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Concepts of Internet Service Providers

Chapter Three: The Concepts of Internet Service Providers

    1. Introduction

This chapter examines into details the responsibilities of internet service providers in preventing infringement of copyright involving piracy and illegal file-sharing. It outlines how online copyright can be enforced using internet service providers. The chapter further investigates how adopting the electronic regime’s approach can ensure users, and other stakeholders comply with online copyright. It also explores how ISPs can breach the copyright of their customers.

  1. Copyright Enforcement by Internet Service Providers

The internet is structure to promote sharing of ideas, scientific knowledge and works of art.[1] On the contrary, intellectual property and copyright laws are based on preventing the exchange of ideas. Thus, many repression methods and techniques are employed to avoid violation of copyright-protected materials online. Some of the earliest tactics used were numerous lawsuits against users. Besides, technical measures were also used to prevent users from copying or transferring protected materials. The first major case on online piracy and copyright violation is seen in the Napster case.[2] This was a landmark case of infringement of intellectual property online in the United States. The peer-to-peer (P2P) files sharing service by Napster was considered liable for vicarious and contributory copyright infringement. However, the fight against copyright infringement online has changed from mass litigation of the violators to other methods that target individual offenders. The case against Napster only led to the development of newer and more complicated methods of copyright infringement online.
The newest method of limiting online copyright infringement is referred as graduated response system. This method attempts to prevent online piracy by peer-to-peer file-sharing software and programs. It is based on the idea of cooperation with the internet service providers to identify violators through the concept of “three strikes and you are out.”[3] This technique gives powers to content owners to monitor the internet through the ISPs to identify infringers. For each violation, online users who breach the copyright using peer-to-peer networks are given warnings by the ISP. In the case, they ignore the first two warnings given to them with a period of twelve months, penalties are applied. The nature of the penalties varies across different countries and the nature of the system. The penalties could include internet disconnection, fines, capping of bandwidth and site blocking. The various forms of the graduated response system have attracted debate around the world. Some countries have accepted while others have rejected the concept of graduated response.[4] Countries such as France, Italy, Germany, Spain, South Korea and the United Kingdom are considering how the method can be applied to curb copyright infringement online. In some countries, such as the USA and Ireland, the graduated response system has been implemented through private partnerships with the ISPs. The applicability of this method relies mainly on the capacity and willingness of the internet service providers. However, in Ireland court orders may be used to force some service providers to engage in such partnerships.[5]

  1.     The Role of ISPs in the Graduated Response Systems

The ISPs play a significant role in the functioning of the internet. However, the content stored and transmitted through the ISPs infrastructure had led to issues of liabilities and controversies since the early 1990s. A knowledge-based policy regarding the responsibility of ISPs has been developed in the European Union. The Electronic Commerce Directive is the primary document that outlines when an ISP is liable for copyright infringement. The directive categorises the ISPs into three based on their functions- caching, mere conduit and hosting. It further protects the ISPs from liability where it had no prior knowledge of copyright infringement.[6] The hosting ISP is required by the E-commerce Directive to remove the infringing content expeditiously once it acquires the knowledge of its existence to escape any form of liability. This practice by ISPs is referred to as “notice and take down.” This measure has often faced some criticism because there are some instances that it cannot limit the liability of an ISP. Per EC Directive, states are required to ensure copyright owners are in positions to request a sanction against internet intermediaries whose services or infrastructure are used by a third party to violate the intellectual property rights.[7] The national courts should be capable of requiring internet providers to bring an end to an infringement by user of that marketplace and prevent further similar forms of violations. The EC Directive further notes that any injunction must be proportionate, efficient and dissuasive, but not be a barrier to legitimate forms of trade.[8]  In another ruling, the ECJ made a decision that the national courts were not allowed to make any injunction to order ISPs to install any form of indiscriminate filtering mechanisms.[9] Such filter mechanisms requiring constant monitoring go against the spirit of the EC Directive as outlined in Article 15.[10] Member states are not supposed to force the ISPs to control or monitor information they store or transmit. Further to this, ISPs are under no obligation to actively investigate the activities of their subscribers or investigate any suspicious online activity.[11] There is no doubt the position of ISPs in the internet structure provides them with a lot of capabilities to control online activities if authorised by the court. The position of the ISPs in the internet system is one of the main factors that led to the rise of the graduated response systems.

  1. The Legislated forms

Several efforts have been undertaken to legislate graduated response system since 2009 in France when “Loi favorisant la diffusion et la protection de la creation sur Internet” was implemented.[12] The law proposed the disconnection of the web for violators and the formation of an independent authority to investigate online infringement among other measures. The primary role of the independent authorisation called HADOPI (Haute Autorité pour la Diffusion des oeuvres et la Protection des droits sur Internet)[13] is to send warning letters to the alleged copyright violators and then decide their punishments. The implementation of this regulation in France led to a lot of controversies until the Constitutional Council revised some articles for the final HADOPI II to come to power.[14] This modified version of the regulations allowed the procedure to be divided into two stages of examination. The first step allows HADOPI to examine the claims put forward by the content owners concerning the violation of their copyright and send warnings to the violators.[15] The second stage involves the determination of the punishment to the infringer including disconnection. The punishment can only be determined by the court, but HADOPI has the right to blacklist and maintain a record of all infringers to prevent them from using alternative providers until their punishment is over.[16]
Many other countries such as South Korea have followed the example of France in developing a copyright commission.[17] The Korean Copyright Commission was formed in 2009 and has the right to order local Internet Service Providers to terminate their contracts with repeat violators of online copyright and privacy.[18] The Korean government further clarifies that the law is only applicable to users who upload the content without the authority of the owner. The government has the power to close-down web pages, portals and websites that upload or host illegal or copyrighted content for a period of up to six months if they do not comply after receiving a warning letter.[19]
The United Kingdom has also taken the same path through the implementation of the Digital Economy Act.[20] Like the French and the Korean laws, the Digital Economy Act does not obligate the ISPs to warn their subscribers in the case of infringement of copyright. The Act only requires the ISPs to keep a record of all notices sent out to infringers and to forward the violation list to the owner of the copyrighted content on request of the proprietor. However, the listing should be anonymous, and the owner cannot identify the violator.[21]  The Secretary of State can determine if the ISP need to implement any technical control such as bandwidth capping, filtering, site blocking, or internet disconnection against the violators depending on the degree of violation.[22] However, the British largest ISPs, Talk Talk and BT were opposed to the requirements placed on them by the Digital Economy Act. In a ruling by the High Court, their appeals were rejected.[23]

