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Thursday, 27 April 2017

Filmspeler, the right of communication to the public, and unlawful streams: a landmark decision

Yesterday this blog reported that the Court of Justice of the European Union (CJEU) has issued yet another long-awaited judgment, this being the decision in Filmspeler, C-527/15.

At the time of writing, the text of the ruling was not yet available. Now that it is and having had a chance to read it, it seems to me that – despite its highly specific factual background (sale of multimedia players enabling free access to audiovisual works protected by copyright without the consent of the rightholders) - Filmspeler is a MAJOR copyright decision.

The reason is essentially two-fold:

·       First, because the Court relaxed the notion of what amounts to an ‘indispensable intervention [the judgment does not even contain a reference to the intervention being ‘indispensable’] for the sake of the right of communication to the public within Article 3(1) of the InfoSoc Directive. This means – as I also suggested in this article on GS Media written for Common Market Law Review – that a broader group of defendants might be now regarded as primarily liable for unauthorized acts of communication to the public.
·       Secondly, because the Court held that streaming unlicensed content can amount to copyright infringement, on consideration that the mandatory exemption for temporary copies within Article 5(1) of the InfoSoc Directive would not be applicable. This paves the way to holding not only those who provide unlawful streams, but also viewers of such streams, liable for copyright infringement.

Let’s take a closer look at both issues.

Construing
the right of communication to the public:
yes, but where to start,
wonders Bubi?
Construction of the right of communication to the public

The first issue for the Court to address was whether the concept of ‘communication to the public’ must be interpreted as covering the sale of a multimedia player on which there are pre-installed add-ons, available on the internet, containing hyperlinks to websites - that are freely accessible to the public - on which copyright-protected works have been made available to the public without the consent of the rightholders.

As usual, the CJEU recalled at the outset that the right of communication to the public, which is preventive in nature, must be interpreted broadly. This is so in order to fulfill one of the objectives of the InfoSoc Directive, ie to grant authors a ‘high level of protection’.

Provided that an act of communication to the public requires (1) an act of communication directed (2) to a public, what actually amounts to an act of communication to the public also requires an individual assessment and taking into account several complementary criteria. These – as the CJEU noted in GS Media – are not autonomous and are interdependent, and must be applied both individually and in their interaction with one another.

At para 31 of the Filmspeler decision the Court recalled that among such criteria, there is “the essential role played by the user. The user makes an act of communication when he intervenes, in full knowledge of the consequences of his action, to give access to a protected work to his customers and does so, in particular, where, in the absence of that intervention, his customers would not, in principle, be able to enjoy the broadcast work”.

Readers might remember that in his Opinion in GS Media, Advocate General (AG) Wathelet [here] had embraced a narrow understanding of what amount to such an ‘essential role’/’indispensable intervention’. The AG held the view that links posted on a website that direct to copyright works freely accessible on another website cannot be classified as an ‘act of communication’: the
intervention of the operator of the website that posts the hyperlinks is not indispensable to the
making available of the works in question to users. The CJEU did not go as far as AG Wathelet. However, it ‘limited’ liability for linking to unlicensed content to the situations in which [see further here]:

·       The defendant has knowledge that the content linked to is unlicensed and no defence is available to him;
·       The defendant operates for profit, so that he is presumed to have knowledge of the lawful/unlawful character of the content linked to, and he fails to rebut such presumption;
·       The defendant's link circumvents restrictions to access.

An indispensable intervention
to allow access
Why Filmspeler is different

Filmspeler is different. Although possibly a natural evolution of GS Media and preceding case law, it seemingly broadens the framework of liability. This is essentially because the intervention needed to fall within the scope of Article 3(1) does not require to be strictly indispensable: mere facilitation seems enough.

The Court excluded that the sale of a multimedia player could be regarded as akin to the mere provision of physical facilities [this is outside the scope of Article 3(1), as Recital 27 in the preamble to the InfoSoc Directive clarifies], and concluded that the communication at hand to would be to a ‘public’.

With regard to the former, the Court noted that “intervention enabling a direct link to be established between websites broadcasting counterfeit works and purchasers of the multimedia player, without which the purchasers would find it difficult to benefit from those protected works, is quite different from the mere provision of physical facilities … [I]t is clear  … that the streaming websites at issue in the main proceedings are not readily identifiable by the public and the majority of them change frequently.” [41]

Turning to the notion of ‘public’, the court held that there is a ‘public’ if a number (above de minimis) of persons purchases or may acquire the multimedia player in succession and has an internet connection [44 and 45; so potentially this means ‘anyone’]. The CJEU also noted that in this case the works would be communication to a ‘new public’. [47]

Having established that in the case at hand there would be a communication to a new public, the CJEU turned to GS Media, and noted that: (1) the defendant has knowledge that the content linked to is unlawful [50]; (2) the defendant has a profit-making intention.

