Internet legal developments to look out for in 2020

Never mind Brexit, what is coming up on the UK internet legal scene in the coming year? The highlight of 2020 is of course the January publication of the 5th edition of Internet Law and Regulation :-). That apart, here are some cases and legislation to look out for. (In accordance with long tradition this feature does not cover data protection.)

Copyright

DSM Copyright Directive Member States’ implementation of the Digital Single Market Copyright Directive is due by 7 June 2021. This includes the so-called snippet tax (the press publishers’ right) and the Article 17 rules for online sharing service providers (OSSPs).

A CJEU challenge to Article 17 by the Polish government (Poland v Parliament and Council, Case C-401/19) is pending. Poland argues that Article 17 makes it necessary for OSSPs, in order to avoid liability, to carry out prior automatic filtering of content uploaded online by users, and therefore to introduce preventive control mechanisms. It contends that such mechanisms undermine the essence of the right to freedom of expression and information and do not comply with the requirement that limitations imposed on that right be proportionate and necessary.

SatCab Directive The EU Directive extending the country of origin provisions of the Satellite and Cable Broadcasting Directive to online radio and news broadcasts was adopted in April 2019 and has to be implemented by 7 June 2021.

Linking and communication to the public In the UK case of Warner Music/Sony Music v TuneIn permission has been granted to both sides to appeal the High Court’s judgment of 1 November 2019.

Pending CJEU copyright cases Several copyright references are pending in the EU Court of Justice. Judgment in the Dutch Tom Kabinet case on secondhand e-book trading (Case C-263/18) is due was delivered on 19 December 2019. The CJEU decided against Tom Kabinet, holding that its service was a communication to the public, not a distribution subject to exhaustion of rights.

The YouTube and Uploaded cases (C-682/18 Petersongs v YouTube and C-683/18 Elsevier v Cyando) pending from the German Federal Supreme Court include questions around the communication to the public right, as do C-392/19 VG Bild-Kunst v Preussischer Kulturbesitz (Germany, BGH), C-442/19 Brein v News Service Europe (Netherlands, Supreme Court) and C-597/19 Mircom v Telenet (Belgium).

Questions about injunctions against intermediaries are also raised in C-682/18 Petersongs v YouTube, C-442/19 Brein v News Service Europe and C-500/19 Puls 4 TV.

C-264/19 Constantin Film v YouTube asks questions about the permissible scope of court orders against intermediaries requiring provision of information about alleged infringers to rightholders under the IP Enforcement Directive.

Intermediary liability

The UK government published its Online Harms White Paper on 8 April 2019. The subsequent Conservative manifesto for the December 2019 election promised to legislate for online safety, while at the same time defending freedom of expression and in particular recognising and defending the invaluable role of a free press. The government’s response to its consultation on the White Paper was originally due to be published before the end of 2019. The Queen’s Speech immediately before the election indicated that draft legislation would be subject to the pre-legislative scrutiny process.

The German Federal Supreme Court has referred two cases (YouTube and Uploaded  – see above) to the CJEU asking questions about (among other things) the applicability of the ECommerce Directive hosting protections to UGC sharing sites. C-442/19 Brein v News Service Europe (Netherlands, Supreme Court) and C-500/19 Puls 4 TV (Austria, Supreme Court) also ask questions around the Article 14 hosting protection, including whether it is precluded if communication to the public is found.

On 19 December 2019 the CJEU issued its AirBnB (C-390/18) judgment on the scope of the eCommerce Directive, holding that the kind of service provided by AirBnB is an information society service within the scope of the Directive. It also held that in criminal proceedings with an ancillary civil element, it is a defence to measures restricting an information society service incoming from another Member State that the measures had not been notified to the European Commission and the Member State concerned under Article 3(4) of the Directive.

The new European Commission is proposing a Digital Services Act, starting with a public consultation in early 2020. This will include a review of the ECommerce Directive liability shields.

On 12 September 2018 the European Commission published a Proposal for a Regulation on preventing the dissemination of terrorist content online. This followed its September 2017 Communication on Tackling Illegal Content Online and March 2018 Recommendation on Measures to Effectively Tackle Illegal Content Online. It is notable for proposing one hour takedown response times and for the ability for Member States to derogate from the ECommerce Directive Article 15 prohibition on imposing general monitoring obligations on conduits, caches and hosts. Discussions on the proposed Regulation continue.

