Wednesday, April 9, 2014

Data Retention Challenge Earns Historical Victory for Privacy

I am sure all of you already know by this time about the epic privacy ruling - Digital Rights Ireland C-293/12 - that the Court of Justice of the EU yesterday handed down. This post won't be a usual legal analysis on which you are used to. I think that more learned colleagues and experts on human rights law, such as Steve Peers, Cybermatron, Daithí Mac Síthigh, Fiona de Londras, Paul Bernal can express and comment better on this ruling than I ever could.

I rather want to share with you my personal note of gratitude for this achievement that is owed to many amazing individuals not only in Europe. 

The success of Irish and Austrian reference is a very personal thing for me. Yet as a student at Law School, it was our first strategic litigation. Inspired by many members of EDRi taking actions in Germany, Czech republic, Romania and other countries, I and bunch of my wonderful colleagues decided to help out, formed EISi, and started sending out letters to Slovak authorities. And it did not work. Authorities completely ignored our requests, despite the fact that the German Constitutional Court (BVerfG) at the time already cancelled the German implementation. Its quite funny to think of it now, but for some unknown reason, probably more as citizens than scholars or lawyers, we felt that even BVerfG got it wrong. And so we started getting in touch with EDRi members such as Patric Breyer from German AK Vorrat, Jan Voboril from Czech IuRe, Katitza Rodrigez from EFF and many others. From the very beginning, I was very pleasantly surprised by very supportive and constructive atmosphere on EDRi mailing lists and also by how many great small organizations and individuals around the Europe decided to spend their time on fighting data retention. I was more than happy when three years later, I could finally report that we made it to the Slovak Constitutional Court.

And even thought preliminary reference eventually came from Austria and Ireland, I think it is important to view this as a win of many more individuals. As paradoxical as it sounds, I don't think that we could get here without many decisions of the national Constitutional Courts that got it wrong - from today's perspective (German one, Czech one, etc.). In a sense, I think that they framed the debate and thus gave us good grounds to demand more and more privacy from the state. All of us coming after, were inevitably building on these decisions, and also on all the scholarly commentaries, scientific responses or public interested steered by them.

I believe that nothing tells better the story behind this success as the fact that Digital Rights Ireland itself has no staff or office and that Austrian challenge was brought up almost 12.000 individuals. It tells us that it was not big corporations or angry industry, but small individuals who made this whole thing happen. Thank you to all of you!

CJEU Confirms Pinckney Ruling

For all the private international law & IP law enthusiast, it might of interest that in the meantime of waiting for Coty Prestige C-360/12 ruling, the CJEU issued its Hi Hotel C-387/12 ruling last week (without an advice from Advocate General). Hi Hotel partially pre-determines the outcome of Coty Prestige with the main message - the attribution of effects under Art. 5(3) Brussels I. will, despite the criticism from the Advocate General, govern our case-law on jurisdiction for the future. In a similar way, Melzer ruling is confirmed. Several points are still not clear, but it is fair to say that Hi Hotel resoundingly confirms Pinckney on attribution. Readers of this blog might know that I on several occasions, similarly as Advocate General, criticized Pinckney

I believe that by enabling to hear a "territory-limited claims" under Art. 5(3) Brussels I. against a defendant, who is not domiciled, and did not act or directly cause an effect by his acts in a state of the court, purely on the basis that that the effect was furthered by somebody else, is a dangerous approach. Despite the fact that the end result might be an empty jurisdiction, i.e. jurisdiction, where no claim can be awarded. I have recently summed up some of my arguments in a comment for IIC (see Husovec, Case Comment on Pinckney, IIC, Volume 46 - 3 Issue, not yet out, so if you are interested, just drop me an email).

From the ruling:

32      Consequently, Article 5(3) of that regulation does not allow jurisdiction to be established on the basis of the place of the causal event with respect to one of the supposed perpetrators of the damage who has not acted within the jurisdiction of the court seised (see Melzer EU:C:2013:305, paragraph 41).

33      However, in contrast to the Melzer case (EU:C:2013:305), in the present case the referring court has not limited its question to the interpretation of Article 5(3) of the regulation for the sole purpose of establishing the jurisdiction of the German courts on the basis of the causal event of the alleged damage.

34      Accordingly, it must also be examined whether, in circumstances such as those at issue in the main proceedings, where several supposed perpetrators of the alleged damage have acted in different Member States, Article 5(3) of Regulation No 44/2001 allows jurisdiction to be attributed, on the basis of the occurrence of the damage, to the courts of a Member State with respect to one of the supposed perpetrators of the damage, even though he did not act within the jurisdiction of the court seised.
This brings me only a little comfort, as the Court does not seem to anticipate prima-facie absurd assertions of such connections (attributions). To the contrary, it indicates that most likely it will not create any qualitative criteria for such an attribution, and that it will leave it completely open for the national courts. I don't think that proving the "empty jurisdiction" on the substantive law level then anyhow helps the defendant, who had to spend some money on his defense. But maybe I am missing something.

