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GERMAN HIGH COURT HOLDS THAT FILE HOSTING PROVIDERS MUST ENSURE THAT THE FILES AND LINKS DO NOT VIOLATE COPYRIGHTS, AND IMPOSES COMPREHENSIVE MONITORING REQUIREMENTS

The German High Court [Federal Court of Justice, Bundesgerichtshof (BGH)] has issued an opinion which elaborates the obligations of file hosting companies to protect copyrights.

In a previous opinion issued in 2012, the German High Court had found that file hosting providers must block access to links and delete files once they receive notification that they violate copyrights. They must also review and filter as necessary once they receive notification of an infringement ("Alone in the Dark" matter, Urteil vom 12.07.2012, Az: I ZR 18/11). The German High Court now expands these duties by requiring active monitoring of links and data files.

The dispute began with the German Society for musical performing and mechanical reproduction rights (GEMA) filing suit against RapidShare (www. rapidshare.com), a file hosting ("sharehosting") company based in Switzerland. GEMA has exclusive use rights for numerous musical works, including 4,800 works that GEMA found on the RapidShare website in violation of registered copyrights. RapidShare stores, administers and helps users distribute electronic files such as music, games and images. RapidShare permits users to upload files, and allows other users to anonymously download those files through a download link. RapidShare does not provide a table of contents or catalogue, and does not offer any search function. However, users can create link collections which can be searched.

GEMA notified RapidShare repeatedly of the violations in 2006 and 2008, and demanded that (a) the 4,800 files and links be deleted, and (b) that RapidShare investigate whether files have been uploaded in violation of copyrights.

GEMA filed suit in the District Court Hamburg (Landgericht Hamburg, ZUM 2009, 863; Beschluss vom 10.12.2009; Az. 308 O 667/09) against RapidShare and two of its officers, demanding that RapidShare stop the offering of the 4,800 musical works through its website. RapidShare appealed.

The Court of Appeals in Hamburg (Oberlandesgericht, OLG) found that RapidShare acted as an "interferer" ("Storer") who enabled the copyright infringements by providing a forum where the infringements can take place (Urteil vom 14.03.2012, Az. 5 U 87/09, available at http:// openjur.de/u/270161.html).

[NOTE: "Storer" ("interferer") is a term of art in German law. As for internet-related offenses, there is "Storerhaftung" ("interferer liability") for those who participate in the distribution of content that violates the law. See Wikipedia article on "Storerhafung" in German law at http://de.wikipedia.org/wiki/ St%C3%B6rerhaftung.]

The Court thus imposed a duty to monitor such file sharing activities upon file hosting providers such as RapidShare. RapidShare appealed to the German High Court, asking that the case be dismissed.

The German High Court affirms the decision of the Hamburg Court of Appeals as for RapidShare, and elaborates on the monitoring duties for such service providers. Such service providers must actively monitor whether the offered files violate copyrights, and delete links and files that are found to be in violation. The Court remands, however, for additional fact-finding as for the two individual officers, whether they were aware of the infringements and could have prevented them.

The German High Court essentially affirms the findings and monitoring duties imposed by the Hamburg Court of Appeals. RapidShare received notification of the infringements being committed through its servers, and could have stopped them. The musical works at issue, however, continued to be accessible. If RapidShare had monitored the activities of its users for copyright infringements, it could have prevented the violations of GEMA's rights.

For all copyrighted works for which service providers like RapidShare have received notices of infringements, it is not an undue burden to regularly monitor the files and links created by users to prevent copyright infringements (Paragraphs 1-16 of the German High Court Opinion). RapidShare is liable as an "interferer" because it failed to comply with its monitoring obligations. The Court notes that RapidShare contributes to the illegal file sharing, for example by permitting anonymous access to the links and files, and the availability of for-pay "premium accounts" which make file sharing simpler and faster. While RapidShare's business deserves the protection of the law, it contains in its very structure the potential for large-scale copyright infringements.

As for international jurisdiction over the subject matter, the Court relies on Article 5, paragraph 3, of the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (1988) (BGBL. 1994 II S. 2658) ("Article 5. A person domiciled in a Contracting State may, in another Contracting State, be sued: .... 3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred; ..."). GEMA alleges that the infringements also occurred in Germany.

[NOTE: There is a "new Lugano Convention" which entered into force on January 1, 2010, see http://ec.europa.eu/world/ agreements/prepareCreateTreatiesWorkspace/ treatiesGeneralData.do?redirect=true&treaty Id=7481].]