  1. ISPs Voluntary Collaborations

Although the graduated response system has not been legislated in many countries, it does not rule out the participation of ISPs in preventing of copyright infringement. Major copyright owners can still enter to private agreements with Internet Service providers to avoid illegal sharing of their content. These agreements represent the changing ways of handling the problem of illegal file-sharing and copyright infringements. The partnerships between big copyright owners and ISPs help the content owners from pursuing copyright violators with expensive and rigorous legal processes. The ISPs can have interests in decongesting their networks through curbing file-sharing that infringes copyright. Major ISPs experience congestion and slow down due to extensive use peer-to-peer data sharing. Thus, managing the level of peer-to-peer files transmission is not only a problem for the content developers but also ISPs.
For instance, in Ireland, where there is no legislated form of graduated response system, there are many private agreements between the major copyright owners such as Sony, Warner, Universal, and EMI and the major ISP Eircom.[24] Following the case pitting Irish Music Association (IRMA) and EMI Records against Eircom for illegal sharing of files by its subscribers, Eircom decided to use graduated response system.[25] The system would enable Eircom to detect, identify and when necessary disconnect users are violating the copyright of the principal owners.[26] The Eircom can only disconnect violator after reviewing all the infringed materials without the interference of the court. In the United States, such partnerships have become a common practice.[27] Most ISPs have installed filtering technology in their network infrastructure to help the detection any copyright infringement or transfer of illegal materials. Many universities and colleges in the country also use similar systems to prevent piracy and violation of copyright. There are several cases where major ISPs have disconnected users for sharing illegal materials or violating copyright online. The situation is similar in Canada, where many ISPs have started warning their subscribers when an infringing activity is flagged.[28]

  1. The Anti-Counterfeiting Trade Agreement (ACTA)

The negotiations for the implementation of the Anti-Counterfeiting Trade Agreement (ACTA) commenced in 2008 through the initiatives of the United States and Japan.[29] This agreement brought a lot of discussion in the context of its application. The main aim of the initiative was to develop an answer to the growing worldwide trade of pirated copyright protected goods and counterfeit products. Many stakeholders fear the introduction of compulsory graduated response system due to the secrecy of the talks and the presence of world major copyright holders in the negotiations. The first draft of the trade agreement that was released in April 2010 reinforced these fears by requiring the ISPs to implement measures to control the unauthorised transmission and storage of copyright protected materials to enjoy the benefits of a safe harbour. However, the agreements did not have any requirements for enforcement of compulsory implementation of the graduated response system.[30] Instead, the agreement encouraged the formation of mutually beneficial relationships between the copyright owners and the internet service providers, and thus promoting the basis for the formation of graduated response system. This draft went further editing until a final and official document was unveiled online in late 2010.[31] The final document used phrases such as “cooperative efforts” instead of “supportive relationships” to encourage the cooperation among stakeholders. The agreement further reinforced its desire to promote the cooperation between the ISPs and copyright owners in addressing the problem of privacy and copyright infringement in the digital environment. It can be noted the Anti-Counterfeiting Trade Agreement does not promote the mandatory implementation of the graduated response system as a tool for enforcing copyright. However, it encourages the collaboration and cooperation between content creators and the internet service providers. The wording to the ACTA justifies the formation of private agreements between major copyright owners and the ISPs. Bridy (2011) notes that ACTA is a tool that puts pressure on internet intermediaries to cooperate with major copyright holders in the transmission and storage of protected works where the graduated response system has proven controversial.[32]
Some scholars have argued against the implementation of ACTA claiming that it hinders the transmission and dissemination of information in the digital economy. They have argued that the control of peer to peer software is a major hindrance to the free distribution of information. The ACTA creates an environment of suspicion and monitoring and curtail the freedom of expression and threatens the creativity and innovation required to develop software. However, the final document of the ACTA does not contain any obligations for the internet service providers to implement the controls and the graduated response system. The UN has expressed its concerns over the infringement of the freedom of expression due to ACTA.[33]

