Are Banks Required to Disclose Indentity of their Customers to Copyright Holders?

FutureOfCopyright reports very interesting recent Dutch copyright case - BREIN v. ING (Case No. C/13/539327). Local anti-piracy group BREIN sued well known bank and insurance company, ING, for disclosure of identity and bank transfers of one of it's customers, who is a domain name holder of a website (largest Usenet community in the Netherlands with around 500,000 member) that was found to be infringing copyright by Dutch courts in 2011. From Google Translated version of the decision, I grasped that ING in fact provided partial information to BREIN out of the court upon it's request.

It is not entirely clear to me from the FOC article and Google Translated version of the decision, whether disclosure action was brought against ING as an injunction against innocent party or as an injunction against wrongdoer. The court (in Google Translate) discusses:

The claim of BREIN can be granted if it is sufficiently plausible that ING Bank acted unlawfully towards Brain. According Brein rests on ING Bank on the basis of social care standards the legal obligation to provide those who are authorized to possess the funds to the account of [F] and identifying data acts ING Bank unlawfully against her through despite a request not to do. In answering the question whether in this case there is wrongdoing, it comes in the opinion of the court entails a consideration of mutual interests.

ING Bank has hearing for hands rightly argued that it was not "instrumental" is in the commission of (alleged) copyright infringement by FTD World of facilitating this by FTD World. Brein has to support its claim rely on case law which hosting providers and / or internet service providers sentenced to providing responsible behind "pirate websites".'s Personal In the opinion of the judge ignores this brain that the role of an Internet service provider or hosting provider is substantially different from that of a bank like ING Bank. A "pirate site" can not exist without a provider. There is no question of illegality if the provider does not supply services. ING Bank provides "only" bank transactions, which is not as a sine qua non to have effect in relation to (possible) copyright infringement. The provision of services by ING Bank, is not necessary for copyright infringement (unlawful). This is also available as on the websites involved no account number is known. Execution of a payment is not required to use the services offered on the websites of FTD World. Use The alleged unlawful activities take place entirely outside the purview of ING Bank and outside its sphere of influence. ING Bank is not in a position - and they do not have the expertise to have - to become an informed assessment (to) assess the (un) lawfulness of "pirate websites". There is no relationship between ING Bank and copyright infringement, while there is a relationship between an internet service provider or hosting provider and copyright infringement.

This would suggest that action was indeed brought as an injunction against wrongdoer, although to be frank, it makes only little sense to me. It would make more sense if the bank would be sued for disclosure as an innocent 'intermediary' aka UK Norwich-Pharma order [1974]. The action that one would expect in Member States national law as an implementation of either Art. 8(3) of the Information Society Directive, or Art. 8(1) of the Enforcement Directive that reads:

Member States shall ensure that, in the context of proceedings concerning an infringement of an intellectual property right and in response to a justified and proportionate request of the claimant, the competent judicial authorities may order that information on the origin and distribution networks of the goods or services which infringe an intellectual property right be provided by the infringer and/or any other person who:

..

(c) was found to be providing on a commercial scale services used in infringing activities;

But this is not why I find the case so interesting to report (although the balancing exercise is of course very interesting). Recently, in my Dallas working paper on 'innocent parties injunctions' (in second updated version), I ask how can we justify such injunctions in cases, where tort law remedies did not fail, i.e. where they have not been exhausted. I ask this both in the context of costs shifting, but also in the context of abusive exercise of such claims (like this one).

This is why it is relevant here. FOC reports that

[..] the Court ruled that the ING is not required to hand over the requested information since such a court ruling can only be deployed as a last remedy. BREIN had not yet depleted all other possible options to cease FTD World’s business and, besides, banks have a specific and legitimate interest to secure its account holders’ privacy and trust. [..] In the judgment, the Court questions whether BREIN has taken sufficient measures to trace the domain name holder and the Russian hosting provider. Also, BREIN has not yet reported FTD World’s acts to enforcement authorities.

If the case was actually brought as an action against innocent party, it might have an interesting line of argument, which basically says following. Injunction against innocent party is acceptable even if it deals with such sensitive data as bank data, but first, the tort law remedies have to be exhausted to justify such action. The argument basically proposes subsidiarity between the two types of claims with priority of tortious claims. Needless to say, that right holders do not really like this idea of subsidiarity of claims, and advocated strongly against it for instance during the debate on amendment of the Enforcement directive: 

The availability of an injunction against intermediaries should not depend on whether the infringer has or has not been identified; nor should the availability of such an injunction be made subject to an obligation for the rights-holder to sue the actual infringer (no rule of subsidiarity).

Exhaustion requirement could help to solve some abuses of injunctions against innocent parties and would, to some extend, solve also problem of costs, but it is still very limited solution to much bigger problem (see my concluding remarks in the mentioned paper).

BREIN announced to appeal the case.

Comment and clarifications from Dutch colleagues in comments or via email are much appreciated.

Update 22/05/2013: a very kind reader, William Bird from Patentive, provides some rough translation of the judgment.