35      It should be noted that jurisdiction to hear an action in tort, delict or quasi-delict may be established in favour of the court seised of a claim for a finding of a breach of copyright, where the Member State in which that court is situated protects the rights of copyright relied on by the applicant and the alleged damage may occur within the jurisdiction of the court seised (see Pinckney EU:C:2013:635, paragraph 43).

36      In the main proceedings Mr Spoering is claiming a breach of various rights of copyright, namely the rights to reproduce, distribute and exhibit the photographs in question. It is common ground that those rights are protected in Germany in accordance with 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 (OJ 2001 L 167, p. 10).

37      In circumstances such as those at issue in the main proceedings, it must be considered that the fact that damage may occur follows from the possibility of acquiring a reproduction of the work to which the copyright relied on by the applicant attaches in a bookshop located within the jurisdiction of the court seised. As appears from the facts referred to in paragraph 14 above, the handing over of the photographs in question to Phaidon-Verlag of Paris gave rise to the reproduction and distribution of the photographs, and thereby to the possibility that the damage alleged might occur.

38      On the other hand, in so far as the protection afforded by the Member State of the court seised applies only in that Member State, the court seised on the basis of the place where the damage occurs has jurisdiction only to determine the damage caused in the territory of that State (Pinckney EU:C:2013:635, paragraph 45).

39      The courts of other Member States in principle retain jurisdiction, in the light of Article 5(3) of Regulation No 44/2001 and the principle of territoriality, to rule on the damage to copyright caused in their respective Member States, given that they are best placed, first, to ascertain whether the rights of copyright guaranteed by the Member State concerned have in fact been infringed and, secondly, to determine the nature of the damage caused (see Pinckney EU:C:2013:635, paragraph 46).
Let's see what the Coty Prestige will bring.

Thursday, March 27, 2014

CJEU Allowed Website Blocking Injunctions With Some Reservations

So the CJEU finally issued its UPC Telekabel Wien C-314/12 decision. It contains several good points, but also some missed opportunities (the rejections of a need of specific measures is quite a disappointment), and black-box type of issues, where only the time will tell.

But before I get to the ruling, it is very interesting to see that CJEU yet again (Scarlet, Sabam same story) did not follow a very interesting argumentation of the Advocate General Cruz Villalón, who suggested to take a look at the injunctions also from the perspective of "quality of the law". This might be a good/bad news for the pending data retention reference in Digital Rights Ireland C-293/12, where he suggested to the CJEU to invalidate the data retention directive mostly not due to proportionality considerations, but for "quality of the law" reasons. I think that his argument there is politically not acceptable for the CJEU, but let's see. So back to the website blocking.

The Court first accepts (§ 23-40) that an access provider who has no affiliation or business relationship with the infringers (streaming websites) can still be a target of the injunctions against intermediaries. This basically means that anybody who enables infringement is capable of being sued from Art. 8(3) injunctions. No surprise here.

In the second part, the Court allows some of the website blocking injunctions as such, but makes it subject to couple of conditions. The Court recalls that the case is about a maximal admissible celling of these injunctions (§ 45), and not about minimal standard required from the Member States (§ 43). This means, as I suggested earlier, that this case in fact does not answer whether the Member States have to provide for such injunctions, but only whether they are permissible when provided for under the national law.

The Court stylized the entire judgment in the perspective of conflicting human rights: 
  • (i) copyrights and related rights, which are intellectual property and are therefore protected under Article 17(2) of the Charter, 
  • (ii) the freedom to conduct a business, which economic agents such as internet service providers enjoy under Article 16 of the Charter, and 
  • (iii) the freedom of information of internet users, whose protection is ensured by Article 11 of the Charter. 
As anticipated earlier, the right to fair trial argument did not appear in the case, but there are some consequences for it as well (see below). The relevant part of the decision are then § 49 -63.

49      The freedom to conduct a business includes, inter alia, the right for any business to be able to freely use, within the limits of its liability for its own acts, the economic, technical and financial resources available to it.

50      An injunction such as that at issue in the main proceedings constrains its addressee in a manner which restricts the free use of the resources at his disposal because it obliges him to take measures which may represent a significant cost for him, have a considerable impact on the organisation of his activities or require difficult and complex technical solutions.

51      However, such an injunction does not seem to infringe the very substance of the freedom of an internet service provider such as that at issue in the main proceedings to conduct a business.

