Monday, 27 July 2020

The penultimate word on copyright intermediary liability?

The 16 July 2020 Opinion of Advocate General Saugmandsgaard Øe in YouTube/Cyando is something of a tour de force, attempting in 256 closely reasoned paragraphs to construct a Grand Unified Theory of how the intermediary liability provisions of the ECommerce Directive 2000 and the communication to the public provisions of the Copyright InfoSoc Directive 2001 can be made to sit comfortably together when applied to platforms to which users can upload and share content: video streams in the case of YouTube, and a private file storage facility with the ability to share download links in the case of Cyando.
The AG’s Opinion will not be the last word on these topics –the CJEU’s judgment in YouTube/Cyando itself will follow, as well as several other pending CJEU references. The judgments may or may not adopt the AG’s approach. However, the Opinion will be difficult to surpass for its thorough analysis of the issues and in its heroic attempt to bring coherence to a fiercely contested and mutable area of the law.
However, for platforms that fall within Article 17 of the new Digital Copyright Directive the Copyright InfoSoc Directive provisions on which the AG has opined will in due course be superseded (albeit not apparently in the UK, which has said that it has no plans to implement the Digital Copyright Directive). Article 17 enacts a sui generis version of the communication to the public right and a corresponding customised liability safe harbour that will, for platforms within Article 17, replace the general Article 14 ECD shield. Notably, the AG rejected an argument that the new Directive merely clarifies what has always been the law under the existing Copyright InfoSoc Directive and the ECommerce Directive.
Article 17, we should also remember, is under challenge in the CJEU by Poland, claiming that the illegal upload prevention provision breaches Article 11 of the Charter. From that perspective, the views of the AG regarding balance of rights under the Charter will be of interest.
Why alignment?
Aligning the two Directives is an exercise peculiar to copyright. Generally speaking, the scope of the ECommerce Directive does not have to be reconciled with that of underlying substantive laws. ECD Articles 12 to 15 are an independent horizontal overlay over an enormous range of substantive civil and criminal liability across all Member States. They provide a uniform liability shield regardless of the scope of the underlying substantive law:
“Article 14(1) of Directive 2000/31 applies, horizontally, to all forms of liability which the providers in question may incur in respect of any kind of information which they store at the request of the users of their services, whatever the source of that liability, the field of law concerned and the characterisation or exact nature of the liability.” [138]

So, if a hosting provider loses the protection of Article 14 through not removing an item of content expeditiously after becoming aware of its illegality, liability does not necessarily ensue. That has to be assessed under the substantive underlying Member State law. As the AG Opinion puts it:
“the purpose of [Article 14] is not to determine positively the liability of a provider. It simply limits negatively the situations in which it can be held liable on that basis.” [134]

Copyright, however, is somewhat different. The ECD and the 2001 Copyright InfoSoc Directive went through the EU legislative process at about the same time and were intended, together, to establish (ECD, Recital 50):
“a clear framework of rules relevant to the issue of liability of intermediaries for copyright and relating [sic] rights infringements at Community level.”

The Copyright InfoSoc Directive noted that liability for activities in the network environment concerned copyright and related rights as well as other areas. The ECD:
“… provides a harmonised framework of principles and provisions relevant inter alia to important parts of this Directive.” (Copyright InfoSoc Directive, Recital 16)

