Saturday, December 10, 2016

Application of problematic CJEU ruling on copyright infringement by hyperlinks is getting out of hand

The European Union, which is already dysfunctional in some even more important regards, threatens to become the world's craziest, most innovation-hostile copyright jurisdiction. Copyright rationality is facing a two-front war in Europe:

  • Just last month, the European Commission announced a push for a "neighboring" right demanded by mediocre, traditional media companies who just can't deal with Google's brilliance and well-deserved success.

    If what happens in other industries on an almost daily basis is any indication, those companies will offer former European commissioners and other EU officials some nice jobs in a few years' time. They may not even wait that long: Bertelsmann has officially had an influential "conservative" MEP on its payroll for decades and there may be more cases like that one.

    In the short term, most traditional media companies are certainly serving the political establishment as a propaganda machinery that denies the undeniable failures of the EU's open borders and common currency in certain areas. The quality of European news coverage and political commentary is, on average, so very low and their "political correctness" (which is dangerously close to how things work under totalitarian regimes) is generally so bad that I'm looking forward with great expectation to Breitbart's French and German sites, which will go live next year (Breitbart London has already demonstrated its ability to scoop the entire German press) and would love to see Fox News expand here as well.

    Basically, some favors must be reciprocated between European politicians and some European publishers, no matter how bad an idea the contemplated "neighboring" right is for innovation and for consumers. But there will be resistance.

  • In parallel, courts are extending the rights of copyright holders against website operators in a way that is nothing short of frightening. The Internet itself is under judicial attack. That's what I'm going to talk about in the remainder of this post.

Let's start with the statute. Directive 2001/29/EC of the European Parliament and of the [European] Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society (official PDF ), briefly called the "EU Copyright Directive," says the following in its Article 3(1):

"Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them."

The two court decisions establishing liability for Internet hyperlinks to websites that contain copyright-infringing material--one by the CJEU and one by the Landgericht Hamburg (Hamburg Regional Court) based on the CJEU opinion--that I'll discuss below are based exclusively on that statute.

Seriously, how could that statute ever have given rise to the current situation?

There's a two-letter word in the statute that we need to focus on: "of" as in "communication to the public of their works" and "making available to the public of their works." A regular Internet hyperlink does not match either definition, not by any stretch of the imagination:

  • An Internet link that points and, if clicked on, redirects users to another website (as opposed to incorporating an image or text from an external URL into one's own site) is not a "communication of" whatever may be on the referred site. It's a communication about the referred site.

  • Nor does such a link constitute a "making available [...] of" whatever may be on the other site (unless, which is not what we're talking about here, the other site is password-protected and you need to go through some other site to gain access). You can't make available what already is available. If lawmakers had intended to cover promotional activities, they could and would have phrased it differently. Again, the preposition "of" means that what is made available must be the copyrighted works, not just information about or pointers to such works.

But here's the rule established by the Court of Justice of the European Union (CJEU) in its Second Chamber's September 8, 2016 judgment (case no. C-160/15, GS Media BV v. Sanoma Media Netherlands BV, Playboy Enterprises International Inc., and Britt Geertruida Dekker):

"Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that, in order to establish whether the fact of posting, on a website, hyperlinks to protected works, which are freely available on another website without the consent of the copyright holder, constitutes a 'communication to the public' within the meaning of that provision, it is to be determined whether those links are provided without the pursuit of financial gain by a person who did not know or could not reasonably have known the illegal nature of the publication of those works on that other website or whether, on the contrary, those links are provided for such a purpose, a situation in which that knowledge must be presumed."

That's just unbelievable. I have read this sentence over and over again, and I don't think I've ever seen anything like that in a U.S. ruling, let alone by higher courts. It happens in all jurisdictions that concepts get conflated or confused, but the words "conflation" and "confusion" are by far not strong enough to describe this.

It's highly illogical that unrelated factors such as a profit motive and knowledge of an infringement cold have any bearing on the term "communication to the public." You either communicate (including that you make available) something to the public or you don't, but that is unrelated to whether you do it for profit, for fun, or pro bono, just like it has nothing to do with whether you do it on a Tuesday or a Wednesday. Also, a "communication to the public" (including a "making available") is a communication to the public regardless of whether it's legal or illegal. That is a subsequent question then.

At any rate, the critical question here is not whether an Internet link is a "communication to the public": it's whether it's a "communication to the public of [some copyrighted material]" as opposed to just some communication "about" it, which clearly falls outside the scope of the statute.

Even if we give that decision the benefit of the doubt and just assume they (like the court that posed the question for review) incorporated "of their works" by referring to the statute, the fundamental problem is still the same: whether or not something (here, a link) is a "communication to the public of [something else]" is not a matter of motivation, legality, or knowledge. The statute defines the scope of an author's exclusive right, not infringement, and that's why it doesn't even obliquely mention the circumstances of a potential act of infringement.

If you look at the court's reasoning, it just turns logic on its head and seeks to justify it with an understanding that the EU Copyright Directive was generally meant to afford strong protection to copyright holders.