52      First, an injunction such as that at issue in the main proceedings leaves its addressee to determine the specific measures to be taken in order to achieve the result sought, with the result that he can choose to put in place measures which are best adapted to the resources and abilities available to him and which are compatible with the other obligations and challenges which he will encounter in the exercise of his activity.
I think this is implicit acceptance of openly formulated website blocking injunctions, and also rejection of AG's suggestion of a need for specific measures. This should make German BGH feel more comfortable with its own case-law. Not sure about ISPs.

53      Secondly, such an injunction allows its addressee to avoid liability by proving that he has taken all reasonable measures. That possibility of exoneration clearly has the effect that the addressee of the injunction will not be required to make unbearable sacrifices, which seems justified in particular in the light of the fact that he is not the author of the infringement of the fundamental right of intellectual property which has led to the adoption of the injunction.
This paragraph is slightly confusing, but I think it essentially refers to execution proceedings when an openly formulated website blocking injunction was being granted. Again, this kind of rule might make a perfect sense for a German or other lawyer who is used to negligence based liability for disobeying the rulings also in the execution proceedings. In some countries, however, execution proceedings attaches strict liability standards to disobeying of the decisions. For these countries, it might be more challenging to implement this principle. This seems to shift the entire debate of exact measures from the court proceedings to the execution proceedings. Also I keep wondering how compatible with the eCommerce Directive it would be to fine an access provider in such proceedings, as Art. 12 safe harbor might be still a limitation here (just a thought).

54      In that regard, in accordance with the principle of legal certainty, it must be possible for the addressee of an injunction such as that at issue in the main proceedings to maintain before the court, once the implementing measures which he has taken are known and before any decision imposing a penalty on him is adopted, that the measures taken were indeed those which could be expected of him in order to prevent the proscribed result.

55      None the less, when the addressee of an injunction such as that at issue in the main proceedings chooses the measures to be adopted in order to comply with that injunction, he must ensure compliance with the fundamental right of internet users to freedom of information.

56      In this respect, the measures adopted by the internet service provider must be strictly targeted, in the sense that they must serve to bring an end to a third party’s infringement of copyright or of a related right but without thereby affecting internet users who are using the provider’s services in order to lawfully access information. Failing that, the provider’s interference in the freedom of information of those users would be unjustified in the light of the objective pursued.
This is an important point. The CJEU here implicitly adheres to the prohibition of the collateral censorship as stipulated in the case-law of the ECHR. This part of the ruling should prevent some forms over-blocking e.g. by means of IP blocking when the IP address is shared.

57      It must be possible for national courts to check that that is the case. In the case of an injunction such as that at issue in the main proceedings, the Court notes that, if the internet service provider adopts measures which enable it to achieve the required prohibition, the national courts will not be able to carry out such a review at the stage of the enforcement proceedings if there is no challenge in that regard. Accordingly, in order to prevent the fundamental rights recognised by EU law from precluding the adoption of an injunction such as that at issue in the main proceedings, the national procedural rules must provide a possibility for internet users to assert their rights before the court once the implementing measures taken by the internet service provider are known.
I consider this to be the most important part of the ruling. My reading is that unless the procedural law of the Member State can guarantee that, the website blocking can not be granted at the first place. Although this remark is made in the framework of a right to the freedom of information, I believe that it can have a big impact also on the right to fair trial issue. Especially the countries that grant website blocking injunctions without any possibility to challenge them by the targeted website ex post (UK courts now incorporate such possibility), it might prevent the injunctions to be granted entirely. CJEU makes an important step by safeguarding the same for the Internet users as well. It would be interesting to see if the national law of your Member State enable that kind of challenge of a non-party. Any thoughts?

58      As regards intellectual property, it should be pointed out at the outset that it is possible that the enforcement of an injunction such as that in the main proceedings will not lead to a complete cessation of the infringements of the intellectual property right of the persons concerned.

59      First, as has been stated, the addressee of such an injunction has the possibility of avoiding liability, and thus of not adopting some measures that may be achievable, if those measures are not capable of being considered reasonable.
Again strict liability might be precluded in these cases.

60      Secondly, it is possible that a means of putting a complete end to the infringements of the intellectual property right does not exist or is not in practice achievable, as a result of which some measures taken might be capable of being circumvented in one way or another.

61      The Court notes that there is nothing whatsoever in the wording of Article 17(2) of the Charter to suggest that the right to intellectual property is inviolable and must for that reason be absolutely protected (see, to that effect, Scarlet Extended, paragraph 43).