The Court notes that the decision of the Hamburg Court of Appeals does not outline the specifics of the monitoring duties for service providers such as RapidShare. Such duties, however, are difficult to specify in detail in this type of proceeding.

While RapidShare cannot be classified as an "accomplice" to the copyright infringements, it certainly is an "interferer" who directly or indirectly contributed to the copyright infringements. The "interferer" liability cannot be unduly imposed upon third parties who have not personally violated the law. Thus, "interferer" liability requires the third party to have violated some duty to monitor.

The scope of the duty to monitor depends. There cannot be a general duty to monitor. See Article 15 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ("Directive on electronic commerce") (Official Journal L 178, 17/07/2000 P. 0001-0016): "Member States shall not impose a general obligation on providers, when providing the services .... to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity." There are, however, permissible monitoring duties in specific cases. Service providers that store data provided by users have a reasonable duty of care to discover and prevent violations of domestic law. See Paragraph 48 of the Preamble of the Directive on electronic commerce: "(48) This Directive does not affect the possibility for Member States of requiring service providers, who host information provided by recipients of their service, to apply duties of care, which can reasonably be expected from them and which are specified by national law, in order to detect and prevent certain types of illegal activities." This general duty of care complies with the opinion of the European Court of Justice in the case Judgment of the Court (Grand Chamber) of 12 July 2011, L'Oreal SA and Others v eBay International AG and Others (C-324/09).

There may be further duties if the purpose of the offered services involves violations of the law. (Paragraphs 29-31).

Here, the business model of RapidShare is not intentionally designed to violate the law. There are many lawful purposes for RapidShare's services, and there is a technical and economic demand for such. For example, business and private persons can use RapidShare to store and protect their data, or to share their proprietary files.

RapidShare generates revenue through "premium accounts" that facilitate downloads. It advertises that some files have been downloaded 100,000, which strongly indicates that highly attractive, copyrighted materials were shared, such as movies, music or software. The more a user downloads such files, the more attractive is RapidShare's premium account. RapidShare thus profits from illegal filesharing. Illegal filesharing becomes even more attractive because RapidShare permits it occur anonymously. (Paragraphs 36-42).

As for a reasonable duty of care in such cases, the Court notes that RapidShare received notice of specific copyright infringements, deleted those infringing files, but failed to prevent similar infringements in the future. Such similar, future infringements that must be prevented are not only those committed by the same user with the same copyrighted work. In addition, the service provider must act as much as technically and economically feasible to prevent the identified infringing user from continuing to offer the specified copyright works. While RapidShare claimed to have a 17-person team working on preventing copyright infringements generally, it did not show that it acted to prevent further infringements of the copyrighted works for which it had received notifications. RapidShare's terms and conditions state that users shall not violate copyrights is a necessary requirement, but not an effective means of preventing copyright infringements. Neither is the user of filtering devices useful, as it can only discover the distribution of identical files. Finally, the "delete interface" offered copyright holders to delete infringing files only permits copyright holders to delete already known files, but does not permit a search of potentially infringing files. RapidShare thus violated its monitoring duties to prevent similar violations of the law in the future. (Paragraphs 44-55).

In particular, RapidShare should have searched the link collections for the works for which RapidShare received notification of copyright infringement. (Paragraphs 55-58).

Service providers such as RapidShare have a "market observation duty" which require the use of search engines such as Google, Facebook or Twitter, and possibly even web crawlers, to identify continuing copyright infringements through its servers of the works for which it received copyright infringement notifications (Paragraphs 59-60).

In sum, the German High Court holds:

Even if the business model of a file hosting service is not intended to violate the law, there are monitoring requirements because the service acts as a contributor to the violations.

If a file hosting service, through its business model, substantially contributes to copyright infringements, it is not an undue burden to regularly monitor the collections of links provided through its services.

The resulting monitoring requirements apply to each copyrighted work for which the file hosting service has received notice of a copyright infringement. They apply even if the number of notified infringements is large (in this case 4,800 music titles).

In practical terms, this decision requires service providers such as RapidShare to actively monitor the files being offered and shared for possible copyright violations.

The German High Court, however, remands the matter to the Hamburg Appeals Court for a new trial and fact-finding as for the individual officers. There cannot be liability as an "interferer" for violations of the law in which one did not participate, of which one had no knowledge, and which one could not have prevented.

CITATION: Bundesgerichtshof (BGH), IZR 80/12 (15. August 2013), available at www.bundesgerichtshof.de.
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Title Annotation:RapidShare and German Society for Musical Performing and Mechanical Reproduction Rights
Publication:International Law Update
Geographic Code:4EUGE
Date:Oct 1, 2013
Words:1786
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