As between ISPs and rights owners, on whom does the burden of policing online copyright infringements lie?   In a judgment delivered on 23 June 2010, the US District Court for the Southern District of New York had no difficulty in deciding that it was a burden for the rights owners to bear. 
 
The question arose in an action brought against YouTube and Google by Viacom, the FA Premier League and others for infringement of their copyrights.  On a motion for summary judgment the judge, pointing to the intended balance in the US Digital Millennium Copyright Act between the interests of rights owners and the public interest in an efficient and well funded internet, held that YouTube and Google  were entitled to “safe harbor” protection under the DMCA and were not liable for the infringements. 

 
The plaintiffs had claimed that tens of thousands of videos on YouTube, resulting in hundreds of millions of views, were taken unlawfully from their copyright works without authorisation and that the defendants had actual knowledge and were aware of facts or circumstances from which infringing activity was apparent, but failed to do anything about it.  YouTube had in fact taken down those items of which they had received specific notice.  What was at issue, according to the judge, was therefore whether the level of knowledge on which the service provider had to act to preserve safe harbor protection was actual or constructive knowledge of specific and identifiable infringements of individual items or whether a general awareness that there were infringements (which the plaintiffs claimed to be widespread and common) was enough.
 
Rejecting the principles of Grokster and its progeny as having little application, the judge held that the answer was that the knowledge had to be of specific and identifiable infringements of particular individual items.  Mere knowledge of the prevalence of infringing activity was not enough.  Imposing responsibility on service providers to go out of their way to discover which of their users’ postings infringed a copyright would, he said, contravene the structure and operation of the DMCA.  He gave summary judgment to YouTube and Google that they were entitled to safe harbor protection.
 
Safe harbor protection under the DMCA has common ancestry with the reliefs from liability available to intermediaries under the e-Commerce Directive.  Both are descended from the same WIPO digital agenda.  Accordingly, whilst obviously not a compelling precedent in the UK or elsewhere in Europe, it is likely to be an influential judicial contribution to the debate about the proper scope of that protection, although possibly short-lived - Viacom’s description of the decision as fundamentally flawed indicates that an appeal is not unlikely. 
 
The decision, while it stands, is also interesting in its rejection of the Grokster principles as having any material application in this context, particularly in light of the High Court having recently embraced the UK version of those principles in the Newzbin case: [2010] EWHC 608 (Ch).  That was a case in which (pace CBS Songs v Amstrad) the operator of a site which indexed infringing films was held to have infringed the film producers’ copyrights by authorisation without consent, opening the way to claims that have hitherto been held back by the CBS Songs decision.  But if the UK courts follow the US YouTube judgment, it will be difficult to use the Newzbin decision to challenge the protection enjoyed by intermediaries under the notice and take down regime under the e-Commerce Directive, as some may have hoped.
 
What rights owners will be able to do in a suitable case will be to invoke the three strikes procedure under the Digital Economy Act to warn infringers off or, if that does not work, to use the Norwich Pharmacal procedure to obtain the infringers’ names and addresses from their ISP.   It seems from the recent BIS consultation on cost-sharing that the bulk of the ISPs’ costs will be recoverable from the rights owners. 
 
As one of the Recitals to the Information Society Directive recognises, intermediaries in the digital environment are often best placed to bring third party infringing activities to an end.  That may be so but the YouTube case and the proposals for implementation of the Digital Economy Act appear to suggest a reluctance to over burden ISPs with responsibility for doing so or with the costs.

Illegal peer to peer filesharing continues to test the boundaries of the law.  Now the European Court of Justice is to consider it, because the SABAM v Tiscali (Scarlet) case is being referred to it.
 
When in 2007 a Belgian court ordered Scarlet, an ISP, to filter traffic on its network to identify illegal P2P filesharing and then to block it, rights owners were pleased but ripples of concern spread through the European ISP community.  As well as questioning whether the technology was available and who should pay for it, serious questions arose as to how to resolve the competing claims of (a) rights holders as to their intellectual property, (b) intermediaries as to their responsibility for traffic passing across their networks and (c) users as to their privacy.
 