62      None the less, the measures which are taken by the addressee of an injunction, such as that at issue in the main proceedings, when implementing that injunction must be sufficiently effective to ensure genuine protection of the fundamental right at issue, that is to say that they must have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter made available to them in breach of that fundamental right.
A difficult sentence, but probably says following: website blocking must (i) make it more difficult to access the source, and [sic!] (ii) seriously discourage Internet users from accessing the blocked source. It is my understanding that unless such a measure exists, not even an open ended injunctions should be granted. I think that the analyses of Justice Arnold in his blocking cases can hold the water in this respect. This part, however, needs to be scrutinized for its impact beyond this brief comment.
63      Consequently, even though the measures taken when implementing an injunction such as that at issue in the main proceedings are not capable of leading, in some circumstances, to a complete cessation of the infringements of the intellectual property right, they cannot however be considered to be incompatible with the requirement that a fair balance be found, in accordance with Article 52(1), in fine, of the Charter, between all applicable fundamental rights, provided that (i) they do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and (ii) that they have the effect of preventing unauthorised access to protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter that has been made available to them in breach of the intellectual property right.
My main issue with the judgment is that it rejected a need for a measure-specific injunctions as suggested by the Advocate General. The CJEU to the contrary, seems to be fine with shifting the debate to the executoin proceedings. I am not sure how flexible are these procedural rules in different countries. On the other hand, CJEU appers to set its standard for what is effective a bit higher than AG, who was also willing to accept also "easily circumventable measures". This negative parts are however somehow overweighted by a good feeling from paragraph 57 of the judgment. Let's see if the second look gives the same impression as well.

And also, an another consequence of this ruling is that the debate of what constitutes a general monitoring obligations can be perhaps again re-opend.

Monday, March 24, 2014

Czech Constitutional Court: Domain Name Protected as a Property

The Czech Constitutional Court this month handed its anticipated decision in globtour.cz case (III. ÚS 2912/12). The Court heard a constitutional complaint by one of the plaintiffs who complained that his right to fair trial, right to property and right to legal certainty were infringed when the Czech Supreme Court rejected the domain name transfer as a legal remedy under domestic tort law.

The Czech Supreme Court in globtour.cz (23Cdo 3407/2010) put an end to a decade long practice of Czech courts issuing domain name transfers based on a claims for injunctive reliefs. The reasons for the shift of the case law are mostly doctrinal (for those interested see my English paper 'Domain Name Transfer Before Slovak and Czech Courts'). 

I was personally criticizing the Czech courts on their reasoning of the domain name transfers some years before the decision was handed. My opinion was (and is) that the Czech Supreme Court is both right and wrong when rejecting the domain name transfers. It is right in rejecting it as a form of a claim for injunctive relief, but it is also wrong for not construing it by analogy based on Regulation Article 22(11) of Regulation 874/2004 (see the paper for details).

It was also for these reasons why our non-profit - European Information Society Institute - filed an amicus curiae with the Czech Constitutional Court, arguing that domain name transfer should be available. We were clear that unless the plaintiff won't be able to establish some constitutional intensity of his case, it will be rejected. Nevertheless we felt that such a submission might help the Court to get a better picture of the doctrinal debate and practical consequences. 

The Constitutional Court on 6th of March rejected the compliant as unfounded. It opined that most of the arguments of the plaintiff had no constitutional intensity to justify any interference by the Court. Nevertheless, it issued a brief opinion on protection of domain name under constitutional right to property. Similarly as European Court of Human Rights in its well-known ‘ad-acta.de’ decision (Paeffgen Gmbh v. Germany, No. 25379/04, No. 21688/05, No. 21722/05 and No. 21770/05), the Czech Constitutional Court (without citing Strasbourg case-law) confirmed that a domain name might be protected as a property under Article 1 of Protocol No. 1 to the Convention, which provides:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
The Court did not engage in any lengthy analysis, but rather quickly comes to the conclusion that neither Article 1 of Protocol No. 1 to the Convention, nor Art. 11 of the Czech Charter of Fundamental Rights and Freedoms, were infringed upon. Civil litigation due to alleged infringement of trade mark rights, unfair competition and rights in trade name were seen as a justified interference (similarly as ECHR in Paeffgen Gmbh v. Germany).

Czech domain name litigation is currently in the flux. After the Czech Supreme Court rejected the domain name transfers in April 2012, in December 2013, it also struck down the legal construction of Czech domain name ADR system that was not soft-law ADR based, but has a form of a full-fledged binding arbitration. The Court rejected validity of the arbitration clause because it was of the opinion that the agreement about the arbitration was not properly formed under the Czech contract law.

Whereas the lack of the remedy for domain name transfers was already remedied by the Czech domain name authority (CZ.NIC) which enabled a system of dispute blocking, the exact reaction of the same authority to the arbitration validity issues is still under the consideration.

