Copyright and Internet

SIAE, the ultimate monopoly

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The Italian antitrust authority has opened an investigation over SIAE, the old-fashioned incumbent holding a legal monopoly position in the Italian market for copyright management. The authority believes that SIAE may have committed some abuses even beyond its monopoly rights with the scope to “exclude all competition in the (investigated) markets, hindering the activities of new entrants and so reducing the freedom of the authors and editors to choose which collecting society to be member of or request services to”.

Whatever will be the outcome of this competition proceeding, the Italian market of copyright management remains something unique in Europe. Unlike other EU countries, where liberalization has been inflated at various levels, in Italy SIAE still enjoys a legal monopoly granted on the basis of a law of 1941 (that is to say during the fascism and even before the attack of Pearl Harbour). The various attempts to open this market has been vain so-far : in 2016 the competition authority signaled to the government that this monopoly should be drastically revised, while competitors have filed complaints with the European Commission. Everything has been ineffective so far: on one side, the Italian government ignored the advice of the competition authority and recently even reinforced the legal monopoly, despite the fact that an option for liberalization was offered while transposing EC Directive 26/2014 on the harmonization of collecting societies in the online music market; on the other side, the European Commission remained officially silent and di not act so-far, despite the fact that SIAE’s competitors have been advocating an intervention on the basis of EU rules and complaints are pending.

The Italian legal monopoly of copyright management is a blatant violation of freedom of services rules and of the Bolkestein directive, since it prevents operators lawfully authorized and operating in the EU to enter into the Italian copyright management market. In other words, when music in Italy is played, streamed or broadcasted, only SIAE is entitled to collect the copyright fee from the users and pay it to the authors. Because of this monopoly status, SIAE has no real incentive to be efficient, cheap and rapid, because authors have no clear legal right to access to competing services. Despite to that, in the last years some operators have entered the market in the hope that the government would have liberalized this business (and thus almost 8000 authors have left SIAE for competitors). SIAE is reacting suing them in front of courts and, because of the recent confirmation of the legal monopoly regime by the Italian government, it may have the real chance to bring the clock back to 1941. So, the legal situation is grey and only a clear intervention by a deus ex machina, that is to say the European Commission, could clarify the scenario.

The position of the Italian government is confused and difficult to understand: the competent ministry, Dario Franceschini of the Partito Democratico of the former premier Matteo Renzi, has shown mixed feeling regarding monopoly and liberalization. Various voices in the party have been advocating a drastic reform of SIAE, also considering the vocation of Renzi to close down (rottamare) the most embarrassing legacies in Italy. Despite of that and nothwitstanding the conflict with EU basic rules, and disregarding the European benchmark showing that the liberalization is the norm, the Ministry Franceschini backed an antistorical, reactionary view of the copyright management market: only one guy, SIAE, can legally make business there, others must stay out.

The start of an antitrust proceedings today is the first consequence of this position, further news may come from Brussels soon.

The European court of justice risks to restrain Mr. Juncker’s enthusiasm on public WiFi

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The EU Court of Justice has issued its final ruling in the well-expected McFadden case regading the liability of a provider of public WiFi. Accoding to the European judges, the operator of a shop who offers a Wi-Fi network free of charge to the public is not liable for copyright infringements committed by users of that network.

The judgment makes commons sense, otherwise it would be impossibile to provide public wifi throughout Europe, no-one would feel able to take the risk. Nevertheless, the court says that a password (in order to identify the user) may be required by way of injunction in order to secure the network and balance the interest of copyright holders. The concrete impact of the latter requirement shall be still evaluated: the court is not saying that any Wi-Fi network must be secured, however this protection may be required on a case-by-case basis by way of judicial injunction or administrative order. Thus, it will be interesting to see how this CJEU ruling will be interpreted, in light of the recent declaration of President Juncker whereby the “main centers of public lifes” of towns and villages should be covered with public WiFi by 2020 (although most of the industry believes it to be more a “boutade” rather than something serious). Fact is, the more protection and identification instruments are imposed (also considering the features of the technology used), the less public WiFi can realistically develop. Therefore, should the protection requirement become common practice or even a legislative requirement, the expansion of free public WiFi will be at risk, contrary to Juncker’s declarations.

