YouTube and Uploaded succeeded before the European Court but under some conditions

The European Court has issued a decision on the joined cases C‑682/18 и C‑683/18 Frank Peterson v Google LLC and Elsevier Inc. v Cyando AG.

In a nutshell these disputes target the question to what extent platform operators violate copyrights over uploaded works by their users. This blog reported about the Advocate General of the EU Court opinion on these cases last year.

Case C‑682/18 has the following background:

Mr Peterson is a music producer and claims to be the owner of the company Nemo Studios.

On 20 May 1996 the company Nemo Studio Frank Peterson entered into a worldwide exclusive artist contract with the performer Sarah Brightman covering the use of audio and video recordings of her performances. In 2005 that contract was amended by a further agreement. On 1 September 2000 Mr Peterson concluded a licence agreement, in his own name and on behalf of Nemo Studios, with Capitol Records Inc. covering the exclusive distribution of the recordings and performances of Sarah Brightman by Capitol Records.

The album A Winter Symphony, containing works performed by Sarah Brightman, was released in November 2008. On 4 November 2008 Sarah Brightman began a tour called the ‘Symphony Tour’ in which she performed the works she had recorded for the album.

On 6 and 7 November 2008 works taken from that album and private recordings from concerts on that tour could be accessed on the YouTube online platform, accompanied by still and moving images. By letter of 7 November 2008, Mr Peterson, who produced, in support of his request, screenshots intended to establish the facts alleged, contacted Google Germany and demanded that both Google Germany and Google issue cease-and-desist declarations under threat of penalties. Google Germany then approached YouTube, which used the screenshots sent by Mr Peterson to find the internet addresses (URLs) of the videos in question manually and blocked access to them. The parties disagree as to the extent to which access was blocked.

On 19 November 2008 audio recordings from Sarah Brightman’s performances, accompanied by still and moving images, could once again be accessed on YouTube’s online platform.

Consequently, Mr Peterson brought an action before the Regional Court, Hamburg, Germany against Google and YouTube (‘the defendants in the main proceedings’) seeking an injunction, disclosure of information and a declaration that they were liable to pay damages. In support of that action, he relied on his own rights as the producer of the album A Winter Symphony, as well as his own rights and rights deriving from those of Sarah Brightman associated with the performance of the works on that album, which was created with his artistic participation as both producer and backing vocalist. He also submits, with regard to the recordings of the ‘Symphony Tour’ concerts, that he is the composer of and author of the lyrics of various works on the album. In addition, he holds, as publisher, rights derived from those of the authors in respect of various musical works.

By judgment of 3 September 2010, the court hearing the case upheld the action in so far as it related to three musical works and dismissed the action as to the remainder.

Mr Peterson and the defendants in the main proceedings brought appeals against that decision before the Higher Regional Court, Hamburg, Germany. Mr Peterson requested that the defendants in the main proceedings be prohibited from making available to the public, in the form of versions that are either synchronised or are otherwise linked to third-party content or to advertisements, 12 audio recordings and performances appearing on the album A Winter Symphony by Sarah Brightman, which he produced, and 12 musical works composed by him taken from the ‘Symphony Tour’ concerts or, in the alternative, from allowing third parties to make the relevant works available to the public. He also required that information be provided concerning the illegal activities and the turnover or profits generated through those activities. In addition, he claimed that YouTube should be ordered to pay damages and that Google should be ordered to return sums that constituted unjust enrichment. In the alternative, he requested information on the users of the YouTube online platform who had uploaded the works in question under pseudonyms.

By judgment of 1 July 2015, the Higher Regional Court, Hamburg reversed in part the judgment delivered at first instance and ordered the defendants in the main proceedings to prevent third parties, in respect of seven musical works, from making available to the public versions that are either synchronised or are otherwise linked to third-party content or to advertisements of audio recordings or performances by the artist from the album A Winter Symphony. Further, it ordered the defendants in the main proceedings to provide the names and postal addresses of the users of the platform who had uploaded the musical works to that platform using a pseudonym or, in the absence of a postal address, the email address of those users. The appeal court dismissed the action as to the remainder as being inadmissible in part and unfounded in part.