Thursday, February 13, 2014

CJEU: Hyperlinks Are Copyright Free. Are They Really?

Highly awaited Svensson C-466/12 ruling of the CJEU is now available online. It will be most likely positively received by the European media. And probably rightly so. Despite this, however, I can not help to (preliminary) question two basic issues in the ruling:

  • Assumption of the authorized (source) content; CJEU carries out the entire analysis and decides for its technique of regulating hyperlinks (absence of "a new public") on the assumption that the linked content is authorized. Sure, this is the case of Swedish proceedings, but does it reflect all cases when we use hyperlinking in our daily lives? If the right owner did not authorize the source content to which I link, is the link still not communicating a work to "a new public"? And what if the source content is put online legally, but not with the consent of the right owner, e.g. under some copyright exception? Does the logic of no-new-public still apply?
Update: New-public argument seems to stretch to all subsequent links regardless of whether the source linked is authorized or not, as long as there is some other source that is authorized and freely available. The possible indication of this reading is given here:

31      On the other hand, where a clickable link makes it possible for users of the site on which that link appears to circumvent restrictions put in place by the site on which the protected work appears in order to restrict public access to that work to the latter site’s subscribers only, and the link accordingly constitutes an intervention without which those users would not be able to access the works transmitted, all those users must be deemed to be a new public, which was not taken into account by the copyright holders when they authorised the initial communication, and accordingly the holders’ authorisation is required for such a communication to the public. This [new public] is the case, in particular, where the work is no longer available to the public on the site on which it was initially communicated or where it is henceforth available on that site only to a restricted public, while being accessible on another Internet site without the copyright holders’ authorisation.

32      In those circumstances, the answer to the first three questions referred is that Article 3(1) of Directive 2001/29 must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website [probably not necessarily linked one] does not constitute an act of communication to the public, as referred to in that provision.
  • Can the pre-emption work?; CJEU opines that a national court can not extend the exclusive right of communication to the public in its national law, because this would create "legislative differences and thus, for third parties, legal uncertainty". I would say this follows from the autonomous concept of such a right. But what is the consequence? Because the Union law harmonizes only some exclusive rights, the national court can still create some additional rights as unnamed non-harmonized rights, where no pre-emption applies, unless CJEU wants to suggest that harmonized rights are in fact exhaustively regulated. An example for all is the issue of embedded content where both German and Czech Supreme Court seemed to see no problem in creating such non-harmonized rights.
What is your take on this?

PS: More analysis will come soon. Stay tuned.

Thursday, January 23, 2014

Spanish Court Issued The First Disconnecting Injunction Against a Single Access Provider

A good friend, Miquel Peguera from Spanish Universitat Oberta de Catalunya, just reported what is probably the first private litigation, where an access provider was sued to disconnect its subscribers from the Internet. Although some Nordic countries already earlier reported cases where access providers were sued to disconnect different providers of allegedly infringing services, Promusicae v. R Cable y Telecomunicaciones Galicia appears to be the first case, when the targeted person is a private user. The legal basis used is of course in(famous) provision on injunctions against (innocent) intermediaries set in Art. 8(3) of the InfoSoc that was transposed to Articles 138 and 139(1)(h) of the Spanish Copyright Act. Miquel writes about the background:

The action was brought by Promusicae, an association of Spanish music producers, along with the main music labels operating in Spain. Aided by DtecNet, an anti-piracy firm, Promusicae learned of an internet user who was making available more than five thousand music files in his hard drive shared folder, using the P2P network Direct Connect. [..] It was not possible to find out the user’s real identity as ISPs in Spain are not obliged to reveal the identity of their users for purposes of civil lawsuits. Not knowing the identity of the file sharer, the plaintiffs brought the case directly and exclusively against the ISP, asking for an injunction under articles 138 and 139.1.h) of the Spanish Copyright Act which allow right holders to seek injunctions against intermediaries whose services are used by a third party to infringe copyright. The requested injunction consisted of suspending the provision of internet access to the infringer.
Miquel also writes that the disconnected user was not part of the proceedings and the court did not assess the proportionality of its injunction. This case is striking in several respects (not that such injunctions were not anticipated). Some of my readers know that I constantly criticize website blocking injunctions for not respecting right to a fair trail. Consider that very same problem here and maybe you start agreeing with me. A user is disconnected from the Internet, without having a possibility to defend himself as to

i) existence of an infringement (e.g. what if kids committed that infringement, and not a subscriber), 
ii) validity and legality of the evidence (can we really rely on one sided submission? who will scrutinize whether they were legally acquired?), 
iii) proportionality (is a full-time disconnection a proportionate response? what about private and business life of an individual and the household dependent on that access? what if the father of the kids works from home for instance?)

