Chasing the Intermediaries

In a reference for a preliminary ruling from the Rechtbank van eerste aanleg te Brussel (Belgium) to the Court of Justice of the European Union lodged on July 19, 2010 (Belgische Vereniging van Auteurs, Componisten en Uitgevers (Sabam) v Netlog NV, Case C-360/10), a legal question was posed as follows:

Do Directives 2001/29 ( 1 ) and 2004/48, ( 2 ) in conjunction with Directives 95/46, ( 3 ) 2000/31 ( 4 ) and 2002/58, ( 5 ) construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that: ‘They [the national courts] may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’, to order a hosting service provider to introduce, for all its customers, in abstracto and as a preventive measure, at its own cost and for an unlimited period, a system for filtering most of the information which is stored on its servers in order to identify on its servers electronic files containing musical, cinematographic or audio-visual work in respect of which SABAM claims to hold rights, and subsequently to block the exchange of such files?

This case throws a spotlight on a phenomenon which has become ubiquitous in the age of the Internet: When there is a case of wrongdoing related to the digital domain, stakeholders find that often it is inconvenient, sometimes even practically impossible to go for the primary wrongdoer because of difficulties to identify him or her or because of the wrongdoer is seated in a foreign jurisdiction which might be less than co-operative due to a variety of reasons. Cases based on some sort of infringement of IP rights and related to the digital domain are notorious for this kind of scenario.

So why not going for the intermediaries, which are plenty and inevitable necessary for running the Internet, some of them surely located in your own jurisdiction or at least in a foreign jurisdiction which shows a co-operative habit, many rights holders may ask themselves.

In this context, Case C-360/10 now pending before the Court of Justice of the European Union is an extreme, if not bizarre case. There is a huge political discussion not only across the EU but worldwide on net neutrality, Internet censorship, and proper forms of law enforcement on the net, and here a Collecting Agency simply intends to overturn all such discussion and  mooting by simply enforcing what they think is their right based on IP law statutes. Cedric Manara from EDHEC Business School has published a paper titled Block the Filtering! A Critical Approach to the SABAM Cases giving some further insights into that case:

When a Belgian court ordered, under a daily penalty, the service provider Scarlet to put an end to confirmed copyright infringements, through preventing its customers from sending or receiving electronic files incorporating one work from SABAM‘s music inventory by means of peer-to-peer software, the case was brought before the Court of Appeal in Brussels. In its turn, the latter legitimately referred to the Court of Justice of the European Union to clarify the possibility for a national judicial authority “to order an Internet Service Provider to introduce, for all its customers, in abstracto and as a preventive measure, exclusively at the cost of that ISP and for an unlimited period, a system for filtering all electronic communications …” that goes through its services. In parallel, SABAM has sued Netlog, which runs a social network where its members benefit from their own storage capacity and that allows them to share with other members contents they have stored therein. SABAM has again asked this service provider to implement, in a manner abstract and preventive, at its own expense and without any time limitation, a filter which would identify files containing works over which the authors‘ society claims rights, and which would block the exchange of these files.

He then concludes:

The implementation of filtering and blocking mechanisms like the ones just described is subject to numerous criticisms of their scope – in abstracto, without a time limitation -; of their terms – at the expense of internet service providers or hosting providers -; and at the abundance of people likely to concerned – all intermediaries whose services are used on line, and all of their users below them. The contemplated measures are so general that they would conflict with many other legal rules, let alone endanger some fundamental rights. [...]

Even in the case SABAM should ultimately win this case: I ask myself if they really have the naivety to believe they could walk off with such victory in court without being aware of counter-actions of the society at large on the political stage. Enforcing that what SABAM strongly desires to have would mean a complete repressive re-structuring of the Internet as we know it today. Low barriers of entry would be replaced by big hurdles of secondary liability, scaring off many businesses from utilising the Internet. In recent polls, the German chapter of the Pirate Party is closer to 10 percent of votes than to meagre 5 percent necessary for gaining seats in parliaments. Let players like SABAM do their work, and we shall see the Pirate Parties in Europe in various coalition governments throughout Europe by the end of this decade.

While the SABAM case is based on copyright, the skilled person clearly will recognise that for trade marks and even patents similar scenarios are realistic.

As of today, the discussion of IP rights in relation to the Internet appears to be somewhat too much enforcement-centered. ACTA is due to be ratified, and the original drafts thereof might have been quite hostile towards the indemnity of intermediaries. It is not yet clear as to what effects exactly ACTA might have on intermediaries but some of the worst ideas have been dismissed during the negotiations of that agreement.

What is needed is a convincing justification of scope and limits of copyright, patent and trade mark law that also holds in the digital age. The solution can’t be simply to chase the intermediaries. If we choke our digital intermediaries we eventually won’t be able to enjoy even the legitimate benefits of the digital age.

To me it appears as if there are indications that the recent Proposal for a Regulation of the European Parliament and the Council on entrusting the Office for Harmonisation in the Internal Market (Trade Marks and Designs) with certain tasks related to the protection of intellectual property rights, including the assembling of public and private sector representatives as a European Observatory on Counterfeiting and Piracy might perhaps get misguided to act as an instrument to curtail legitimate business models of digital intermediaries aka ISPs.

In 2007, even IBM mooted a concept of “Soft IP” (see presentation of Mr Jonathan Sage given in Brussels, July 05, 2007 as well as another presentation of Mr Roger Burt and Mr Jonathan Sage on Intellectual Property Strategy in the 21 Century – Balancing Open & Proprietary Innovation). Such thinking as promoted in those days by top patent ranking company IBM was not always welcome in other quarters of the industry, and I have not heard anything more from this initiative since then. In a similar context there are publication like this one from James Love.

I don’t think that in particular patent and trade mark law, properly developed and carried on in the digital age, is that bad that it needs to hide in a corral fashion behind militant imaginations of enforcement against intermediaries. What is needed in order to find adequate solutions are common sense and deep expert knowledge on the intrinsic properties of the digital domain.