This is the basis on which it is suggested that the scope of the two Directives should be aligned. If so, however, which should be the template? Since the ECD is horizontal and thus of general application, it would be logical that any such interpretative exercise should focus on bringing the Copyright Directive into line with the ECD, not vice versa. Recital 16 of the Copyright Directive explicitly cedes precedence to the ECD: “This Directive is without prejudice to provisions relating to liability in that Directive.”
The AG’s view is that the criteria for communication to the public and the conditions for application Art 14 must and can be interpreted consistently in order to avoid, in practice, any overlap between them.
Fundamental rights compatibility
The AG addresses compatibility with the EU Charter of Fundamental Rights, opining that the ‘high level of protection’ demanded by the Copyright InfoSoc Directive does not necessarily equate to ‘maximum protection’. Although copyright is protected as a fundamental right in the Charter, that right is not absolute and must generally be balanced with other fundamental rights and interests. The Court, he says, seeks a reasonable interpretation to achieve that.
He emphasises that a general monitoring obligation on hosts to seek illegal information and activity was held by the CJEU in SABAM/Netlog to be contrary not only to Article 15 ECD, but also the Charter. It would introduce a serious risk of undermining the fundamental rights involved: platform operators’ freedom to conduct a business (Article 16), users’ freedom of expression (Article 11) and also, in his view, freedom of the arts (Article 13).
For freedom of the arts, an obligated filtering tool might not distinguish adequately between legal and illegal content, leading to the blocking of legal content. That would endanger online creativity, in that maximum protection of some forms of intellectual creativity would be to the detriment of other forms of creativity which are also positive for society.
Approach to alignment
Since the general approach of the AG is to mould communication to the public, in its application to platforms, to fit Article 14 ECD, it is logical to focus primarily on his exposition of Article 14 ECD. The Opinion is also a useful reminder of some aspects of Article 14 that are easily overlooked or misunderstood.
Generally, the AG takes the active/passive distinction to qualify for hosting protection under the ECommerce Directive, then applies it to the contrast drawn in the Copyright InfoSoc Directive between (a) someone who, by providing ‘physical facilities’, acts as an intermediary (Recital 27) and (b) someone who “intervenes actively in the communication to the public of works” ([75]).
He emphasises that the distinction has to be drawn in relation to specific content. (This focus on whether conduct is active or passive in relation to a given item of content contrasts with a common misconception that the active/passive distinction under Article 14 ECD involves an assessment of the overall role of the platform.)
He expresses reservations about the line of CJEU caselaw in GS Media, Filmspeler and Pirate Bay, which he characterises as extending the CTP right into unharmonised areas of secondary liability, founded on facilitation and knowledge of illegality. Nevertheless, he goes on to discuss the application of that reasoning to the instant cases.
For this purpose he applies to communication to the public the knowledge and awareness principles of ECD Article 14 ([111]). As with the active/passive distinction, this focuses on specific activities and information, as opposed to (in this context) consequences flowing from generalised awareness of illegality.
In summary, therefore, the AG equates “primary” communication to the public – intervention in an actual or possible transmission – with the active/passive distinction that determines initial qualification for ECD Art 14 protection; and equates “secondary” communication to the public with the ECD's knowledge-based conditions for losing the liability protection of Article 14.
Article 14 transposed to “primary” communication to the public
The following are some key points in the AG’s discussion of Article 14. References are to paragraph numbers, together with (where relevant) an italicised citation to the closest equivalent point in the AG’s discussion of the communication to the public right.
  • Only a shield The purpose of Article 14 is to act as a liability shield, not to provide a positive determination of liability. [134]
  • Horizontal application The Article 14 exemption applies horizontally, independently of the characterisation of the liability by the underlying substantive law.  It therefore covers both primary and secondary liability for information provided and activities initiated by users. [138]
  • Additional activities Activities additional to storage provided as part of the service do not prevent applicability of Art 14. [145] Nevertheless, the exemption concerns only liability that may result from information provided by users. It does not cover any other aspect of the provider’s activity. [146]
  • Active/passive hosting As regards the active/passive hosting distinction established by the CJEU:
    • Inherent control The capacity for control inherent in any hosting activity cannot amount to an active role. [151] (cf CTP [73]: being an important, or even crucial, link in the chain does not amount to an essential role.)
    • Specific content An active role must relate to specific content, where by the nature of its activity the intermediary is deemed to acquire intellectual control of that content. [152] (cf CTP [75]: intentional decision to communicate a given work.)
    • A distinction should be made between controlling the conditions for display of user information and controlling the content of that information.  [160], [162] (cf CTP [75]: determines the content in some other way.)
  • Examples of an active role include:
    • Selecting stored information. [152] (CTP: [75])
    • Active involvement in the content of stored information in some other way. [152] (CTP: [75] (“determines it in some other way”)).
    • Presenting stored information to the public in such a way that it appears to be the host’s own. [152] (CTP: [75]) As to that, in the Advocate General’s view YouTube does not do so because it indicates which user uploaded the video. [156] (CTP: [83]); and Cyando does not do so because the average, reasonably informed, internet user knows that files stored by a file hosting/sharing platform do not, as a rule, come from the operator. [156]
  • Examples that are not an active role include:
    • Automatic uploading without prior viewing or selection [154] (CTP: [78])
    • Providing access to content or the ability to download, by purely technical and automatic processes. [155]
    • Structuring the way in which videos are presented and integrating into a standard viewing interface [157] - [159] (CTP: [81], [82])
    • Processing of search results and indexing under different categories [157] (CTP: [81], [82])
    • Integrated search function [157], [160] (CTP: [81])
    • Automated recommendation of videos similar to those previously viewed [161], [162] (CTP: [84])
    • Remuneration by advertising [163] (CTP: [86])
    • Proactively carrying out checks for illegal content [166] (CTP: [78])

