itself of the
protection available in Articles 1215.
In Google France v Louis Vuitton, the issue was whether the use of a
registered trade mark in an Adword link within the Google search system
constituted an infringement of that registered trade mark.30 The European
Court ruled that search engines must be treated as hosts:
where that service provider has not played an active role of such a kind as to
give it knowledge of, or control over, the data stored.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 16 /
Date: 17/12
120
EU Internet law
Nevertheless, the Court said that, when interpreting and applying the
Copyright Enforcement and the Electronic Privacy Directives, national
courts must not rely on an interpretation which would conflict with
fundamental rights.
This interpretation, which confirms the earlier Promusicae case,33
clearly puts a significant responsibility on national courts. The EU law
does not oblige Member States to release data. They may or may not
31
32
33
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 17 /
Date: 2/11
Liability of intermediaries
121
allow this in their national law but, if they do, this must not be contrary
to EU and international fundamental rights. The question which the Court
had avoided in this case, however, is the legal status of data released in
cases where this does not violate fundamental rights.
An important dilemma concerning the obligation to install filtering was
resolved in the SABAM case.34 There, the European Court ruled that the
E-Commerce Directive, the Copyright Directive, the Copyright Enforcement Directive, the Data Protection Directive and the E-Privacy Directive, read together in light of protection of fundamental rights:
must be interpreted as precluding an injunction made against an internet
service provider which requires it to install a system for filtering:
all electronic communications passing via its services, in particular those
involving the use of peer-to-peer software;
which applies indiscriminately to all its customers;
as a preventive measure;
exclusively at its expense; and
for an unlimited period.
34
C-70/10 Scarlet Extended SA, SABAM, 24 November 2011, not yet
reported.
35
Supreme Court decision 49/2005, 10 February 2006, TDC v IFPI, The
Danish Weekly Law Report (U.) 2006.1474 H.
36
Sheriffs Court Copenhagen, Order F115124/2006, 25 October 2006,
IFPI v Tele2.
37
See Frost, K., Denmark: Restraining Injunction against Internet Providers
(2007) 2 Computer Law Review International 50 and (2007) 3 Computer Law
Review International 87.
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 18 /
Date: 2/11
122
EU Internet law
38
Job: Savin_EU_Internet_Law
Division: 05-Ch
/Pg. Position: 19 /
Date: 2/11