29 March, 2013

Civil enforcement of intellectual property rights: public consultation on the efficiency of proceedings and accessibility of measures - ETNO considerations

ETNO is the European association representing approximately 40 member companies in the telecommunications market across 35 European countries. Besides being network and Internet access providers, many ETNO members also offer hosting services. In addition to this, many members are also content providers and are active in the promotion and provision of legal content services. As such, ETNO is very much interested in this debate.

ETNO is pleased to provide input to the European Commission on the civil enforcement of intellectual property rights (public consultation on the efficiency proceedings and accessibility measures).

ETNO has actively taken part in all phases of the discussion on the need to review the IPR Enforcement Directive (IPRED), by responding to the previous consultation documents as well taking part in the public hearings organized by the European Commission. We very much welcomed the Commission’s Report on the application of the IPRED published last December 2010 and the Report adopted further the public hearing held in June 2012. In particular, the Report and the Staff Working Document recognized that “the information available on the impact of the Directive is too limited to allow for a full assessment of its effectiveness at this stage”. In the Staff Working Document, the Commission brought many examples demonstrating the good functioning of the Directive throughout Europe. For example, the Commission stated that Member States and Stakeholders agreed that Article 8 of the IPRED has improved the ability to trace infringers considerably and has facilitated a better knowledge of the infringers. This leads us to consider that it was premature, at that stage, to propose any revision of the current Directive.

Against this background, we welcome the current public consultation as a valuable tool for the Commission to collect further information concerning the efficiency and accessibility of the enforcement measures in place. However, to our knowledge, no significant changes or controversial cases have occurred recently in the Member States. Therefore, while we understand the Commission’s intention to better understand the overall situation, we believe that the previous considerations about the soundness of the Directive’s provisions – and the implementation measures - are still valid.

More generally on the need to improve the legal framework – since that seems to be the objective of this new round of discussion - ETNO would like to stress that ISPs’ role and activities in the digital content market are subject to several EU Directives: the e-Commerce Directive, the Personal Data Protection Directive, the e-Privacy Directive and of course the IPRED. At international level, electronic communications operators also face other obligations such as those imposed by bilateral free trade agreements. Moreover, we highlight that the Staff Working Document reported that the current IPRED goes, in many aspects, beyond the TRIPs agreement.

Therefore, ETNO strongly believes that the current legal framework already provides for clear and efficient rules and that the relationship between the different set of rules is clear-cut: for instance, as the Commission mentions within its questionnaire, the respective scope of the IPRED and the e-Commerce Directive cannot be seen as ambiguous. Indeed, the e-Commerce Directive clearly defines and limits the liability of ISPs while the IPRED grants rights-holders the procedural tools to enforce their rights.

We also believe that the debate over the past months relating to the ACTA proposal should be duly taken into account when assessing the need to improve the legal framework, as stated in the public consultation, and in particular those concerns expressed by many stakeholders in relation to the risks regarding the innovation capacity that would be (negatively) impacted by the application of a stringent regulatory approach towards innovative industry players, such as the platform providers.

Fair regulation would imply also taking into account the differentiation between the various forms of counterfeiting. Applying the same enforcement measures to criminal organizations infringing copyright for profit and individual consumers downloading music for personal use is not a proportionate response. As stressed many times, ETNO believes that creative artists should receive a fair return for their work and creativity, and ISPs are able, in certain circumstances and upon request from the competent authority, to provide useful information to the competent judicial authorities. However, citizens’ rights must be guaranteed at the same time.

Therefore, ETNO considers that the Commission should promote a more coherent and global approach aimed at harmonizing the existing regulation. This would help towards increased innovation and the protection of IPR.

Points for Consideration

We take the opportunity of the Commission’s current consultation to re-state some relevant points that we have already pointed out on previous occasions.