This illogical attempt to import the circumstances of an infringement into the definition of the scope of an author's exclusive right was even more unnecessary in light of the fact that Attorney General Melchior Wathelet had explained very well in his final pleading (which the CJEU follows most but not all of the time). Here are my favorite sentences from his opinion:

  • "If the Court were to rule that the posting on a website of hyperlinks to protected works which are freely available on another website cannot be classified as an 'act of communication', the question of the copyright holder not having authorised the placement of his work on other websites operated by third parties would no longer arise." (paragraph 45)

  • "Although it is true that hyperlinks posted on a website make it much easier to find other websites and protected works available on those websites (28) and therefore afford users of the first site quicker, direct access to those works, (29) I consider that hyperlinks which lead, even directly, to protected works do not 'make available' those works to a public where the works are already freely accessible on another website, but merely facilitate the finding of those works. As the Portuguese Republic states in its observations, the act which constitutes the actual 'making available' was the action by the person who effected the initial communication." (paragraph 54) "It follows that, in order to establish an act of communication, the intervention of the 'hyperlinker' must be vital or indispensable (33) in order to benefit from or enjoy works." (paragraph 57)

  • "Since one of the cumulative criteria necessary for establishing a ‘communication to the public’ under Article 3(1) of Directive 2001/29 is not met, the question of the copyright holder not authorising the placement of his work on other websites operated by third parties (36) is, in my view, immaterial." (paragraph 61)

  • "I consider that extending the concept of 'communication to the public' to cover the posting of hyperlinks to protected works freely accessible on another website would require action to be taken by the European legislature." (paragraph 79)

The court also ignored input from the European Commission and the governments of Germany, Portugal, and Slovakia. And the government of France argued that the copyright image would not have been easily accessible on its original site due to the need for a "key," which would have been a way to find in favor of the right holder based on "making available of" as opposed to a highly illogical interpretation of the term "communication to the public of [a copyright work]." The French position would have been considerably narrower than the disastrous one the CJEU adopted. That would be an example of a "vital or indispensable" intervention by the hyperlinker.

Copyright is the most important protection for me as a software developer. I've taken very pro-copyright positions on this blog, particularly in connection with application programming interfaces (APIs), a context in which large parts of the open source and "open Internet" communities disagree with me. But even I want the scope of copyright to have reasonable boundaries.

If you think it through, this approach to hyperlinks has pretty much no boundary: if a direct hyperlink to a site that contains infringing material makes the original site an infringing site, what about sites linking to that site? Or sites linking to sites linking to that site, which in turn links to the site that contains the copyrighted work?

To the extent that AG Wathelet and some governments argued that a decision holding hyperlinks to constitute potentially-infringing communications to the public was "to the detriment of the proper functioning and the very architecture of the internet, and to the development of the information society," I agree in principle but, philosophically, can also appreciate the CJEU's desire to close a potential loophole: profit-seeking infringers could work with a partner site in a territory where copyright enforcement is hard and then link to the illegal copies of some material, including computer programs.

I don't deny that there is a potential enforcement issue, but I agree with AG Wathelet that any related questions would have to be addressed by lawmakers. (Needless to say the EU has an enforcement directive.) If someone really tried to hide behind hyperlinks in order to benefit commercially from copyright infringement, there should be a means of shutting that activity down. In some jurisdictions, including Germany, copyright infringement can (under certain circumstances) constitute a crime. If there's a criminal infringement, such as an illegal file-sharing site, and someone drives traffic to that site, then he aids and abets a crime. Let's go after those bad guys and, if and wherever necessary, the law should be adjusted to today's technological realities. But a statute that defines a scope, not an infringement, remains a statute that defines a scope, not an infringement.

It didn't take long before the first national court applied the CJEU decision to another hyperlink case. The Landgericht Hamburg (Hamburg Regional Court) found in favor of a right holder who was represented by lawyers who simply wanted to test the boundaries and advance the development of case law. They published the decision (PDF, in German). I don't want to go into detail on that one. The gist is that the Hamburg court interpreted the CJEU guideline to the effect that anyone who generates any income from a website, even if that income is not directly related to a link to a website that infringes someone's copyright, the failure to know about the infringement is not an excuse because the Hamburg judges believe the CJEU ruling implicitly requires some IP clearance by the hyperlinker.

I disagree with this result, of course, and I hope the appeals court will overturn it and restore sanity. But the Hamburg application of the CJEU ruling is not contrary to what the CJEU wrote. The CJEU established liability for cases in which the hyperlinker has some kind of "financial gain" and could reasonably have found out about the infringement on the referred site. That is not the only and, in my opinion, not even the most reasonable interpretation of the CJEU decision. Short of also holding someone responsible for linking to a site that links to a third site, which then contains unlicensed material, the Hamburg approach is the most extreme interpretation, but it's not indefensible (unlike the CJEU's importing of infringement criteria into the definition of a scope).

The CJEU could have prevented the Hamburg court's interpretation by making it clear that the failure to be aware of an infringement only results in liability if there was what is called "willfull blindness" in U.S. law. The CJEU could also have limited the concept of reasonableness to the presumption of someone's knowledge of an infringement. But it didn't, and that's why the Hamburg decision wasn't baseless at all.

The weakness of the Hamburg ruling is that anyone who knows the practicalities and realities of the Internet would disagree with the idea that IP clearance of sites one links to is commercially reasonable. Furthermore, anyone who knows about the subject understands that such a requirement would have chilling effects on linking, making right holders lose a lot more (because of fewer links) than they would gain from occasionally having an additional enforcement opportunity (besides going after someone who published unlicensed content) by shutting down hyperlinks. It's in this area that I believe other courts (the Hamburg decision is not binding for any court, not even for the Hamburg court itself) will usually reach different conclusions. But until then, there will be chaos and confusion.

Just when one terrible appellate ruling was overturned in the U.S. (design patent damages in Apple v. Samsung), it becomes clearer than ever that EU copyright law is a mess. It's not like the Internet has been "destroyed," but it's yet another failure by the EU.

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