should carry the burden?
Dr Maria Chetcuti Cauchi. All Rights Reserved.
The E-Commerce Directive
Bulletin Board Service Providers
Internet Service Providers
importance of service providers and their role in the promotion of the
internet is undeniable. It follows that undue hampering of these
internet builders could jeopardise the development of the online
infrastructure. Nonetheless, service providers are still often unduly
involved in intellectual property disputes, hence the importance of
certainty in the field of online copyright liability.
there are comparatively a limited number of decisions on internet
liability. In this sense, the net is aptly described as a terra
incognita, a dark area, where the judicial application of
conventional copyright principles is difficult and uncertain. The
difficulty lies in pinpointing the real copyright infringer and in
establishing the guilt or otherwise of Internet Service Providers (ISPs)
in a Court of law.
the face of such a problem, the last decade has witnessed a major
upheaval in copyright regulation. Several countries have addressed the
problem of online copyright infringement in their domestic laws while
measures have also been taken at multilateral and regional levels.
Geneva, in December 1996, the World Intellectual Property Organisation
(WIPO) adopted two intellectual property treaties: the WIPO Copyright
Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT).
These treaties provide responses to the challenges of new digital
technologies, hence their denomination “internet treaties”. The WCT
entered into force in March 2002. It updates and supplements the Berne
Convention, the major international copyright treaty in the world
today. Signatories to the treaties are required to provide a basic
framework of rights, allowing copyright holders to control the diverse
ways in which their works are used and enjoyed by others. The WCT
provides that the traditional right of reproduction continues to
be valid in cyberspace and confirms the right-holders’ right to manage
the availability of their creations to individual members of the public.
The treaty also clarifies that signatory states have the power to
establish exceptions or limitations to intellectual property rights in
the digital environment, either to extend existing exceptions and
limitations or adopt new ones.
European Union’s approach to solving the problem of online copyright
infringement was in the form of two Community Directives: the Directive
on the harmonisation of certain aspects of copyright and related rights
in the Information Society (Directive 2001/29/EC) and the Directive on
certain legal aspects of electronic commerce in the Internal Market
Copyright Directive is intended to ensure a similar implementation by EU
Member States of the provisions of the above two WIPO Treaties. The
Commission’s aim was to update and harmonise European copyright law to
protect right-holders in the digital age while striking a balance of
interests between right-holders, users and information carriers. The
Copyright Directive aims to protect innocent carriers of information by
clarifying that the mere provision of physical facilities for the
enabling or making of a communication, does not in itself amount to an
act of “communication to the public”, which is an exclusive right of
the copyright owner.
the Copyright Directive directs that any digital copy of protected
material, even a temporary one, is an infringement of the exclusive
right of the right-holder. In
order to balance this wide exclusive right of reproduction and permit
the reproduction of material with the sole intention of transmission,
the Directive provides an obligatory exception for temporary acts of
reproduction carried out by carriers of information. Thus, transient and
incidental acts, which are an integral and essential part of a
technological process, whose sole purpose is to enable use to be made of
a work, are exempted from the general exclusive right.
primary focus of the E-commerce Directive is on the general development
and strengthening of e-commerce in Europe.
The Directive addresses the civil and criminal liabilities of
ISPs acting as intermediaries. It ensures that ISPs will not be held
liable under any field of law applicable to their services, where the
application of strict liability standards would damage the expansion of
e-commerce within the EU.
Directive’s safe harbours extend beyond copyright to provide service
providers broad-based protection against liability for third-party
content (including, for example, with respect to defamation). The safe
harbours apply to Information Society services, i.e., “any service
normally provided for remuneration, at a distance, by means of
electronic equipment for the processing (including digital compression)
and storage of data, and at the individual request of a recipient of a
Directive also provides that Member States shall not impose a general
obligation on providers to monitor the information that they transmit or
store, nor a general obligation to actively seek facts or circumstances
indicating illegal activity.
the Directive, a service provider who does not initiate the relevant
transmission, who does not select recipients and who does not alter the
content, i.e. a service provider acting as a mere conduit, is provided a
safe harbour from liability.
regards to caching, to qualify for the safe harbour, a service provider
must (a) not modify the cached information; (b) comply with conditions
on access to the information; (c) comply with industry-standard rules
regarding the updating of information; (d) not interfere with
industry-standard technology to obtain data on the use of information;
and (e) expeditiously remove or disable access to the information upon
receiving actual knowledge that the source information has been removed,
or that a court has ordered removal.
regards to hosting or storing information, the service provider does not
qualify for a safe harbour if he knows that the information’s presence
constitutes illegal activity or if he is aware of facts and
circumstances from which the illegal activity is apparent. The service
provider will not lose the exemption, however, if he acts expeditiously
to remove or disable access to the information.
