The Great Escape: Rapidshare's managers avoid criminal sanctions in Switzerland

From former Guest Kat Peter Ling comes an interesting report on that most rare of copyright cases, a criminal complaint based on infringement. What do Kat readers think—yes, no, maybe?

Rapidshare was an online file hosting service that operated between 2002 and 2015. At its peak, it was among the internet's 20 most visited websites and it hosted several petabytes of information. Rapidshare's version of file hosting was in distinct contrast to other providers of similar services (think Dropbox or Google Drive).

Uploads were made easy and free, while downloads were made artificially slow, and users were encouraged to purchase a subscription, allowing for faster download speeds. The service appears to have made most of its profits from subscriptions for fast file downloads.

Rapidshare maintained its offices in Switzerland and its servers in Germany. In 2010, several right holders filed a criminal complaint for copyright infringement against three individuals involved with Rapidshare. In a recently published decision, the Zug Criminal Court ruled that the defendants were not liable for copyright infringement under criminal law.

Still, the court ordered two of the defendants to pay court costs and attorneys' fees to the right holders because it considered them liable for copyright infringement under civil law. This is possible under Swiss criminal procedure law if the defendants have "unlawfully or culpably caused the proceedings to be initiated", even in case of an acquittal.

The court's analysis of potentially infringing acts can be broken down into four steps, as follows:

	Who	Description of the acts	Analysis of the court
1	Uploader	Uploads protected work to Rapidshare's server.	The upload of a protected work to a non-public server is covered by the private use exemption of Swiss copyright law and is thus lawful.
2	Rapidshare	Creates a download link and provides it to Uploader.	Creating a download link and providing it to the Uploader is not relevant under copyright law.
3	Uploader	Shares the download link, either with a specific person or with the general public on dedicated link-sharing platforms.	Sharing the download link with the general public constitutes copyright infringement (civil and criminal liability) by the Uploader (violation of the right to make available).
4	Downloader	Uses the download link to download the work from Rapidshare's server.	The download for private use is covered by the private use exemption of Swiss copyright law and is thus lawful.

 In other words, the court found that only step 3 amounted to copyright infringement. As this step had been committed by the Uploaders on third party platforms, the only question for the court was whether the defendants have been aiding or abetting the sharing of the download links carried out by the Uploaders. The court answered this question in the negative, mainly because it considered that it lacked jurisdiction over most relevant acts.

In Swiss criminal law, aiding or abetting a felony that takes place outside of Switzerland is not subject to Swiss criminal sanctions, even if the aiding or abetting itself takes place in Switzerland. In this case, the prosecutor had not shown that any Uploaders were located in Switzerland when they shared the download links, nor that any third-party link-sharing platforms were in Switzerland.

Therefore, the court was of the view that the sharing of the links on third-party platforms by the Uploaders did not have a sufficient connection to Switzerland. That these third-party platforms could be accessed from Switzerland was considered insufficient connection with Switzerland. As such, the court ruled that it--

was lacking jurisdiction in relation to the unlawful sharing of the links – including the potential aiding or abetting of these acts by the Defendants.

The court deemed that it only had jurisdiction regarding the sharing of links to content owned by entities based in Switzerland. Here, the issue of the statute of limitations arose. In particular, because the criminal prosecution of copyright infringement for commercial gain is subject to a longer limitation period than is copyright infringement without such an intent. In this case, the shorter limitation period for non-commercial infringement had lapsed, so the defendants could only be prosecuted if the sharing of the "Swiss" works had been made "for commercial gain".

Since the profit from the sharing of the "Swiss" works was minimal (being close to zero) compared to Rapidshare's overall business, the court ruled that these acts had not been made "for commercial gain". Hence, the prosecution of the acts related to works owned by Swiss right holders was considered barred by the statute of limitations.

Still, the court found that defendants 1 and 2 (former CEO and former COO) were liable for copyright infringement under Swiss civil law. The court underscored that (i) the managers of Rapidshare were aware of the widespread use of the service to distribute copyrighted works; (ii) the business model encouraged such use for purposes of copyright infringement; and (iii) Rapidshare did not undertake enough effort to prevent multiple re-uploads of infringing works, even after being made aware of it by the right holders.

The court reasoned that Swiss law for civil liability was applicable and Swiss courts would have jurisdiction. Because the defendants' behavior caused the public prosecutor to initiate criminal proceedings, the defendants were liable for costs.

Comment

Two aspects in the court's legal analysis are questionable: (1) the alleged exemption of uploads to a file-sharing server under the rules on private use; and (2) the lack of consideration regarding Rapidshare's business model as an inducement to copyright infringement.

1. Upload to a "non-public server" is not automatically covered by the private use exemption

Uploading a copyrighted work to a server creates a copy of the work and is therefore relevant under copyright law. In a single sentence and with no further explanation, the court set forth that the upload of copyrighted works to a "non-public server" is covered by the private use exemption of the Swiss Copyright Act (CA). This broad statement seems incorrect.

Under the relevant provision of Swiss law (Art. 19(1)(a) Copyright Act), any "personal use of a work or use within a circle of persons closely connected to each other" is lawful. Whether a specific use (e.g. making a copy of a work) qualifies as "personal use" depends on the purpose and scope of the use.

This involves looking at subjective aspects, such as the intent of the user. Making a copy of a movie for screening on a Saturday night with the family is lawful. Making a copy of the same movie for distribution over a streaming service is unlawful.

Therefore, the upload of a protected work to a "non-public server" can, but does not necessarily, constitute personal use. In the case at hand, many users did not upload protected works for their own use, but rather to allow later downloads by anyone. Hence, the purpose and scope of the initial upload was not covered by the private use exemption in most cases.

Rapidshare was no doubt widely used in Switzerland. There may have been enough evidence to show that a number of users were uploading content from Switzerland. This, coupled with the fact that the uploads were not covered by the private use exemption, could have led to a different result in favor of the right holders.

2. Rapidshare's business model was disregarded

The decision does not discuss whether Rapidshare's business model per se constitutes an inducement of infringement by others – except regarding the issue of the civil liability. In fact, there were several aspects showing that this might have been the situation. If the case had not failed on the jurisdiction issue, some evidence may have been difficult to explain away by the defendants.

First, Rapidshare was encouraging uploads but making users pay for acceptable download speeds. This is a long way from a service claiming lawful uses, such as creating an online back-up for personal files, or a space for sharing content within a closed circle of people.

Second, it would have been easy for Rapidshare to identify and block those users who were relying on the service for distributing content to the general public. Users whose files were downloaded frequently, or works downloaded frequently from IP addresses in many different geographical areas, could have been removed or blocked.

Finally, the decision does not contain any clear information on how Rapidshare was reacting to numerous takedown requests. While the decision mentions that Rapidshare was at times receiving tens of thousands of such requests each month, the prosecutor did not substantiate whether Rapidshare's response was insufficient.

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