Tuesday, 24 September 2013

Everyman learns about internet jurisdiction

Everyman has just read the questions referred to the EU Court of Justice in C-441/13 Pez Hejduk. [And has now added some Pinckney updates, following the CJEU decision on 3 October 2013.].

Everyman: I see the ECJ has been sent another internet jurisdiction case.

Scholarly Lawyer: Keep ’em coming.

E: Well on my count they’ve had 9 internet jurisdiction referrals in 6 years: Pinckney; Martinez/eDate Advertising; Wintersteiger; L’Oreal v eBay; Sportradar; Pammer/Hotel Alpenhof, Blomqvist, and now this one.  What’s going on?

SL: Lots of tricky stuff, in actual fact.  But let's get straight that they’re not all jurisdiction cases.  You have to understand four different things: territoriality, jurisdiction, applicable law and the Electronic Commerce Directive.

E: They are all about cross-border internet liability, yes?

SL: Yes.

E: So why four different labels?

SL: So first we have territoriality.  Between you and me, no-one understands this apart from IP lawyers.  But it’s important.  Take copyright. Each country’s copyright law applies only within its borders.   To infringe UK copyright, you have to do an act within the UK.  If you do the same thing in France, that would infringe French copyright.  Or maybe not:  UK and French copyright are not the same.  

E: But what’s the problem?  Surely it’s obvious where a copy is located.

SL: Yes, although copyright can apply to transient copies and on the internet those spring up everywhere.  But anyway copyright isn’t just about copying.  You can infringe copyright in a load of different ways. 

E: Can we keep this simple?

SL: So if you put an infringing copy on your UK website, that’s not just copying but also making available to the public – a separate type of copyright infringement. But your website can be read anywhere in the world.  Does that mean you are infringing by making available to the public only under UK copyright, or under the copyright laws of every country in the world, or maybe just some of them? They’ve been having fun at the ECJ with that question.

E: So, what’s the answer? 

SL: Basically, targeting.  For database right…

E: Weren’t we discussing copyright?

SL: Have patience.  For database right the ECJ said in Sportradar that, country of the server apart, making available to the public occurs in the countries to which you target your website.  They said much the same for use of a trade mark in L’Oreal v eBay. 

E: Dare I ask about copyright?

SL: For copyright, they said in Titus Donner that targeting applies to the distribution right (that’s a third way of infringing copyright).  Actually no one has asked them about making available and copyright yet, though your Mr Justice Arnold has held that targeting applies.    

E: So targeting applies to everything then?

SL: Not so fast.  You might think so, but that would be too simple.  Clearly it doesn’t apply to copyright infringement by copying, since that is down to where the copy is made.  Also, the ECJ can only opine on rights that are harmonised across Europe.  That cuts out a chunk of criminal law, not to mention personality rights such as privacy and defamation.

E: So those are down to national laws?

SL: Correct.  Your national courts decide whether the right is territorial under your national law; and if so they apply their own test for the location of the act.  For example your English defamation courts have gone off in a completely different direction from targeting. According to them (and the Australian and New Zealand courts), a defamatory statement on a website is published wherever in the world it can be read and comprehended.  That's a mere accessibility rule, and bad news for the internet.

E: OK, we’ve done substantive law.  Let’s move on to jurisdiction.

SL: Yes, let’s. I’m sure you know the basic rule under the Brussels I Regulation.  You have to sue an EU defendant in the Member State of its domicile.  But there are many exceptions, including the particularly slippery Article 5(3).  That says that for a tort claim you have the option of suing a defendant in the location of the harmful event.  In an early pollution case the ECJ said that that includes the place where the damage is suffered. 

E: That makes sense if you’ve got toxic chemicals flowing down the Rhine – it only brings a handful of extra countries into the frame.  But if you apply that doctrine to the internet, doesn’t the whole world come into play? And within the EU wouldn’t that completely undermine the basic rule?

SL: Article 5(3) causes a lot of trouble.  Because it’s an exception Article 5(3) can’t be allowed to undermine the basic rule.  But you’re right, it’s very easy to argue that on the internet the damage is suffered wherever the effects of the website are felt.  The ECJ is also supposed to provide a high level of protection to IP rights; which could mean allowing rightsholders to sue in any country in which the IP right is infringed.

E: That makes sense, doesn’t it?  Otherwise every court will be clogged up applying the IP laws of foreign countries.

SL: Up to a point, but at the jurisdiction stage it’s only an allegation of infringement.  If a plaintiff only has to make an unsupported allegation to get jurisdiction in the country in which it wants to bring proceedings, then the basic defendant's domicile jurisdiction rule disappears.

