Thursday, 25 November 2010

Madrid court confirms YouTube's host status

Authors: Enrico Bonadio (City University London) and Davide Mula (Università Europea di Roma)

Telecinco v YouTube, Court of Madrid, 20 September 2010

Citation: Journal of Intellectual Property Law & Practice (2010) doi: 10.1093/jiplp/jpq183, first published online: November 24, 2010

On 20 September 2010 the Court of Madrid gave its decision in Telecinco v YouTube, affirming that the famous video sharing platform (i) is a hosting provider and (ii) is exempted from liability for the copyright infringement committed by its users.

Legal context

On 20 September 2010 the Court of Madrid ruled on an interesting case involving the provision of video-sharing services by the well-known platform YouTube (Gestevision Telecinco S.A.-Telecinco Cinema S.A.U. v YouTube). The Court interpreted Article 16 of the Ley 34/2002, de 11 de julio de Servicios de la Sociedad de Información y Comercio Electrónico (LSSI). This provision implemented in Spain Article 14 of Directive 2000/31 (the E-Commerce Directive), which offers providers of internet hosting service a shield from copyright liability with regard to content hosted by them, if they (i) do not have ‘actual knowledge’ of illegal activity or information and are unaware of facts or circumstances from which the illegal activity or information is apparent, or (ii) upon obtaining such knowledge or awareness, act expeditiously to remove or to disable access to the information.

Facts

The YouTube video-sharing platform allows users to upload and share videos. These videos often consist of, or contain, content which is protected by third party copyright, such as television shows, movies and musical videos.

The claimants, which belong to the Gestevisión Telecinco group, produce TV programmes and shows in Spain and own the copyright on certain videos posted to YouTube platform. They contended that YouTube actively controls and modifies the information and contents posted by its users and should thus be considered as a publisher and content provider. Accordingly, in the claimants' eyes, YouTube is liable for directly infringing their copyright as it reproduces, distributes, publicly performs and displays Telecinco's audiovisual works.

The claimants maintained that the use policy adopted by YouTube (and accepted by its users) showed that its activity was not limited to mere intermediation services. Moreover, the defendant actively selected videos: this was especially true of the so-called ‘suggestions’, videos stored in a special section of YouTube platform and which are selected by its staff, to the exclusion of other videos.

YouTube countered that the videos in question were exclusively uploaded by its users, being automatically inserted in its web platform: only users therefore should be deemed as content providers and, depending on the circumstances, copyright infringers. The defendant also claimed that it implemented a security policy called Video Identification Beta, which aimed to cut down on the number of infringing videos posted to its platform and which required right holders to cooperate with YouTube by informing it of specific infringing videos. Once an infringing video is identified, the right owner can choose between three options: to block the video, not to request its withdrawal or to try to obtain a royalty from the user by proposing to link an ad message to the video in question.

Analysis

The Court of Madrid analysed the following issues: (i) is YouTube a publisher and content provider or a mere hosting provider which offers just intermediation services? (ii) How does one interpret the concept of ‘actual knowledge’of illegal activity referred to in Article 16 LSSI?

Publisher or host?


The distinction between these two categories is critical. While in the case of a publisher the copyright owner need only bring evidence that the former was at fault (in order to succeed in a copyright dispute), when it comes to internet service providers right owners must prove that the providers were aware of the unlawful activities carried out by their users and failed to act expeditiously to stop the infringement.

The Spanish judge stated clearly that YouTube did not carry out any publishing activities and no evidence in this regard could be inferred by the terms of use accepted by users. Thus a video platform provider cannot be considered as a publisher-provider. This also holds true when it comes to the videos nominated as ‘suggestions’ which, the court stressed, are automatically identified and selected through objective criteria, such as their popularity amid users.