  1. Principle of Proportionality

The principle of proportionality is fundamental in the verification of the conformity of any legislation.  This is one of the few known legal principles in the world that has supranational powers. It is widely applied in the field of freedoms and rights of individuals.[34] Proportionality has gained its importance through its application in the domain of rights and freedoms. The goal of the doctrine of proportionality is promoted the balance between the protection of the fundamental human rights and the needs for social order.[35] Walter further notes that ECHR ensures that any essential meets the needs of a democratic nation, and fulfils the most important social needs. The EC law provides that the national goals correspond with the fundamental rights and freedoms.[36] The European Court of Human Rights (ECHR) and the European Court of Justice (ECJ) have both emphasised the needs to achieve a balance between conflicting rights and freedoms through the application of the doctrine of proportionality. The principle of proportionality can only be assessed if the underlying motives for any regulation or measures are determined. Thus, the purpose of a graduated response system is to curb the violation of copyrighted materials and create awareness among users on the illegality of their activities and to communicate to the subscribers the legal options that exist to access the materials. The principle of proportionality is based on sound reasoning. The purpose of a regulation and the nature of the law are based on three criteria.[37] The first criterion is the suitability or the appropriateness of the measure. The second example evaluates the need or the necessity of the action or regulation.[38] This criterion evaluates the available options to determine the most appropriate law that could have been used to achieve a similar goal. The third criterion is the evaluation of the balance of the restriction or proportionality.[39]
The proportionality of implementing the regulations on copyright infringement should not only consider the economic benefits of preventing infringement but also the promotion of a culture of creativity among the content developers. The Universal Declaration of Human Rights qualifies intellectual property rights as human rights.[40] The qualification indicates the need to protect the intellectual property and the copyright owners not only for their economic benefits but also as a human right. The protection of intellectual property is also based on the needs to promote a community that encourages free participation in the cultures and the advancement of scientific knowledge.[41]
The examination of the principle of proportionality brings to the fore major shortcomings of the graduated response system. The primary concern in the graduated response system that conflicts with the doctrine of proportionality is the final punishment of internet disconnection of the offender after failing to heed three warnings by the ISPs.[42] The significant discussion lies in the fact that internet access is qualified as fundamental human right. Unfortunately, there appears to be no agreement on this argument. Countries such as Greece, Finland, and Spain, connection to the internet are regarded as a fundamental human right, but such provisions do not exist in many other countries.[43] The EC Directive establishes that internet connection is a necessary tool for education and it is important for the practical exercise of the freedom of expression and access to information.[44] The important role of the web makes its access a fundamental human right. The disconnection of internet by an internet service provider as a form of punishment brings into conflict two essential rights: rights to intellectual property protection and right to access information.[45] Article 1A of the EC Directive outlines the needs for member states to respect the freedom of expression and access to information in any actions taken relating to the electronic communication networks. This is as guaranteed by the doctrine of community law and the European Convention for the Protection of Human Rights and Fundamental Freedoms.[46]
Per the EC Directive, any restrictions or regulations implemented by the member states should be proportionate, appropriate and necessary as outlined in the democratic state. Under certain circumstances, the fundamental rights of an individual can be restricted. For instance, the case of Productores de Música de España (Promusicae) v. Telefónica de España SAU, C-275/06 [2008] required a fair balance to be achieved in any ruling affecting various fundamental rights.[47] Any ruling by the ECJ should ensure the community legal order is preserved and no conflict between the fundamental laws or any other doctrines of community law such as the principle of proportionality.[48] On the other hand, the ECHR in the case of KU v Finland outlines that the interference with the use of internet in any ruling or balancing exercise of fundamental rights should not promote any particular consideration.[49]
The European Union revised it “no disconnection policy” to allow for possible interruption when authorised by the court. The French Constitutional Council applied this argument in rejecting the first draft of the HADOPI law on the graduated response system. This law allowed the independent authority to monitor copyright offenders and disconnect serial offenders. This problem is far much widespread in countries that promote the graduated response system through using private partnerships. The privately agreed graduated response system primarily uses an ISP to play the role of a judge. The importance of the measures and the sanctions makes it reckless to leave it solely in the hands of private entities, while in France; this power was denied to an independent authority.[50]
Legal jurisprudence has shown that the freedom of expression covers matters relating to Internet usage. The right to free speech of expression and access to information is a critical enabler of other human rights. The internet is an important catalyst that promotes people to access information and expresses them with freedom.[51]  The use of internet also facilitates the realisation of other fundamental human rights such as access to education.[52] If a law affects the fundamental rights, it should be considered to disproportionate. The impact of internet disconnection varies from one person to another because not all places have the same level of internet connectivity. The graduated response system faces a challenge of availability of various forms of internet connections in different regions. When the internet of an infringer is disconnected, they can explore different other alternatives. It is evident that the impact of internet disconnection varies depending on the profile of the infringer. The conditions that lead to denial of fundamental rights of access to information can be qualified as proportionate but differ from one individual to another. In some instances, a subscriber can suffer disconnection for not securing his line, and it is used for internet copyright infringement.[53] This punishment is disproportionate since such a customer can suffer up to one month from internet disconnection even though they did not infringe any copyright directly. In such a case, the regulations demonstrate double standards: on the one hand, they exempt the internet service providers from any liability in the case illegal activities are conducted on their network, and on the other hand, they punish individuals for a similar thing. The lack of control of the internet by a subscriber can result in severe punishment as internet disconnection.
Where a subscriber has been disconnected, they are still obligated to pay their monthly subscription fees to their internet service providers because services such as television and telephone are retained. The graduated response system takes into consideration the other services offered by an ISP, and it is disproportionate to shut it down based on one service.[54] This kind of punishment is considered complementary because the main beneficiary is not the state but rather the ISPs that continue to charge even the disconnected customers.[55] It is evident that the nature of this provision is disproportional. Despite this fact, the constitutional judges still upheld the double punishment clause because the obligation is not punitive. They argued that it is the responsibility of the subscriber to continue paying subscription fees despite the connection as per the terms of the contract.[56]
It should be noted that the graduated response system is entirely dedicated to deal with alleged violators. Some people who are punished by the system could be victims of errors or false accusation. Punishment of subscribers based purely on allegations of infringement is disproportionate. Additionally, the system limits the time for one to appeal for such penalties and involves a lot of costs. A UN report observes that any law or restriction on freedom of expression should ensure there are sufficient safeguards against harm or its application in ways that abuse the spirit of the law.[57] It is also important to note that under the Telecoms Framework, the Internet freedom should guarantee fair and non-partisan procedures including fair hearings for persons alleged to have violated online copyright.[58] The process of the hearings should conform to the European Convention for the Protection of Human Rights and Fundamental Freedoms’ requirements.[59] The presumption of guilt instead of innocence in the implementation of the graduated response system is in itself disproportionate and is contrary to the provisions of the freedom mentioned above on the internet. The last several years have seen a growth in false accusations of copyright violations. Infringement cases do not have a straight answer of yes or no, but require the courts to carefully examine all the legal and technical details to determine if there was an infringement or not. To avoid false accusations, guiltiness should be proved with sufficient and reliable evidence. The investigators should not solely rely on IP address of the alleged infringer. Any conviction should be transparent and clear of any doubt by giving the accused user equal opportunity to defend his or her rights. Despite that, the right to due process is well-known and established, alleged infringers are not likely to have accusations of infringement reversed under the graduated response system. Another controversy of the graduated response system is the false positives that could pose a threat to data protection. Monitoring of IP address is required for identification of copyright violators.  Internet monitoring creates a sense of insecurity among the users regarding their freedom of expression and access to information. The data collected during an investigation over the web can be stored in servers for more than 24 months. In the case of internet disconnection, a list of all disconnected users is published to enable all other ISPs to check new clients against the list.[60] The transfer of the data of violators to the prosecutor automatically is accepted in France. When a subscriber is warned twice against infringement, their data is automatically sent to the attorney. It is upon the prosecutor to decide whether to continue with the case or not depending on the level of evidence presented.
A lot of controversy surrounds the use of an IP address as personal data. Article 2(a) of Directive 95/46 defines an IP address as part of personal data of a user over the internet. Nonetheless, there is no consensus on the definition of IP address as personal data at a court level. An IP address is a personal data because it can link directly or indirectly to the identity of the online user.[61] On the other hand, some cases have shown that an IP address cannot be considered as personal data.[62] Article 29 of the Working Party and the European Data Protection Supervisor both hold the position the IP address is part of personal identification online. This is because an IP address acts as an identification number of the user online, and it directly relates to the activities of the user.[63]
The biggest question that remains is whether states in Europe can allow the ISPs in their national laws to provide a copyright owner with personal data of the offenders to prevent copyright infringement. In such a case, it is also important to evaluate how the doctrine of proportionality applies. In several instances, the ECJ has ruled that article 15(1) of the Directive 2002/58 does not obligate or prevent any member state from introducing national laws that require ISPs to disclose personal data of the copyright infringers.[64] A similar argument has been put across in Germany where the court further emphasised the need to respect the doctrine of proportionality in the case of conflicting fundamental rights.[65] The proportionality of disclosing personal data must be examined based on the magnitude of the violation committed by the offender. The lack of clear guidelines on the disclosure of personal data makes it difficult to separate between the right to privacy and protection of copyrights.[66] ECJ rulings have shown that although the intellectual properties of individuals are protected by Article 17(2) of the Charter of Fundamental Rights of the European Union,[67] no clause that indicates that this right is inviolable or should be protected entirely.[68]
With the development in technology and ever-increasing connectivity, the fundamental right to data protection will come under more sever tests. The validity of private agreements between major copyright holders and ISPs that allow the ISPs to monitor the data of the users must be evaluated within the doctrine of proportionality. Such agreements can encourage ultimate data control leading to interference with the freedom of expression. Several academics have argued that such arrangements and clauses that promote control of information should only be allowed in repressive countries and not in countries that support democracy.[69]