Readers will remember that in GS Media the CJEU failed to provide guidance on how the profit-making intention criterion should be assessed: should one consider whether the relevant link is provided with the intention to make a profit? Or should rather one consider the surrounding environment to the relevant link, eg whether it is provided on a website that is operated for profit?

Although both alternatives appear plausible, consideration of the context in which the relevant link is provided appears to be more in line with earlier CJEU case law and, now, Filmspeler

In both SGAE and FAPL, in fact, the Court considered that the profit-making nature of the communication was apparent from the fact that the defendants transmitted the relevant works in their own establishment (hotels and a public house, respectively) in order to benefit therefrom and to attract customers to whom the works transmitted are of interest. 

Similarly, in Filmspeler the profit-making intention subsists because “the multimedia player is supplied with a view to making a profit, the price for the multimedia player being paid in particular to obtain direct access to protected works available on streaming websites without the consent of the copyright holders … [T]he main attraction of such a multimedia player for potential purchasers lies precisely in the fact that add-ons are pre-installed on it which enable users to gain access to sites on which copyright-protected films are made available without the consent of the copyright holders.” [51]

Also known as 'three-step test'
Streaming of unlicensed content

The next, topical, issue to address was whether the streaming of unlicensed content could result in liability infringement of the right of reproduction or could be, instead, excused under the exemption for temporary copies within Article 5(1) of the InfoSoc Directive.

As readers know, the exemption within Article 5(1) is subject to five cumulative conditions that must be interpreted strictly: (1) the act of reproduction is temporary; (2) it is transient or incidental; (3)  it is an integral and essential part of a technological process; (4) the sole purpose of that process is to enable a transmission in a network between third parties by an intermediary or a lawful use of a work or protected subject matter; and (5) that act does not have any independent economic significance.

In addition, Article 5(1) is subject to the three-step test in Article 5(5).

The CJEU held that the acts of reproduction at issue do not relate to a lawful use of copyright works, also because the main attraction of Filmspeler’s player is the pre-installation of the add-ons. In addition, and as a consequence, the resulting temporary acts of reproduction are such as to adversely affect the normal exploitation of those works and causes unreasonable prejudice to the legitimate interests of the right holder [71].

Comment

As mentioned, the background proceedings in Filmspeler relate to a very specific factual background, so I expected that the resulting CJEU decision could have limited impact.

This does not seem to be the case.

Watch out what you're watching!
Communication to the public

As regards the construction of communication to the public, two main aspects are worth noting.

First, that facilitation is seemingly akin to intervention, which arguably does not even need to be ‘indispensable’. This makes me think when the CJEU decides Ziggo, it will follow AG Szpunar [here] and hold that a subject like The Pirate Bay makes acts of communication to the public, and is primarily liable for copyright infringement.

In the immediate aftermath of the AG Opinion in Ziggo and the CJEU decision in Filmspeler some commentators have submitted that the CJEU has de facto harmonised secondary liability, ie an area of copyright that has not been formally harmonized at the EU level. That might be true, but it is important to note that not all EU Member States envisage a secondary liability regime for copyright infringement.

The second aspect is that after Filmspeler it should be clear that one’s own profit-making intention should be appreciated in relation to the context, ie surrounding environment, in which the allegedly infringing act takes place, rather than whether the actual act of infringement is motivated by a profit-making intention. This, as seen from the early national applications of GS Media (particularly in Sweden and Germany), should broaden the situations of prima facie infringement.

Unlawful streaming

Turning to liability for unlawful streaming, just a few weeks ago the Derbyshire Council Trading Standards in the UK submitted that streaming unlicensed content would not give rise to liability. After Filmspeler, this does no longer seem true.

Although there might be a discussion as to whether the acts of reproduction are actually made by the viewer (rather than the site that hosts the stream), it appears that now the case of unlawful streams is fully comparable to that of unlawful downloads. In fact, the reasoning of the CJEU in Filmspeler closely resembles that in ACI Adam [Katposts here], ie the case concerning whether unlawful downloads of copyright works could be covered by the private copying exception.

In conclusion

All in all, Filmspeler is a very good victory for rightholders: this is so as far as their enforcement efforts are concerned, but also in relation to lobbying work at various levels – notably the EU and the drafting of a ‘value gap’ provision.

6 comments:

Pedro Malaquias said...

In relation to the reproduction rights, this decision creates an (in my view, unjustifiable) difference between viewing of copyright material in physical form and on the internet (also, see Lord Sumption in Meltwater)

In addition, considering the references in p69 (i.e. "Advertising" and "main attraction of that player for potential purchasers"), I wonder if a different decision would be taken if I google "film x" and then I click on one of the results not knowing if it is legal or illegal. We are more and more distancing ourselves from the strict liability idea...

Anyway, this is how I though about this issue following ACI(whose reasoning, in my view, would be limited to the private copying / download scenario):

"By viewing the stream, a user is potentially infringing the reproduction right, as copies are made: copies from buffering, the screen copy and (depending upon the kind of stream) copies from caching.