Even more, also without the possibility to challenge such a disconnection!

For exactly these reasons, as I argued in my paper, the Spanish court should have rejected the application, unless the right to fair trail of the user was guaranteed. Injunctions against intermediaries can not be exercised in a way that undermines the values of affected individuals.

This case is also interesting from an another viewpoint. It really reminds in(famous) French disconnecting laws. Unlike HADOPI, however, this is a privately litigated disconnecting injunction. As Miquel also notes, the disconnected user can now still subscribe with other access providers. It has to be noted that legal basis makes it very difficult to invoke a disconnecting injunction at once (like with website blocking) against all the access provider in a country for instance. This is because the language of Art. 8(3) requires that intermediaries services are used by a third party to infringe. Although difficult, it is not impossible to argue that other access providers were also used by the infringer. This is because file-sharers for instance, communicate the works to subscribers of other access providers. In this way, their services are used by the infringer to infringe as well (although in a different way). As a consequence, it would be possible to sue the subscribers access provider and at the same time also other access providers for a disconnection [I hope that I just did not give an advice to some zealous plaintiffs]. 

Suing all the access provider in a country at once, however, would make such disconnecting injunctions even more problematic. Justifying them as to their proportionality in collision with other human rights would be extremely difficult, even impossible, also thanks to the Internet case-law of the ECHR

The Spanish case exhibits an another possible stream of litigations for the future. If a right to fair trail and proper consideration of proportionality won't be embedded into the system of deciding about these injunctions, the injunctions can have a disastrous consequences. More disastrous than any website blocking injunctions ever had.

Monday, January 6, 2014

Meta Search Engines Likely to Infringe Database Right by Data Scraping

The Christmas time drowned out publication of a particularly interesting CJEU decision - Innoweb C‑202/12 - dealing with the EU-specific database right and its applicability to meta search engines.

The preliminary reference before the CJEU came from a Dutch proceedings of Wegener group against Innoweb BV and its operation of a dedicated car meta search engine that enables searches to be carried out on third party websites, including Wegener’s website, where a collection of car sales advertisements (‘car ads’) is displayed.

8        Through its website www.autotrack.nl (‘the AutoTrack website’), Wegener provides access to an online collection of car ads, together with a list, updated daily, of 190 000 to 200 000 second-hand cars. Approximately 40 000 of those advertisements are to be found only on the AutoTrack website. The other advertisements can also be found on other advertising sites. With the help of the AutoTrack website search engine, the user can carry out a targeted search for a vehicle on the basis of various criteria.

9        Via its website, www.gaspedaal.nl, Innoweb provides a meta search engine dedicated to car sales (‘GasPedaal’). A ‘meta search engine’ uses search engines from other websites, transferring queries from its users to those other search engines – a feature which differentiates meta search engines from general search engines such as Google. A meta search engine described as ‘dedicated’ is designed to enable searches to be made in one or more specific subject areas. GasPedaal is such a dedicated meta search engine, designed to search for car ads: through a single query on GasPedaal, the user can simultaneously carry out searches of several collections of car ads listed on third party sites, including the AutoTrack website.

10      By means of the GasPedaal dedicated meta search engine, it is possible to search through the AutoTrack collection on the basis of different criteria, including not only the make, the model, the mileage, the year of manufacture and the price, but also other vehicle characteristics, such as the colour, the shape of the chassis, the type of carburant used, the number of doors and the transmission and, second, ‘in real time’, that is to say at the time when a GasPedaal user enters his query. GasPedaal carries out that query in ‘translated’ form; in other words, it translates the query into the format required for AutoTrack’s search engine.

11      The results thrown up by the AutoTrack website – that is to say, cars meeting the criteria chosen by the end user – which are also to be found on the results pages of other sites are merged into one item with links to all the sources where that car was found. A webpage is then created with the list of the results thus obtained and merged, which shows essential information relating to each car, including the year of manufacture, the price, the mileage and a thumbnail picture. That webpage is stored on the GasPedaal server for approximately 30 minutes and sent to the user or shown to him on the GasPedaal website, using the format of that site.

12      The total number of advertisements on websites searched through GasPedaal is approximately 300 000.

13      Every day, GasPedaal carries out approximately 100 000 searches on the AutoTrack website in response to queries. Thus, approximately 80% of the various combinations of makes or models listed in the AutoTrack collection are the object of a search daily. In response to each query, however, GasPedaal displays only a very small part of the contents of that collection. In every case, the contents of those data are determined by the user on the basis of criteria which he keys into GasPedaal.
The referring court basically asked whether an owner of a website with car ads from users can prevent a third party from data scraping its database of user car ads and thus effectively prohibit the meta search engine operation.