  1. Chapter Summary

The involvement of internet intermediaries in the protection of copyrighted materials with graduated response systems and other measures such as site blocking and filtering is justified but may come with negative impacts such infringement of the fundamental rights of the user and high running cost for the intermediaries and the society.[70] It is crucial to obtain the appropriate balance between primary rights that come into conflict. It was further noted the protection of intellectual rights entails more that protecting the economic benefits of the owner. Intellectual property is part of fundamental human rights. The controversy of copyright protection between the content owners and the audience is likely to grow bigger if we continue to put societies and major copyright holders in the forefront of copyright negotiations. It can be seen the idea of intellectual property and copyright protection varies from one country to another. However, it is good to understand that the basis of copyright protection is not only borne from the need to secure economic benefits but to promote creativity and artistic expression.
The use of graduated response systems and laws does not dispel this confusion. The protection of creativity and artistic expression should remain the core reason for copyright protection laws. It should not be about the economic might of the copyright owners. Imposing short-sighted regulations to protect the economic benefits of major rights holders could impact the other significant rights of users. Such regulations could have an adverse impact on the right of expression and access to information. However, graduated response system offers a promising step to move away from the earlier methods of litigation towards more comprehensive and elaborate ways of protecting copyright materials. This initiative indicates that law makers are involved other stakeholders in the improvement of regulations. With growing internet connectivity, there is a need to develop a dynamic and a balanced method of protecting copyrighted content to curb the threat on the financial feasibility of the culture in the twenty-first century. Regular changes in legislation and strict punishments will not solve the problem of copyright infringement and consumer piracy, but will only deter some few occasional infringers.[71] Rayna and Barbier (2010) further observe that these measures are outdated since peer-to-peer file-sharing has become a practices and it’s hard to stop such habits that have become part of the internet culture.[72] It would be advisable to stop developing numerous legislations and stop wars against the web service providers. It would be more advisable for content creators to embrace different technological tools that they can use to distribute their arts without the risk of infringement. These technological tools include watermarks and product keys. It is likely that the best solution for addressing copyright infringement does not exist in the legal sphere but through technological advancement and the study of habits of the users.
Chapter Four: EU Regulations Machines in Copyright Infringement Regarding Piracy and File Sharing

  1. Introduction

This chapter evaluates the different mechanisms put forward by the EU, United Kingdom and Ireland to address the problem of copyright infringement regarding piracy and file sharing.

  1. The EU Copyright Legislation

The European Union copyright law is a made of ten directives which bring together the essential rights of performers, authors, artists, broadcasters and producers. All member countries of the EU are required to harmonise their national laws on copyright with these ten directives and any ruling made by the European Court of Justice (ECJ). The development of harmonised laws helps to reduce the discrepancies of the copyright legislation across different countries in the EU. This harmonisation enhances the protection of copyright across the region and hence promote creativity, cultural diversity, investment in creative industry, and increase better access for businesses and customers to the online content and services across the continent.
The attempts to harmonise the European law on copyright dates to 1886 when the Berne Convention for the Protection of Literary and Artistic Works was signed.[73] All the member countries are signatories to this convention and complaint to its directives. The decision to use a universal standard for protection of computer programs that were made in the 1991 Computer Programs Directive marked the first significant step towards harmonised copyright laws in the European Economic Community.[74] Before the harmonisation in the 1980s, the EC law on copyright had limited effect on the intellectual property laws of individual member countries through treaties.[75] The EC treaties regulated the movement of goods and competition among countries.[76] The EC treaties provide several exceptions on the free flow of goods and services when needed in order to protect the violation of intellectual property. According to the European Court of Justice, even though there are national laws on protection of intellectual property, the treaties nonetheless affect their implementation. The Article 295 of the Treaty on the Functioning of the European Union outlines that the European Community treaties do not exclude the laws of member states on copyright infringement.[77]
One important aspect of the EC laws is that they bar member states from discriminating citizens of EU countries in the application of their domestic copyright laws. This point is based on the doctrine of non-discrimination enshrined in the EC Treaty. Article 7 of the Treaty on the Functioning of the European Union prevents member states from denying performers, artists and authors the rights it accords its citizens. Before the Treaty on the Functioning of the European Union, the states were still bound by the doctrine of non-discrimination due to their membership in the Berne Convention and other agreements that protect copyrights and intellectual property. However, the treaties and the Berne Convention allowed for some exceptions in the application of the national laws and treatment of members in the region.[78] The states are not authorised to practice federal legislation in an inter-community scenario. The ECJ observes that the implementation of competition and free movement provisions of the treaties can interfere with the intellectual property laws of individual states. This occurs when the national legislation empowers content holders to protect their copyrights in a way that significantly affects the trade between countries or discriminate others. The ECJ notes that the intellectual properties are protected by the EC law and cannot be affected by any laws. The definition of intellectual property rights under the EC laws have been criticised for lack of regional and national inclusivity.
The application of state legislations that restrict movement of goods and services is only allowed if it is necessary to protect the intellectual property right in question. In a landmark case involving Warner Brothers, the ECJ ruled that the two essential rights of the authors are an exclusive right of reproduction and performance.[79] The ECJ further limits the use of intellectual property rights as means of controlling the flow of goods and services in the member states. From this perspective, it can be observed the EC laws have the modest influence on the national intellectual property laws and systems. The significant impact of the EC legislation on the national laws is through harmonisation. The late 1980s saw the European community move to try to address the major barriers to free movement of goods and services within the market.
This initiative pointed to the improvement of the EC directives to address the domain of copyright and privacy. The first directive on the use and transfer of computer programs was implemented in 1991. Since then, other directives have been included with changing technology. One of the most recent directive deals with access to information and copyrights of artists. Some directives in the period between have been revoked and consolidated.