Points specific to communication to the public

For communication to the public, the AG also rejected arguments that grant of a licence by users to the platform amounted to active intervention. That would be different if the platform re-used content under the licence. [85]

Generally, profit was not a relevant criterion for the existence of communication to the public, but at most was an indicator. Revenue models related to attractiveness of content are a less useful indicator where the provision of physical facilities is generally carried on for profit. [86] to [88]

“Secondary” communication to the public and Article 14 knowledge and awareness

As to knowledge and awareness of illegality under the “secondary liability” interpretation of the communication to the public right, the AG suggested that they should be determined on the same principles as for Article 14 ECD. In other words, the conditions for loss of protection for a host under Article 14 should also found liability under the “secondary” communication to the public right as applicable to platforms such as YouTube and Cyando. 

In the AG's view knowledge of whether files are legal or illegal should not be presumed merely because the operator pursues a profit-making purpose. The GS Media presumption (aside from the fact that the CJEU seemed to have applied it only to hyperlinks [113]) should not be applied where the platform did not itself upload the content. That would contradict the Article 15 prohibition on imposing a general monitoring obligation. [115]

Further, the fact that an intermediary profits from illegal use should not be decisive. Any provider of goods or services that might be subject to both kinds of use will inevitably derive some of its profits from users who purchase or utilise them for illegal purposes. Other facts must therefore be demonstrated. [118]

The AG incorporated by reference ([111]) his discussion of the Article 14 knowledge and awareness provisions at [169] to [196]:
  • The knowledge of illegality required for the protection of Article 14 to be removed relates to specific illegal information. [172], [196]. That reflects the legislative purpose that Article 14 is intended to form the basis of notice and takedown procedures, when specific illegal information is brought to the attention of the service provider. [176]
  • Loss of protection based on general awareness is not compatible with the requirement of actual knowledge in Art 14(1)(a). [179]
  • As to awareness of facts and circumstances from which illegality is apparent:
    • the diligent economic operator referred to in L’Oreal v eBay is assumed, on the basis of objective factors of which it has actual knowledge relating to specific information on its servers, to perform sufficient diligence to realise the illegality of that information. It has no obligation to seek facts or circumstances in general. [182], [184], [185].
    • Since many situations regarding copyright infringement are ambiguous in the absence of context, a general obligation would create a risk of systematic over-removal in order to avoid risk of liability, posing an obvious problem in terms of freedom of expression. [189]
    • In order to be apparent, illegality must be manifest. This requirement seeks, in the AG’s view, to avoid forcing the operator itself to come to decisions on legally complex questions and, in doing so, turn itself into a judge of online legality. [187]
    • In order for illegality to be apparent, a notification must provide evidence that would allow a diligent economic operator in its situation to establish that character without difficulty and without conducting a detailed legal or factual examination. [190]
Bad faith

