[Guest post] German court finds online marketplace liable under CJEU YouTube/Cyando standard

The IPKat has received and is pleased to host the following post by former GuestKat Mirko Brüß (Brüß Law) concerning a recent German decision tackling the vexed issue of when an internet platform operator may be held directly liable for IPR infringements. Here’s what Mirko writes:

German court finds online marketplace liable under CJEU YouTube/Cyando standard

by Mirko Brüß

The Court of Justice of the European Union (CJEU) ruling in joined cases YouTube, C-682/18 and Cyando, C-683/18 (Katpost here) was probably the most-awaited decision of 2021. It brought us insights on platform liability under copyright law, safe harbours, and injunctions.

Germany’s Bundesgerichtshof (BGH, the Federal Court of Justice) has since ruled in the cases that were the foundation of the referrals (Katpost here). The judgments related to YouTube’s video-sharing platform and Cyando’s “sharehosting” service called “Uploaded”.

Now the Higher Regional Court of Nürnberg has ruled on a case in which the key issue was whether an online marketplace can be held liable for damages and injunctive relief, when a third-party vendor uses a copyright-infringing image to advertise their product (case number 3 U 2910/22, judgement of 01.08.2023, not final).

The plaintiff in this case is a photographer who found that an image he had taken of the Manhattan Bridge was being used to advertise a TV set on several websites.

A Kat enjoying TV

The ads led to an offer on an online marketplace (Rakuten) that is similar to eBay, insofar as third-party vendors can register and use the platform to sell their goods. Rakuten promotes some of the offers on third-party websites.

On 21.08.2018, the photographer asked the marketplace to remove the image from the offer, as he had not given anybody permission for this use. From the judgement, it is not totally clear whether that offer was removed by Rakuten or the vendor. What is clear is that on 05.10.2018 and 20.10.2018, the photographer found two new offers of the same TV, using the same image, but created on Rakuten by a different vendor.

The OLG Nürnberg found Rakuten to be liable for these infringements. At the outset, the court found that the case would not be governed by DSM Directive or its German implementation in the beautifully named Urheberrechts-Diensteanbieter-Gesetz (UrhDaG), as the infringements occurred before the UrhDaG came into force. To this former GuestKat, it seems that the Nürnberg court overlooked that for injunctive relief (but not for damages), the claim has to exist under the law that is in effect when the judgment is made, as the BGH has also stated in its subsequent YouTube II decision (case number I ZR 140/15, para 151). Regardless of this oversight, UrhDaG is inapplicable to the case anyway because as Art. 2(6) of the DSM-Directive and Section 3 Nr. 5 UrhDaG clarify, online marketplaces are not ‘online content-sharing service providers’ within the meaning of this Directive.

Applying the CJEU’s reasoning from YouTube/Cyando, the court found Rakuten to play a central role. Without the provision and management of the sales platform, it would be impossible, or at least more complex, to freely share potentially copyright-infringing content on the internet.

Next, the court laid out three groups of cases that can justify a perpetrator's liability of the platform operator:

• The platform operator knows or should know that protected content is generally made available to the public in an unlawful manner via its platform by users of the same and it does not take the appropriate technical measures that can be expected from an economic operator observing due diligence in its situation in order to combat copyright infringements on this platform in a credible and effective manner;

• The operator is involved in the selection of protected content that is unlawfully made available to the public, offers on its platform tools specifically designed for the unlawful sharing of such content, or knowingly encourages such sharing, which may be indicated by the fact that the operator has chosen a business model that encourages users of its platform to unlawfully make protected content available to the public on that platform;

• The operator has been notified by the rightholder that protected content has been unlawfully made available to the public via its platform and does not immediately take the necessary measures to prevent access to this content; in this context, there is a duty to also prevent the continued making available to the public of infringing content by similar infringing acts within the scope of what is technically and economically reasonable.

Here, the case falls in the last category, as Rakuten had not taken appropriate measures to prevent repeated infringements of the rights in the same work, after having received a notice by the plaintiff. The defendant did not explain the reasons why a review of existing or future offers would not have been possible. In line with the CJEU’s reasoning, the court held that Rakuten could not invoke an exemption of liability as a hosting provider under Section 10 TMG. As a result, the platform was found to have carried out an act of communication to the public under Art. 3 of the InfoSoc Directive, and Section 19a UrhG.

Having established Rakuten’s liability, the judges assessed the damages owed to the plaintiff and found an amount of EUR 6,675.00 appropriate. Under section 97(2) UrhG, entitlement to damages may also be assessed on the basis of the amount the infringer would have had to pay in equitable remuneration if the infringer had requested authorisation to use the content at issue. As the plaintiff had provided the court with invoices for granting licenses in similar cases, amounting to EUR 4,662.00, EUR 4,361.00 and EUR 4,450.00, the court calculated an average of EUR 4,450.00 to be a reasonable licence fee. It then added 50% to this amount for infringement of the right to acknowledge authorship, as the plaintiff was not named as the author of the photograph in the advertisements.

As this is the first time a German court has applied the new liability principles to an online marketplace, the OLG Nürnberg allowed a further appeal to the BGH. It is not clear if Rakuten will take this step, as the terms of service oblige vendors to guarantee that their uploads do not infringe anybody’s rights, so that the platform may be able to recover any damages claims it has to pay from the relevant vendors.