These questions are being addressed all over Europe.  Some indications as to a solution are visible in the ECJ’s decision in Promusicae v Telefonica that a balance has to be struck between competing fundamental rights, which was followed in 2009 by the French Constitutional Court when, weighing the balance in relation to three-strikes legislation to curb illegal filesharing, it struck down part of the HADOPI law.  And then in November the Framework Directive was amended to require that measures regarding end-users’ access to the internet should respect their fundamental rights and freedoms and any measures restricting those rights or freedoms were subject to safeguards and general principles of Community law.  Meanwhile the Digital Economy Bill proposing the UK’s solution to the problem is passing through Parliament.
 
Now the ECJ is to consider these questions head-on, thanks to a reference being made to it in the SABAM v Tiscali (Scarlet) case.  The Belgian Court of Appeal on 28 January 2010 decided that the Promusicae decision, dealing as it did with remedies for an existing infringement, did not provide guidance as to how the court should deal with an application for an injunction to require filtering and blocking as a means of preventing future infringements.  So the question is being referred back to the ECJ.  That is good news for all concerned except that the wheels of justice turn slowly and it will be a year or two before the ECJ makes its decision.
 
A brief account of the Scarlet case is set out below.
 
SABAM v Tiscali (Scarlet): the litigation
 
In June 2007, in SABAM v SA Tiscali (Scarlet), the Brussels District Court ordered Scarlet, an ISP, to prevent all forms of P2P file sharing by its subscribers involving copyrights in the repertoire of SABAM, a collecting society, and to give SABAM details of the measures that it would apply to do so.  Scarlet, as well as appealing to the District Court on the ground that it was not technically feasible to comply with the order, appealed to the Brussels Court of Appeal to set aside the District Court’s judgment and make a fresh ruling on the original claims.  The Court of Appeal has now given its judgment (on 28 January 2010).
 
The issues between the parties were briefly as follows.  SABAM relied on national copyright laws, interpreted in the light of Directive 2001/29 (the Information Society Directive) and 2004/48 (the Enforcement Directive), which not only permitted an injunction to be granted against an intermediary whose servicers were used by a third party to infringe IP rights but, in SABAM’s submission, required it.  Scarlet in turn relied on national laws implementing Directive 2000/31 (the e-Commerce Directive), 95/46 (the Data Protection Directive) and 2002/58 (the e-Privacy Directive), submitting in particular that blocking or filtering systems inevitably involved monitoring all traffic on its network (and anyway did not work) which was not consistent with e-Commerce laws, and that they breached community laws concerning data protection and the confidentiality of communications, particularly as they involved the use of IP addresses which Scarlet considered to be personal data.
 
The Court decided that it was necessary, before considering whether effective filtering and blocking systems exist and could be made to work, to consider whether the national law relating to the rights of authors was consistent with European law, having regard to Scarlet’s submissions.  To resolve this question, it looked at the decision of the European Court of Justice in Promusicae where the ECJ had held that a balance should be struck between the different fundamental rights protected by the community legal order.  In that case Promusicae, a society representing rightsholders, sought the disclosure of personal data held by an ISP to enable the rightsholders to take action to protect their copyrights.  In the present case, the Brussels Court held that the same need to reconcile different fundamental rights arose but in a different way - in Promusicae, the remedy was sought after infringement had occurred, whereas in the present case, the filtering and blocking remedy was sought with a view to preventing infringements in the future.
 
The Court held that the Promusicae judgment was not sufficient to allow it to give a ruling on the compatibility with community law of the relevant provisions of Belgian national law and whether it was an adequate transposition of the Directives.  It therefore referred two questions to the ECJ -
whether, having regard to the various Directives and Articles 8 and 10 of the European Convention on Human Rights, a Member State can authorise a national court to require an ISP at the ISP’s expense to filter, without limit of time, traffic on its network, particularly traffic using P2P software, with a view to identifying files containing content in which a person claims to hold rights, and then blocking them
if so, whether the court is required to apply the principle of proportionality when asked to rule on the effectiveness and dissuasive effect of the measure sought.

