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Ninth Circuit Court of Appeals affirms that a music video platform was protected by the DMCA’s safe harbor provision

On 20 December 2011 the US Ninth Circuit Court of Appeals affirmed a decision from the Central District of California holding that video-sharing platform Veoh was entitled to protection under the DMCA hosting safe harbor.

In this case, Universal Music Group (UMG), one of the world’s largest recorded music and music publishing companies, brought action against Veoh and its investors for direct, vicarious and contributory copyright infringement after deciding that Veoh’s efforts to combat infringement of UMG’s catalogue on Veoh’s website were “too little, too late.” On 3 November 2009, the District Court granted summary judgment to Veoh after determining that it was protected under the DMCA hosting safe harbor.

On appeal, UMG first asserted that Veoh was not eligible under the hosting safe harbor since its activity, especially when facilitating user access to third party infringing videos, goes beyond mere storage. Veoh further claimed that UMG should, in any case, be excluded from the benefit of the DMCA’s hosting safe harbor since: (i) it had knowledge (or at least sufficient awareness) of infringing activity, and (ii) it financially benefited from and controlled such infringing activity within the meaning of Section 512(c)(1)(B) of the DMCA.

The 9th Circuit first affirmed the District Court’s interpretation that Veoh was eligible under the DMCA’s hosting safe harbor by holding that the language and structure of the statute, as well as the legislative intent behind the law, clearly shows that Section 512(c) of the DMCA (the hosting safe harbor) was meant to cover more than mere electronic storage lockers and specifically encompasses the access-facilitating processes that automatically occur when a user uploads a video to Veoh.

On the question of the knowledge standard that triggers liability under the hosting safe harbor, the court held that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material was insufficient to impute knowledge to a service provider.

Lastly, the Ninth Circuit rejected UMG’s assertion that Veoh exercised control over this activity by holding that “control” implied “specific knowledge” of an infringing activity. [Béatrice Martinet Farano]

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ECJ holds that EU Law rules out broad ISP filtering system

On 24 November 2011 the ECJ released its long awaited judgment (Case C-70/10) on the question of whether a broad ISP preventive filtering system complies with EU law.

The case arose after the 2004 discovery by SABAM, the Belgian Society of Authors, Composers and Publishers, that customers of Scarlet, an Internet Service Provider, were downloading works in SABAM’s catalogue without authorization and without paying any royalties. As a result of this discovery, SABAM moved for prohibitory measures against Scarlet and was granted a broad injunction by the President of the Brussels Court of First Instance that ordered Scarlet, in its capacity as an ISP, to make it impossible for customers to send or receive files containing a musical work in SABAM’s repertoire by means of peer-to-peer software, on pain of a periodic penalty.

Scarlet, claiming that such an injunction was both impractical and contrary to Article 15 of the Directive 2000/31, (the E-Commerce Directive prohibiting the imposition of general monitoring obligations on an ISP) and  the provisions of EU law that protect personal data and secrecy of communication, appealed against this decision to the Court of Appeal of Brussels. Consequently, the Court of Appeal of Brussels referred the question to the ECJ.

In a somewhat expected decision, the ECJ held that the injunction would be at odds with Article 15 of Directive 2000/31, because it would require an ISP to install a filtering system of all electronic communications passing via its services, for an unlimited period of time, at its own expense in order to prevent any future infringement of the rights held by members of SABAM. Indeed, such a decision is in line with the opinion issued by the ECJ’s Advocate General (not available in English). Moreover, the ECJ held that such a broad injunction would also infringe the ISP’s customers’ fundamental rights to protection of their personal data and freedom to receive or impart information.

However, the Court did not exclude the possibility for domestic Courts in Europe to impose specific injunctions on ISPs aimed at stopping or preventing specific types of infringement, in accordance with certain provisions of Directive 2000/31 (the E-Commerce Directive), Directive 2004/48 (the Enforcement Directive) and Directive 2001/29 (the Copyright Directive). [Béatrice Martinet Farano]

Italian Court rejects Samsung’s request for injunction against Apple in Italy

On 5 January 2012 an Italian Court rejected Samsung’s request for an injunction against Apple in relation to the sale of the iPhone 4S in Italy.  Samsung alleges that Apple is violating a number of its patents, which Samsung claims are essential to implement the 3G/UMTS standard used in smartphones like the iPhone 4S.

According to the Court’s order (the Court issued a second order in relation to a different patent), the injunction to stop marketing of the iPhone 4S cannot be granted, mainly because Apple (albeit unsuccessfully) requested that Samsung grant a license for certain patents on FRAND terms.  Apple even set aside an amount in the event that Samsung was deemed to be entitled to royalties, notwithstanding the fact that Apple disputes Samsung’s entitlement to any royalty at all.

The Milan Court further noted that, as a result of an agreement between Samsung and Qualcomm that relates, inter alia, to the contested patents, Samsung agreed not to sue “Qualcomm’s customers.”  According to the Milan Court, Apple would appear to fall within such a definition to the extent that its iPhone 4S incorporates Qualcomm’s chips (using Samsung technology), even though the chips are actually bought by the intermediary that assembles the iPhone.