4.2. Liability of ISPs under EC Directives
The liability of internet service providers is a highly contested topic in the European Union laws, especially regarding the violation of intellectual property rights (IPRs). Whereas the IP Enforcement Directive (2004/48/EC) and the Information Society Directive (2001/29/EC) allows the content owners to make claims against internet intermediaries, the E-Commerce Directive (Directive 200/31/EC) provides some exceptions under which an internet intermediary cannot be held liable for copyright infringements. Taking for the example the case of Tobias Mc Fadden v Sony Music Entertainment Germany GmbH raises important questions on the scope and applications of the Article 12 of the E-Commerce Directive, especially taking into consideration the fundamental human rights.[80] This case examines under which circumstances the Wi-Fi networks operated publicly can be held liable in the case of copyright infringements, and the punishment that can be meted to such internet intermediaries.
Within Tobias Mc Fadden v Sony Music Entertainment Germany GmbH case, the defendant run a store that allowed customers to access free Wi-Fi network. The complainant, Sony Music, was the copyright owner of the music files that were offered for download using the Wi-Fi network made available by Mr Mc Fadden. On noticing the infringements, Sony Music warned Mc Fadden on infringements through a formal notice. However, Mc Fadden sought for a negative ruling from the Munich Regional Court with an argument that he did not have any control over the network and thus did not commit any copyright violation of the musical work. However, Sony made a counterclaim and asked for compensation for the damages incurred. The court upheld Sony’s counterclaims after Mc Fadden failed to appear in front of the court, and order Mc Fadden to pay damages incurred from the direct infringement. Mc Fadden appealed and argued that he was not liable for copyright infringement as stipulated in Article 12(1) of the E-Commerce Directive. The German Court consulted the CJEU indicating that it considers holding Mc Fadden liable for indirect infringement for providing the network that was used to violate copyright.
The German Court sought to clarify if a free Wi-Fi operator was under the liability exemption in Article 12 of the E-Commerce Directive. It further sought to understand the scope of determining such cases and the exemptions. The Court also enquired about the limits of the possible punishments and injunctions.