To remind that facts of the case:

  • Mc Fadden was running in Germany a lighting and sound system shop in which he offers access to a Wi-Fi network to the general public free of charge in order to draw the attention of potential customers to his goods and services;
  • After his network was used by third-parties to commit copyright infringements, an important copyright holder (Sony Music) sued McFadden in front of a German court claiming his indirect liability for the infringement for having failed to secure his network.

According to the CJEU:

  • making a Wi-Fi network available to the general public free of charge in order to draw the attention of potential customers to the goods and services of a shop constitutes an ‘information society service’ under the E-Commerce directive (2000/31/EC);
  • where the three conditions for Article 12 of the E-Commerce directive (mere conduit exception) are satisfied, a service provider such as Mc Fadden, who providers access to a communication network, may not be held liable;
  • consequently, the copyright holder is not entitled to claim compensation on the ground that the network was used by third parties to infringe its rights.
  • However, the E-Commerce directive does not preclude the copyright holder from seeking before a national authority or court to have such a service provider ordered to end, or prevent, any infringement of copyright committed by its customers.
  • In that context, an injunction ordering the internet connection to be secured by means of a password is a fair balance of rights at play.
  • Finally, as per Article 15 of the E-Commerce directive McFadden cannot be obliged to monitor all communications on his networks in search of copyright infringement, nor can termination of connections be considered a proportionate injunctive relief.

 

Europe and copyright: turning back the clock

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What’s the opposite for modernization? Regression? Turning back the clock? Whatever the word may be, the copyright reform (here the leak) which is going likely to be proposed on September 15 by the European Commission does not seem a modernization at all. The main purpose of this initiative seems, despite the ambitions showed in the past, just to countervail the growing power of main OTTs and social platforms vis-à-vis publishers and content industry by empowering the latters with some special negotiation powers. It is very doubtful that this purpose will be ever achieved and the collateral damages may be higher than expected.

The feared provisions on ancillary copyright will grant to publishers a 20-years right about their news and content. In countries like Germany and Spain where a similar attempt was already done, Google (the real objective of these legislative initiatives) reacted by de-indexing the publishers’ news, which then preferred to waive the rights in order not to be obscurated from the search. This means that there we have a problem of competition, not regulation. Now, the proposal by Commissioner Oettinger aims at avoiding such an humiliation but, again, Google will not be obliged to negotiate and could be able to get granted the publication right for free. By contrast, other Internet operators, start-up, emerging social platforms and blogs will face the uncertainty. They may be required to pay the publishers without having the same capability of Google of monetizing the news and without the same negotiation power vis-à-vis the publishers (in Italian: cornuti e mazziati).

It will be interesting to see how publishers may think to use their new weapon against Facebook, a platform which is becoming much more powerful than Google news in aggregating and making availble news.

Beside that, the European Commission is seeking to force hosting sites (Youtube and others) to monitor user-uploads for similarity to works where media companies claim copyright, and empower those companies to prevent the upload from working. Again, also in this case the Commission is granting a specific industry sector (the content and media industry) a tool to balance the negotiation battle with OTTs and big platforms, but it is not clear whether this system will ever work and what could be the collateral damage. To make an example, while Google & Co may negotiate whatever with the content industry while granting the minimum, other operators will not be able to do it. The same issue applies when dealing with sophisticated identification systems: Google/Youtube can put in place such systems, others probably not.

Meanwhile, photographers are left at risk of being sued for copyright infringement by architects when they take a photo with a building in the background; the Commission has passed up the opportunity to introduce a so-called “panorama” exception to fix this problem.

Taken together, these issues point to a legislative proposal which contains little progressive measures for digital citizens and providers of innovative online services. It is regrettable to remember that when announcing its much-lauded Digital Single Market strategy in 2015, the European Commission committed to empower the Internet as an engine of European economic growth. But in today’s copyright “modernisation” proposal, the Commission has instead rocked the legal foundations of Europe’s digital economy – namely the intermediary liability safe harbours of the E-Commerce Directive – and has put a chill on information society innovation.

One may hope that European Parliament and the EU Council will attentively scrutinise and amend the legislative proposal in the coming months.

A detailed analysis of the leaked reform can be found here.

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PS: amongst so much darkness, a light of hope. The proposed directive sets fort the right for artists to be duly informed by publishers about the commercial results of their licensed works and, in case of unexpected and extraordinary success, to get an additional compensation. This is a remarkable improvement for young and unknown artists like me 🙂

 

European court rushes in rescue of hyperlinks

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An opinion rendered today by the Court of Justice of the European Communities appears very innovative with regard the legal status of hyperlinks and their relation with copyright law. If confirmed in a final judgment, the opinion is susceptible to provide additional and substantial certainty to the development of Internet and digital businesses.