Brein submits - in summary - that FTD World is unmistakably guilty of committing on-going copyright infringement or to facilitate it. Brein therefore has a compelling interest in order to find out who the leaders are behind FTD World. Under Articles 31 and 31a of the Copyright Act, the activities of FTD World as a criminal offense must be considered, moreover, in this case, also the application of the sanction under Article 31b Aw. The business model of FTD World means that it receives payments from advertisers and users of the websites of FTD World. ING Bank facilitates these payments. In practice, it is almost impossible to trace those responsible. Behind FTD World the domain name holder of FTD World ([E]) is a non-existing person. There was no response to a summons to his / her address. The Russian hosting provider has not responded to a summons of Brein. The Dutch intermediary involved in the registration of the domain name of FTD World has no more information than is already known to Brein. One can assume that [F] is not responsible for the websites of World FTD, she is very old and lives in Suriname in an unknown place. It is possible that she is a 'strawman'. The person currently in the former home of [F] is not doing anything with World of FTD. Brein has therefore done everything to find out the identity of those responsible behind FTD World. Today the only clue is the account at ING Bank. ING Bank, according to its letter of 7 March 2013 is only prepared to meet part of the request for information by Brein. ING Bank has advised that there is a proxy, but the data in its letter provides not lead to the identity of those authorized. In the opinion of Brain ING Bank should also provide such data. The necessary conditions (see for example the judgment of the Supreme Court of 25 November 2005 in the case Lycos / Pessers) are met in this case [in this case, the Dutch Supreme Court said that 'the request to reveal the identity of the holder of the website should be judged independently of the ISP’s liability based on the E-commerce Directive. Refusal to reveal the identity of the holder of a website might, in certain circumstances, constitute an unlawful act.', note by Hutko]. FTD World develops manifestly unlawful activities, it is beyond reasonable doubt that the representative of [F] is responsible, the affiliates of Brein will suffer significant damage and Brein has no other (practical) ability to identify those responsible. The claim of Brain is limited and is sufficiently specific and proportionate. The privacy interests of [F] should therefore be waived for the interests of the members of Brein.


4. The opinion of the court

4.1. The claim of Brein can be granted if it is sufficiently plausible that ING Bank acted unlawfully towards Brein. According to Brein, ING Bank has the legal obligation to provide the names of those who are authorized to access the funds from the account of [F] and identifying data on the basis of social care standards and that ING Bank acts unlawfully against her despite a request not to do so. As answer to the question whether there is wrongdoing in this case, in the opinion of the court is that this entails a consideration of mutual interests. ING Bank would have to give up the privacy interests of its customers. The importance for Brein lies in the fact that it should take action against copyright infringement on behalf of its member owners. In this balancing of interests, all relevant circumstances of the case are involved.

4.2. Both parties have referred to the Data Protection Act (DPA), in particular Article 8 paragraph f of that law. ING Bank has also referred to the Conduct in Processing of Personal Information by Financial Institutions which is derived from the DPA. It is true that the purpose of the collection of personal data by a bank like ING Bank is not in the investigation of criminal and/or unlawful activities. In answering the question whether ING Bank may be made to provide information under the Data Protection Act and / or the Code of Conduct this broadly relates to the same interests as mentioned under

4.1. In this context, the legitimate interest in the disclosure of certain information has to be weighed against the privacy interest.

4.3. ING Bank has in the hearing rightly argued that it was not "instrumental" in the (alleged) copyright infringement by FTD World or of facilitating this by FTD World. Brein has to rely in its claim on case law concerning hosting providers and / or internet service providers that were ordered to provide information on those responsible behind "pirate websites”. In the opinion of the judge Brein misjudges the role of an Internet service provider or hosting provider which is substantially different from that of a bank like ING Bank. A "pirate site" cannot exist without a provider. There is no question of illegality if the provider does not supply services. ING Bank provides "only" bank transactions, which is not to have effect sine qua non in relation to (possible) copyright infringement [I find this argument to be very little convincing, some ISPs certainly have very similar position to a bank, note by Hutko]. The provision of services by ING Bank, is not necessary for copyright infringement (for it to be unlawful). This also occurs on the websites where no account number is known. Execution of a payment is not required to use the services offered on the websites of FTD World. The alleged unlawful activities take place entirely outside the purview of ING Bank and outside its sphere of influence. ING Bank is not in a position - and they do not have the expertise - to get an informed assessment to assess the (un) lawfulness of "pirate websites". There is no relationship between ING Bank and copyright infringement, while there is a relationship between an internet service provider or hosting provider and copyright infringement.

4.4. Furthermore, ING Bank rightly argued that the (legal) possibilities of Brein to identify those responsible behind FTD World have not (yet) been exhausted. One can put in question the effectiveness of the efforts of Brein to trace the domain name owner  and / or trace the Russian hosting provider. Moreover, [F] has not been contacted or legally called upon to provide the personal details of the proxy let alone has any attempt been made to trace her. Brein assumes that [F] has nothing to do with FTD World, but this assumption is based on nothing else than on general knowledge about the "profile" of those responsible for "pirate websites".

4.5. The criminal law is not closed to Brein. Brein did not file any claim, although it considers the case involves criminal offenses. While it is true that the Intellectual Property fraud is based on the principle of civil enforcement, the fact remains that the public prosecutor is the person who may ask a third party to provide certain information to him in the context of a criminal investigation. If Brein want access to personal data, they should report a crime, in order to get the public prosecutor to provide that information. Note that Intellectual Property Fraud does not make such a request impossible.

4.6. Finally, ING Bank has rightly relied on the special position that banks have in legal and financial transactions. There is a strong emphasis on the trust that clients should be able to enjoy in their banks. This confidence must keep in mind that customers' personal data may only be communicated to third parties in very exceptional circumstances. If the data is to be provided then these should be "in safe hands" with such third parties. That Brein, as she stated in the hearing, has a legitimate statement of the Data Protection Authority, does not necessarily lead to the conclusion that it will not provide the data to others.

4.7. Based on the above considerations, the judge considers that the interests of ING Bank in this case outweigh those of Brein. For the time being ING Bank therefore is not acting unlawfully by refusing to (further) to provide data. This leads to the denial of the requested provision by Brein.

4.8. The reference to the judgment of the District Court of The Hague December 6, 2011 in the case Brain/Techno Design does not cast a different light on this matter. In that judgment is first mentioned that Techno Design made a limited defense. Techno Design is also not a bank, but a so-called payment provider. She offers an online payment service that allows visitors to a website to execute payments to the operator of a website, without the visitor obtaining information about the administrator of the site. In this way it allows administrators of websites - including operators of websites through which copyright infringement may be committed - to remain anonymous while knowingly aware of the issue. Unlike the present case in which Brein can figure out who the trustee of the account through [F], in the Brain / Techno Design case, Brain could only find out who committed the unlawful act from Techno Design. For this reason, the balance of interests differs materially.