  1.                                                                    The Field; of Article 12 of the EC Directive

The article 12 of the E-commerce directive provides an exemption to the internet service providers that transmit information or allow access to the network from any form of civil liability for the transmission of data under specific circumstances. The intermediary is exempted if a) it does not initiate the transmission, b) it does not choose the recipient of the data and c) does not alter or modify the content of the information transmitted. The first important question to address under this provision is whether the defendant is a provider of information society service (ISS). Article 2(a) of the E-Commerce Directive (Directive 98/34/EC: Technical Standards Directive) defines Information Society Service (ISS) provider as “any service that is provided for pay, at the far distance by used of electronic methods and at the request of the receiver of the service.”[81]
The court found no reason for not classifying the free Wi-Fi network offered by Mc Fadden as ISS since it was offered as part of an economic activity that is provided “for remuneration.” Although the primary business activity of Mc Fadden was a sale of sound and lighting equipment, the Wi-Fi offered as a complimentary service can still be considered as part of the trade package. The service be “normally provided for remuneration” even though indirectly. It suffices that the defendant argued that the network was installed to attract customers to the business, and thus should be classified as an economic activity.
It is important to understand the context of the term “provided” used in the Article 12 of the EC Directive whether it means the service provider should only provide service or should actively search for customers. The Advocate General (AG) ruled that providing the Wi-Fi access was sufficient to create a bidding relationship between the provider and the user of the service. After finding that the Article 12 of the EC Directive could be applied in this case, it was important to define the content that is covered in the article. The major questions were to determine if the information service society (ISS) could be held liable for damages incurred and if injunctions can be made against “mere conduit” internet intermediaries, and if an internet intermediary can be carried responsibility for failing to comply with such directives. The claimant, Sony, had requested an injunction in addition to the payment of damages and other costs related to infringement of copyright and court cases. However, the Article 12 of the EC Directive protects the ISPs and other internet intermediaries from liability for infringement of copyright and any damages resulting from such violations. Thus, the ISS cannot pay damages and other costs related to breach by a third party. The liability of an ISP only arises if it breaches its obligations as stipulated in Article 12(3). This does not apply to the matter of injunctions and their related costs. The Article 11 of the IP Enforcement Directive and Article 8(3) of the Information Society Directive do not exempt information society services from injunctions regarding copyright infringement. Article 12(3) of the EC Directive only excludes injunctions liability of ISS as provided in Article 12(1). This implies that an order can be made even when an internet intermediary complies with all the provisions of the article and can be held liable for not complying with an injunction.
Article 14(1) (b) requires the internet intermediary or the “hosting provider” to remove or disable any materials that violate copyrights. This provision can limit the wider scope of Article 12 of the EC Directive. Although article 12 absolves internet intermediaries from liability as “mere conduit”, article 14 addresses the issues of “host providers.” Host provider offers to store data, information and digital files in its websites, servers and network infrastructure. For instance, Facebook, YouTube and Instagram are some internet intermediaries that store data and other forms artistic works on behalf of third parties. Such information society service providers are exempted from liability under different conditions. Article 12 and 14 of the EC Directive refer to two different and distinctive forms of ISS activities.
It is important to determine if article 12(1) prevents the national courts from implementing non-specific and general injunction to obligate ISPs to prevent its subscribers from infringing copyright or disabling their access to the internet. In the German Court further sought clarifications on whether an internet service provider or information society service can be forced by a national court to disable the internet, or protect it with a password, or to monitor communications and data. It needed to understand if such activities complied with the requirements or Article 12(1) of the EC Directive.
It was first important for the AG to evaluate the limit of any injunction provided by the Electronic Commerce Directive. These limits are defined in Article 12(3) of the EC Directive. The article requires that all orders given by national courts to be aimed at preventing or terminating violations. Article 15(1) does not obligate the information society service provider to monitor and control all information passing through its network infrastructure. These limits of punishments and injunctions can also be obtained in the principles and fundamental rights of European Union Laws. The principles include the freedom to access information, freedom to conduct business and the right to freedom of expression. The implementation of the right to intellectual property should not preclude the fundamental rights of an individual. There must be a balance between the freedom to access information, freedom of expression and freedom to conduct business with the right to intellectual property. This provision of proportionality is found under Article 17(2) of the EU Charter of Fundamental Rights.[82] The requirements for a balanced approach in the implementation of these rights are found in the provisions of the EC Directive as well as in the national laws of member states. It is the responsibility of state courts to interpret their national laws by the requirements of the provisions of the Electronic Commerce Directives and the fundamental rights. This will allow the measures adopted to protect copyright to be more efficient, dissuasive and proportionate. The measures and injunctions put in place must be aimed and preventing or discouraging users from infringing copyrighted content without imposing obligations on the ISPs to monitor and control user behaviours. The actions must also achieve a proportionate balance between the affected fundamental rights of the internet users.
The ruling of the UPC Telekabel Wien C-314/12 case held that a punishment or injunction is in line with the requirements of the EU law when it leaves the ISPs to decide the measure to apply to prevent copyright infringement.[83] However, in the case of uncertainty or disputes, a national court could intervene and provide a ruling that is more accurate. This becomes necessary where a general punishment would disrupt the balance between the interests and rights of the parties involved.
Considering rulings made in Scarlet Extended v SABAM,[84] SABAM v Netlog[85] and UPC Telekabel Wien[86] cases, the AG to Tobias Mc Fadden v Sony Music Entertainment Germany GmbH[87] discarded the suggestions for injunctions of terminating the internet of Mc Fadden and an obligation to monitor users’ activities. Finally, the AG evaluated if the ISS need to secure their networks and the compatibility of the requirement with the EU law. Such a requirement would undermine the business model of Mc Fadden because the Wi-Fi was offered as a complementary service, and would make access to the network more cumbersome for customers. An obligation for the business to maintain the data of the users would be cumbersome and expensive, and therefore, not proportionate to the freedom of doing business for Mc Fadden, whose primary business was not to provide internet services bus to sell sound and light equipment. Placing such injunction on Mc Fadden would be going contrary to the requirements of Article 15(3) of the E-Commerce Directive that prohibit monitoring obligations for internet intermediaries.[88]  It was also argued that a secured network would not deter users from infringing copyrighted work. The injunction to ensure the Wi-Fi network fails as an appropriate measure to prevent infringement and fail to achieve a balance between rights and interests of the affected parties. Measures interfere with the freedom to conduct business and freedom of expression and to access information. Such limitations could have more impacts on the society than benefits.

  1. Chapter Summary

This section indicates that the concept of liability of internet service provider in the case of online copyright infringement s highly contested. The ruling by the CJEU in the UPC Telekabel Wien case in 2014 indicates the numerous economic benefits of the free flow of information in the digital economy. Publicly accessible Wi-Fi networks are included under the information society services. The court can order an injunction against internet service providers or intermediaries to pull down infringing materials or prevent copyright infringement. It has also been observed that business is offering web services, under certain circumstances, are exempted from the liability for copyright infringement under the E-Commerce Directive. However, ISPs can still be held liable for non-compliance with injunctions ordered by the court against them. The court maintains that general non-specific injunctions can be ordered against ISPs, but prohibit laws such as filtering and monitoring obligations. In the case examined, the court placed orders that were aimed at preventing access to the website and left it up to the ISPs to come up with an appropriate method to avoid infringement. However, specific injunctions could be placed against smaller ISPs that operate readily available internet services. Thus, the scope of liability may depend on the nature and the size of the ISP service. The court determining the case must evaluate the most appropriate injunction on a case-to-case basis. The order placed must ensure there is a balance between the freedom to run business, freedom of expression and access to information, and right to intellectual property.
Chapter Five: Conclusion and Recommendations

  1. Introduction

The section provides a summary of the significant findings of the liability of ISPs in copyright infringement concerning piracy and file sharing. The chapter also makes recommendations for future measures on preventing copyright infringement and involving internet intermediaries in addressing this problem more efficiently.