As regards seven musical works from the album A Winter Symphony, the appeal court found that Mr Peterson’s rights had been infringed by the fact that those works were posted, without his permission, on YouTube’s video-sharing platform and were accompanied by moving images, such as films taken from Sarah Brightman’s promotional video. The appeal court found that YouTube was not liable for those infringements as the perpetrator or as a participant, since it did not play any active role in the creation or posting of the content at issue on the platform and, moreover, did not adopt that third-party content as its own. In addition, it did not demonstrate the intent required in order to be liable as a participant, as it had no knowledge of the specific acts of infringement. The appeal court held that YouTube was nevertheless liable as an ‘interferer, since it had failed to discharge its obligations as to its own conduct. Thus, as regards those works, although it had been notified of illegal activities relating to those works, it had not immediately deleted the content at issue or blocked access to that content.

By contrast, YouTube had not infringed any conduct obligations in respect of the recordings of the ‘Symphony Tour’ concerts. It is true that the videos featuring those musical works were unlawfully posted by third parties on the video-sharing platform. However, YouTube either did not have sufficient information about those infringements, or blocked access to the content in question in good time or, in certain cases, could not be accused of having infringed the obligation to block that content immediately.

The Federal Court of Justice, Germany gave leave for an appeal on a point of law (Revision) against the judgment on appeal, but limited it to the grounds of appeal which had been found to be admissible by the appeal court. Mr Peterson maintains his grounds of appeal in the context of his appeal on a point of law (Revision) despite the fact that the appeal court held that they were unfounded. In their appeal on a point of law (Revision), the defendants in the main proceedings claim that the action should be dismissed in its entirety.

The referring court notes that the success of Mr Peterson’s appeal depends, in the first place, on whether YouTube’s conduct in the dispute in the main proceedings constitutes a communication to the public within the meaning of Article 3(1) of the Copyright Directive. It takes the view that that could be the case only in respect of the seven musical works from the album A Winter Symphony which YouTube did not expeditiously remove or block despite having been informed of the fact, established by the appeal court, that those works were illegally made available to the public via its platform.

That court goes on to state that, by operating its platform, YouTube does not play a role that is indispensable, within the meaning of the case-law of the Court, which is a prerequisite of its conduct being classified as an act of communication if, after having been made aware that content-infringing copyright is being made available to the public, it deletes that content or immediately blocks access to it. In order for YouTube to be regarded as having such a role, it is necessary for it to be fully aware of the consequences of its conduct and, in particular, of the lack of authorisation from the rightholder. Since videos are uploaded automatically, YouTube has no knowledge that copyright-infringing content is being made available to the public until it is informed of this by the rightholder. The referring court states that YouTube informs users, in its terms of service, and then subsequently during the upload process, that they are prohibited from infringing copyright via its platform and provides rightholders with tools which they can use to take action against such infringements.

The referring court states that, if YouTube’s conduct at issue in the main proceedings cannot be classified as a communication to the public within the meaning of Article 3(1) of the Copyright Directive, it is then necessary to determine, in the second place, whether the activity of the operator of a video‑sharing platform, such as YouTube’s, comes within the scope of Article 14(1) of the Directive on Electronic Commerce, so that that operator may benefit from an exemption from liability in respect of the information stored on its platform. That court notes that, as is apparent from the findings made by the appeal court, YouTube did not associate the videos infringing Mr Peterson’s copyright with advertising. However, the question arises whether YouTube nevertheless played an active role, which would preclude the application of that provision, in view of the other circumstances of the present case, as summarised in paragraph 30 of the present judgment.

In the event that YouTube’s role is to be classified as neutral and, therefore, that its activity falls within the scope of Article 14(1) of the Directive on Electronic Commerce, the question arises, in the third place, as to whether ‘actual knowledge of illegal activity or information’ and ‘[awareness] of facts or circumstances from which the illegal activity or information is apparent’, within the meaning of that provision, must relate to specific illegal activities or information. In the view of the referring court, that question should be answered in the affirmative. It follows from the wording and scheme of that provision that it is not sufficient that the provider was generally aware that its services are used to engage in some illegal activities. An infringement must therefore be notified to the provider in a manner that is clear and precise so as to allow the provider to establish that infringement without conducting a detailed legal or factual examination.