Although the reasoning little bit blurs whether this was a case against an innocent party, referring to other cases, such as Lycos v. Pessers, indicates that this might be the case. I understand the outcome, but at the same time I have to say that courts reasoning is not entirely convincing in a part where it draws distinctions to other Internet service providers. It literally seems as if the court was surprised that a far reaching interpretation given in the context of Internet providers, shall be applied outside of the Internet world. Needless to say, I am not surprised.

Injunctions Outside of Tort Law?

Thanks to crowd funding call orchestrated by Jeremy and several extraordinary people from around the world (some of them anonymous), to whom I am greatly indebted for their spontaneous support, I will be able to share one of my recent work-in-progress papers with audience at INTA next week in Dallas. The working version of the paper already sits on my SSRN page here (Husovec, Martin, In Rem Injunctions: Case of Website Blocking (April 27, 2013)).

The paper discusses a concept of protection of the intellectual property rights by so called 'in rem injunctions' (actio in rem negatoria), i.e. tort-law-independent system of injunctive protection of absolute rights. One type of such injunctions, website blocking, is currently appearing in a spotlight around various European jurisdictions as a consequence of the implementation of Art. 8(3) of the Information Society Directive and Art. 11 of the Enforcement Directive. Website blocking injunctions are in this paper used only as a plastic and perhaps also canonical example of the paradigmatic shift we are facing. Author of this paper maintains that the theoretical framework for these injunctions is not in the tort-law, but in an old Roman law concept of so called 'in rem actions'. Thus the term in rem injunctions is coined to describe this concept. Besides the theoretical foundations, the paper explains how this system fits into the private law regulation of negative externalities of on-line technology and also what are expected dangers of derailing injunctions from the tracks of the tort law. The important question of the justification of an extension of the intellectual property entitlements by in rem injunctions [and their limits] however, which is author's PhD project, is left out from the paper.

As an outcome of the paper, following is being presented:

Website blocking is a manifestation of derailing injunctions from the tracks of the tort law in the recent jurisprudence. This phenomenon leads to an extension of the rights by extending the scope of enforcement of the rights against persons that are too far for the tort law, but have resources, factual and legal means how to reduce the negative externalities. In this paper I argued that theory behind such extension can be found in Roman notion of 'in rem action' (remedy of law of property). And also that justification for such extension shall not be mechanical, but subject to thorough justification analysis. In this respect, I have tried to demonstrate arising problems on the praxis of the website blocking. The article also suggests that if we now shift to this new paradigm of injunctions, we should also start discussing new positive intellectual property limitations not only on the level of the scope of the right, but also on the level of the scope of it's enforcement.

I look forward to hearing any feedback from you from various jurisdictions. After collecting feedback on the draft, I plan to submit it to one of the Open Access Journals towards the end of the month. 

PS: I will add slides from INTA after the presentation as usual.
PS2: Of course, readers coming to Dallas are cordially invited to my talk scheduled on Monday (6.5.), 2:40 pm – 3:15 pm at Omni Dallas Hotel –Deep Ellum A (look for Trademark Scholarship Symposium (Session I), European Trademark Rights and Enforcement).

Update1: Below are my slides from INTA.

In Rem Injunctions: Case of Website Blocking from Martin Husovec

Does Use of CCTVs to Protect Your Home From Offenders Fall Outside of EU Data Protection Laws?

This is how we could rephrase a new preliminary reference by the Czech Administrative Supreme Court. 

Journalist and former publisher of local newspapers Mr. Ryneš had persisting problems with unknown offenders who attacked him six times and several times damaged his house. Czech Police never found out who they were. Mr. Ryneš thus decided to protect his family and property, and installed a CCTV on his house. One fixed CCTV was covering entrance to his and his neighbour's house and the street. System was installed by a professional firm and designed in a way that after hard disk limit was reached, the old data were rewritten by new data. No monitor was installed and only person with the access was Mr. Ryneš and his family. 

During one October night, house of Mr. Ryneš was damaged again. Unknown offenders broken his windows with a sling shot. This time, CCTV captured two suspects. One of them decided to defend by submitting a complaint with Czech Data Protection Office (CDPO) alleging that CCTV system of Mr. Ryneš was installed contrary to several provisions of Czech data protection laws. Several weeks later, CDPO fined Mr. Ryneš with 1.500 Kč (approx. 60 euros) because he did not notify the Office and was processing without consent the personal data of persons walking on the street and entering his neighbours house. 

Mr. Ryneš took things to the court arguing inter alia that Czech data protection laws do not apply because his CCTV was installed 'in the course of a purely personal or household activity' (art. 3(2) of Directive 95/46/EC, lists what falls outside of the scope of the Directive).

First instance court, City Court in Prague (9Ca 41/2009), disagreed with Mr. Ryneš and uphold the fine. Mr. Ryneš then appealed to the Czech Administrative Supreme Court. This Court now decided to stay proceedings (1 As 113/2012) and ask CJEU following:

CZ: Lze provozování kamerového systému umístěného na rodinném domě za účelem ochrany majetku, zdraví a života majitelů domu podřadit pod zpracování osobních údajů „prováděné fyzickou osobou pro výkon výlučně osobních či domácích činností“ ve smyslu čl. 3 odst. 2 směrnice 95/46/ES (Úř. věst. L 281, s. 31; Zvl. vydání 13/015, s. 355), třebaže takovýto systém zabírá též veřejné prostranství?

EN: Does processing of personal data by operation of the CCTV system on a private house with purpose of protecting property, health and life of its owners fall within the scope of art. 3(2) of Directive 95/46/EC, even if this system also covers public space?