The main question is the applicability of any exception. After the CJEU clarification that article 5(2)(b) cannot be interpreted to allow reproductions from unlawful sources (ACI Adam), the only possibility is for users to rely on art. 5(1) InfoSoc. Applying the five condition of 5(1) to streaming, results in the following:
• Streaming is not the same as downloading, as no permanent copies are created in the computer hard disk – any existing copy is, therefore, temporary.
• It seems that any given copy on the computer resulting from streaming is transient as it will be deleted automatically from the computer memory once the streaming transmission is closed (Infopaq I).
• While streaming, the temporary copies of the work are an essential and integral part of a technological process, as they are necessary for its correct and efficient function (Infopaq II).
• A use should be considered lawful where it is authorised by the right holder or where it is not restricted by the applicable legislation (FAPL and Infopaq II). In FAPL, it was held that the visual display of broadcasts did not reveal an act restricted by the EU and, therefore, fulfilled this condition. A similar answer should be giver to streaming, in which any temporary reproductions are intended to a non-restricted act: the mere reception of the works.
• Any temporary act of reproduction resulting from viewing a streaming lacks independent economic significance, since they do not enable the generation of any additional profit to the user that goes beyond that derived from a lawful use of the protected work and do not lead to any modification of such work (FALP and Infopaq II). Applying to this scenario, the occurring reproductions do not have any economic value other than that which is inherent in its mere reception and viewing and, hence, cannot be regarded as having independent economic significance.
• (Following Infopaq II, article 5(5) is fulfilled as long as all the conditions of article 5(1) are fulfilled)"

Anonymous said...

@Pedro: Do you understand what you typed there? I have no idea what your discussions about streaming have to do with this case.

The issue in this case is that Filmspeler sells a device with (only?) special add-ons installed for the sole purpose of watching copyright protected content without the consent of the copyright owner.

Google automatically indexes the whole Internet and involuntarily (at least that's what they say) also provides links to pirated material. That's an entirely different situation.

Pedro Malaquias said...

@Anonymous Thursday, 27 April 2017 at 14:41:00 BST:

In the case pending in Netherlands, one of the parties argued that the streaming of works protected by copyright from an illegal source is not a ‘lawful use’ within the meaning of Article 5 of Directive 2001/29. As a result, questions 3 and 4 of the reference for preliminary ruling (which were found admissible by the CJEU) refer to "reproductions made by END-USERS during the streaming of a copyright-protected works".

The answer to these questions was "Article 5(1) and (5) of Directive 2001/29 must be interpreted as meaning that acts of temporary reproduction, on a multimedia player, such as that at issue in the main proceedings, of a copyright-protected work obtained by streaming from a website belonging to a third party offering that work without the consent of the copyright holder does not satisfy the conditions set out in those provisions".

Is is true that the CJEU decision refers to the use of multimedia player (although "It is not for the Court (...) to decide issues of fact raised in the main proceedings"). Still, in this point, we are discussing solely the acts of the USER / VIEWER (primary infringement and liabilities), not the ones from the site that hosts the stream, nor the ones from Filmspeler. As a result, I still think that my considerations are pertinent.

Finally, I used accessing a streaming via Google as an example. In such circumstances, would there be an infringement by / liability of the USER / VIEWER? If I wanted to extrapolate even more, I could have referred to buying a counterfeit dvd and watching it as there will result in buffer and monitor copies. If I wanted to go even further, I could refer to "a pirated copy of a protected book or views a forgery of a protected painting".

The main problem with this decision is its implications in relation to the infringement of the reproduction rights by users / viewers. As mentioned in the post, "Turning to liability for unlawful streaming, just a few weeks ago the Derbyshire Council Trading Standards in the UK submitted that streaming unlicensed content would not give rise to liability. After Filmspeler, this does no longer seem true.".

Anonymous said...

I think Pedro is correct.

It seems that the Commission completely opposed the Court's approach (See the AG's Opinion) and pointed out the harmful consequences of such an approach especially for consumers. The Court tries to safeguard Meltwater and Premier League (Grand Chamber and this is a mere chamber.

Due to the absence of secondary liability remedies in the Netherlands, rightholders have had to subvert the process to get this caught under the right.

Bad decision -Article 3 case law remains a mess.

Not sure what the IPKAT is saying about the value gap as if the EP is clever it will ensure the value gap is kicked out.

Eleonora Rosati said...

@Anonymous at 16:56: What I meant re the value gap is that the construction of Article 13 assumes that hosting providers make acts of communication to the public. Before Filmspeler I was unsure whether that would be really the case, but after this ruling the overall architecture of Article 13 appears more plausible (at least from the point of view of Art 3 InfoSoc Directive).

PHOSITA said...

Dreadful judicial lawmaking: conflating inducing/facilitating infringement with infringement itself. Incredible that the CJEU felt itself competent to extend the definition of "communication" to acts in which nothing is communicated, on the basis of the need for a "broad reading". Broad, yes, but not boundless. Let's hope that the CJEU does not act like this in references from the UPC.

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