The referring court states that, if YouTube’s conduct at issue in the main proceedings falls within the scope of Article 14(1) of the Directive on Electronic Commerce, the question also arises, in the fourth place, as to whether it is compatible with Article 8(3) of the Copyright Directive that the rightholder should not be in a position to obtain an injunction against the operator of a video-sharing platform, whose services have been used by a third party to infringe copyright or related rights, unless the operator, after having been notified of a clear infringement of such a right, has not acted expeditiously to delete the content in question or to block access to it and to ensure that such infringements do not recur. In the view of that court, that question should be answered in the affirmative, since it follows from Article 14(1) and Article 15(1) of the Directive on Electronic Commerce that an injunction against such an operator may be provided for under the national law of the Member States only where that operator has actual knowledge of the illegal activity or information.

In the event that YouTube’s conduct does not fall within the scope of Article 14(1) of the Directive on Electronic Commerce, the question arises, in the fifth place, as to whether YouTube must, even in the absence of a communication to the public, within the meaning of Article 3(1) of the Copyright Directive, be regarded as an ‘infringer’ who, unlike an ‘intermediary’, may, under Articles 11 and 13 of the Enforcement Directive, be the subject not only of an injunction, but also of an order to pay damages or to recover profits.

Once again, in the situation referred to in the previous paragraph and in the event that the Court were to concur, in that regard, with the referring court’s view that YouTube should be regarded as an infringer, the question arises, in the sixth and last place, whether the obligation of such an infringer to pay damages, under Article 13(1) of the Enforcement Directive, may be made subject to the condition that it acted deliberately with regard both to its own illegal activity and the specific illegal activity of the third party.

In those circumstances, the Bundesgerichtshof (Federal Court of Justice) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)  Does the operator of a video-sharing platform on which videos containing content protected by copyright are made publicly accessible by users without the consent of the rightholders carry out an act of communication within the meaning of Article 3(1) of [the Copyright Directive] if:

– the operator earns advertising revenue by means of the platform,

– the upload process takes place automatically and without material being seen or monitored in advance by the operator,

–  in accordance with the terms of service, the operator receives a worldwide, non-exclusive and royalty-free licence for the videos for the duration for which the videos are posted,

–  in the terms of service and during the upload process, the operator points out that copyright-infringing content may not be posted,

–  the operator provides tools with which rightholders can take steps to block videos that infringe their rights,

–  on the platform, the operator prepares search results in the form of rankings and content categories, and displays to registered users an overview of videos recommended on the basis of videos previously seen by those users,

if the operator is not specifically aware of the availability of copyright-infringing content or, after having become aware, immediately deletes that content or expeditiously disables access thereto?

(2) If Question 1 is answered in the negative:

Does the activity of the operator of a video-sharing platform under the conditions described in Question 1 come within the scope of Article 14(1) of [the Directive on Electronic Commerce]?

(3) If Question 2 is answered in the affirmative:

Must the actual knowledge of the illegal activity or information and the awareness of the facts or circumstances from which the illegal activity or information is apparent relate to specific illegal activities or information pursuant to Article 14(1) of [the Directive on Electronic Commerce]?

(4)  Also if Question 2 is answered in the affirmative:

Is it compatible with Article 8(3) of [the Copyright Directive] if the rightholder is in a position to obtain an injunction against a service provider whose service consisting of the storage of information provided by a recipient of the service has been used by a recipient of the service to infringe copyright or a related right, only if such an infringement has been repeated after notification of a clear infringement has been provided?

(5) If Questions 1 and 2 are answered in the negative:

Is the operator of a video-sharing platform under the conditions described in Question 1 to be regarded as an infringer within the meaning of the first sentence of Article 11 and Article 13 of [the Enforcement Directive]?