The Milan Court will address Apple’s claims on the merits, which state that Samsung abused its dominant position by setting the 3G/UMTS standard (“a patent ambush”) and by refusing to license its “essential” standards on FRAND terms. [Gabriele Accardo]

Neelie Kroes’s speech on net neutrality

On 19 April 2011, Neelie Kroes, EU’s commissioner for the Digital Agenda, reiterated her support for “net neutrality” at a press conference in Brussels.

This statement was released at that time notably in view of the application of the new EU telecoms rules due to come to force in all Member States on May 21.

For Kroes, net neutrality can only be guaranteed through the respect of three milestones (i) service transparency (customers should get clear and accurate information about the service, notably as regard to their speed connection and possible restrictions of their Internet services) (ii) quality of service and (iii) ability to switch operator within one working day and to keep the same phone number.

While Kroes acknowledged that traffic management can be useful, notably when it is done in the interest of the consumers (for instance prioritizing video calls over emails so that they can run smoothly, even if that means that emails can be delayed by a few second), she condemned firmly the practice of “throttling” (slowing down certain types of traffic, such as video streaming provided by a competitor) or the one of degrading or blocking the use of website or technology provided by certain companies for anti-competitive purposes.

She therefore asserted that the Commission will closely look at these market practices and publicly name operators engaging in such practices by the end of 2011. She added that these practices could even be regulated by specific legislation, should the market fail to find a system that would guarantee an open and neutral Internet for everyone. [Béatrice Martinet Farano]

European Commission announces a new Intellectual Property Rights Strategy

On 24 May 2011, the European Commission announced a new blueprint for Intellectual Property Rights aimed to boost creativity and innovation in the European Union. The Commission’s specific proposals cover a series of policy actions in various areas, including:

  • Patents: According to the Commission, work is underway to create a unitary patent protection for twenty-five Member States (all except for Italy and Spain) and a “unified patent litigation system” allowing patents of any member states to be enforced or revoked throughout the EU territory. Proposals also include the simplification of administrative procedure for getting a patent and the development of machine translation systems in order to save time and money and make patents more affordable for companies of all sizes.
  • Trademarks: Inspired notably by the result of the Max Planck study on European trademarks (see Newsletter 2/2011 p. 8), proposals include the modernization of the system at both European and national levels by (i) simplifying and speeding up the registration procedure, notably through digital means, (ii) increasing legal certainty (notably through a common definition of what should constitute a trade mark at European level), (iii) clarifying the scope of trade marks notably in the customs seizure procedure, (iv) increasing cooperation between the Office of Harmonization for the Internal Market (“OHIM”), the trademarks and designs registry for the European Union, and national trademarks offices.
  • Copyrights: the proposal includes inter-alia the creation of a European legal framework for the collective management of copyright to enable multi-territorial and pan-European licensing, notably through the creation of European “rights brokers” able to license and manage the world’s musical repertoire on a multi-territorial level. The Commission is also willing to promote the digitization and on-line availability of the collections of European cultural institutions (libraries, museums and archives), notably by (i) promoting collective licensing schemes for works still protected by copyright but no longer commercially available and (ii) creating a European legislative framework to make available “orphan works” (whose rights holders are not known or cannot be located to obtain copyrights permission).
  • IP rights violations: the Commission is willing to intensify its efforts in this area notably by (i) entrusting the tasks assigned to the European Observatory on Counterfeiting and Piracy to the OHIM allowing it to benefit from a more sustainable structure in terms of resources and expertise, (ii) modifying the Intellectual Property Rights Enforcement Directive 2004/48 to tackle online infringement more effectively and (iii) revising Regulation 1383/2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights to strengthen enforcement with streamlining procedures. [Béatrice Martinet Farano]

U.S. Senators announce antitrust subcommittee agenda and call for hearing on Google

In March 2011 the Chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights – Senator Kohl (D-WI) – announced the Subcommittee’s agenda for the new session of Congress.

The announced agenda includes a number of issues pertaining to intellectual property rights and high-technology industries. In particular, the Subcommittee will pursue legislation against reverse payment settlements and legislation against resale price maintenance. The Subcommittee will also examine challenges involved in the Internet distribution of content and allegations raised against Google that some e-commerce websites are treated unfairly in search rankings and in their ability to purchase search advertising. Senator Lee (R-UT) joined Senator Kohl in calling for antitrust oversight hearings on Google. [Juha Vesala]

European conferences and a workshop on IPRs and standardization

A number of events on IPR and standard-setting issues were held in Europe in November 2010.

On 22 November 2010 the European Commission and European Patent Office organized a conference on IPR issues of standardization. The topics discussed ranged from administering patents and SDO contributions to licensing of essential patents.

The following day the preliminary results of a study commissioned by the European Commission on IPRs and standardization were presented in a workshop. The final report is expected to be published in March 2011.

Moreover, on 12 November 2010, the Swedish Competition Authority held a conference on standard-setting. [Juha Vesala]