Cross-border liability and jurisdiction

In the law enforcement field the EU has proposed a Regulation on EU Production and Preservation Orders (the ‘e-Evidence Regulation’) and associated Directive that would set up a regime for some cross-border requests direct to service providers. The UK has said that it will not opt in the Regulation.

The US and the UK signed a Data Access Agreement on 3 October 2019, providing domestic law comfort zones for service providers to respond to data access demands from authorities located in the other country. Final implementation in each country awaits completion of review by the US Congress and the UK Parliament. The EU will commence negotiations with the USA for an EU-wide agreement.

Discussions continue on a Second Protocol to the Cybercrime Convention, on evidence in the cloud.

State surveillance of communications

The UK’s Investigatory Powers Act 2016 (IP Act), has come into force, including amendments following the Watson/Tele2 decision of the CJEU. The government has said that it will introduce ‘thematic’ certification by the Secretary of State of requests to examine bulk secondary data of individuals believed to be within the British Islands.

A pending reference to the CJEU from the Investigatory Powers Tribunal in litigation brought by Privacy International (Case C-623/17) raises questions as to whether the Watson decision applies to national security, and if so how; whether mandatorily retained data have to be held within the EU; and whether those whose data have been accessed have to be notified.

Liberty has a pending judicial review of the IP Act bulk powers and data retention powers. It has been granted permission to appeal to the Court of Appeal on the question whether the data retention powers constitute illegitimate generalised and indiscriminate retention. Other aspects (including bulk powers) are stayed pending the Privacy International reference to the CJEU or (a challenge based on the Human Rights Act) were refused by the Divisional Court.

The IP Act (in particular the bulk powers provisions) may be indirectly affected by other cases pending in the CJEU: Schrems 2 (C-311/18), challenges by La Quadrature de la Net to the EU-US PrivacyShield (T-738/16) and to the French data communications data retention regime (C-511/18 and C-512/18), and a challenge to the Belgian communications data retention regime (C-520/18); in the European Court of Human Rights (in which Big Brother Watch and various other NGOs challenge the existing RIPA bulk interception regime) and by a pending domestic judicial review by Privacy International of an Investigatory Powers Tribunal decision on equipment interference powers.

The ECtHR gave a Chamber judgment in the BBW case on 13 September 2018. That and the Swedish Rattvisa case were subsequently referred to the ECtHR Grand Chamber and are awaiting judgment. If the BBW Chamber judgment had become final it could have affected the IP Act in as many as three separate ways.

In the Privacy International equipment interference case, the Supreme Court held on 15 May 2019 that the IPT decision was susceptible of judicial review. The litigation will now continue.

Compliance of the UK’s surveillance laws with EU Charter fundamental rights will be a factor in any data protection adequacy decision that is sought once the UK becomes a non-EU third country post-Brexit.

Here is an updated mindmap of challenges to the UK surveillance regime:

Software - goods or services?

Judgment is awaited from the UK Supreme Court as to whether software supplied electronically as a download and not on any tangible medium is goods for the purposes of the Commercial Agents Regulations (Computer Associates (UK) Ltd v The Software Incubator Ltd).

[Updated 20 December 2019 to add Tom Kabinet and AirBnB CJEU judgments; and 22 December 2019 to add C-511/18 and C-512/18); and 20 October 2020 with updated mindmap]

UsedSoft - not just about software?

Tuesday's decision of the EU Court of Justice in UsedSoft has set the software industry aflutter by largely giving the green light to resale of permanent software licences, regardless of whether the original provision of the software was on a physical medium such as CD or DVD or was downloaded, so long as the original purchaser renders its copy unusable. 

The principle applied in UsedSoft is that the original transaction 'exhausts' the rightsowner's ability to control further dealings with the copy.  The Court has held that this even extends to permitting a resale of the bare licence, where the purchaser owner downloads a new copy of the software from the rightsowner's website.  For fuller details of the decision see here.