(6) If Question 5 is answered in the affirmative:

Can the obligation of such an infringer to pay damages pursuant to Article 13(1) of [the Enforcement Directive] be made subject to the condition that the infringer acted intentionally with regard both to his own illegal activity and to the illegal activity of the third party, and knew, or ought reasonably to have known, that users use the platform for specific acts of infringement?’

 Case C‑683/18 has the following background:

Elsevier is an international specialist publisher, which holds the exclusive rights to use the works at issue in the main proceedings.

Cyando operates the ‘Uploaded’ file-hosting and -sharing platform, which can be accessed via the websites uploaded.net, uploaded.to and ul.to. That platform offers all internet users, free of charge, storage space for uploading files regardless of content. In order to be able to upload files to that platform, it is necessary to create an account, with a user name and password, by providing, inter alia, an email address. The uploading of a file by a user happens automatically without the material being seen or monitored in advance by Cyando. Each time a file is uploaded, Cyando automatically creates a download link which allows direct access to the file concerned and automatically sends that link to the user who uploaded it.

Cyando offers neither a directory nor a search function for the files stored on its platform. Users may nevertheless share on the internet the download links sent to them by Cyando, in particular in blogs, forums or even in ‘link collections’. Those collections, which are provided by third parties, index those links, provide information on the content of the files to which those links refer and thus enable internet users to search for the files that they wish to download. In that way, other internet users can access the files stored on Cyando’s platform.

The downloading of files from Cyando’s platform is free of charge. The quantity of downloads and the download speed are nevertheless limited for unregistered users and for users who have a free subscription. Users with a paid subscription have a daily download volume of 30 GB, up to a cumulative maximum of 500 GB with no restriction on download speed. They can download an unlimited number of files simultaneously with no waiting time between downloads. The price for such a subscription ranges between EUR 4.99 for two days and EUR 99.99 for two years. Cyando pays remuneration to users who have uploaded files according to how many times those files are downloaded. For example, up to EUR 40 is paid for 1 000 downloads.

According to Cyando’s general terms and conditions, users of its platform are prohibited from infringing copyright via that platform.

The referring court states that that platform is used both in ways which are lawful and in ways which infringe copyright. Cyando was informed that more than 9 500 works had been uploaded to its platform, in respect of which, in breach of copyright, download links were shared on the internet on approximately 800 different websites (link collections, blogs, forums).

In particular, on the basis of searches carried out from 11 to 19 December 2013, Elsevier notified Cyando, by two letters dated 10 January 2014 and 17 January 2014, that three works in respect of which it holds exclusive rights of use, namely Gray’s Anatomy for StudentsAtlas of Human Anatomy and Campbell-Walsh Urology, may be consulted as a file on the Uploaded platform, via the link collections rehabgate.com, avaxhome.ws and bookarchive.ws.

Elsevier brought an action against Cyando before the Regional Court I, Munich, Germany. Elsevier requested, inter alia, that a prohibitory injunction be issued against Cyando, principally, as the party responsible for the copyright infringements with respect to the works at issue in the main proceedings, in the alternative, as a participant in those infringements and, in the further alternative, as an ‘interferer. Elsevier also requested that Cyando be ordered to provide it with certain information and to pay damages to it in respect of those infringements.

By judgment of 18 March 2016, the Regional Court I, Munich issued a prohibitory injunction ordering Cyando, as a participant, to cease infringing copyright in three of the works at issue in the main proceedings, namely those cited in the letters of 10 January 2014 and 17 January 2014.

Elsevier and Cyando each brought an appeal against that decision before the Higher Regional Court, Munich, Germany.

By judgment of 2 March 2017, the appeal court varied the judgment at first instance. That court issued a prohibitory injunction ordering Cyando, as an ‘interferer’, to cease infringing copyright in the three works referred to in the letters of 10 January 2014 and 17 January 2014 and dismissed the action as to the remainder.