In response, the government has tabled amendments to clause 17.  First the amendments raise the bar to some extent by requiring the Minister to be satisfied (note the subjective test) that the infringement is having a serious adverse effect on businesses or consumers and that the amendment is proportionate.  But second, the procedural safeguard has been raised from affirmative to super-affirmative.  This has been done by copying and pasting into the bill two large chunks of the 2006 Act.  It means that the Minister will not be able to change copyright law without going through all the hoops of that procedure, including laying a draft of the order and an explanatory document before Parliament, allowing 60 days for Parliament to react and not making the order if either House or a committee of either House charged with reporting on the draft recommends against it.
 
The power is not therefore entirely unprecedented although it goes a step further than the 2006 Act.  That Act was essentially retrospective, aimed at tidying up existing legislation.  In contrast, clause 17 is now aimed at actively creating new legislation.  It is designed to enable the Minister to write new law.  If the new law is controversial, is it appropriate without full Parliamentary scrutiny? 

On the face of it, the constitutional need for assurance that the power will not be used to implement highly controversial changes is even more acute than it was in 2006.  Then, the government gave an undertaking (for what it was worth) but is the Minister going to give anything similar now?  There is no sign that he intends to do so.  Even if he did, or wrote something to the same effect into clause 17 of the Bill, it would be of limited value where what is highly controversial is likely to depend on a subjective point of view.

The question for those concerned with clause 17 must be how to weigh the balance between the undoubted benefits that would flow from speeding up the legislative process to meet online challenges to copyright on the one hand and the erosion of Parliamentary scrutiny on the other.  The power under the clause would not be as sweeping or arbitrary as some have described it in recent commentaries since Parliament would still have powers to countermand a Minister’s decision and there would even be opportunities for judicial review.  But while the amended clause 17 would not entirely abolish Parliament’s function it would pre-empt much of Parliament’s role in changing copyright laws in relation to the internet which is likely to be, if it is not already, the dominant medium for exploitation of copyright works.  Is it appropriate for this huge new medium to be ruled by Ministers with a reduced role for Parliament?  That is the question that Parliament must wrestle with in considering clause 17.

On 19 December 2009 the provision of television programme services on the internet or on mobile platforms without an Ofcom licence becomes an offence.
 
This is one of the lesser known consequences of the implementation of the AVMS Directive.  Since 2003, when the Communications Act was enacted, webcasters and mobisode providers, and indeed anyone providing an internet service consisting of moving or still images or legible text produced to be seen on television, were exempted from content licensing thanks to subsection (3) of section 233 of the Act. 
 
All that is now going to change on 19 December.  The AVMS Regulations repeal that subsection with effect from that date and, by doing so, bring within the scope of Ofcom regulation a great swathe of internet and mobile services, all of which will need to a television licensable content service from Ofcom.  The application fee is £2,500 and there are annual charges based on turnover thereafter, not to mention editorial and advertising standards to observe.
 
That this is not well known is attributable to a number of things, not least of which is the obscure drafting of section 233(3), which must be a contender for the title of worst drafted provision in English statutory law.  In an Act which does not mention the internet once, the draftsman indulged in extraordinary contortions to produce an exemption for internet services without mentioning the word itself.  The passing of this provision will not be mourned by those who favour clarity of expression in statutory language. 
 
Against this background, the citizen might expect to be excused for having overlooked the extension of content regulation to the internet by the words in AVMS Regulations, which themselves are not exactly self-explanatory.  The extension is achieved by the words: “In section 233 of the 2003 Act (services which are not television licensable content services), omit subsection (3).”  The practical meaning and effect of these words do not exactly spring from the page.
 