But buried in the middle of the judgment is what at first sight appears potentially to be an even more radical statement, suggesting that the same principle may apply not just to computer programs but to all copyright works.  At paragraph 52 the Court states: 

"the existence of a transfer of ownership changes an ‘act of communication to the public’ provided for in Article 3 of [the Copyright in the Information Society directive] into an act of distribution referred to in Article 4 of the [Infosoc] directive which, if the conditions in Article 4(2) of the [Infosoc] directive are satisfied, can, like a ‘first sale … of a copy of a program’ referred to in Article 4(2) of [the Software] Directive 2009/24, give rise to exhaustion of the distribution right."

The key statement is that an act of communication to the public 'changes' into an act of distribution if there is a transfer of ownership.  The court said that transfer of ownership includes a download from the internet where the rightsholder has also "conferred, in return for payment of a fee intended to enable him to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, a right to use that copy for an unlimited period".

The Infosoc Directive specifically states that an act of communication to the public does not give rise to exhaustion.  But if there is no act of communication to the public because it has changed into an act of distribution, then it would seem that the 'no exhaustion' exception can be sidestepped.

In principle the broad economic test of transfer of ownership applied in UsedSoft could then also be applied to works within the Infosoc Directive, such as music and video.

This could suggest that fully paid-for permanently licensed authorised downloads under the Infosoc Directive, such as of music and video, are capable of being exhausted thus allowing purchasers to transfer them like secondhand CDs or DVDs. The bright line for exhaustion would then seem to be not between physical copies and downloads, but between downloads (when they satisfy the economic value test described above) and streaming or other service-type online offerings.  

However there are some obstacles in the way of applying exhaustion to online downloads of non-computer program works.  First, Recitals (28) and (29) of the Infosoc Directive lean very strongly in favour of a distinction between tangible and non-tangible copies:

“(28) Copyright protection under this Directive includes the exclusive right to control distribution of the work incorporated in a tangible article. The first sale in the Community of the original of a work or copies thereof by the rightholder or with his consent exhausts the right to control resale of that object in the Community. This right should not be exhausted in respect of the original or of copies thereof sold by the rightholder or with his consent outside the Community. …

(29) The question of exhaustion does not arise in the case of services and on-line services in particular. This also applies with regard to a material copy of a work or other subject-matter made by a user of such a service with the consent of the rightholder. Therefore, the same applies to rental and lending of the original and copies of works or other subject-matter which are services by nature. Unlike CD-ROM or CD-I, where the intellectual property is incorporated in a material medium, namely an item of goods, every on-line service is in fact an act which should be subject to authorisation where the copyright or related right so provides.”

This apparent distinction between tangible and non-tangible is reflected in the reference in Article 4(2) of the Infosoc Directive to the distribution right being exhausted on first sale or other transfer of ownership within the EU of an 'object'. 

The Advocate General in his Opinion discussed these provisions of the InfoSoc Directive and concluded that they did not prevent a download being regarded as a distribution capable of being exhausted. If that is right, then UsedSoft could admit of a possibility not mentioned in recitals (28) and (29), that of an online download that is not in the nature of a service.

However applying exhaustion to online non-software would also do violence to the Agreed Statement interpreting Articles 6 and 7 of the WIPO Copyright Treaty, which the Infosoc Directive implements:

"As used in these Articles, the expressions "copies" and "original and copies," being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects."

Ultimately the Court in UsedSoft based its decision on the narrower ground of the Software Directive being a lex specialis that takes precedence over the lex generalis of the Infosoc Directive.  In doing so it left open, albeit in somewhat sceptical terms, the possibility that the exhaustion of the distribution right under the Infosoc Directive concerns only tangible objects: "even supposing" that to be right "that would not be capable of affecting the interpretation of Article 4(2) of the Software Directive, having regard to the different intention expressed by the European Union legislature in the specific context of that directive".

At a more general level the distinction between tangible and non-tangible is the very distinction that the Court in UsedSoft has rejected in favour of an economic value test.

The Court in UsedSoft did make a distinction between computer programs and works under the Infosoc Directive.  It said:  "The use of a computer program, unlike the use of other works protected by copyright, generally requires its reproduction." 

It is unclear whether the Court meant this to favour or oppose the possible application of exhaustion to non-program downloads.  If anything the implicit lack of need to take account of the reproduction right would suggest that it would be conceptually easier to apply exhaustion. 