The appeal court held, inter alia, that Elsevier could not pursue a claim against Cyando as the party infringing the rights of copyright in question. Cyando’s contribution was limited to providing the technical means allowing the works at issue to be made available to the public. As it had no knowledge that users of its platform were carrying out such infringements, Cyando could also not be regarded as a participant in those infringements. However, as an interferer, Cyando was required to ensure that the infringements of the copyright in the three works cited in the letters of 10 January 2014 and 17 January 2014 were brought to an end. By contrast, as regards another work, entitled Robbins Basic Pathology, which is also at issue in the main proceedings, Cyando had not infringed its monitoring obligations, since that work was not republished until two and a half years after the first infringement was determined, which triggered those monitoring obligations. Furthermore, as an ‘interferer’, Cyando was not required to pay damages.

In its examination, the appeal court found, inter alia, that, by virtue of the way in which Cyando’s remuneration system is structured, the fact that it provides download links which allow direct access to uploaded files and the fact that it is possible to use its platform anonymously, Cyando gives significant encouragement to the use of its platform for illegal purposes. Users interested in downloading files are more likely to take out a paid subscription, which gives them the right to a preferential account, where they can, via that platform, download desirable works protected by copyright. Cyando encourages its users to upload files which, it can be assumed, will often be downloaded, by remunerating them according to how frequently the files they have uploaded are downloaded and by allowing them to benefit from the revenue generated when new users are acquired. Since that remuneration is dependent on the number of times a file is downloaded and, therefore, on how attractive that file is to the public, users are encouraged to upload copyright-protected content, access to which would otherwise have to be paid for. Furthermore, the fact that download links give direct access to uploaded files allows users who have uploaded the files easily to share those files with users who are interested in downloading, in particular by way of link collections. Last, the fact that the platform can be used anonymously reduces users’ risk of being subject to legal proceedings for copyright infringements.

On the other hand, although Elsevier had claimed at the appeal stage that copyright-infringing content represented between 90 and 96% of the files that could be consulted on Cyando’s platform, which is disputed by Cyando, the appeal court made no finding as to the proportion of the files on that platform which had been uploaded legally as compared with the proportion of the files there which had been uploaded illegally.

By its appeal on a point of law (Revision), in respect of which leave was given by the Federal Court of Justice and which Cyando seeks to have dismissed, Elsevier maintains its claims.

The referring court states that the question of whether the appeal is well founded turns, in the first place, on whether the conduct of the operator of a file-hosting and -sharing platform, such as Cyando, constitutes a communication to the public within the meaning of Article 3(1) of the Copyright Directive. It takes the view that Cyando could be regarded as playing a role that is indispensable, within the meaning of the Court’s case-law, which is a prerequisite of its conduct’s being classified as an act of communication. In that regard, the referring court notes that it is true that Cyando does not know that protected content is illegally being made available until the rightholder informs it of what is happening, since that content is uploaded by third parties. Furthermore, Cyando informs its users in the conditions of use of its platform that they are prohibited from infringing copyright via that platform. However, Cyando does know that a large volume of protected content is illegally communicated to the public via its platform. Moreover, Cyando significantly increases the risk that its platform is used for illegal purposes by virtue of its remuneration system, the fact that it provides download links which allow direct access to uploaded files and the fact that it is possible to use its platform anonymously.

Should the Court find that the conduct of the operator of a file-hosting and ‑sharing platform, such as Cyando’s, does not constitute a communication to the public within the meaning of Article 3(1) of the Copyright Directive, the referring court asks, in essence, questions that are the same as the second to sixth questions referred in Case C‑682/18.

In those circumstances, the Federal Court of Justice decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:

‘(1)  (a) Does the operator of a [file-hosting and -sharing platform] via which files containing content protected by copyright are made publicly accessible by users without the consent of the rightholders carry out an act of communication within the meaning of Article 3(1) of [the Copyright Directive] if:

–  the upload process takes place automatically and without being seen or monitored in advance by the operator,

–  in the conditions of use, the operator indicates that copyright‑infringing content may not be posted on the platform,

–  it earns revenue through the operation of the service,

–  the [platform] is used for lawful applications, but the operator is aware that a considerable amount of copyright-infringing content (over 9 500 works) is also available,

–  the operator does not offer a directory of the content or a search function, but the unlimited download links provided by it are posted by third parties on the internet in link collections that contain information regarding the content of the files and make it possible to search for specific content,

–  via the structure of the remuneration for downloads that are paid by it in accordance with demand, the operator creates an incentive to upload content protected by copyright that users could otherwise only obtain by payment therefor

and

–  by providing the possibility of uploading files anonymously, it increases the probability that users that will not be held legally accountable for copyright infringements?