• IPR protection is fundamental to allow for the development of creative offers and specifically to allow a fair remuneration of rights-holders. However, measures to protect online intellectual property must be flexible and should not stifle innovation.
• ETNO members – as intermediaries whose services and networks can be used by third parties in the context of an infringement of copyright - have always worked in collaboration with judicial authorities, who play a crucial role in ensuring citizens and businesses the right to a fair trial and the respect of all the necessary safeguards. The IPRED, and national implementation rules, have set the basis for such collaboration.
• The IPRED played and continues to play a crucial role in providing Europe’s rights-holders with a high level of intellectual property right protection. We believe that a revision of the IPRED, with an alteration of the existing legislative framework for enforcement, would increase regulation and fragmentation and result in complexity for Members States and ISPs. Also, should the result of the “improvement” of the legal framework be an excessive use of litigation, this would imply a significant increase in the related costs for all parties involved.
• It is important to stress that in this debate, the issue of intermediaries’ liability should not be at stake. It is fundamental that any future eventual revisions must be coherent with the current ISP liability regime. The IPRED contains measures and procedures to enforce intellectual property rights and to take appropriate action against those responsible for counterfeiting (measures to gather evidences, injunctions,...). In addition, the IPRED contains measures to be taken against intermediaries: the right of information, provisional and precautionary measures and permanent injunctions. It provides the appropriate procedural tools to rights-holders, allowing them to protect their rights in the framework of an established court case, in front of the competent judicial body which applies the necessary procedural safeguards to all parties involved. Telco operators cannot replace the courts in their role of determining the illegality of a conduct or act. They do not have either the capacity or the tools to provide such an assessment. Such a regime would expose them to enormous risk and an unacceptable increase of liability.
• It is also crucial to recognize that counterfeiting and online IP infringements are different in nature and size, and require different approaches. Any new legislative proposal should meet the ‘better regulation’ standard and be objectively necessary and proportionate to the objective. Global and non-contested figures about the dimension of illegal activities over digital networks and the subsequent impact on different industries should be provided. In this respect, we look with interest to the work of the European Observatory on Counterfeiting and Piracy, which may provide the relevant and most recent data on which the Commission will be able to ground and elaborate new legislative proposals. Similarly, other tools and studies which can improve the knowledge of the phenomenon should be taken into account, such as the recent Working Paper created by the Joint Research Centre of the European Commission: Digital Music Consumption on the Internet: Evidence from Clickstream Data, according to which “our findings indicate that digital music piracy does not displace legal music purchases in digital format. This means that although there is trespassing of private property rights (copyrights), there is unlikely to be much harm done on digital music revenue”. The paper goes on to state that “our findings suggest that digital music piracy should not be viewed as a growing concern for copyright holders in the digital era. In addition, our results indicate that new music consumption channels such as online streaming positively affect copyrights owners”.
• Enforcement of intellectual property rights should not be seen as the sole solution of illegal downloading by itself: a more holistic view is necessary, focusing on how to increase offers and the consumption of legal content and not just on facilitating current infringement claims by rights-holders. In this context, we welcomed the IPR Strategy which acknowledged the importance of overcoming the fragmentation of the IPR landscape in the EU, which has been damaging to growth, innovation and competitiveness. This is something that ETNO and other industry partners have been publicly calling for in an effort to overcome the serious issues that have arisen through a patchwork of rights system. ETNO wants to stress that the Commission should put equal emphasis on the different actions points presented in the IPR strategy. In this context, we welcome the Commission Directive on orphan works. Similarly, other Commission initiatives, such as the one on Licensing Europe, can be regarded with interest to the extent that it is aimed at establishing a multi-stakeholder discussion forum and at exchanging best practices..
• We believe that in the digital environment, it is important to establish the correct balance of interests, as noted by the IPR Strategy Communication which stresses that the relationship between “the three main players: creators, service and content providers and consumers” needs to be optimised.
• In addition to the need for measures established and applied in accordance with the IPRED to be viable for all parties concerned and proportionate to the gravity of infringement, they must also respect the fundamental rights to a presumption of innocence, the right to a fair trial, the right to privacy and the right to the confidentiality of communications. This applies in particular for the provisions concerning the information on the identity of an alleged infringer. Any reinforcement of the contribution of intermediaries in the fight against illegal file sharing must remain compliant with these fundamental rights.
• With reference to the gathering of evidence on the Internet, ETNO takes note that it is something which is claimed to be difficult by rights-holders. Greater attention is given to infringements of IPRs on the Internet; however, regulators need to bear in mind the differences between counterfeited goods being offered on the Internet and infringing use of digital content. The determination of what is reasonably available evidence and what is sufficient evidence to support an applicant’s claim should always be left to the judicial authority and not to the responsibility of intermediaries. The reason for this is simple and as stated above: intermediaries cannot replace the judicial authority and their functions.
• Concerning the right of information, it is important to underline that a request for information from electronic communications operators relating to the identity of a user shall, due to the right to privacy of users, only be provided to right holders after a judicial authority or court order. Such a decision shall only be issued if the rights holder has presented sufficient evidence that an infringement has been committed from the IP-address in question.
• Concerning the balance between different fundamental rights, the ECJ gives important indications in two well-known cases (Promusicae and Tele2), asking Member States and their respective authorities to take measures that, while balancing both rights, should respect the principle of proportionality. The ECJ decisions imply also that ISPs cannot assume the responsibility of balancing rights and becoming controllers of the Internet. ETNO believes that legal framework in place and the existing interpretations given by the CoJ can help to solve potentially unclear situations.
• In case the European Commission would try to weaken data protection rules via a revision of the IPRED, such a revision would lead to rights-holders being able to lodge formal complaints, be they seriously grounded or not, against intermediaries, with a subsequent inefficient multiplication of litigations and of the related costs.