After several remarks on how technologically dedicated (real time) meta search engines differ from general search engines like Google or Bing (§ 24-29), the Court court, relying mainly on contextual (§ 33-34) and teleological arguments (§ 35-36), comes to the following conclusions:

37      In the light of that purpose, the concept of ‘re-utilisation’ as used in Article 7 of Directive 96/9 must be construed as referring to any act of making available to the public, without the consent of the database maker, the results of his investment, thus depriving him of revenue which should have enabled him to redeem the cost of the investment (see The British Horseracing Board and Others, paragraph 51). ‘Re-utilisation’ accordingly refers to any unauthorised act of distribution to the public of the contents of a protected database or a substantial part of such contents (see The British Horseracing Board and Others, paragraph 67; Case C‑545/07 Apis-Hristovich [2009] ECR I‑1627, paragraph 49; and Football Dataco and Others, paragraph 20). The nature and form of the process used are of no relevance in this respect (Football Dataco and Others, paragraph 20).
Note that tautology par excellence in CJEU language: "re-utilisation .. refers to any unauthorised act of distribution" = it is like saying that a concept of prohibited acts refers to what is prohibited under the law.

38      The second part of the definition given in Article 7(2)(b) of Directive 96/9 – ‘by the distribution of copies, by renting, by on-line or other forms of transmission’ – and, in particular, the alternative ‘or other forms’ also make it possible to construe that definition broadly, by reference to the objective of Article 7, considered in paragraphs 35 and 36 above.
The objective being "to ensure that the person who has taken the initiative and assumed the risk of making a substantial investment in terms of human, technical and/or financial resources in the setting up and operation of a database receives a return on his investment by protecting him against the unauthorised appropriation of the results of that investment" [again? protecting against unauthorisied?].

39      As regards the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings and, in particular, the facet of that activity that is of relevance to the present case – that is to say, making available on the Internet a dedicated meta search engine for translating queries (keyed into that meta search engine by end users) into the search engines of the databases covered by the service of the meta search engine in question – it should be noted that that activity is not limited to indicating to the user databases providing information on a particular subject.

40      The purpose of that activity is to provide any end user with a means of searching all the data in a protected database and, accordingly, to provide access to the entire contents of that database by a means other than that intended by the maker of that database, whilst using the database’s search engine and offering the same advantages as the database itself in terms of searches, as can be seen from paragraphs 25 and 26 above. The end user no longer has any need, when researching data, to go to the website of the database concerned, or to its homepage, or its search form, in order to consult that database, since he can consult the contents of that website ‘in real time’ through the website of the dedicated meta search engine.

41      That activity on the part of the operator of a dedicated meta search engine such as that at issue in the main proceedings creates a risk that the database maker will lose income, in particular the income from advertising on his website, thereby depriving that maker of revenue which should have enabled him to redeem the cost of the investment in setting up and operating the database.

42      As the end user no longer has any need to proceed via the database site’s homepage and search form, it is possible that the maker of that database will generate less income from the advertising displayed on that homepage or on the search form, especially to the extent that it might seem more profitable for operators wishing to place advertisements online to do so on the website of the dedicated meta search engine, rather than on one of the database sites covered by that meta engine.
I find this finding to be a bit puzzling. You can try the disputed meta search engine yourself here. If this is the form in which it worked before the litigation, then I see only regular list of results leading to original websites. If a customer wants to see the car ad, he needs to consult the website of the source with all its advertising. To me, it seems that operation is no different than one of flight tickets (e.g. skyscanner.net) or general price comparison websites (e.g. preisvergleich.de).

43      As regards, furthermore, database sites displaying advertising, sellers – aware that, with the dedicated meta search engine, searches will be made simultaneously in several databases and duplications displayed – may start placing their advertisements on only one database site at a time, so that the database sites would become less extensive and therefore less attractive.

44      The risk that the making available on the Internet of a dedicated meta search engine such as that at issue in the main proceedings deprives the database maker of revenue cannot be ruled out by force of the argument that, in order to have access to all the information relating to a result found in a database – that is to say, in the case before the referring court, access to all the information on a car featured in an ad – it is still necessary, as a rule, to follow the hyperlink to the original page on which the result was displayed.
OK, so it seems that operation is really like one of price general comparison websites. Then what kind of revenue will be lost by the operation of a meta search engine? I can understand a business reasons when Raynair was suing screen scraping websites as it was trying to build an image of cheapest European airline. The image that meta search engines could effectively undermine. But the database right can not protect any kind of business model build around the collection and subsequent provision of databases.
45      First, the information displayed by the dedicated meta search engine enables the end user, to some extent, to sort the results found and to decide that he does not need further information on a particular result. Second, it is possible that the end user will access more detailed information on a result without following the link to the database concerned, if that result is thrown up by a number of databases covered by the dedicated meta search engine, since that search engine reveals duplication by grouping all doubles together.
So what? I don't see why it is a "problem" that a user will decrease its transactions costs in search for useful information. To the contrary, I would list it as a benefit of the service. The viewpoint of the database owner can not be the only decisive one.