The citizen might also expect to be excused if he or she had relied on Ofcom’s Guidance Notes for licence applicants, which still say (as at the time of writing, 4 December 2009) that internet services, including websites and web-casting, are excluded from the licensing requirement (paragraph 42 of the Guidance Notes).
 
As a matter of law the citizen will, of course, be disappointed to the extent that it is a matter of ignorance of the law.  But where the law is expressed in terms as obscure as section 233(3), where its repeal is achieved by a few words buried without fanfare in an instrument aimed primarily at different services, and where the regulator’s guidance notes may be said to give rise to a reasonable expectation of exemption, those who are pursued for non-compliance after 19 December may have a serious grievance if they are pursued under the criminal provisions of the Broadcasting Act for provision of a licensable service without a licence.

The Digital Economy Bill proposes a reformulation of the public service broadcasting principle.
 
Not so long ago, the Government spoke of digital television bringing about the end of television as broadcasting and the beginning of electronic communications as a seamless web which transcended the old distinctions between television, computer and the telephone.  It foresaw a future where broadcasting regulation was based in the first instance on competition law with a reduced set of distinctive media rules added only where strictly necessary.  The upshot was the Communications Act 2003, which withdrew almost all specific content regulation from the internet, and a campaign in Europe to limit the scope of the Audiovisual Media Services Directive.
 

What was to some extent foreshadowed in Digital Britain and what we see now in the Digital Economy Bill is something completely different.  Quite apart anything in the Directive, which will impose on the VOD industry some minor consumer protection requirements and regulatory costs, the Bill has ambitions to embrace the internet in seeking to achieve one of the oldest ambitions of public service broadcasting, which is positively to provide wide-ranging programmes of quality to the public in the UK. 
 
Under the Communications Act, Ofcom has a general duty to secure the availability throughout the UK “of a wide range of television and radio services which … are both of high quality and calculated to appeal to a variety of tastes and interests”.  This is one of the sacred texts of broadcasting law handed down ultimately from the 1920s and Lord Reith, albeit adapted to today’s markets.  A change in this duty can be expected to be a bellwether of Government thinking.  And the Bill proposes just such a change.  It would change the duty so that it was not just to secure a wide range of television and radio services, nor a mere extension to cover VOD to reflect the emasculated Directive, but a full-on extension to the internet.  If the Bill is enacted, the duty will extend to other services provided by means of the internet.  It would cover every conceivable service on the internet subject to just one condition - that there is a person who exercises editorial control over material included in the service.  The new formulation of the duty will substitute “media services”, widely defined to include VOD and these other internet services, for “television and radio services” so Ofcom’s duty would be to secure the availability throughout the UK of a wide range of high quality “media services” calculated to appeal to a variety of tastes and interests.
 
The immediate practical consequences of the change are mainly confined to Channel Four, whose new remit would be to invest in (or otherwise procure), make and distribute “relevant media content”, which would be material included in these widely defined media services.  In other words it would have a remit that extended expressly to material included in internet services of every kind where editorial control was exercised.  Similarly the new providers of regional or local news will be appointed to provide material of this kind, including material capable of being included in such services. 
 
More generally, Ofcom would now have to review and report on the extent to which material included in these “media services” contribute towards the fulfilment of public service objectives, which would be assessed not by reference only to the traditional public service broadcasters (as at present) nor even to them and other broadcasters and VOD providers but instead by reference to all such services and all other services provided by means of the internet where there is a person who exercises editorial control.  This is a new, holistic approach to public service broadcasting which was not entirely foreshadowed by Digital Britain.
 
The editorial control requirement indicates, however, a certain timidity in this otherwise bold step into cyberspace.  Quite what it will mean in practice remains to be explored but it might be characterised as confining the new approach and the new remits of Ofcom and Channel Four to Web 1.0 services.  4oD okay but 4iP may yet be a step too far for this Government.
 
Nevertheless, the new Bill indicates an abandonment of the old dream of broadcasting regulation based in the first instance on competition law with a reduced set of distinctive media rules.  Instead, the tide has turned and the trend is now in the direction of expanding regulation so as to embrace rather than exclude the internet.