US is a major player in the intellectual property protection arena. In
October 1998, Congress enacted the Digital Millennium Copyright Act
(DMCA) which, inter alia, limits copyright infringement liability
DMCA limits liability for ISPs for actions of copyright infringement
committed by their own clients. The liability limitations relate to
transitory communications; system caching; storage of information on
systems or networks at the direction of clients; and information
location tools. If
an ISP falls within any of these limitations, then any action against
him, in terms of monetary damages is barred. To be eligible, the ISP
must adopt and reasonably implement a policy of terminating the accounts
of clients who are recurrently infringe copyright law and it must
accommodate and not hinder “standard technical measures” employed in
copyright identification and protection.
legislation is being enacted on a regular basis on both the domestic and
the international plane, Courts have frequently interpreted such
legislation scantily. The internet has provoked a multitude of copyright cases and
the problem remains that of determining who should be held liable for
online copyright infringements. Should ISPs be held responsible for acts
of internet users? Can these key players be implicated as joint
defendants when a user copies copyrighted work? Should we give priority
to the economic welfare of copyright owners or should we uphold the
social good of the community as the ultimate goal in the functioning of
the world wide web?
the US case Playboy Enterprises, Inc. v. Webbworld (1997), the
defendant amended, reproduced, and uploaded adult-oriented material from
Usenet newsgroups to its server for viewing by paying subscribers. The
defendant argued that it served merely as a “conduit” between
subscribers and newsgroups, as an ISP would. The court pointed out that
the defendant’s customers specifically paid for the photographs,
rather than paying for access to the internet. The Court found that the
defendant served as an online store which repackaged and sold pictures
and held that such web site operator was directly liable for infringing
the plaintiff’s exclusive rights.
Board Service Providers
bulletin boards are places where users can exchange communications.
Users have occasionally displayed or transferred copyrighted works via
such services. The issue here is whether the copyright holder can hold
the service provider liable even though the infringing material was
posted by subscribers.
have generally found Bulletin Board Service (BBS) providers responsible
for contributory rather than direct liability. However, in Playboy
Enterprises, Inc. v. Frena (1993), the Court failed to distinguish
between the requirement of a direct act by the alleged infringer and
lack of awareness of the infringing material.Frena, a BBS, was unaware of the infringing material and the act
of copying had been carried out by the users of the BBS. Thus, one of
the vital ingredients in establishing direct liability was lacking,
i.e., a direct act of ‘copying’ by the defendant. However, the Court
failed to recognise this and held that having access to the BBS implied
that Frena had copied the material. The Court held Frena liable for
direct infringement when strictly speaking, he should have been held
liable for either contributory or vicarious infringement, if at all.
Playboy Enterprises, Inc. v. Russ Hardenburgh, Inc. (1997), a BBS
encouraged subscribers to upload files by means of an incentive program.
These files held infringing material and the BBS operator screened such
uploaded files before making them available to its subscribers. Rightly,
the court granted summary judgment for direct infringement as it
held that the defendants had become active participants in the
is a fact that presently many courts refuse to hold BBS operators
directly liable for infringing material uploaded by BBS users, even
though the above cases are not clear-cut. It seems that in Frena and
Hardenburgh, the operators were deemed implicitly or otherwise to
be actively and knowingly involved in the infringing activity, and hence
directly liable, yet the reasoning of the courts was still obscured by
uncertainty. It is hoped that the position of BBS operators has now been
clarified by the recent legislative interventions.
of predictability in the area of online copyright infringement has
caused real concerns for the ISP industry. Having regard to the unique
role played by the ISP industry in cyberspace, ISPs have pressed for a
narrow interpretation of copyright infringement liability. ISPs
emphasise that they are nothing but passive carriers of information and
should be granted protection from liability. On the other hand, the
‘content’ industry, especially authors and record companies, has
claimed that liability should be placed on those who are in a position
to police the system, and therefore ISPs.
tension is reflected in Religious Technology Centre v. Netcom
(1995). Netcom provided internet access for a BBS on which a
former member posted copyrighted material without authority from the
church of Scientology. Since Netcom had not taken any affirmative step
to initiate the making of the copies, the Court held that it could not
be held liable for direct infringement, merely for providing a system
that automatically forwards messages and temporarily stores copies. The
Court applied the ability-to-control and direct-financial-benefit
tests and held that there was no contributory or vicarious liability
because knowledge of the infringing act by the ISP had not been
to service providers liability can also be found in the imminent Maltese
E-Commerce Act, under Part VI, which deals with intermediary service
providers. As under EU and US norms, the Maltese E-Commerce Act exempts
a provider from liability for copyright infringement committed by its
own clients if the provider is acting as mere conduit of information, in
case of system caching and hosting. However, such provider must not have
initiated the transmission, selected the receiver of the transmission or
selected or modified the information contained in the transmission
itself. The provider is also legally bound to promptly inform public
authorities of any alleged illegal activity and grant such authority any
information it may deem necessary in its investigation.
limitations of liability give the ISP the assurance that it will not be
enjoined as a third-party defendant simply on the basis of the internet
services it offers. In the case of hosting, the law provides that the
ISP must not have actual knowledge of the infringement and must not be
aware of the facts and circumstances of the infringement.
Alternatively, the ISP, upon receiving
notice of the infringing activity, must remove or disable excess
to the information expeditiously. These provisions have been welcomed by
the service provider industry in that they have clarified the position
of ISPs by specific legislation.
adoption and entry into force of the WIPO Copyright Treaty and other
specific national legislation was a breath of fresh air for both
copyright owners and access providers in many jurisdictions.
Unfortunately, the Maltese Electronic Commerce Act has not yet entered
into force. Malta has also not signed the WIPO Copyright Treaty. In the
light of the considerable number of cases involving service providers’
liability worldwide and steady increase in internet activity in Malta,
the entry into force of the Maltese E-Commerce Act is more important now
than ever before.
Dr Maria Chetcuti Cauchi. All Rights Reserved.