ISP Liability

The recent Spanish court ruling that clears YouTube of copyright liability has got a good deal of international attention. It’s been reported, for instance, by the The New York Times, The Wall Street Journal, The Guardian, Out-Law, TechDirt, TechCrunch, and many other sources, including, of course, Google itself.

In this post I’ll try to give an account of the case, providing some context to the Spanish law when needed.

First, I’d like to make clear that this ruling is not a decision handed down on appeal, despite what some of the reports appear to suggest. Rather, it is the judgment delivered by the lower Court, the Commercial Court of Madrid No 7. It now can be—and surely will be—appealed before the Court of Appeals (the “Audiencia Provincial” of Madrid).

True, there had been two previous decisions on the case, but they were issued by the same Judge and were preliminary rulings dealing only with precautionary measures requested by the plaintiffs.

On July 1, 2008, Telecinco (actually two companies of the group: Gestevision Telecinco S.A. and Telecinco Cinema S.A.U.) filed a petition for preliminary measures of protection against YouTube under article 141 of the Spanish Copyright Act (Texto Refundido de la Ley de Propiedad Intelectual, TRLPI). They asked the court to grant these measures inaudita parte, that is, before the defendant has the opportunity to present its arguments against it. The Court accepted Telecinco’s views about the urgent need for adopting the requested measures and issued an order granting them on July 23, 2008. The ruling ordered YouTube to stop using Telecinco’s clips on YouTube’s site and to remove them from it. The court further prohibited YouTube to use those works in the future without Telecinco’s authorization. At the same time, the court ordered the plaintiffs to immediately provide enough identification of the infringing contents so that their use on YouTube could be stopped and prevented in the future.

YouTube then filed a brief in opposition to the adopted measures. It argued they were technically unfeasible, essentially because the information provided by Telecinco didn’t allow a proper identification of the clips. In a new order issued on November 21, 2008, the court accepted this argument and acknowledged that YouTube was already offering a way for copyright owners to identify allegedly infringing clips. The court deemed this system to be appropriate—at least for that initial stage of the procedure—and thus modified the prior order in the sense of requiring Telecinco to specifically provide the URLs of the claimed infringing clips. I don’t know whether or not Telecinco complied with this request, or to what extent, though it appears that the clips, or some of them, were effectively removed from YouTube.

What has now been rendered is the final judgment on the case. It is certainly an interesting ruling. It nicely parallels some of the holdings of Viacom v. YouTube. It would be interesting to highlight the similarities between the discussions in both cases, but that would be too long for a single post and so I will leave it for another occasion. In any event, unlike in Viacom v. YouTube, where almost all documents filed on the case are available online at the justia.com website, in Telecinco v. YouTube—as it’s normally the case in lawsuits in Spain—we lack access to the actual text of the complaint and to defendant’s opposition brief. Hence, it is not easy to assess to what extent the ruling addresses all the arguments put forward by the parties—or to what extent it side steps them. Rather, we must content ourselves with the streamlined references to the parties’ arguments offered in the ruling.

The ruling addresses three main questions. First, the nature of the service provided by YouTube, i.e. whether it acts as a mere intermediary or rather as a content provider. Second, in the event that YouTube is deemed to merely provide intermediary services, whether or not it qualifies for the hosting safe harbor set forth in the Spanish transposition of the E-Comm Directive. Third, in the event that it qualifies for the safe harbor, whether or not plaintiffs may be granted injunction relief.

i) The nature of the service provided

As to the first question, plaintiffs contend that, despite the appearances, YouTube is in fact a content provider. To support this contention they point to the fact that in its Terms of Use, YouTube asks users to grant YouTube a license for the content they upload. This would allegedly show that YouTube is aware that it is exploiting the copyrighted contents sent by users, as otherwise it wouldn’t need to ask for a license. The ruling rejects this argument asserting that requiring a license from users is not incompatible with carrying out a merely intermediary service. Here the court asserts that different types of intermediary services exist, one of which would be what it labels as “hosting 2.0”, as opposed to strict or pure hosting. This might point to a debated issue between the parties, i.e. whether “hosting” under article 14 of E-Comm Directive (and its Spanish transposition) covers not only web hosting (i.e. providing server space for a website), but also the storing of users materials by a website, like in a video sharing site.