Art. 3(2) reads: 'This Directive shall not apply to the processing of personal data .. by a natural person in the course of a purely personal or household activity'

Czech Administrative Supreme Court points out that praxis in Members States is not coherent in this respect. According to the decision, Spain, Austria and Belgium consider these kind of scenarios as falling within the scope of the data protections laws, whereas UK and Ireland are reported to take opposite views. The Court refers to following part of the UK Information Commissioner’s Office opinion:

„The use of cameras for limited household purposes is exempt from the DPA. This applies where an individual uses CCTV to protect their home from burglary, even if the camera overlooks the street or other areas near their home.“ (CCTV code of practice, Revised edition 2008, s. 5, www.ico.gov.uk)

Let's see what CJEU has to say about this. Though I am bit sceptical that CJEU would want to go for an extensive reading of Art. 3(2) of Directive 95/46/EC.

CJEU Gets Referal Directly From Czech IPO

Two weeks ago UK IPO informed about new preliminary reference from Czech republic - MF7 C-49/13, which deals with some questions of bad faith in trade mark law. I was very curious about the case. Not because of a substance as IPKat, but because it was filed directly by the Czech Industrial Property Office and not a Czech court. So I filed a request for information with Czech IPO. Today, after almost two weeks I finally got an answer, which reads something like 'the information was prepared in course of proceedings of the IPO and it will be published after CJEU decides'. Not very cooperative given that they (IMHO) have to disclose such information under Czech Information Freedom Act.

Anyway, Czech IPO at least confirmed that MF7 C-49/13 was filed directly by the IPO in course of pending nullification proceedings. This is very unusual situation I would say. I don't know how other IPO's are dealing with this, but I suspect that it is always a court that files such proceedings. And I am also not sure whether this is a good precedent for the CJEU to take. This could potentially open floodgates. Important question I thus expect CJEU to answer is whether national IPO can even file such preliminary reference.

In the last months, we have seen some other administrative authorities filing such preliminary references and looking at CJEU case-law it is definitely not a new trend. One can mention Austrian Office for Protection of Personal Data (Datenschutzkommission) that filed preliminary reference (H C-46/13) dealing with data retention.

So what is the legal position of the CJEU? It is well known that not every body that deals with Union law can also file preliminary reference. CJEU limits number of these bodies by interpreting a notion of "court or tribunal of Member State" set in  Art. 267 TFEU. It is also a general rule that administrative authorities don't have a right to refer their own questions. According to settled CJEU case-law, in order to determine whether a body making a reference is a court or tribunal for the purposes of Article 267 TFEU, the CJEU takes account of a number of factors, such as whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whether its procedure is inter partes, whether it applies rules of law and whether it is independent.

In Syfait C-53/03 case, dealing with the reference from the Greek Competition Authority, CJEU said:

 30      It should be noted, first of all, in this regard that the Epitropi Antagonismou is subject to the supervision of the Minister for Development. Such supervision implies that that minister is empowered, within certain limits, to review the lawfulness of the decisions adopted by the Epitropi Antagonismou.

31      Next, whilst it is true that the members of the Epitropi Antagonismou enjoy personal and operational independence and are bound in the exercise of their duties only by the law and their conscience within the meaning of Law No 703/1977, it nevertheless remains that there are no particular safeguards in respect of their dismissal or the termination of their appointment. That system does not appear to constitute an effective safeguard against undue intervention or pressure from the executive on the members of the Epitropi Antagonismou (see, to that effect, Case C-103/97 Köllensperger and Atzwanger [1999] ECR I-551, paragraph 21).

32      It should also be noted that under Article 8C(1)(b) and (d) of Law No 703/1977, the President of the Epitropi Antagonismou is responsible for the coordination and general policy of the secretariat, is the immediate superior of the personnel of that secretariat and exercises disciplinary power over them.

33      It should be noted in this regard that the Tribunales Económico-Administrativos (Economic and Administrative Courts) (Spain) were found by the Court, in paragraphs 39 and 40 of the Gabalfrisa judgment, to be third parties in relation to the departments of the tax authority responsible for the management, clearance and recovery of VAT, particularly given the separation of functions between them. However, in so far as there is an operational link between the Epitropi Antagonismou, a decision-making body, and its secretariat, a fact-finding body on the basis of whose proposal it adopts decisions, the Epitropi Antagonismou is not a clearly distinct third party in relation to the State body which, by virtue of its role, may be akin to a party in the course of competition proceedings.

Some time before above decision, CJEU said moreover following in Schmid C-516/99 case:

36.     It must be remembered that the expression ‘court or tribunal’ within the meaning of Article 234 EC can mean only an authority acting as a third party in relation to the authority which adopted the contested decision (Case C-24/92 Corbiau [1993] ECR I-1277, paragraph 15).

37.     The authority before which an appeal can be brought against a decision adopted by a department of an administrative authority cannot be regarded as a third party in relation to that department and, accordingly, as a court or tribunal within the meaning of Article 234 EC, where it has an organisational link with that administrative authority (see, to that effect, Corbiau, paragraph 16). This will be so unless the national legal framework is such as to ensure a separation of functions between, on the one hand, the department of the administrative authority whose decision is being challenged and, on the other, the authority which rules on complaints lodged against decisions of that department without receiving any directions from the administrative authority to which that department is responsible (see, to that effect, Gabalfrisa and Others, paragraph 39).

38.     Where there is an organisational and functional link between an appeal chamber and the regional finance authority which adopts the decisions contested before it, it is impossible to regard the chamber as a third party in relation to that administrative authority.

Thanks to non-cooperativeness of Czech IPO, I can't tell if the case is in first or second instance of administrative proceedings before it, so I don't have a full picture. Also this is certainly not strictly speaking my 'field'. However, given Syfait and Schmid cases, I don't think that Czech IPO is likely to get any answer from CJEU other than that it has no jurisdiction.

What's Wrong With UK Website Blocking Injunctions?

British courts issued already three website blocking injunctions against five copyright-infringing websites (Newzbin II. + 1 [Newzbin], Dramatico Entertainment + 1 [Thepiratebay], EMI Records [KAT, H33T, Fenopy]). In this blog post I don't want to question the effectiveness of the remedy for copyright cases as I did before (see also J Arnold's opinion in EMI Records, para 106). Here, I want to focus on the fundamental rights perspective of the website blocking.