(b) Does this assessment change if the copyright-infringing content provided by the [file-hosting and -sharing platform] accounts for 90% to 96% of the overall use?

(2) If Question 1 referred is answered in the negative:

Does the activity of the operator of a [file-hosting and -sharing platform] under the conditions described in Question 1 come within the scope of Article 14(1) of [the Directive on Electronic Commerce]?

(3) If Question 2 referred is answered in the affirmative:

Must the actual knowledge of the unlawful activity or information and the awareness of the facts or circumstances from which the unlawful activity or information is apparent relate to specific unlawful activities or information pursuant to Article 14(1) of [the Directive on Electronic Commerce]?

(4) Also if Question 2 is answered in the affirmative:

Is it compatible with Article 8(3) of [the Copyright Directive] if the rightholder is in a position to obtain an injunction against a service provider whose service consisting of the storage of information provided by a recipient of the service has been used by a recipient of the service to infringe copyright or related rights, only if such an infringement has recurred after notification of a clear infringement has been provided?

(5) If Questions 1 and 2 are answered in the negative:

Is the operator of a [file-hosting and -sharing platform] under the conditions described in Question 1 to be regarded as an infringer within the meaning of the first sentence of Article 11 and Article 13 of [the Enforcement Directive]?

(6) If Question 5 is answered in the affirmative:

Can the obligation of such an infringer to pay damages pursuant to Article 13(1) of [the Enforcement Directive] be made subject to the condition that the infringer must have acted intentionally with regard both to his or her own unlawful activity and to the unlawful activity of the third party, and knew, or ought reasonably to have known, that users use the platform for specific acts of infringement?’

The Court’s decision:

1. 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 the operator of a video-sharing platform or a file-hosting and sharing platform, on which users can illegally make protected content available to the public, does not make a ‘communication to the public’ of that content, within the meaning of that provision, unless it contributes, beyond merely making that platform available, to giving access to such content to the public in breach of copyright. That is the case, inter alia, where that operator has specific knowledge that protected content is available illegally on its platform and refrains from expeditiously deleting it or blocking access to it, or where that operator, despite the fact that it knows or ought to know, in a general sense, that users of its platform are making protected content available to the public illegally via its platform, refrains from putting in place the appropriate technological measures that can be expected from a reasonably diligent operator in its situation in order to counter credibly and effectively copyright infringements on that platform, or where that operator participates in selecting protected content illegally communicated to the public, provides tools on its platform specifically intended for the illegal sharing of such content or knowingly promotes such sharing, which may be attested by the fact that that operator has adopted a financial model that encourages users of its platform illegally to communicate protected content to the public via that platform.

2. Article 14(1) 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’) must be interpreted as meaning that the activity of the operator of a video-sharing platform or a file-hosting and -sharing platform falls within the scope of that provision, provided that that operator does not play an active role of such a kind as to give it knowledge of or control over the content uploaded to its platform.

Article 14(1)(a) of Directive 2000/31 must be interpreted as meaning that, for such an operator to be excluded, under that provision, from the exemption from liability provided for in Article 14(1), it must have knowledge of or awareness of specific illegal acts committed by its users relating to protected content that was uploaded to its platform.

3. Article 8(3) of Directive 2001/29 must be interpreted as not precluding a situation under national law whereby a copyright holder or the holder of a related right may not obtain an injunction against an intermediary whose service has been used by a third party to infringe his or her right, that intermediary having had no knowledge or awareness of that infringement, within the meaning of Article 14(1)(a) of Directive 2000/31, unless, before court proceedings are commenced, that infringement has first been notified to that intermediary and the latter has failed to intervene expeditiously in order to remove the content in question or to block access to it and to ensure that such infringements do not recur. It is, however, for the national courts to satisfy themselves, when applying such a condition, that that condition does not result in the actual cessation of the infringement being delayed in such a way as to cause disproportionate damage to the rightholder.