By way of exception to his propositions regarding specific knowledge, the Advocate General went on to discuss deliberate facilitation of illegal uses, for which general awareness of illegality would suffice to found liability. The AG discusses this bad faith exception in detail under communication to the public ([120] to [131]), incorporated by reference into his discussion of Article 14 [191].
The AG suggests that general and abstract knowledge of illegality should be sufficient to disapply Article 14 protection where the operator deliberately facilitates carrying out of illegal acts by users of its service. Where objective elements demonstrate the bad faith of the provider, then it should lose the benefit of the exemption.
The AG suggests the following principles for determining bad faith:
  • Intent to facilitate third party infringements should suffice [120]
  • The mere fact of enabling users to publish content by an automatic process and not carrying out a general pre-upload check cannot be tantamount to wilful blindness or negligence. [122]
  • Subject to notice of a specific infringement, mere negligence of a provider is (by definition) not sufficient to show that that provider is intervening ‘deliberately’ to facilitate copyright infringements committed by users. [122] 
  • The way in which a provider organises its service can, in some circumstances, show the ‘deliberate nature’ of its intervention in illegal acts of ‘communication to the public’ committed by users. [123] 
  • Characteristics of the service may demonstrate the bad faith of the provider in question, which may take the form of an intention to incite or wilful blindness towards such copyright infringements. [123] 
  • It is appropriate to check whether the characteristics of service (a) have an objective explanation and offer added value for lawful uses and (b) whether provider has taken reasonable steps to prevent unlawful use of the service. [124] 
  • But the service provider cannot be expected to check, in general, all user files before upload (cf ECD Art 15). Therefore reasonable steps should be a defence. Good faith will tend to be shown where the provider diligently fulfils ECD Art 14 withdrawal obligations [sic] or complies with any injunction obligations, or takes other voluntary measures. [124] 

It seems, therefore, that the AG is saying that the question of reasonable steps should be relevant only to rebut a presumption of bad faith that may arise if there are aspects of the service that do not, on the face of them, have an objective explanation and offer added value for lawful uses.
By way of guidance (although it would be a matter for the national court) the AG suggested that indexing and search functions [126], inserting advertisements into videos [121] (YouTube), and anonymity [129] and allowing users to generate download links [130] (Cyando) had an objective explanation and offered added value for lawful uses. On the other hand, the AG had doubts about Cyando’s practice of remunerating certain users based on the number of their downloaded files [131].
Stay-down arises in two separate contexts. The first is the argument that a host who is aware of the illegality of specific information on the platform should also be regarded as being aware of the illegality of further uploads of the same or equivalent information, and thus should not benefit from the Article 14 liability shield in respect of such future information.

The second question is whether, and if so how far, an injunction against an intermediary can require it proactively to prevent future uploads of the same or equivalent information to that specified in the injunction.
  • No imputed awareness of future uploads of the same information. As to the first issue, the AG considered that such a ‘stay-down’ interpretation of Article 14 would significantly alter its scope. It would require upload filtering not only of the same file as that notified, but of any file with equivalent content. Such an obligation would apply not only to providers that have such technology, but also those who do not have the resources to implement it. [194]
  • The AG went on to contrast that with the position in relation to injunctions against intermediaries. The CJEU has held that where a national court has determined content to be illegal, it is not contrary to the Article 15 prohibition on general monitoring obligations to grant an injunction in respect of equivalent files (i.e., in the AG’s understanding, those that use the protected work in the same way).  [220], [221] 
  • In that situation the measures must still be proportionate. It does not mean that rightsholders should be able to apply for any injunction against any intermediary service provider. In some cases a provider might be too far removed from the infringements for it to be proportionate to grant an injunction. That was not the case with YouTube and Cyando in the instant cases. [215] 
Proportionality also means that the injunction must not create obstacles to legal use of the service. Its purpose or effect cannot be to prevent users uploading legal content and making legal use of the work (such as, in the case of copyright, criticism, review or parody). [222]

[Amended 28 July 2020 to correct the number of paragraphs in the AG Opinion from 255 to 256. Unaccountably I didn't count the Conclusion...; and 29 July 2020 to eliminate a repetitious sentence.] 

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