  1. Summary

Internet service providers have faced challenges of potential liability for third party content infringement. The copyright holders have expressed concerns over the protection of their intellectual properties and claimed remedies against ISPs and users. On the hand, ISPs have argued that placing obligations on them to prevent copyright infringement will stifle innovation. Such interventions have raised questions of interference with freedom of expression, freedom to run business and freedom to access information. Any copyright law must create a balance between the interests of the content developers and the society. Efforts to pursue individual infringers have proven difficult, inefficient and very ineffective in preventing copyright infringement. Instead, copyright owners in the United Kingdom prefer to continue the infringers en masse. Another method that is preferred is to pursue the third parties such as Internet intermediaries and Internet Service Providers (ISPs). However, efforts to seek legal remedies from ISPs are proving difficult due to legal protection afforded to third parties in the digital economy. It has become increasingly difficult to gain the cooperation of the ISPs in addressing the problem of online copyright infringement due to their unwillingness.
Some of the proposed measures that ISPs can use to curb online copyright infringement include blocking of web pages or sites that host or facilitate users to access infringing content. Internet intermediates are evolving in nature, scope, and scale rapidly with the growth in internet connectivity. The ISPs represent an essential role in the functioning of the web. However, the content stored and transmitted through the ISPs infrastructure had led to issues of liabilities and controversies since the early 1990s. The Electronic Commerce Directive is the primary document that outlines when ISP is liable for copyright infringement. The directive categorises the ISPs into three based on their functions- caching, mere conduit and hosting. EC Directive protects the ISPs from liability where it had no prior knowledge of copyright infringement.[89] The hosting ISPs is required by the E-commerce Directive to remove the infringing content expeditiously once it acquires the knowledge of its existence to escape any form of liability. States are required to ensure copyright owners are in positions to request for the injunction against internet intermediaries whose services or infrastructures are used by a third party to violate the intellectual property rights. The EC Directive further notes that any injunction must be proportionate, efficient and dissuasive, but not be a barrier to legitimate forms of trade and freedom of expression and to access information. National courts were not allowed to make any injunction to order ISPs to install any form of indiscriminate filtering mechanisms.[90] ISPs are under no obligation to actively investigate the activities of their subscribers or investigate any suspicious online activity.[91]
In the UK, the Digital Economy Act does not obligate the ISPs to warn their customers in the case of infringement of copyright. The Act only requires the ISPs to keep a record of all notices sent out to infringers and to forward the violation list to the owner of the copyrighted content on request of the owner. However, the listing should be anonymous, and the owner cannot identify the violator.[92] Although the graduated response system has not been legislated in many countries, it does not rule out the participation of ISPs in preventing of copyright infringement. Major copyright owners can still enter private agreements with Internet Service providers to prevent illegal sharing of their content. For instance, in Ireland, where there is no legislated form of graduated response system, there are many private agreements between the major copyright owners such as Sony, Warner, Universal, and EMI and the major ISP Eircom.[93] Per the EC Directive, any restrictions or regulations implemented by the member states should be proportionate, appropriate and necessary as outlined in a democratic state. The use of internet also facilitates the realisation of other fundamental human rights such as access to education.[94] If a law affects the fundamental rights, it should be disproportionate.

  1. Obstacles and Challenges

The major impediment and challenges in the protection of intellectual property rights are to achieve a balance between the freedom of expression and access to information while promoting rights to intellectual properties. It is a delicate balance that requires thorough consideration of the roles of different parties in the digital economy in protecting privacy and copyrighted materials. Over regulation of the internet service providers can stifle innovation and development of creative industry by hindering the free sharing of information. Placing too many obligations of the ISPs could also initiate conflicts with users on the grounds of privacy and illegal monitoring. It is important for any regulations to be proportionate. However, with the changing roles of internet service providers with advancing technology, it has proven to be a big challenge to develop comprehensive regulations. Also, with the structure of the internet meant to promote sharing of files, it has become difficult to initiate measures that prevent sharing of files.

  1. General Recommendations

To develop effective regulations on copyright infringement, it is very critical for law makers to involve other stakeholders in the digital economy. The stakeholders should include the internet intermediaries, users and the content developers. With growing internet connectivity, there is a need to develop a dynamic and a balanced method of protecting copyrighted content. Regular changes in legislation and strong injunctions on ISPs will not solve the problem of copyright infringement and consumer piracy. Peer-to-peer file-sharing has become a habit, and it is hard to stop such habits that have become part of the internet culture.[95] It would be desirable to stop developing numerous legislations and stop wars against internet intermediaries. It would be more advisable for content developers and the creative industry to embrace different technological tools to prevent infringement instead of using legal measures. It is likely that the best solution for addressing copyright infringement does not exist in the legal sphere but through technological advancement.