The website blocking cases are usually proceedings against the Internet access providers, who as defendants are asked to employ certain technical means to make the access to disputed websites more difficult for its subscribers (an uncircumventable website block is impossible). These injunctions are a way of exercising, what I call, actio negatoria in rem, i.e. a cease and desist claim (injunction) in rem, that is entirely independent of the defendants position within the tort law system. The defendant here does not have to be a wrongdoer (direct or secondary infringer) in a tort law sense, in order to be asked to change certain disturbing factual situation for the rights holder. In rem injunctions are based on the understanding of the injunctive claim as an internal part of the absolute right, that is protected not only by the tort law or unjust enrichment system, but also by a separate system of injunctive absolute protection that in fact executes it's erga omnes character (more on this in upcoming posts).

Website operatorts (alleged infringers) or Internet users are typically not party of a court proceedings, but theoretically, they could be. From all the three UK website blocks, only Newzbin II. was initiated after the court decision against the website operator was issued (Newzbin I.) and failed to be implemented. In other two cases, the infringing nature of a website was assessed as a preliminary question. Website operators, whose websites were to be blocked, were not party to the proceedings and thus could not defend themselves in front of the court. Similarly, Internet users, whose access is being limited, also were not in a position to defend themselves. Is this a problem?

The author of all three website blocks, Justice Arnold, addressed this question in Dramatico Entertainment in a following way:

(9) The operators of TPB have not been joined as defendants to this claim, nor has it been served upon them. They did not appear at the hearing, nor have they been represented. Nor has any user been joined, served, appeared or been represented. It might be asked why it would be appropriate for this Court to determine the preliminary issues in their absence. Counsel for the Claimants gave four answers to that question, the first three of which I agree with.

(10) First, there is no jurisdictional requirement to join or serve the operators or users of TPB. Article 8(3) of the Information Society Directive and section 97A of the 1988 Act (set out below) confer jurisdiction on the Court to grant injunctions against intermediaries whose services are used by a third party to infringe copyright. Neither Article 8(3) nor section 97A requires joinder or service of the third party.

(11) Secondly, the courts both in this jurisdiction and in other Member States have proceeded on the basis that it is not necessary to join or serve the third party. In 20C Fox v BT the operators of Newzbin2 claimed to be different to the operators of Newzbin1. I granted the order sought even though the operators of Newzbin2 had not been joined or served and no user was joined or served (although one user did apply to be joined prior to the second hearing). The same approach has been adopted by courts in Belgium, Denmark and the Netherlands. Thus in Stichting Bescherming Rechten Entertainment Industrie Neederland BREIN v Ziggo BV (case 374634/HA ZA 10-3184, judgment dated 11 January 2012) the District Court of the Hague (Judges Blok, Kalden and Loos) held at [4.42]:

"The District Court considers on that as follows. The imposing of the claimed order meets the conditions of due process. After all, the measure is imposed after a prior, fair and impartial procedure, i.e. the present proceedings. Contrary to what Ziggo and XS4ALL argue, it is not required that all its subscribers are parties to the proceedings or are heard. It provides that 'the person or persons concerned' must be heard. In a case like the present one, in which an order is claimed against intermediaries, such intermediaries can be considered to be the persons concerned in the sense of this provision. Said intermediaries have been heard. Any different interpretation would render the regulation for orders against intermediaries which the European legislator has implemented with the Enforcement Directive meaningless. It is inherent in such regulation that an order can be imposed upon inter alia internet providers to cease their services in proceedings to which the alleged infringer is not, at least not necessarily a party and so is not heard in it. One of the reasons for implementing such an option is precisely, after all, the situation that the alleged infringer cannot be sued, for instance because his identity is not known (see Memorandum, following the report, Parliamentary Documents II 2005-2006, 30 392, no. 6, p. 10 and 11)."

(12) Thirdly, it would be impracticable, or at least disproportionate, to require joinder or service of the operators or users of TPB. TPB was set up and originally operated by four Swedish individuals (Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi and Carl Lundström) who were convicted of criminal offences of aiding and abetting copyright infringement by the Swedish courts. It appears that, while their (unsuccessful) appeals against conviction were pending, they left the jurisdiction of the Swedish courts. While Warg is said to be in Cambodia, it is unclear where the others are. Furthermore, they have claimed that TPB is now operated by a Seychelles company called Reservella Ltd, although this is disputed. In subsequent civil proceedings brought by a number of record companies in Sweden against Warg, Neij and Sunde, the court has thus far been unable to serve the proceedings on the defendants. There is no reason to believe that any attempt to serve English proceedings on them would be any more successful.

(13) Even if proceedings could be served upon the operators of TPB, there is no reason to believe that they would seek to defend them or to make representations to this court. The BPI wrote to the operators complaining of infringement on 12 July 2011 and subsequently sent a copy of the letter by email on 10 August 2011, but received no reply. The operators' attitude is clear from the following passage on the "about" page of TPB:

"Only torrent files are saved at the server. That means no copyrighted and/or illegal material are stored by us. It is therefore not possible to hold the people behind The Pirate Bay responsible for the material that is being spread using the tracker. Any complaints from copyright and/or lobby organisations will be ridiculed and published at the site."

True to their word, the "legal threats" page of the website contains links to copies of a series of cease and desist letters sent by right owners together with the operators' responses, which tend to the profane. The page ends:

"No action (except ridiculing the senders) has been taken by us because of these. :-)

Nice graphs for the law firms who don't get the hint above:

(we used to have a nice graph here, but it's simpler to just say: 0 torrents has been removed, and 0 torrents will ever be removed.)"

There is more evidence of this kind.

