Regional Court of Krakow, ref No. IX GC 791/12, 27 May 2015. The Court ordered hosting provider Chomikuj.pl to carry out monthly searches for copyright infringement on its platform.
Chomikuj.pl (in English chomik means hamster) is a Polish hosting provider that set up a platform for users to store but also share their data via the internet. Chomikuj.pl was established in 2006. Initially the platform mainly supported students by allowing them to share their study materials. Its purpose gradually evolved along with greater promotion of the site to become the most popular filehosting and sharing platform in Poland. In 2014, Chomikuj.pl had more than five million active users storing over two billion files.
Users pay to download large files by paying for particular files, or by using an already purchased transfer package. There is also a bunch of smaller files (below 1 mb) that may be downloaded for free. Users may also increase their transfer package by promoting their files and gaining user points that can be exchanged for transfer, i.e. users can obtain points when other users download their files. Registered users may also copy files stored by other registered users to their folders within the platform without downloading them.
Chomikuj.pl does not pursue active monitoring or filtering of the files stored and shared on its platform by users. However, in 2010 Chomikuj.pl established a separate Abuse Department to deal with copyright infringement notices and provided a special online form for filing abuse notices. Nevertheless, Chomikuj.pl only blocked the allegedly infringing files if it received a notice that precisely described the potentially unlawful file, including its name, the name of the user sharing it and the exact location of the file on its platform. Chomikuj.pl receives hundreds of notices each day.
This case relates to three very popular Polish movies produced in recent years: Day of the Wacko’ (Polish: Dzien swira), ‘Katyn’ directed by AndrzejWajda; and ‘Venice’ (Polish: Wenecja).
The Polish Filmmakers Association (‘SFP’), along with three producers of the said movies, were the plaintiffs in this case. SFP is a filmmaker’s organisation established, inter alia, to represent the professional interests arising from the protection of their copyright and related rights; it is an authorised collecting society in relation to the exploitation of movies in Poland.
Users of Chomikuj.pl were sharing illegal copies of the three films in question. Despite numerous notices filed by SFP and the producers with the Abuse Department, the illegal files were not successfully blocked by Chomikuj.pl and their copies were available on Chomikuj.pl’s servers even during the court proceedings.
SFP and the producers of the movies sued Chomikuj.pl for contributory infringement by providing users with a platform and incentives (in the form of points exchangeable for transfer) enabling copyright infringement in relation to the three movies. They claimed damages, ordering Chomikuj.pl to search and block access to the illegal files and their copies containing the movies on its platform and to implement a file filtering mechanism on its platform. The claimants referred in this respect to Article 422 of the Polish Civil Code (‘CC’) under which, not only parties who have directly caused damage, but whoever induced a party to cause damage or aided in committing such act, as well as those who knowingly took advantage of the damage caused to another, shall also be responsible for the damage. Also, the claimants referred to Article 439 CC which states that a person endangered with a direct harm as a result of the actions of another, in particular as a result of lack of proper supervision of the operation of its business,may demand that such other person undertakes the necessary measures to eliminate such risk, and if necessary also to provide adequate security.
Chomikuj.pl responded to the lawsuit by indicating that it is an ordinary hosting provider and therefore is subject to exemption stemming from Article 14 (1) of the Polish Act on the Provision of Services by Electronic Means (‘APSEM’), which is an equivalent of Article 14 of Directive 200/31/EC. It also stated that it cannot consider as complete and credible the notices to the Abuse Department, which include only the title of the supposedly illegally shared work and the name of the allegedly infringing user, but no details of the specific file to be removed as it is not competent to determine copyrighted character in these files and should not be burdened with having to identify the specific illegal files on its own. It also argued that the fact that it charges users for transfer of data and provides extra transfer packages should not affect classification of its services as mere hosting.
Under Article 14 (1) APSEM, a hosting provider is not responsible for the data stored if is not aware of the unlawful nature of the data, or related activities, and in the case of receiving official notification or having actual knowledge of the unlawful nature of the data or activity related to them, immediately prevents access to the data. Article 15 APSEM states at the same time that the host provider is not obliged to check the stored data of users
On 27 May 2015 (ref. No. IX GC 791/12), the Regional Court in Kraków accepted SFP’s and the producers’ claims in large part and found Chomikuj.pl to be liable for contributory infringement of copyright of the movies in question.
The court imposed the following obligations on Chomikuj.pl that should be carried out monthly for the next three years, starting three months after the ruling becomes final and valid:
- Chomikuj.pl must block access to files including any of the movies in question which appear on the first five pages of Google and Bing search engines’ results referring to files stored on its servers after typing the title of the movie along with the phrases ‘Chomikuj.pl’ and ‘film’;
- Chomikuj.pl must also, if it becomes aware or receives a credible notice that a specific file contains illegal copies of the three movies in question, disable access to all identical files, including a copy of the specific file in question, even if the name of the file is not identical to the file in question, to everyone with the exception of the user that first placed the file in question on its servers; and
- Chomikuj.pl must also, if it becomes aware or receives a credible notice from any of the claimants that any of the movies are being illegally shared on its platform, disable access to files including any of the movies in question which appear on the first five pages of search engines’ results referring to files stored on its servers after typing the title of the movie along with the phrases ‘Chomikuj.pl’ and ‘film.’
Chomikuj.pl was also ordered to pay PLN 91,650 (approx. €22,000) with interest to the producers of the three Polish films as damages for infringing their copyright.