• The IPRED links its provisions to the notion of commercial scale. This is extremely important. The deletion of this concept would dramatically expand the number of legal proceedings related to minor infringements, and would be detrimental for a large part of the industry. At national level, most Member States have adopted this principle. More in particular, the measures provided for in Articles 6(2), 8(1) and 9(2) IPRED need to be applied only in respect of acts carried out on a commercial scale. Even though the Directive provides no definition of this term, we can easily refer to the Recitals, which are part of the Directive and must be used as a fundamental tool for interpreting its provisions. In this respect, Recital 14 of the Directive provides that “acts carries out on a commercial scale are those carried out for direct or indirect economic or commercial advantage; this would normally exclude acts carried out by end consumers acting in good faith”. ETNO would like to stress that its Member companies strongly oppose any attempt to question the link foreseen by the IPRED between commercial scale infringements and the Right of Information. The Right of Information is granting rights holders access to personal data of electronic communications operators customers. It is of utmost importance that the balance between intellectual property rights and data protection is ensured by a) the involvement of judicial authorities and b) the limitation of right to information when infringements are not of commercial scale.
• Any injunction on an ISP to ensure that a given IPR infringing act is taking place through its service, even for a single piece of content, effectively amounts to a general obligation to monitor and filter “every single” communication carried through a network or hosted in a server. It was also confirmed by the recent CJEU decisions SABAM v. Scarlet and SABAM v. Netlog NV, that such general monitoring obligations are both inconsistent with the e-Commerce Directive and with important underlying fundamental rights of users. In addition, the Court ruled that the introduction of enforcement measures should be proportionate and respectful of industry’s freedom to conduct a business activity as laid down in article 16 of the EU Charter of Fundamental Rights. ETNO urges the Commission to abandon its extreme interpretation of IPRED that an intermediary - because of its supposed position of control, while not itself committing or condoning the alleged infringement - may be ordered to implement unspecified, disproportionate and possibly repressive technical measures in a blanket fashion against their customers simply because the intermediaries are not the infringing party
• On technical measures, all filtering techniques known today are not effective because they can easily be circumvented.  In addition, the use of blocking techniques to filter content in the framework of civil claims needs to be carefully examined because it raises meaningful concerns under the data protection rules. Similarly, the protection of fundamental rights, in particular the freedom of expression, calls for a cautious approach. We also note that in the Report of the UN Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, Frank La Rue highlighted his concerns in relation to State-imposed blocking and filtering measures that deny access to certain content on the Internet. The Special Rapporteur is deeply concerned by discussions regarding a centralized “on/off” control over Internet traffic. In addition, he is alarmed by proposals to disconnect users from Internet access if they violate intellectual property rights. This also includes legislation based on the concept of “graduated response”, which imposes a series of penalties on copyright infringers that could lead to suspension of Internet service, such as the so-called “three strikes law” in France and the Digital Economy Act 2010 of the United Kingdom.
• Unfortunately, the transposition of the IPRED is not harmonized. In particular, several Member States provide for the right of information only in the context of judicial proceedings while other Member States provide for a right of information even before formal proceedings as a provisional measure. However, we should not forget that the IPRED is meant to regulate the procedures in front of the judicial authority. Therefore, any provision allowing rights-holders to use the tools in a different context, which does not guarantee the same level of impartiality and control, may jeopardize the balance of the entire system.
• In the Commission report it was stated that the court practice in some Member States has reduced the effectiveness of Article 6. Certainly, Article 6 needs to be applied in the same manner across all Member States. However, the requirements of the Article must at the same time be interpreted in a way that provides opposing parties with an accurate and proportionate level of protection. There is a fundamental need for proportionality. Moreover, ETNO is not aware of any imbalance in the application of Article 6(2), concerning confidential information. In Sweden, for example, the legislator considered that the Code of Judicial Procedure did not have to be altered when implementing the IPRED and the protection of confidential information should be considered as sufficient and adequate. ETNO considers that no modification of Article 6 or 7 is necessary. Should the Commission wish to improve legal certainty, it might provide, in this case, for guidance on how the notions of specified evidence and under control should be interpreted: this would probably diminish the variances in interpretation and in the application of Article 6 by Member States.
• The Commission’s Report stated that Article 8 has improved the ability to trace infringers considerably. The fact that some right-holders find it difficult to establish that the alleged infringer has acted on a commercial scale cannot be seen as a reason for considering alteration of the Article. As recognised by the Commission, many Member States have only just started seeing the effects of Article 8 due to late transposition. It is important to underline that the request for information from electronic communications operators relating to the identity of users shall, due to the right to privacy of users, only be provided to rights-holders after a judicial authority or court order. Such a decision shall only be issued if the rights holder has presented sufficient evidence that an infringement has been committed from the IP-address in question. 
• ETNO believes that there appears to be, if any, a need for further guidance on the application of Articles 9 and 11 and that no need for any change to Articles 9 and 11 can be justified. In any event, we welcome the Commission’s current public consultation aimed at collecting new data, since it confirms the ETNO vision that any modification to the current rules needs a factual and clearly documented ground.
• Finally, concerning the mechanisms to inform the intermediary about the fact that its services are being used to infringe IPRs, we stress that many European intermediaries, including ETNO members, have already developed their own efficient notice practices based on experiences that are specific to their diversified businesses. In the future, such tools will be even further adopted in a voluntary way, also as part of a business strategy aimed at providing services of increased quality and with a rights protection viewpoint. Others work within a system where public authorities work closely with intermediaries to ensure an efficient and smooth process. Usually, the notification tools developed by ETNO members are accessible via their portal or a forum web page. This may also include notification links that transfer directly to an appropriate body depending on the category of illegal content (e.g. an NGO taking care of reports on child abuse material). The use of these existing tools makes procedures easier to follow and quicker to apply. Internet users are therefore able to notify illicit content such as child abuse material in the most user-friendly and speedy way. In some Member States, these notification processes are optimized for the specific intermediary platform and tailored to the categories of content to be notified. The objective is to gather relevant data to act efficiently against the illegal content addressed (contact of the notice provider, time and date of alleged infringement, URL, description of the infringement,…). Having a minimum set of information to be supplied to the hosting provider will help the process. 