(14) Turning to the users of TPB, the evidence is that there is a considerable number of these in the UK. While in theory it would be possible to identify those users, or most of them, who were using TPB during a particular period by means of Norwich Pharmacal orders directed to ISPs, that would be a costly exercise in itself. It would be wholly disproportionate to attempt to join or serve all such users, and there would be no basis for singling out particular users for joinder or service. Nor, I suspect, would most users wish to defend the proceedings or even make representations.

(15) The fourth answer given by counsel was that any findings of infringement made in these proceedings would not be binding upon the operators or users of TPB. While technically correct, I do not regard this point as particularly persuasive, since if the order sought by the Claimants is granted the operators and users of TPB will be adversely affected.

In summary, Justice Arnold accepted following arguments: 

i) nothing in the injunctive provision requires court do so,
ii) other courts did the same, 

iii) it would be impracticable, or at least disproportionate to require joinder or service of the operators or users.

I aim to examine this rather brief argument of Justice Arnold from the perspective of the European Convention on Human Rights (ECHR) and Charter of Fundamental rights of the European Union (Charter), in particular, a right to a fair trail. A right to fair trail is embodied in Art. 6(1) ECHR and Art. 47 Charter in a following way:

Art. 6(1) ECHR: "In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.

Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interests of morals, public order or national security in a democratic society .. or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice."

Art. 47 of EU Charter: "Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented."

First, we need to recognize that website blocking proceedings are derogation from this rule. So let's turn to the Strasbourg case-law. The right to a fair trial is an absolute right, and therefore, for example, an individual cannot be denied the right to a fair trial in the interests of the broader community (Jonathan Cooper. Procedural Due Process, Human Rights and the Added Value of the Right to a Fair Trial [2006] JR 78). Constituent elements of Article 6 may be limited in relation to certain circumstances as long as the trial as a whole remains fair (Ibid). Any constituent elements thereof are subject to the tests of strict necessity and proportionality.

Website blocking proceedings fall within the scope of Art. 6(1) because their result is decisive for private rights and obligations (Ringeisen v. Austria, No. 2614/65). As to website operators, their right to engage in commercial activities, property rights or other rights of private individuals, can be interfered with by such a result. For instance, a right to conduct a business can be limited by a blocking decision, which orders other entities (here Internet access providers) to block access to business website. Thus, a court has an obligation to provide for a fair trail to all parties that are in this way affected. It could be argued that not only website operator who is a target of the proceedings, but also users indirectly can be affected as to their rights. In most cases however, I think impact on users rights would be de minimis. It could however be the case as well, that e.g. when the blocked service is having regular paying customers (which wasn't the case in UK blocks), the blocking decision would affect even some Internet users substantially (namely costumers of the website operator). But let's disregard these cases now, and focus on the website operator's right to a fair trail.

Website operator's right to a fair trail can be interfered with as to two of its components: i) access to the court and ii) equality of arms. The main problem of a website block is not only that the court will not hear the website operator in the proceedings, but also that the website operator has no remedy how to challenge the block of his website. The court thus decides de nobis sine nobis, i.e. about us without us. Moreover, equality of arms requires that each party is afforded a reasonable opportunity to present his or her case, including his or her evidence, under conditions that do not place him/her at a substantial disadvantage vis-à-vis his or her opponent (Ibid). The website operator can not object to evidence or present his legal arguments in the assessment whether his service is complying with the law. Even the criminals have a right to defend themselves, regardless of how evident their case can be. The Strasbourg court reads the set of minimal rights from criminal cases stipulated in Art. 6(3) as minimum standard also into the civil cases in scope of Art 6(1). This is a so called right to adversarial proceedings (see e.g. J.J. v. The Netherlands, No. 21351/93). That right means in principle the opportunity for the parties to a civil trial to have knowledge of and comment on all evidence adduced or observations filed, with a view to influencing the court's decision.

Let's stop for a while and try to draw an analogy to website blocking to make it more plastic for a reader. Imagine, that a rightsholder would instead of suing a domain name holder, sue a domain name authority for a cancellation of a registration. As the rights holder is the dominus litis, he does not have to name the defendant as a party. Let's assume that he has a cease and desist claim against the domain name authority as outlined above. Now, would it be OK if the judge decides on a trade mark dispute claims only between the domain name authority and the plaintiff, without providing the domain name holder with a possibility to defend himself? Very likely not. The website block has a very similar, although bit more limited effect. The customer or readership demand in a certain country can be stopped, without providing the website operator with a possibility to defend his case.

Now let's turn to Justice Arnold's arguments. It is apparent that for a far trail assessment, argument of 'there is nothing in the law' and 'others do the same' is not relevant. The only argument thus remains that 'it would be impracticable, or at least disproportionate to require joinder or service of the operators or users'.

It would certainly be disproportionate ask all the website users to join the proceedings. This is however in most of the cases not necessary, as the possible website block has usually only little interference with user's civil rights. Certainly all the proceedings Justice Arnold dealt with, did not require the users to join in order to guarantee their right to a fair trail. As we suggested above however, it would be different if the users were paying customers, who could thus loose their money or subscriptions. But even in these cases, these users would have claims against the website operator ex post. Thus their civil right would be not necessarily infringed upon.

The different is however true for the website operator. If his website is blocked, he is stopped or substantially disadvantaged (as it can be circumvented) from conducting his business, sharing opinions, exploiting his property (see for domain names Paeffgen v. Germany, No.  25379/04,  No. 21688/05, No. 21722/05). As a recent case Ahmet Yıldırım v. Turkey (No. 3111/10) suggests, ECHR is very strict about this. The case concerned a court decision to block access to Google Sites in Turkey, which were hosted an Internet site whose owner was facing criminal proceedings for insulting the memory of Atatürk. As a result of the decision, access to all other sites hosted by the service was blocked. The ECHR observed that the blocking of access to the applicant’s website had resulted from an order by the Denizli Criminal Court in the context of criminal proceedings against the owner of another site who was accused of insulting the memory of Atatürk. The court had initially ordered the blocking of that site alone. However, the administrative authority responsible for implementing the order (the TİB) had sought an order from the court for the blocking of all access to Google Sites, which hosted not only the offending site but also the applicant’s site. The court had granted the request, finding that the only way of blocking the site in question was to bar access to Google Sites as a whole. Although neither Google Sites nor Mr Yıldırım’s own site were concerned by the above-mentioned proceedings, the TİB made it technically impossible to access any of those sites, in order to implement the measure ordered by the Denizli Criminal Court. The ECHR reiterated that a restriction on access to a source of information was only compatible with the Convention if a strict legal framework was in place regulating the scope of a ban and affording the guarantee of judicial review to prevent possible abuses.