E: So should the national court consider the strength of the allegation before taking jurisdiction?  

SL: Good question.  But that’s for each national court’s procedure.  Some countries maintain a clear distinction between jurisdiction and the substantive right; and others, such as England, will look at whether there is a good arguable case of substantive infringement when they consider jurisdiction.  And that brings into play the territoriality of the substantive right.  It’s all very difficult.  [Pinckney update: The CJEU seems to be coming perilously close to saying that jurisdiction and the substantive right must be kept completely separate (para 41 and 42) - even though in Shevill the CJEU said that the standard by which to test jurisdiction is for the national court.  We may start to wonder if the English approach is consistent with EU law.  The UK government made no submissions in Pinckney.]

E: But if, say, a targeting test were part of Article 5(3), then territoriality wouldn’t feature so much.  And all the national courts could apply a uniform jurisdiction rule.

SL: Well spotted.

E: But the ECJ hasn’t said that yet, has it?  In fact its Article 5(3) decisions seem to be all over the place.  Not only do they set different tests for off line defamation (Shevill), online defamation and privacy (eDate/Martinez) and online trade marks (Wintersteiger), but none of them has adopted targeting. 

SL: Wait for Pinckney. [Pinckney update: Well, the CJEU seems very happy with the idea that the meaning of Article 5(3) can vary according to the substantive right (para 32)].

E: That’s the one where the Advocate General has said the ECJ should declare the reference inadmissible? [Pinckney update: The CJEU declared the reference admissible.]

SL: That aside, it’s a copyright case.  The AG has suggested that if the ECJ declares it admissible then Article 5(3) should be aligned more closely with territoriality.  So the AG says that for communication to the public in copyright, the place of damage should be subject to a targeting test. [Pinckney update: Oh dear.  The CJEU has gone in the opposite direction and said in terms (para 42) that Article 5(3) does not require targeting.  Mere accessibility appears to be sufficient (paras 44, 47, operative part).] 

E: That’s all very well, but what on earth does it mean to target a country?  Isn’t that a very uncertain test?

SL: Shazam!  I produce a decision they made earlier: Pammer/Hotel Alpenhof.  It was nothing to do with IP rights or even tort, but the ECJ explained exactly what it means to direct activities at a Member State.  And they have referred to it each time they introduce a new targeting test.  So every time they apply the targeting test in a new area you can look up Pammer/Hotel Alpenhof to find out what it means.

E: That’s quite enough of jurisdiction.  Where does applicable law fit into all this?  Surely if a territorial right is engaged, then it must follow that that territory’s law applies?

SL: Well you’re right – in fact you might think there is no room for a choice of law rule at all.  But not all claims are about territorial rights.  And anyway we have the Rome II Regulation (plus the Rome I Regulation for contractual claims), which lays down choice of law rules for all sorts of non-contractual claims, including some that are territorial. 

E: Don’t tell me that Rome II gives a different answer.

SL: Fortunately, no.  For infringement of IP rights the applicable law is that of the country for which protection is claimed.  When you think about it, that’s really territoriality in different words.

E: So it seems simple enough.  A court has to apply the Rome I or II rules and then, assuming it has jurisdiction, decide the case on the basis of the applicable substantive law.

SL: Not exactly.  Now we have to factor in the ElectronicCommerce Directive.

E:  We’ve done substantive law, we’ve done applicable law and we’ve done jurisdiction.  How can there be room for anything else?

SL:  There’s always room for the internal market rules of the European Union.  These embody the principle of free movement of goods and services which underpins the EU. 

E: Go on.

SL: The Electronic Commerce Directive applied the internal market rules to online services.  The Directive says that one Member State cannot restrict online services incoming from another Member State. 

E: Which it would do by applying its own national law?

SL: Yes, or any other law that the receiving Member State’s court has decided is applicable.  In eDate/Martinez the ECJ said that if the applicable law is stricter than that of the foreign Member State from which the online service is being provided, the court must disapply it.

E: My head’s spinning. You’re telling me that having gone through the whole procedure of establishing jurisdiction and determining that its country’s law is applicable, the court then has to disapply that law again if it is stricter than the law of the defendant’s own country?

SL: If the defendant’s country is in the EU or EEA, exactly so. Except, that is, for IP as it's one of the fields excluded in the Annex.  Fun, isn’t it?

 [Pinckney update added 3 October 2013. Blomqvist added, 6 October 2013.]