The court discontinued the proceedings as to ordering Chomikuj.pl to implement a file filtering system as the claimants withdrew this claim. The court also dismissed the extended claims of the claimants that the obligations imposed on Chomikuj.pl by the court should extend in general to all current and future works to which copyrights are owned by the claimants without listing the works and proving their rights to each and every such work.
The court’s findings
In its written justification the court presented its analysis of the case’s main aspects, i.e. the form and results of paid services provided by Chomikuj.pl, and whether such conduct falls within typical hosting activities subject to exemption, as well as its understanding of the concept of credible notice of illegal data. The court considered Chomikuj.pl an indirect copyright infringer, which justifies its obligation to pay damages.
The court accepted that to be able to invoke exemption of Article 14(1) APSEM a hosting provider does not need to provide their services for free and may make profits on their activities, even through the display of advertising banners. In the court’s view however, Chomikuj.pl is organised in a way that, apart from being a hosting provider, it also cooperates with its users to share files, including files containing copyright-protected works, thus it should be considered involved in the sharing itself and not just a mere host.
Chomikuj.pl’s individual consent is required for users to download files larger than 1 MB. To obtain such ‘consent’ (transfer ability) users have to pay Chomikuj.pl to download a file through a registered account, or by SMS. The court also stated that when more data is transferred, Chomikuj.pl becomes more attractive and popular, thus more advertising is displayed on its site. Thus, Chomikuj.pl gains profit by encouraging users to transfer more data. Thus, Chomikuj.pl receives further profit from each copyright infringement and therefore cannot enjoy exemption under Article 14(1) APSEM. In the court’s view, it would be sufficient if Chomikuj.pl had a different business model and enabled fully free transfer of files (without any payments) but it does not.
The court also judged Chomikuj.pl’s notice and takedown procedure to be not sufficiently effective and disagreed with Chomikuj.pl that a notice of abuse is correct and credible only if it fully identifies the specific file on its servers that is illegal. In the court’s view, credibility of a notice should be assessed not upon verification of the contents of a particular file (as this is a further step), but simply upon assessing whether uploading a particular file could be unlawful, i.e. without the copyright holder’s consent. Thus, if the hosting provider has credible information that enables it to believe that any files with the given work on its servers are illegal, that should be sufficient to block them. The obligations imposed by the court, in its opinion, are proportionate as they would not be too cumbersome for Chomikuj.pl as it has already partially implemented a system to identify illegal files using a fingerprint mechanism. Moreover, the likelihood of removing non-infringing files of the same/a similar file name, even if existent, would be very low in the court’s view.
The court acknowledged Chomikuj.pl’s efforts to set up its Abuse Department; however, in the court’s opinion this measure is not sufficient to protect claimants’ rights, as even throughout the duration of the trial numerous illegal files containing the movies in question were available on its platform despite notices filed by the claimants. According to the opinions prepared by the appointed court experts, it is technically possible to implement a more effective system of blocking illegal files, even if ‘effective’ does not mean complete elimination of all illegal files but only a significant reduction of copyright infringements.
Article 439 CC was the legal basis, in the court’s view, to impose obligations on Chomikuj.pl as the hosting provider is supervising operation of its servers. In the court’s opinion, its ruling is in line with Article 14(3) of the Directive 2000/31/EC as Chomikuj.pl had credible notice of illegal files stored on its servers and could block access to them. The ruling in the court’s view is also in line with Article 15 APSEM as no general obligation of monitoring data stored on its servers was imposed on Chomikuj.pl but only a duty to monitor certain specific files corresponding with the claimant’s copyrighted works.
As in the court’s view Chomikuj.pl is liable for contributory copyright infringement, it ordered Chomikuj.pl to pay damages to the claimants. The court rejected however Article 79(1)(3)(b) of the Polish Copyright Act providing for the possibility to claim two - or in case of defaulted infringement, three - times the amount of the appropriate remuneration that would be normally due to the claimant as the right basis to calculate the damages. The court argued that as this provision provides for an exceptional method of calculating damages it should be applied very narrowly and shall be applicable only to damages claimed from the actual infringer but not from a person that only aided the infringement. Thus, the court decided to calculate the amount of damages due on the basis of an exemplary licence agreement concluded by another movie producer for lawful distribution of a similar movie on the internet.
Impact on business
This judgment may effectively change the effectiveness of combatting sharing of illegal files via the internet and de facto impose an obligation on hosting providers to actively search and block potentially infringing files on their servers. Although in theory the court ruled out the general obligation of the hosting provider to actively filter the stored files, in practice this judgment opens the door for imposing on hosting providers’ obligations (even if time-limited) to actively search and block certain files in case of obtaining knowledge or receiving a credible notice of the file’s illegal character.
The court also ruled in this judgment, for the first time in Poland, that a hosting provider may be liable for indirect copyright infringement.
Hosting providers store and make a large amount of data available on their servers. If courts impose more duties to protect different copyright holders, hosting providers will have to change their policy. The hosting service may become economically unfeasible as the majority of profits would have to be spent on monitoring the files and the protection of copyright.
Also users may feel limited when using hosting platforms and feel supervised as to the content they store. As a result, platforms such as Chomikuj.pl may become far less attractive.
It seems that specific obligations imposed on hosting providers whose services are not limited to purely technical operations but make profit on additional options connected with the hosting and sharing of hosted files may be ordered by courts more frequently in the future. This case may also encourage copyright holders to seek for hosting providers to play a more active role in regard to protecting their copyright.
However, it is unlikely that Chomikuj.pl would accept this new business role without challenging it. The ruling is not yet final and Chomikuj.pl announced that it will appeal before the Court of Appeal in Kraków.
Article published in "E-commerce law reports" vol. 15 issue 4.