In the light of above mentioned, it is very likely that ECHR would require that website operator has at least a chance to defend his case. Therefore as a rule, he would need to be given this opportunity and courts should not allow such injunctions without it. This however does not mean that website operator have to defend his case. If he is unwilling to participate it is his fault. But he should be at least notified about the case and given the opportunity to comment and defend himself. I don't see why the fact that defendant appears to be non-cooperative from the outset (see Justice Arnold's arguments), should give the court a discretion as to whether it will hear the affected party.

Last but not least, there is another aspect of the website blocking that shall be mentioned. Ahmet Yıldırım v. Turkey teaches us that the courts shall be very cautious about the scope of a ban and the guarantee of judicial review to prevent possible abuses. Otherwise, website blocks can clash with a legal principle that the rights have to be proportionate and 'prescribed by the law' (compare the arguments of AG in Sabam and Scarlet Extended). Justice Arnold did, I think, a good job when it comes to assessing different alternatives and their collateral damage on others. I am however not so sure, whether his conditions of the website blocks are good enough to prevent an abuse. As the number of the website blocks will be growing, these court-approved website blocks should have more strict system of checks and balances, e.g. transparency obligations by the Internet access providers or periodical review of the implementation. The website blocking orders should also foresee situations when the content of the website has changed, or foresee the ways how to narrow down the injunctions later on.

All this suggests that praxis of website blocking has to be improved to respect the fundamental rights of different parties. Otherwise, the abuses of this type of injunctions, such as this one, will appear more often. It is always more convenient to sue somebody who can give you what you want without having to argue with the opposing party. I do think that website blocks have a certain role in the online enforcement, though I am not sure whether it's really the copyright one due to the specific nature of the user demand that has big incentives to circumvent the blocks. Website blocking can nevertheless yield some more efficient results for the rights enforcement online. However as Evgeny Morozov concludes in a different context, 'we cannot circumvent legal procedures and subvert democratic norms in the name of efficiency alone'.

Retransmission by Internet Stream, CJEU Decides ITV Broadcasting

Television broadcasters may prohibit the retransmission of their programmes by another company via the internet, decided CJEU today in a British reference ITV Broadcasting C-607/11.

Defendant in the British proceedings, TVCatchup Ltd (‘TVC’), offers an internet television broadcasting service. This service permits its users to receive, via the internet, ‘live’ streams of free-to-air television broadcasts. TVC ensures that its subscribers can obtain access only to content which they are already legally entitled to watch in the United Kingdom by virtue of their television licence. The terms to which users must agree include the possession of a valid TV licence and a restriction of use of TVC services to the United Kingdom alone. The TVC website has the facility to authenticate the user’s location and thereby to refuse access where the conditions imposed on users are not satisfied. The CJEU had to decide whether such webstreaming of works included in a terrestrial broadcast, and thus making available of those works over the internet, constitutes a communication to the public within a meaning Article 3(1) of the Directive 2001/29. From the decision:

21      In the first place, it is necessary to determine the meaning of the concept of ‘communication’ and reply to the question whether the activity at issue in the main proceedings comes within its scope.

24      If follows that, by regulating the situations in which a given work is put to multiple use, the European Union legislature intended that each transmission or retransmission of a work which uses a specific technical means must, as a rule, be individually authorised by the author of the work in question.

26      Given that the making of works available through the retransmission of a terrestrial television broadcast over the internet uses a specific technical means different from that of the original communication, that retransmission must be considered to be a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29. Consequently, such a retransmission cannot be exempt from authorisation by the authors of the retransmitted works when these are communicated to the public.

28      Admittedly, it follows from the case-law of the Court that a mere technical means to ensure or improve reception of the original transmission in its catchment area does not constitute a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29 (see, to that effect, Football Association Premier League and Others, paragraph 194, and Airfield and Canal Digitaal, paragraphs 74 and 79).

29      Thus, the intervention of such a technical means must be limited to maintaining or improving the quality of the reception of a pre-existing transmission and cannot be used for any other transmission.

30      In the present case, however, the intervention by TVC consists in a transmission of the protected works at issue which is different from that of the broadcasting organisation concerned. TVC’s intervention is in no way intended to maintain or improve the quality of the transmission by that other broadcasting organisation. In those circumstances, that intervention cannot be considered to be a mere technical means within the meaning specified in paragraph 28 above.

31  In the second place, in order to be categorised as a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29, the protected works must also in fact be communicated to a ‘public’.

32      In that connection, it follows from the case-law of the Court that the term ‘public’ in Article 3(1) of Directive 2001/29 refers to an indeterminate number of potential recipients and implies, moreover, a fairly large number of persons (see, to that effect, SGAE, paragraphs 37 and 38 and the case‑law cited).

35      In the present case, it should be noted that the retransmission of the works over the internet at issue in the main proceedings is aimed at all persons resident in the United Kingdom who have an internet connection and who claim to hold a television licence in that State. Those people may access the protected works at the same time, in the context of the ‘live streaming’ of television programmes on the internet.

36     Thus, the retransmission in question is aimed at an indeterminate number of potential recipients and implies a large number of persons. Consequently, it must be held that, by the retransmission in question, the protected works are indeed communicated to a ‘public’ within the meaning of Article 3(1) of Directive 2001/29.