[1] Giannopoulou, Alexandra. “Copyright enforcement measures: the role of the ISPs and the respect of the principle of proportionality.” European Journal of Law and Technology 3, no. 1 (2012).
[2] A&M Records v. Napster, Inc., 239 F.3d 1004 is the first major case that indicates how peer-to-peer file-sharing can be considered a copyright infringement
[3] Giannopoulou, Alexandra. “Copyright enforcement measures: the role of the ISPs and the respect of the principle of proportionality.” European Journal of Law and Technology 3, no. 1 (2012).
[4] Ibid.
[5] Ibid.
[6] article 14 of the Electronic Commerce Directive
[7] Article 11 of the 2004/48/EC Directive is on enforcement of intellectual property rights without prejudice to Article 8(3) of Directive 2001/29/EC
[8] L’Oreal SA v. eBay C- 324/09 [2011]
[9] Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) [2011]
[10] Article 15 of the Electronic Commerce Directive
[11] Ibid
[12] Loi nº 2009-669 du 12 juin 2009 favorisant la diffusion et la protection de la création sur internet (Law No. 2009-669 of June 12, 2009 to Promote the Dissemination and Protection of Creation on the Internet), Journal Officiel de la République Française [J.O.] [Official Gazette of France], June 12, 2009, p. 9666,
[13] Haute Autorité pour la Diffusion des oeuvres et la Protection des droits sur Internet translates to High Authority for the Diffusion of Works and the Protection of Rights on the Internet.
[14] Alexandre Entraygues, ‘The Hadopi Law: new French rules for creation on the Internet’ (2009) 20 Entertainment Law Review 264 (Westlaw UK)
[15] Ibid
[16] Ibid
[17] Ibid
[18] Korean Copyright Act available in English at http://www.moleg.go.kr/english/korLawEng?pstSeq=52683&pageIndex=23
[19] South Korea’s “three-strikes” law, July 2009, available at http://www.zeropaid.com/news/86703/south-koreas-three-strikes-law-takes-effect/
[20] Digital Economy Act
[21] S124B, Digital Economy Act
[22] S124G Digital Economy Act
[23] BT & Talk Talk v The Secretary of State for BIS [2011] EWHC 1021
[24] Bridy, Annemarie. “ACTA and the Specter of Graduated Response.” Am. U. Int’l L. Rev. 26 (2010): 559.
[25] EMI Records & Ors v. Eircom Ltd., [2010] IEHC 108
[26] Ibid
[27] Brendan Hallissey, ‘Eircom, Injunctions and the European Union (Copyright and Related Rights) Regulations 2012’ (2013) 31 Irish Law Times 53 (Westlaw IE)
[28] Ibid.
[29] Anti-Counterfeiting Trade Agreement (ACTA)
[30] Bridy (2011)
[31] Ibid
[32] Bridy (2011)
[33] Ibid.
[34] Emiliou, Nicholas. The principle of proportionality in European law: a comparative study. Vol. 10. Kluwer Law Intl, 1996.
[35] Van Gerven, Walter. The effect of proportionality on the actions of member states of the European community: national viewpoints from continental Europe. na, 1999.
[36] Ibid
[37] Alexandre Entraygues, ‘The Hadopi Law: new French rules for creation on the Internet’ (2009) 20 Entertainment Law Review 264 (Westlaw UK)
[38] Nicolas Suzor & Brian Fitzgerald, ‘The legitimacy of graduated response schemes in copyright law’ (2011) 34 University of New South Wales Law Journal 1  http://eprints.qut.edu.au/43926/
[39] Ibid
[40] Universal Declaration of Human Rights
[41] Article 27 of the Universal Declaration of Human Rights
[42] Peter K. Yu, ‘The Graduated Response’ (2010) 62 Fl. L. Rev. 1373
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1579782
[43] Rebecca Giblin, ‘Evaluating Graduated Response’ (2013)  http://ssrn.com/abstract=2322516
[44] Ibid
[45] Ibid
[46] Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009
[47] Productores de Música de España (Promusicae) v. Telefónica de España SAU, C-275/06 [2008]
[48] Ibid
[49] KU v Finland (2009) 48 EHRR
[50] Ibid.
[51] Benedek, Wolfgang, and Matthias C. Kettemann. Freedom of expression and the Internet. Council of Europe, 2014.
[52] Report of the Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, Frank La Rue, p.7
[53] Article R335-5 of the French Intellectual Property Code
[54] Rebecca Giblin, ‘Evaluating Graduated Response’ (2013) http://ssrn.com/abstract=2322516
[55] Gautier P.-Y., Propriété littéraire et artistique, 2010, Presses universitaires de France, p. 836
[56] Benabou V.L., The Chase: The French Insight into the “Three Strikes” system, in Copyright Enforcement and the Internet, Kluwer Law International, 2010, p. 179
[57] Report of the Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, Frank La Rue, p.8
[58] Telecoms Framework
[59] Edwards, Lilian. “Role and responsibility of the internet intermediaries in the field of copyright and related rights.” (2011).
[60] Nicolas Suzor & Brian Fitzgerald, ‘The legitimacy of graduated response schemes in copyright law’ (2011) 34 University of New South Wales Law Journal 1  http://eprints.qut.edu.au/43926/
[61] FDPIC v Logistep AG, Federal Supreme Court of Switzerland, 8 September 2010
[62] EMI Records & Others v Eircom Ltd [2010] IEHC 108
[63] Art 29 Working Committee Opinion 4/2007 on the concept of personal data, 20 June 2007, WP 136
[64] Productores de Música de España (Promusicae) v. Telefónica de España SAU, C-275/06 [2008], at 55-56
[65] LSG- Gesellschaft zur Wahrnehmung von Leistungsschutzrechten GmbH v. Tele2Telecommunication [2009] ECR I-01227
[66] Giannopoulou, Alexandra. “Copyright enforcement measures: the role of the ISPs and the respect of the principle of proportionality.” European Journal of Law and Technology 3, no. 1 (2012).
[67] Article 17(2) of the Charter of Fundamental Rights of the European Union
[68] Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) C 70/10 [2011], at 42-43
[69] Ohm P., The Rise and Fall of Invasive ISP Surveillance, 2009 U. ILL.L.REV. 1417, 1426 and Yu, (2010)
[70] Edwards, Lilian. “Role and responsibility of the internet intermediaries in the field of copyright and related rights.” (2011).
[71] Rayna, Thierry, and Laura Barbier. “Fighting consumer piracy with graduated response: an evaluation of the French and British implementations.” International Journal of Foresight and Innovation Policy 6, no. 4 (2010): 294-314.
[72] Rayna, Thierry, and Laura Barbier. “Fighting consumer piracy with graduated response: an evaluation of the French and British implementations.” International Journal of Foresight and Innovation Policy 6, no. 4 (2010): 294-314.
[73] Berne Convention for the Protection of Literary and Artistic Works
[74] Computer Programs Directive
[75] van Eechoud, Mireille MM. Harmonizing European copyright law: the challenges of better lawmaking. Vol. 19. Kluwer Law International, 2009.
[76] Ibid
[77] Treaty on the Functioning of the European Union
[78] Article 7 of Berne Convection on terms of protection
[79] Warner Brothers, ECJ 17 May 1988, Case 158/86, ECR [1988] 2605
[80] Tobias Mc Fadden v Sony Music Entertainment Germany GmbH
[81] Article 2(a) of E-Commerce Directive
[82] Article 17(2) of the EU Charter of Fundamental Rights
[83] UPC Telekabel Wien C-314/12
[84] Scarlet Extended v SABAM, c-70/10
[85] SABAM v Netlog, ECUJ 360/10
[86] UPC Telekabel Wien C-314/12
[87] Tobias Mc Fadden v Sony Music Entertainment Germany GmbH
[88] Article 15(3) of the E-Commerce Directive
[89] article 14 of the Electronic Commerce Directive
[90] Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) [2011]
[91] Ibid
[92] S124B, Digital Economy Act
[93] Bridy, Annemarie. “ACTA and the Specter of Graduated Response.” Am. U. Int’l L. Rev. 26 (2010): 559.
[94] Report of the Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, Frank La Rue, p.7
[95] Rayna, Thierry, and Laura Barbier. “Fighting consumer piracy with graduated response: an evaluation of the French and British implementations.” International Journal of Foresight and Innovation Policy 6, no. 4 (2010): 294-314.


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