It is the user, said the judge, who takes the decision of using a video and who bears liability regarding its content. YouTube merely uses software which converts videos into a format known as ‘Flash’ and stores them into its servers. This process aims to let other users access the shared videos, as most web users have software that can play video in Flash Format. Yet this is a completely automatic process, without any involvement of the video platform provider (see also UMG Recordings v Veoh Networks, United States District Court, C.D. California, 2008). Further, according to the court, YouTube does not facilitate users in downloading videos, nor gives them specific tools useful for said downloading.

Another circumstance which led the Spanish judge to consider YouTube as a mere hosting provider was the fact that, to date, more than five hundred million videos have been stored on its platform, so it would be technically impossible for YouTube to control all these videos.

The meaning of ‘actual knowledge’

After concluding that YouTube was a hosting provider, the Court of Madrid had to verify whether it could be exempted from liability for the copyright infringement committed by its users under Article 14 E-Commerce Directive and Article 16 LSSI on the basis that it was a host which lacked ‘actual knowledge’ of illegal activity.

The Court explained when knowledge could be imputed to video platform providers such as YouTube. Since no general obligation to monitor data stored or to seek facts indicating illegal activity can be placed on hosting providers (Article 15 E-Commerce Directive), it is the copyright owner who must inform service providers about the availability of infringing videos within their platform (see also FAPAV v YouTube, Court of Rome, 14 April 2010). And the right holder should not do so by merely informing service providers that there exists a generic massive infringement of copyright (indeed, many videos uploaded on the platform might contain content not protected by copyright in some jurisdictions, such as parodies). Rather, they should carefully identify, and report the platform provider on, the specific videos which they deem as infringing (in US case law see Perfect 10, Inc. v CCBill, C.D. California, 2007). That is why Youtube implemented a policy (Video Identification Beta) which allows right holders to detect and report on infringing videos, a policy which the service provider adopted under Articles 14 E-Commerce Directive and 16 LSSI and which has turned out to be very efficient.

This decision resonates with a similar decision of the Court of Appeal of Paris in Dailymotion v Carion, Nord-Ouest Production et al. (4th Chamber, Section A, 6 May 2009). Dailymotion, a YouTube-like video-sharing website, was held not liable for copyright infringement since it lacked the required knowledge of the existence of the illegal content. Here the court observed that the hosting exemption provision requires that notifications should be sent to service providers by copyright holders, indicating precisely which content is alleged to be unlawful, its precise location on the website and the reasons why it is unlawful (in US case law see Viacom v YouTube, US District Court, Southern District of New York, June 23, 2010).

Finally, returning to Telecinco v YouTube, the Court of Madrid stressed that the fact that the hosting service in question is remunerated does not make YouTube liable. Since the E-Commerce Directive was enacted to encourage and boost the development of commercial activities on the internet, it would be wrong to decline to exempt from liability an internet service provider just because it charges for its activities (see also Google AdWords v Louis Vuitton, ECJ, C-236/08 to C-238/08, 23 March 2010).

Practical significance

This ruling appears consistent with previous decisions on the liability of hosting providers, both in Europe and US. It again represents a big win for video platform providers and will further boost their business activity.

Cultural diffusion will be also boosted, as the Court of Madrid impliedly recognized: ‘the challenge of companies in the new economy is not to protect acquired rights, but to create value in spreading contents, as the course of time highlights the sterility of artificial barriers’. This confirms that these platform providers—by hosting videos and other files with the aim of making them available and sharing them—actively contribute to disseminate ideas and information and favour cultural diffusion: these are the Web 2.0 applications, which facilitate information sharing and offer their users the opportunity to interact or cooperate with other peers.

This point echoes the point stressed by another Spanish court in SGAE v Jesus Guerra (Case N. 261/09, Barcelona Commercial Court N. 7, Sentencia N. 67/10, March 2010), a dispute involving other popular internet technologies (peer-to-peer networks): in that case the judge emphasized that these technologies are mere conduits for the transmission of data between internet users and may contribute to cultural diffusion worldwide.

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