37      However, TVC contends that the retransmission at issue in the main proceedings does not satisfy the requirement that there must be a new public, which is none the less necessary within the meaning of the judgments in SGAE (paragraph 40), Football Association Premier League and Others (paragraph 197), and Airfield and Canal Digitaal (paragraph 72). The recipients of the retransmission effected by TVC are, it submits, entitled to follow the televised broadcast, identical in content, using their own television sets.

38    In that connection, it should be noted that the situations examined in the cases which gave rise to the abovementioned judgments differ clearly from the situation at issue in the case in the main proceedings. In those cases, the Court examined situations in which an operator had made accessible, by its deliberate intervention, a broadcast containing protected works to a new public which was not considered by the authors concerned when they authorised the broadcast in question.

39    By contrast, the main proceedings in the present case concern the transmission of works included in a terrestrial broadcast and the making available of those works over the internet. As is apparent from paragraphs 24 to 26 above, each of those two transmissions must be authorised individually and separately by the authors concerned given that each is made under specific technical conditions, using a different means of transmission for the protected works, and each is intended for a public. In those circumstances, it is no longer necessary to examine below the requirement that there must be a new public, which is relevant only in the situations on which the Court of Justice had to rule in the cases giving rise to the judgments in SGAE, Football Association Premier League and Others and Airfield and Canal Digitaal.

Huťko wonders whether it is just him at this late hour who can not get the 'clear difference' mentioned by CJEU in paragraphs 38 and 39.

IViR Has Some Numbers for CJEU

One of Huťko's favorite European Internet law Institutes, Dutch IViR, recently published an interesting survey-based study on downloading and streaming from illegal sources in the Netherlands (including the effects of website blocking on consumers behaviour). Some of the findings might be really interesting for CJEU, who will be deciding two related cases this year. Namely:

• Aci Adam C-435/12 [downloading from illegal sources]
• UPC Telekabel Wien C-314/12 [website blocking, streaming from illegal sources]

Both Aci and UPC are at least implicitly (UPC) concerned with the narrowing effect of the three step test. However similar the problem of streaming and downloading from illegal sources may look like, there is a substantial difference between the two. Whereas the first is concerned with a compulsory transient copy exemption, the second with optional personal use exemption under InfoSoc framework. Those who remember the debate about InfoSoc and it's structure would also point out that transient copy exception should be rather treated as a clarification of the reproduction right, not as an exemption to this right. In other words, and in contrast to personal use exemption, transient copy should have been part of Art. 2(a), rather than Art. 5 and thus also not subject to three step test. If this would have been the case, the question like UPC would never pop up. But the reality is different and we can only rely on the CJEU that it will repeat it's ratio decidendi from Infopaq II C-302/10, where it held that "if those acts of reproduction fulfil all the conditions of Article 5(1) of Directive 2001/29, as interpreted by the case-law of the Court, it must be held that they do not conflict with the normal exploitation of the work or unreasonably prejudice the legitimate interests of the right holder". This situation has to be distinguished from Art. 5(2) exemptions, that are only optional and leave more space to the member states. BGH recently filed few cases that exactly ask whether the national transposition of Art. 5(2) type of exemption, comply with the three step test. Thus in my opinion, CJEU will give private copying exemption different three-step-test-treatment that it gave to transient copy exemption in Infopaq II. And this is where study of IViR comes into the play. Executive summary of the study reads:

This report presents the results of a consumer survey on the downloading and streaming of music, films, TV series and programmes, games and books. The authors make a distinction between four channels: buying material on physical formats in an offline or online store, paid-for downloading or streaming from a legal source, free downloading or streaming from a legal source and  downloading or streaming from an illegal source. In May and June this year 3,118 members of the CentERpanel, an online household panel that is representative of the Dutch population, were invited to take part in the survey. The response rate was 64.4%, or 2,009 fully completed questionnaires.

IViR study treats downloading and streaming probably for practical reasons together. According to IViR's findings, around 27 % percent of Dutch respondents engage in downloading or streaming from illegal sources. IViR also found that:

About one in five people who download from illegal sources had in the past year bought a CD or LP that they had previously downloaded from an illegal source. The same was found for DVDs, Blurays and for printed books. The opposite – downloading a book from an illegal source that had been previously purchased in print – is also very common. This shows that for a substantial group of consumers printed books and e-books are complementary. Personally uploading purchased material is done by no more than 5% of the Dutch population.

..

Here we see that those who download from legal and illegal sources without paying are younger than those who pay for downloads and streams. In the case of books, the popularity of illegal content hardly declines with age up to 54 years. Men are more likely to use free legal sources and illegal sources than women. [..] Downloading from an illegal source, on the other hand, shows no significant correlation with level of education. [..] People who download from an illegal source are more frequently also consumers from legal sources, and they are more likely go to concerts and the cinema and to purchase derived products.

Further interesting finding is one about the website blocking. The study states that:

The recent blockade of the file sharing site The Pirate Bay has had next to no effect on consumers. More than three quarters of XS4ALL and Ziggo subscribers said they had never downloaded, or had stopped downloading from an illegal source before access to the site was blocked. So the blockade has no implications for them. Of the remaining 23.8% of Ziggo and XS4ALL customers, about three quarters said the blockade had not affected their downloading habits and a mere 5.5% said they now download less, or had stopped downloading altogether. The expected reaction of customers of providers that had not yet enforced the court-ordered Pirate Bay blockade at the time of the survey was found to be comparable.

Quite interesting finding. If this is the case, than all the website blocking injunctions are basically big waste of resources on the both sides (ISPs and rights holders). Consider that from 100 % of the infringing customers that are the target group of the block of an ISP (24 % of all customers), only 20 % percent (5.5 % of all customers) would change their behaviour. In other words, the increased transaction costs needed to obtain the illegal material after the website blockage (as argued by Mr. Justice Arnold in NewzBin 2), will have only 20 percent effect among the relevant public. The website block will be thus issued only for 5.5 % percent of all the customers of an ISP.