A key ruling concerning platform liability and its practical relevance in light of the DSM Directive

October 2021 | EXPERT BRIEFING | INTELLECTUAL PROPERTY

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On 22 June 2021, the European Court of Justice (CJEU) finally ruled on the joined cases C-682/18 (YouTube) and C-683/18 (Cyando), which concerned platform liability pursuant to Article3(1) of the Infosoc Directive on uploading user content which infringes third-party copyright.

It should be noted that the CJEU has taken a long time to issue a decision and in the meantime the new Directive – the Directive on Copyright in the Digital Single Market 2019/790 (DSM Directive) – entered into force on 7 June 2021, including article 17 which sets out specific new rules on platforms’ liability. A significant issue that immediately arises is how the new law provisions and the ruling of the CJEU can be coordinated with each other, and whether this decision still has any practical relevance considering the new article 17. In this article we address this issue, which is particularly relevant given that some member states have not implemented the directive yet.

The courts asked the CJEU whether the operator of a video-sharing platform, or file hosting and sharing platform such as YouTube or Uploaded – on which users unlawfully make available to the public protected content – themselves make a ‘communication to the public’ within the meaning set out under article 3(1) of the Infosoc Directive, by making available content uploaded by the users.

The underlying rationale of this provision is to strike a fair balance between the interests of copyright and intellectual property (IP) rights holders and the interests and fundamental rights of users and their freedom of expression and of information. Keeping in mind this aim, the court stated that the concept of ‘communication to the public’ should be understood in a broad sense, covering all communications to the public not present at the place where the communication originates and, thus, any such transmission of a work to the public by wire or wireless means.

The court had to assess whether there is communication, and if it is in fact a communication to the public, and in order to do so had to analyse various criteria.

It is first relevant to verify whether there is an indispensable role played by the platform and the deliberate nature of its intervention (with full knowledge of its conduct), to understand whether, in the absence of that intervention, users would not, in principle, access the work. Second, the communication must be addressed to a ‘new public’, different to the one already considered by the copyright holder who authorised the initial communication.

In the case at issue, given that content is uploaded by users, it is necessary to assess whether platform intermediaries initiate a ‘communication’ to the public different and additional to the one made by users, and that this inevitably provides third parties access to protected works.

The court clarified that is not possible just to consider that this role is played by a platform that simply allows files to be shared. To evaluate whether the role played by the platform is indispensable, it must be verified whether its intervention is deliberate. Further, it is the act of the platform intervening in full knowledge of the consequences of doing so, with the aim of giving the public access to protected works, which means that intervention could be considered an ‘act of communication’.

The court stated that in order to determine whether the platform intervenes in the illegal communication of protected content, in full knowledge of the consequences of its conduct, in order to give other internet users access to such content, it is necessary to take into account different factors, such as: (i) the intermediary knows or ought to know that the contents are illegally made available to the public; (ii) the intermediary fails to put in place appropriate technological measures; (iii) the intermediary participates in the selection of the contents; (iv) the intermediary provides on the platform tools intended for the illegal sharing of such content or promotes such sharing; and (v) despite having been warned that the content is being communicated illegally to the public, the intermediary refrains from expeditiously taking necessary measures to make that content inaccessible.

Based on the court’s reasoning, a platform does not make a communication to the public in accordance with article 3 unless it contributes, beyond merely making that platform available, to giving access to such content to the public in breach of copyright. This happens when it is aware of the unlawful content and does not expeditiously block it, or fails to put in place measures that could prevent the dissemination of it, or provide tools that help users share the content.

The court was also asked whether a platform operator’s activities fall within the scope of article 14 of the Directive on Electronic Commerce, to the extent that it covers content uploaded by users.

According to the court, in order to be exempted from liability under article 14, it is key to examine whether the provider plays a neutral role – i.e., whether its conduct is merely technical, automatic and passive, which means that it has no knowledge of or control over the content it stores, or whether that operator plays an active role that gives it knowledge of or control over that content.

The provider must have actual knowledge of the illegal activity or information, or must beware of facts or circumstances from which the illegal activity is apparent. Further, the illegal nature of the activity or information must be specifically established or readily identifiable, because freedom of expression means the provider cannot be subject to a general obligation to monitor information which they transmit or store, or to actively search for facts or circumstances indicating illegal activity.

We believe that article 17 of Directive 790/2019 is innovative and bears basic intrinsic differences to the CJEU decision because it provides that specific platforms defined as ‘online content sharing service providers’ (OCSSPs), which are platforms that host user-uploaded content and promote and organise content for profit-making purposes, perform an act of communication to the public simply by providing public access to copyright-protected works uploaded by users. According to the new provision, there is a communication to the public, so in the future it will not be necessary to debate this aspect, as in the case decided. The simple fact that the platform is an OCSSP and gives the public access to content uploaded by users constitutes communication to the public.

An OCSSP will be obliged, therefore, to obtain authorisation from the rights holder via a licensing agreement, for works uploaded by its users. It can no longer claim to be a passive host with no control over the content uploaded on the platform. It must provide access only to content that has been licensed. In the absence of a licence, the platform will not escape liability even if it took ex ante or ex post measures to mitigate infringing uses. A licence will cover activities carried out by the platform and its users.

If the platform cannot obtain a licence, it must demonstrate that it made best efforts to do so, and to restrict access to specific works, and in any event that it acted expeditiously, upon receiving notice, to disable access to, or to remove from its websites, the notified works or other subject matter, and made best efforts to prevent them being uploaded in the future.

Furthermore, the safe harbour exemption from liability provided by article 14(1) of the E-commerce Directive will not apply to OCSSPs, given that they perform copyright-restricted acts through their communication to the public. It is a unquestionable fact in accordance with article 17 that the platform performs a communication to the public and thus is ineligible for the hosting safe harbour.

On the other hand, article 17 will apply only to specific type of platforms (OCSSPs), whereas for the other platforms, the CJEU judgement will continue to have an impact. YouTube will certainly fall into the OCSSP category, but in case of Uploaded, there could be room for discussion.

We will have now to wait while the member states complete their legislative process to implement the DSM Directive to assess how the new provisions concerning platform liability which apply in practice.

Pietro Pouche is a partner and Giulia Maienza is an associate at Herbert Smith Freehills LLP. Mr Pouche can be contacted on +39 02 3602 1394 or by email: pietro.pouche@hsf.com. Ms Maienza can be contacted on +39 02 3602 1396 or by email: giulia.maienza@hsf.com.

Pietro Pouche and Giulia Maienza

Herbert Smith Freehills LLP