Plaintiffs further contend that YouTube acts as a content provider because it carries out “editorial functions”, such as selecting “featured videos” and preventing some inappropriate, but not unlawful, clips from appearing on the site. The court holds that in fact it would be impossible for YouTube to control all the videos users upload. Besides, it asserts that selecting “featured videos” doesn’t amount to an editorial function, as it is carried out automatically, following certain objective parameters. Nor the fact that videos are displayed on a site designed by YouTube and distinguished by its trademark would, according to the court, turn YouTube into a content provider. Similarly, the court states that the fact that YouTube exploits its site for gain is not a sign that its services are not of an intermediary nature. The court rightly underscores that the E-Comm Directive presupposes that intermediary services covered by the safe harbors are provided for gain.

The ruling goes on describing the notice-and-take-down procedure YouTube has in place. Just like in Viacom, the Judge finds that this procedure works smoothly, and highlights that every time Telecinco has followed it to request the taking down of a video, YouTube has promptly reacted removing the allegedly infringing clip. The court stresses that, being an intermediary service provider, YouTube cannot be subject to a general obligation of monitoring its site nor to actively seek for facts or circumstances revealing infringements (art. 15 E-Comm Directive).

ii) Qualifying for the safe harbor

Once it has been established that YouTube provides an intermediary service, the second group of issues relate to whether it qualifies for the hosting safe harbor laid down in the Law on Information Society Services (LSSI) (the Spanish transposition of the E-Comm Directive). Article 16 of this Law implements the liability exemption for hosting set forth in Article 14 of the E-Comm Directive.

As it is well known, the hosting safe harbor exempts a service provider from liability on the condition that it lacks actual knowledge of illegal activity or information (or, with regards claims for damages, it lacks awareness of facts or circumstances from which the illegal activity or information is apparent), and that upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.

It is worth noting here that the Spanish transposition of the Directive does not contain the standard of “awareness of facts and circumstances”. Rather, it establishes a single standard consisting of the lack of “actual knowledge”. In addition, it establishes a very narrow legal notion of actual knowledge. According to Article 16.1.II of the Spanish Law, “[i]t will be understood that the service provider has the actual knowledge referred to in […] when a competent body has declared that the data are unlawful, or has ordered their removal or the disablement of access to them, or the existence of the damage has been declared, and the provider knew of this resolution, without prejudice to the procedures of detection and removal of content that providers may apply by virtue of voluntary agreements, and without prejudice to other means of actual knowledge that might be established.”

Spanish courts have wrestled over how to construe this provision. Some rulings have taken the strict view that only in the cases contemplated by this article the provider has the relevant knowledge, while others have chosen a more open reading, admitting other ways of gaining this knowledge. Finally, in a judgment issued on December 9, 2009, the Spanish Supreme Court explicitly rejected the strict construction of this article on the grounds that it would not be in accordance with the Directive.

Telecinco argued for an open interpretation of the concept of actual knowledge. The court holds that the concept of actual knowledge must indeed be construed in an open way (thus not limited to the instances where a prior ruling has declared the illegality of the materials), but at the same time in a way which is compatible with the general principle that the provider cannot be subject to a general obligation of monitoring. As a result, according to the court, copyright owners should precisely identify the specific infringing files in order for the provider to gain actual knowledge of the infringement. The court finds that YouTube’s system of notice-and-take-down is consistent with this approach. While it acknowledges that this may be burdensome for copyright owners, the court stresses that this is nonetheless the order of priorities that both the EU and Spanish legislators have chosen.

iii) Injunction relief

Finally, the court tackles the issue of the injunction requested by plaintiffs. According to the ruling, the plaintiffs requested an injunction against YouTube under articles 138 and 139 of the Spanish Copyright Act. These provisions allow right holders to apply for an injunction against intermediaries whose services are used by a third party to infringe, even where the acts of the intermediaries as such are not infringing, “without prejudice to the provisions of [the LSSI]”. The court rejects the injunction on the grounds of the latter clause of the provision. The court thinks to be “blindingly obvious” that this clause “completely eliminates the possibility of bringing the action” against intermediary service providers.

(Arguably, however, this is not that clear. The E-Comm Directive clearly states that the hosting safe harbor “shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement” (Art. 14.3 E-Comm Directive). Therefore, even though the Spanish transposition remains silent about this point, it seems that the liability exemptions of the LSSI, as such, do not prevent injunctions against the service provider (provided, of course, that the injunction doesn’t imply actively monitoring the site). If the LSSI doesn’t prevent injunctions then the “without prejudice to” clause quoted above might have a different meaning).

In accordance with all the reasons expressed above, the ruling dismisses all plaintiffs’ claims. The ruling can be appealed, and it appears that Telecinco will appeal indeed.

The full text of the ruling (in Spanish) can be downloaded here (PDF).