We believe that using intermediary notification systems is the easiest way for the notice provider to inform the hosting service provider and/or relevant authorities about the alleged existence of illegal content or behavior online. A different approach is to be followed in the context of the fight against child pornography and abuses, where ex post blocking access injunctions are put in place and should remain, in any case, a last resort measure aiming for instance at minimizing access to child abuse images

Conclusion

In conclusion, we believe that there is a need to ensure that EU legislation relating to intermediaries’ role in the framework of injunctions is aligned and applied in a harmonized way across the EU. In this context, we must not forget that the e-Commerce Directive clearly states that Member States shall not impose a general obligation on service providers to actively seek facts and circumstances indicating illegal activity and thereby monitor information on their networks (Article 15 (1) E-Commerce Directive). The scope of the injunctions should therefore remain strictly limited to the elimination of a concrete infringement. This means, inter alia, that the application of Article 11 of the IPRED, “permanent injunction”, may only apply to one specific website, i.e. not to any new location to which the content of such a website may move to after the block. Otherwise this would mean that the ISP would have to monitor the Internet to ensure that the injunction is obeyed, and this would be in direct conflict with the e-Commerce Directive. This example illustrates once more the necessity of a holistic approach taking into account, the whole picture of existing legislation.

ETNO welcomes the consideration of a stable, comprehensive framework for IPR that is fit for the digital era and new emerging business models. The patchwork of national online markets in existence today frustrates the objectives of the Single Market. For ETNO, rather than reviewing the IPRED, the EC should promote a more coherent and global approach aimed at harmonizing existing regulation and providing certainty for all players. This would help towards increased innovation and ensure a balanced framework that will also ensure the necessary protection of IPR.