According to Advocate General Wathelet who rendered an opinion in the Case C-160/15 (GS Media BV v Sanoma Media Netherlands BV and Playboy Enterprises International Inc. and Britt Geertruida Dekker) the posting of a hyperlink to a website which published photos without authorization does not in itself constitute a copyright infringement. In particular, the motivation of the person who placed the hyperlink and the fact that this person may know or not whether the initial posting was authorized, is irrelevant.

The Advocate General seems to see the legal status of hyperlinks quite differently from what the European court thought in the previous case Svensson (2014):

  • in the latter case, the European court confirmed that hyperlinks are act of communication under the Copyright Directive, and therefore they need the authorization by the right holders of the content which the hyperlink is referring to; then, however, the court elaborated a reasoning for an exception (if the content referred to is already in the public domain, then the authorization is not needed);
  • in the present case, the Advocate General states that “hyperlinks which are placed on a website and which link to protected works that are freely accessible on another site cannot be classified as an ‘act of communication’ within the meaning of the Directive”.

This opinion of the Advocate General, if confirmed in the final judgement by the European Court, would add clarity clarity and legal certainty to any Internet users, whether a business or even an individual, using hyperlinks to refer to other pages or content in the Internet. By contrast, a different rule would jeopardize any initiative in the Internet because making a preliminary check whether a given content or image has been initially communicated to the public in licit way, would be practically impossibile.

This principle may have a deep impact on the dynamics about fight against digital piracy: the content industry would then be more encouraged in targeting websites were unauthorized content has been intentionally published, asking for removal, rather than targeting thousand of websites which, by simply referring to the initial one with a simple hyperlink, may not know about the lawfulness of the situation.

The same principle may play in favor of innovative digital business models, including platforms and search engines, which base their business in connecting the content spread in the Net.

One should remember the European institutions are currently revising the Copyright Directive and, in case a reform is launched, the present judgment will be quite relevant with regard to the rules applicable to hyperlinks.  Content industry is sometimes asking to restrict then usage of hyperlinks by adding a special liability for that – a system which would seriously affect any business and individual initiative in the Internet.

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As regard the legal case and the facts, one should remember that pursuant to the Copyright Directive 2001/29, each act of communication of a work to the public has to be authorized by the copyright holder. The question is whether a simple hyperlink may be considered an “act of communication”.

Sanoma, the editor of the monthly magazine Playboy, commissioned a photoshoot of popular Dutch character, Britt Dekker. A website named GeenStijl published advertisements and a hyperlink directing viewers to an Australian website where the photos in question were made available without the consent of Sanoma. Despite demands from Sanoma, GennStijl refused to remove the hyperlink in question. When the Australian website removed the photos upon Sanoma’s request, GeenStijl published a new advertisement which also contained a hyperlink to another website on which the photos in question could be seen. That site also complied with Sanoma’s request to remove the photos. Finally, internet users who frequent the GeenStijl forum posted new links to other websites where the photos could be viewed.

According to the solution suggested by the Advocate General, the behavior of Geenstijl was lawful, since the request for removal should have been addressed to the website initially posting the content.

NB: the Advocate General’s Opinion is not binding on the Court of Justice. It is the role of the Advocates General to propose to the Court, in complete independence, a legal solution to the cases for which they are responsible. The Judges of the Court are now beginning their deliberations in this case and a judgment will be given at a later date. Normally, in the 80% of the cases the judges confirm the legal solution suggested by the Advocate General.

From hyperlinks to embedded videos: not a copyright infringement, EU court says

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A landmark decision has been adopted by the Court of Justice of the European Union (CJEU) in the matter of Internet and copyright. The new case concerns embedding a video without the consent of the right-holder, also for commercial purposes.  According to the CJEU, this behavior does not constitute an infringement of copyright law when the video is already publicly available in the Internet, since no additional public is reached by way of the embedding, and provided that the work is not altered in any way.

The decision of the Court echoes a similar case, the Svensson case, which concerned hyperlinks. Also in this case, while admitting that hyperlinks constitute a kind of “communication to the public” according to the copyright framework, the court said that no infringement occurred since the linked content was already available in the web and therefore the hyperlink was not deemed to distribute the work to a “new public”.