However in fact the enjoyment of other works on a computer does, as with computer programs, involve transient reproduction.  So it would seem that in the way that the Court invoked the Article 5(1) 'lawful acquirer' provisions of the Software Directive in Usesoft to bypass the reproduction right, in order to achieve the same result it would have to find a way of doing the same with the Article 5(1) 'lawful use' provisions of the Infosoc Directive.

We can speculate that UsedSoft may open up the path to genuine file-shifting of all sorts of copyright works - not the type of illegitimate file-sharing that multiplies and proliferates infringing copies by uploading to public sites, but person to person transfers where the original purchased copy is deleted: the functional equivalent of passing on second hand CDs or DVDs.  Whether this is the direction that is in fact signposted by UsedSoft will have to await further debate and court rulings.

[Updated 29 June 2013 to include reference to WIPO Copyright Treaty Agreed Statement.]

Software Story 3

First there was Navitaire v Easyjet, then Nova v Mazooma. Now we have SAS Institute Inc. v World Programming Ltd, delivered by Mr Justice Arnold on 23rd July 2010, the third in a trilogy of cases grappling with the scope of copyright protection for software under the EU Software Directive.

The cases are notable for their broad exclusion as mere ideas of material such as programming languages and interfaces; and for the courts’ enthusiasm for eliminating the possibility of indirectly infringing copyright in source code or underlying design materials by copying the functionality of software. In this case however, unlike the previous two, Mr Justice Arnold has referred a number of questions to the European Court of Justice.

SAS Institute developed and markets software enabling users to carry out a wide range of analytical and statistical tasks. The SAS software comprises a suite of components. Users are able to create applications that will run with the components by writing scripts in SAS’ proprietary language, SAS Language.

WPL set out to write software (WPS) capable of running user applications written in SAS Language. It did this by studying the published SAS Manuals and the response of SAS Learning Edition to a large number of programs written in SAS Language. WPL developers had not had any access to SAS source code, nor had they copied the text of any SAS source code, nor had they copied any of the structural design of the SAS source code, nor had they decompiled SAS object code. However the WPS software did reproduce elements of the SAS Language such as keywords (words and symbols reserved to the SAS Language) and was able to read and write SAS data file formats.

SAS alleged that WPL had infringed copyright in the following ways:

1. WPL had copied the SAS Manuals when creating WPS and thereby had infringed copyright in the Manuals.

2. By copying the SAS Manuals when creating WPS, WPL had indirectly copied the SAS programs and infringed copyright in the SAS programs.

3. By its use of SAS Learning Edition WPL had contravened the terms of its licence and had thus breached contract and infringed copyright in the Learning Edition.

4. In creating its own manuals and quick reference guides WPL had infringed copyright in the SAS Manuals.

On the second claim, left to himself Arnold J would have followed Navitaire and Nova and found that there was no infringement of copyright in a computer program by copying functionality.

On the first claim, he would have applied similar reasoning to the protection of the Manuals as non-computer programs under the Copyright in the Information Society Directive.

On the third, he would have found that WPL were protected by the Software Directive’s provisions permitting study of the functioning of a computer program in order to determine the ideas and principles underlying it.

However, on all three of these claims he decided that questions of interpretation of the Software Directive should be referred to the European Court of Justice.

The fourth claim, since it concerned direct copying from one document to another, was a relatively straightforward question of ordinary UK copyright law on which Mr Justice Arnold found in favour of SAS in respect of the manuals, but not the quick reference guides.

The WPS quick reference guides, which reproduced lists of keywords from the SAS Manuals, did not infringe – either because the original compilation of keywords formed part of the SAS System and thus the SAS Manual was not in that respect an original copyright work; or because on the facts the list of keywords grew by accretion and was not the intellectual creation of an author or group of authors. Alternatively the use of the keyword lists in the WPS Guides would, had there been sufficient acknowledgment of the SAS Manuals as source, have been protected as fair dealing for the purpose of criticism or review, since its purpose was to compare the functions supported by WPS with those available in the SAS system.