“Would you tell me please,” said Alice, “what that means?”*

After lengthy consultations and the circulation to stakeholders of drafts, the Regulations implementing the AVMS Directive have been made and laid before Parliament. Unless Parliament intervenes, they will come into force on 19 December.

In one sense, the Regulations are a tour de force of Parliamentary drafting. The draftsman has applied Occam’s razor to the cumbersome prose of the earlier drafts, cutting verbosity, discarding anything not strictly to the point and presenting the new rules in plain English. Purely from a drafting point of view, they are a model of elegance.

Drafting is normally, however, a matter of conveying meaning as well as doing it elegantly. In relation to the extension of regulation to on-demand services, it is difficult to know what the Regulations mean, if anything at all.

The challenge presented by the Directive has always been the fact that it seeks to define the scope of the extension according to a range of criteria. There is a definition of an “audiovisual media service” in Article 1 of the Directive but fully to understand what it means, and therefore where the boundaries of regulation lie, particularly for on-demand services, it is necessary to look at the Recitals. Seven of them (Recitals 16 to 23) are devoted to explanations. They explain, for example, that it is characteristic of on-demand services that they are “television-like”, that is to say that they compete for the same audience as television broadcasts, and the nature and the means of access to the service would lead the user reasonably to expect regulatory protection. They give examples of what is not included, such as electronic versions of newspapers and magazines. All this is very helpful to understanding what it means. That it is necessary to look at both the definition and the Recitals is made clear in Recital 25 which says:

“(25) All the characteristics of an audiovisual media service set out in its definition and explained in Recitals 16 to 23 should be present at the same time.”

In the consultations that have taken place on scope, much has turned on how to transpose the intended meaning of the Directive into English law. It might have been avoided by simply referring to the Directive, but DCMS set its face against that. Lists of criteria have been proposed, changed and drafted around.

The Parliamentary draftsman has made short work of this. The Recitals are simply ignored. The definitions themselves are neatly and briefly summarised. No explanatory material from the Recitals intrudes upon the purity of the text. An on-demand service is to be in scope if its principal purpose is the provision of programmes the form and content of which are comparable to those of programmes normally included in television programme services. Full stop. There is nothing about competing for the same audiences, expectation of regulatory protection, exclusion of electronic versions of newspapers or any of the other criteria.

Those who were hoping for the Regulations to bring clarity should not be too disappointed. Faced with such a paucity of detail, the Courts are likely to spend little time construing them and can be expected to look through them to the underlying Directive if they need to work out where the boundaries lie. If that is what happens, it will not be such a bad result. But Ofcom and the new regulatory authorities need to do so as well - in its September consultation, instead of focusing on the Directive, Ofcom examined the criteria in the then draft Regulations themselves to determine which services will fall in scope of the new regulatory regime. With respect, Ofcom should not waste time attempting the same exercise on the instruments of transposition but should look at the Directive instead.

The Regulations do not yet include some items. After the shock discovery that the Video Recordings Act should have been submitted to Europe for a three month consultation and was unenforceable, the government is making sure it does not fall into the same pit a second time and is submitting to Europe the provisions for on-demand service providers to notify and pay fees to the regulatory authorities. Further implementing Regulations will follow in due course. And there is nothing now about product placement on broadcast television, which must await the outcome of a UK consultation.

Ofcom’s information-gathering powers, which were to have been greatly extended under earlier drafts, have been curtailed and brought into line with existing broadcasting legislation.

With respect to broadcast television, webcasters and mobisode providers have only a few weeks to apply to Ofcom for a licence (£2,500) and will have to pay annual fees for the privilege of being regulated (minimum £1,000 a year). The next few weeks should be a busy time for Ofcom. It could be a busy time too for TV Licensing, the people who collect the television licence fee for the BBC. Many will be looking at the way in which the Regulations reformulate the boundary between broadcast and on-demand television services and how some service providers might structure their services so as to fall on the side of the line that is more favourable to them.