My understanding of the case is that the video must be public because of the intention of the right-holder, who eventually uploaded on a public platform (such as Youtube, as in the most of the case). The parallel with the Svensson case lies lies in these terms. By contrast, should the video be present on a platform without the consent of the right-holder, I would say that embedding should not be allowed or further clarification is needed.

The CJEU made its decision by way of a simple order, i.e. an intermediary act which is easier to be adopted instead of a formal decision. The reasons for the choice to use such an instrument could be that the judges considered the case very easy and did not find necessary to pass through the formal procedure provided for a final decision. This means that some uncertainty may still submits whether the case is definitively closed here or not.

Whether it was an easy case or not, it is a matter of opinions. From the point of view of common sense, it is obvious that the behaviour at stake could not be seen as a copyright infringement. However, the current copyright framework is less obvious than people believe, since these rules have been normally conceived and applied in the traditional analogue off-line world, and therefore any further application in the Internet regularly results in dramas. Also because of the deliberate litigation strategy of most of the copyright-holders.

Whatever the judge believe, this is an important decision in the matter of copyright, because developing the Svensson rationale in order to solve other copyright issues may costitute an important signal for the incoming reform of copyright by the new European Commission entry into force as from November 1st, 2014.

The order of the CJEU (dated October 21, 2014) can be found here for the time being, since it has not been published yet on the website of the court. It will be published only at the end of October, and only in French (formal language of the CJEU) and German (language of the proceeding).

AGCOM releases the first copyright enforcement results

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Today in London, at the International lntellectual Property Enforcement Summit, prof. Angelo Cardani, the Chairman of Italian Regulator AGCOM, reported the preliminary results of the Copyright Enforcement Regulation which recently (March 28, 2014) entered into force in Italy. The regulation is quite a unique measure in Europe – since no other telecom regulator is entrusted with copyright enforcement powers in the EU – and has been highly contested by civil society, ISPs and consumers associations, while plauded by the content industry. Experts have released different views on the matter. Likewise, the Regulation encountered different feedback at international level: while an official advisor of the United Nations argued that the measure may be dangerous for freedom of speech, the US administration welcomed the regulation and apparently because of that it dropped Italy down from the black list of “pirate” countries.

Various recourses for the annulment of the regulation are pending with Italian courts and a decision may be adopted quite soon before the end of June. A legal description of the Copyright Enforcement Regulation can be found here.

Prof. Cardani defended the regulation declaring that “no Armageddon happened“. He maintained that the measure was necessary to protect the creative industry because the judiciary remedies are not sufficiently quick. He informed the audience that  41 complaints have been filed so far with regard to photos (15), movies (11), music (7), books (4) and digital newspapers (1), video games (1). The authority started 28 proceedings, two-thirds (13) of these were closed as a result the spontaneous removal of the content. In 8 cases, the Authority adopted sanctions, ordering also the blocking of pirate sites’ DNS addresses. Most serious infringements concerned the illegal downloading of music and movies.

The data released by prof. Cardani have been made public with a PR of AGCOM.

It is still premature to make a complete assessment of such results. Probably, such outcome will be analyzed by AGCOM to eventually refine the Regulation. For instance, it is clear that many claims have been filed with regard to individual, and non massive, infringements (while the Regulation was deemed to deal only or mainly with large-scale and commercial infringements). Most of the requests concern pictures, i.e. a creative works which are not highly discussed  in the piracy debate. The web-blocking measures have been imposed with regard to websites hosted abroad, however is not clear whether substantial attempts have been made in order to ask foreign police to shut down such servers and avoid web-blocking (Prof. Cardani said that international cooperation is still a problem). Web-blocking was ordered at DNS level rather than at IP level, in order to avoid over-blocking.

Remarkably, in the last weeks various ISP were informed by AGCOM about pending proceedings which could result in web-blocking. AGCOM suggested ISPs to impose a block even before a final decision was adopted. Mostly ISPs rejected this approach and experts have argued that such anticipated blocking could be legally risky.

Piracy and private copy levy: the European Court of Justice makes an important ruling

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According to the European Court of Justice, the amount of the levy payable for making private copies of a protected work may not take unlawful reproductions into account. This principle has been stated today in the decision ACI Adam BV and Others v Stichting de Thuiskopie, Stichting Onderhandelingen Thuiskopie vergoeding (case C-435/12).