While the precise questions to referred to the ECJ are yet to be formulated, they will cover these points:

1. Recital (14) of the Software Directive says that “to the extent that … programming languages comprise ideas and principles, those ideas and principles are not protected under this Directive”. In Navitaire Pumfrey J interpreted that as meaning that programming languages were not protected at all. In this case counsel for SAS argued that it did not exclude protection for the expression of programming languages. Arnold J, while not persuaded that Pumfrey was wrong on the point, agreed that guidance from the ECJ was required.

2. Similarly Recital (13) and Article 1(2) of the Software Directive exclude protection for "ideas and principles which underlie any aspect of a computer program, including those which underlie its interfaces”. Pumfrey J in Navitaire interpreted this as meaning that interfaces were not protected in situations not covered by the decompilation provisions of the Directive. Arnold J, while again not persuaded that Pumfrey was wrong on the point, agreed that guidance from the ECJ was required.

3. Pumfrey J in Navitaire and the Court of Appeal in Nova had held that on the true interpretation of Article 1(2) of the Software Directive copyright in computer programs does not protect the functions of the programs from being copied. SAS argued that this was incorrect, particular having regard to the inclusion of preparatory design material within the definition of Article 1. Arnold J’s view was that there is a distinction between the design of a program (its structure, sequence and organisation) and its functionality, the former being protected and the latter not. However the point should be referred to the ECJ.

4. SAS argued that even if Navitaire and Nova were correctly decided, they applied only to computer programs. SAS claimed that WPL had reproduced substantial parts of the Manuals in the WPS source code. The Manuals were ordinary literary works and the normal rules of infringement should apply, unaffected by the Software Directive.

Arnold J’s view was that it is not an infringement of copyright in a manual describing a computer program’s functions to use the manual as a specification of the functions that are to be replicated and, to that extent, to reproduce the manual in the source code of the new program. Functions were on the wrong side of the idea/expression dichotomy expressed in the Software Directive, TRIPS and the WIPO Copyright Treaty. The Information Society Directive applied to non-computer programs and should be interpreted in the same way as the Software Directive. However the point should be referred to the ECJ.

5. As to the use of SAS Learning Edition, Article 5(3) of the Software Directive provides “The person having a right to use a copy of a computer program shall be entitled, without the authorization of the rightholder, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program if he does so while performing any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do.”

SAS argued that this is a ‘for avoidance of doubt’ provision which simply confirms that the acts of observation, study and testing are not infringements provided that the user is licensed to use the program in the manner in question. WPL argued that that provided the user was doing the kind of acts of loading, displaying, running, transmitting or storing that he was entitled to do under the licence, then he could not be prevented from doing those acts for the enumerated purposes of observation etc. Arnold J’s provisional view favoured WPL, but the point was difficult and should be referred to the ECJ, as should the question whether “ideas and principles’ has the same meaning as in Article 1(2) of the Directive.

Apart from the questions referred to the ECJ the case is of interest for its treatment of data file formats. On the facts SAS was not able to show that the data file formats were present in their own source code, as opposed to being capable of generated by it. “There is no evidence that the SAS source code sets out the SAS7BDAT format, as opposed to reading and writing files in that format.” And on the WPL side “It is common ground that WPS is able to read and write files in SAS7BDAT format ... . For the reasons given above, I conclude that this in itself does not constitute an infringement of the copyrights in the SAS Components.”

Of more general significance, however, Arnold J considered that the data file formats constituted interfaces and so were not protectable: “As for the SAS data file formats, I agree that these are interfaces. These are precisely the kind of information which is required by third parties in order to access data stored in those formats for the purposes of interoperability.”

The judgment runs to 112 pages and is replete with examination of the minutiae of the travaux preparatoires of the Software Directive, its relationship to TRIPS and the WIPO Copyright Treaty, and the question whether the idea/expression dichotomy is now part of copyright law as applied to computer programs (yes).

A software engineer (or a lawyer for that matter) could be forgiven for thinking that software copyright shouldn’t be this difficult. Indeed the founder of WPL looked at it rather more simply: “ … he believed as a result of his experience in the industry, and in particular his time at IBM, that there would be nothing unlawful in creating such software provided that WPL did not copy the source code of the SAS System.” Whilst that remains an over-simplification, if the ECJ supports the view of the English courts it will be closer to the truth than ever.