46      Of course, the protection under Article 7 of Directive 96/9 does not cover consultation of a database (see The British Horseracing Board and Others, paragraph 54, and Directmedia Publishing, paragraph 51). In consequence, if the database maker makes the contents of that database accessible to third parties, even if he does so for a consideration, his sui generis right does not enable him to prevent such third parties from consulting that database for information purposes (see The British Horseracing Board and Others, paragraph 55, and Directmedia Publishing, paragraph 53).

47      However, it is important to note that the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings does not constitute consultation of the database concerned. That operator is not at all interested in the information stored in that database, but he provides the end user with a form of access to that database and to that information which is different from the access route intended by the database maker, whilst providing the same advantages in terms of searches. By contrast, it is the end user keying in a query in the dedicated meta search engine who consults the database by means of that meta search engine.

48      Moreover, the relevant aspect of the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings – that is to say, making that search engine available on the Internet – comes close to the manufacture of a parasitical competing product as referred to in recital 42 of the preamble to Directive 96/9, albeit without copying the information stored in the database concerned. In view of the search options offered, such a dedicated meta search engine resembles a database, but without having any data itself.

49      It is sufficient for the end user to go to the website of the dedicated meta search engine in order to gain simultaneous access to the contents of all the databases covered by the service of that meta engine, as a search carried out by that meta engine throws up the same list of results as would have been obtained if separate searches had been carried out in each of those databases which, however, are presented using the format of the dedicated meta engine’s website. The end user no longer has to go to the website of the database, unless he finds amongst the results displayed an advertisement about which he wishes to know the details. However, in that case, he is directly routed to the advertisement itself and, because duplicate results are grouped together, it is even entirely possible that he will consult that advertisement on another database site.

50      It follows from the foregoing considerations that the act on the part of the operator of making available on the Internet a dedicated meta search engine such as that at issue in the main proceedings, into which it is intended that end users will key in queries for ‘translation’ into the search engine of a protected database, constitutes ‘making available’ the contents of that database for the purposes of Article 7(2)(b) of Directive 96/9.

51      That ‘making available’ is for ‘the public’, since anyone at all can use a dedicated meta search engine and the number of persons thus targeted is indeterminate, the question of how many persons actually use the dedicated meta engine being a separate issue.

52      Consequently, the operator of a dedicated meta search engine such as that at issue in the main proceedings re-utilises part of the contents of a database for the purposes of Article 7(2)(b) of Directive 96/9.
The Innoweb C‑202/12 decision is in a stark contrast with decision Automobil­ Onlinebörse I ZR 159/10 handed down by the German Federal Supreme Court (BGH) in 2011. Unlike CJEU, BGH took position (§ 26) that a provider of a software that enables comparison of different websites with car ads does not use that data himself and hence can not be a direct infringer. Instead, BGH focused on conduct of users and their possible violation of the database right of scraped websites (so did Dutch court in the reference "makes it possible for the public to search"). This led BGH to rejection of an infringement of a database right as to both re-utilization of substantial part of the database and systematic re-utilization of its insubstantial part. As seen above, the CJEU without any arguments, considered similar real time scraping to be acts carried out directly by the meta search engine operator. The Court basically implicitly attributed all the searches to the operator of the website. One can only speculate about the reasons. It however shows, how thin the ice between primary and secondary liability under different intellectual property rights can be.

Even more troubling that above doctrinal issue is a practical impact of the decision. This decision effectively outlaws operation of most of the socially beneficial websites that help consumers to compare the prices or qualities of different goods across the Internet. Unlike general search engines that channel in more traffic than they could possibly take out, the comparison websites are very likely to be nuisance for at least bigger providers/sellers, which probably receive less than loose. I am not sure if it is a good innovation policy for the EU to make operation of such websites dependent on mere tolerance by the big players. Especially when smaller competitors are possibly greater beneficiaries of this comparison websites. It is not that I would favor all forms of meta search engines, but this is a too broad ban of innovative services, which EU can not afford.

PS: interestingly enough: the decision was handed down by the Fifth Chamber with alleged help of General Advocate P. Cruz Villalón. His opinion, however, if delivered at all, was not published until today [reader Juan spotted in the ruling that the Court decided to proceed to the decision without the Opinion].