*Lewis Carroll, Through the Looking Glass (1871)

Metropolitan International Schools Ltd v (1) Designtechnica Corporation (2) Google UK Ltd & (3) Google Inc [2009] EWHC 1765 (QB)

The High Court has set aside an Order to serve Google Inc out of the jurisdiction, on the basis that the defamation claim against it had no reasonable prospect of success. A reasonable prospect of success is a requirement of the Court Rules allowing service out of the jurisdiction.

Background and Facts
Metropolitan International Schools Ltd (”MIS”) is a distance learning course provider. It issued proceedings against Google UK, Google Inc and a third party website in respect of statements published on a web discussion forum which were alleged to be defamatory, in that they bore the meaning that MIS’ Train2Gain courses were a scam. Google searches on the product name produced the scam allegation as part of a snippet of information accompanying the hyperlink.

As Google Inc was domiciled in the US, permission to serve the claim out of the jurisdiction was obtained. Google Inc made applications to have the order for service out of the jurisdiction set aside and for a ruling that the Court should decline jurisdiction on grounds of public policy, abuse, non-publication, and defences under s. 1 Defamation Act 1996, regs 17 - 19 of the E-commerce Regulations 2002, and innocent dissemination at common law.

The Judgment
A key issue was whether Google Inc, the operator of the search engine, was a publisher at common law. If it was not, Google Inc argued, there was no reasonable prospect of succeeding in a claim and the order for service should be set aside.

Much turned on the way in which search engines like Google operate. There was evidence that Google Inc had no control over the search terms entered by users or over material placed on the web. Furthermore, the searching process was automated. With this in mind, Eady J took the view that Google Inc could not be characterised as a publisher at common law. It had “merely, by the provision of its search service, played the role of facilitator“.

The Judge noted that it was well established that a person can become liable for a publication of a libel by permitting it to continue when he has the power to prevent it doing so.  However, he took the view that Google Inc was not in an analogous position to a website host as it could not ensure that the words would never reappear; they may be thrown up by a future search.

Google Inc had taken steps to block certain offending URLs once they were identified. He took the view that Google Inc should not be fixed with liability on the basis of authorisation, approval or acquiescence either, while efforts were being made to block offending URLs.

Other defences had been raised by Google Inc to support its contention that the claim had no reasonable prospect of success. These included a defence under s.1 Defamation Act 1996, the defence of innocent dissemination at common law and defences under the E-commerce Regulations 2002.

The Judge concluded that the defence of innocent dissemination at common law had not been abolished in 1996 but did not assist a defendant whose attention had been drawn to the defamatory content.

Further, if Google Inc had needed to rely on s.1 of the Defamation Act, it was difficult to see how it qualified for s.1 protection by relying on the fact that it had taken reasonable care in relation to the publication, because its process had no human input and was an automated one.

The UK Government had already taken the view that the protection of the E-commerce Regulations did not extend to search engines. Accordingly, the Judge held that statutory intervention would be needed before a search engine might be considered a webhost within Regulation 19 and thereby able to benefit from protection under the E-commerce Regulations.

On this basis, the Judge set aside the order for service.  There was, in the Judge’s view, also a material misrepresentation on the application to serve out of the jurisdiction which justified the order being set aside.

Comment
This is the first time that the question of a search engine’s liability for defamation has been dealt with in the English Courts. The decision will be welcomed by search engine providers as it offers them some comfort.

While the Government has chosen not to expand the protection afforded by the E-Commerce Regulations to search engines, Eady J’s development of common law principles does offer some protection to search engine providers.

The judgment does not, however, offer absolute protection to search engine providers as the fact that Google Inc had taken active steps to block various URLs that it had been made aware of was particularly important in the case. On that basis, it is likely that a search engine provider would be expected to take similar steps to block URLs when notified of defamatory statements appearing in search results, even if they are unable to physically remove the offending material.