According to the court, the fact that no applicable technological measure to combat the making of unlawful private copies exists is not capable of calling that finding into question. The decision at stake involves a couple of relevant consequences for national policy makers and jurisdiction in the matter of private copy levies and fight to online piracy.

Facts

The current legislation in the Netherlands imposes a private copying levy on electronic devices with storage devices in order to compensate copyright holders for the unlawful reproduction of their works. The decision of the ECJ, following the AG opinion of January 9th, 2013, maintains that such Dutch legislation is detrimental to the functioning of the internal market as far as it allows reproductions for private use from unlawful sources. Moreover, the court noted that “national legislation which makes no distinction between private copies made from lawful sources and those made from counterfeited or pirated sources cannot be tolerated”. This indiscriminate application effectively penalises users who lawfully reproduce their digital content from authorized sources as they also pay the private copy levy and creates a disincentive for business based on legal content.

Consequences for private copy legislations 

This ruling will have an impact in countries where the private copy levies mechanism has been arbitrarily used as a compensation for the potential losses deriving from online piracy. In various countries (for instance Italy) the right-holders are lobbying the government to increase the levies on the grounds that their revenues are declining because of pirated content on the iNternet. By doing so, however, the industry blurs the difference between legal and illegal content and creates a contradiction: if pirated content is illegal it should be stopped, not remunerated, both things together are not possible. Some legislators or governments did not understood such distinction and believed that the such kind of mechanism may be a way to make everybody happy: rights-holders and pirates. Right holders may be happy about this solution, because at the very end they want money and not principles: but they stop to fight piracy then.

The ECJ correctly quashed the above reasoning and reinstated the correct interpretation and application of the private copy exception.

Consequences for pirated content

Clearly, the hidden result of the Dutch legislation was to legalize illegal content. In fact, if illegal content is taken as a basis to remunerate rights-holders via the private copy mechanism, then it will not illegal any longer: it will be part of the business. In this case, however, one should stop to fight piracy, which will become a licit business remunerated via a peculiar way. From policy point of view, it is an interesting perspective, however such approach requires a correct legal basis to go ahead.

And in fact, the ECJ rebutted this reasoning, because the private copy mechanism (which is an exception to copyright, but he way, applicable only in some countries and in different ways) has not been deemed for this purpose. Of course Netherlands could decide to legalize illegal content (like drugs!), but they have to choose another legal basis.

Other consequences: filtering?

Following the ECJ’s decision, some stakeholders and commentators have started saying that now Dutsch ISP should start to filter Internet traffic in order to intercept and block users making illegal download. To this purpose, someone has evocated the latest ECJ’d decision on web-blocking (the UPC case). See for instance the director of Brein, the Dutch anti piracy committee:

It’s BREIN to do about the fact that there are illegal traders on the internet (sites and services) that make it their business to facilitate access to illegal content ,” said BREIN director Tim Kuik. “Obviously it’s of the utmost importance that we can claim blocking of access to persistent illegal websites. Blocking [of Pirate Bay] was recently rejected by the appeal court in The Hague. BREIN asked the Supreme Court to annul that decision

This approach is not correct. Monitoring/filtering was admitted by the ECJ in the well-known Sabam case only under strict criteria which, to my opinion, make this measure not really enforceable in practice. In any case, it should be up to the national courts/legislators to foresee a blocking mechanism allowing ISPs to detect illegal downloading without infringing the principles laid down by the European court.

This new Dutch case does not add anything to this perspective. In many countries pirated downloading is already an illegal practice, even a criminal fact: whether ISPs may be required to intercept such conducts is still the same old story. In any case, the reference to the UPC case is inappropriate, because:

– filtering of content to block it (like in Sabam); and

– filtering of Internet traffic for the sole purpose to block the access to a forbidden website (like in the UPC case);

are technically not the same thing. Filtering like in the Sabam case requires a kind of DPI, because intercepting illegal downloading involves an intrusive analysis of IP packets; by contrast, blocking Internet traffic towards a given destination should be in principle less intrusive, depending on the kind of technology chosen to implement the measure. In any case, in the UPC case the European Court made clear the web-blocking should not interfere with individual rights, including privacy – this should prevent ISPs from applying DPI technologies to implement web-blocking measures.