The German Federal Minister of Justice, Leutheusser-Schnarrenberger, quotes Prof. Hoeren as saying that the law was not invented to keep 'old business models' alive. When this comment is viewed in light of the film industry's multibillion Euro losses and the indiscriminately burgeoning 'digital underworld' (Spiegel 27/2011) such statements sound somewhat cynical, in any case thoughtless. Is the production of large, and unavoidably expensive, motion pictures one of these "old business models"? It is widely known that since pirate copy streaming sites have emerged, very few films are produced with budgets of between EUR 10 and 80 million. The film industry reacted long ago and filmmakers are now focussing on either low-budget productions with budgets of up to EUR 10 million or on a few large productions with budgets exceeding EUR 100 million. The area in between has ceased to exist, being forced out of the market by illegal competition. This "in-between" area is precisely where films of cultural value, such as film adaptations of literary works, were created (e.g. The Reader), which leads us to consider whether the cultural impoverishment of the film industry is the inevitable fate of an "old business model"?
The results of the kino.to investigation have revealed which "new" business models are evolving against the background of the current legal policy. Criminal associations operating internationally, generating tens of millions in profit at the cost of copyright owners and filmmakers, are responsible for the availability of pirate copies. Those behind the portals publish photos of their penthouses in Hong Kong and their villas in New Zealand. Few of them can seriously fear prosecution. The streaming of pirated films illegally recorded in cinemas has become a profitable industry, with professionally designed web sites, payment by credit card and banner ads for respectable enterprises. Last but not least, Internet service providers also benefit considerably from the high volume of data traffic that flows in connection with such offers.
The success of the kino.to investigation is the result of the preparatory work of the German society for the prosecution of copyright infringement [Gesellschaft zur Verfolgung von Urheberrechtsverletzungen e.V. – GVU] and a courageous intervention by the prosecutors of the city of Dresden who, for the first time, investigated criminal associations that infringe copyright. However, they would not have succeeded were it not for certain fortuitous circumstances: the investigators were aided by insider tips and the careless actions of the kino.to operators who had based themselves in the middle of Leipzig. However, it does not escape attention that other websites offering pirate copies and operating servers abroad have already replaced kino.to in the market and are continuing their operations unfazed. When the Dresden prosecution was also asked recently whether they intended to take steps against the successors of kino.to they admitted that they simply do not have the resources to do so.
German prosecutors are often powerless in the case of oreign servers and websites. International letters rogatory are fruitless due to corruption in the foreign countries, and are often rejected on the basis that illegal websites cannot be accessed in the relevant country and servers are therefore not liable to prosecution (e.g. Hong Kong). By this stage the criminal prosecution authorities are at their legal wits' end. However, these criminal associations are still present online and, in Germany, they are used hundreds of thousands of times per day. In July, (according to the "Google Ad Planner") the piracy website "movie 2k.to" alone had 5.1 million users - almost half of them in Germany. This means that movie2k. to is the third most used video portal in Germany, with more visitors than the legal video portals Clipfish and Dailymotion and a total of five times more visitors than "ARD-Mediathek" [a video portal of a major German broadcasting station].
Despite the reports on the kino.to case, users of these websites remain unaware that they are acting illegally and the comment made by the German Federal Minister of Justice quoted above is unlikely to assist with a widespread appreciation of applicable copyright laws. It would be expedient to launch a large-scale campaign which targets younger people in schools and takes a firm stand against the use of illegal offers combined with a legal solution which addresses the problem of piracy on the Internet.
The committee of inquiry into the Internet and the digital society [Enquete-Kommission Internet und digitale Gesellschaft established by the German Bundestag] is currently considering how copyright law can be adapted to the requirements of the digital age. In its interim report, the committee writes: "A strong awareness of the value of intellectual property and the protection of copyright are core elements of a digital society" - a welcome, clear statement. There is also likely to be broad consensus that corresponding piracy offers should not be tolerated and must be prevented effectively. The European legislator passed a directive in 2001 instructing Member States to implement measures designed to prevent such offers. The Copyright in the Information Society Directive obliges Member States to ensure that the rights holders can obtain judicial orders against Internet service providers to effectively stop copyright infringements. However, Germany has not yet implemented the relevant provisions. Lobbying by Internet service providers, coupled with vociferous protests from the online community, and the unfortunate history of the Access Impediment Act [Zugangserschwerungsgesetz] concerning child pornography, has so far blocked corresponding legal provisions.
This is despite cases in Austria and England which demonstrate the court's ability to effectively combat illegal offers. In England, on the basis of a statutory provision implementing the InfoSoc Directive, the High Court recently ordered British Telecom to block access to an illegal website (High Court of 28 July 2011, Case No. HC10C04385). There have been similar decisions in Austria and Belgium. Unlike in the case of peer-to-peer offers, it is not necessary that the users of streaming websites be "criminalised" or their Internet access blocked by way of "three strikes" models. It is sufficient if the access or service providers interrupt access to illegal offers on the basis of a judicial order. In contrast to the provider lobby's nebulous statements to the contrary, the technical provisions for implementing such court orders do in fact exist, as was established by the British High Court.
In the US, a bill is currently under discussion (P.R.O.T.E.C.T. IP) containing a whole series of measures for combatting illegal online offers. First, a judicial order can determine that a particular website is illegal. Providers, credit card companies and advertisers who are aware of such an order will then filter out or avoid such offers, usually without being officially forced to. Otherwise, the bill provides that a court can order that access is blocked, under threat of corresponding sanctions. The bill aims to prevent legal service providers from offering their services to obvious criminals and in doing so enabling such criminals to conduct their business. P.R.O.T.E.C.T. IP aims to isolate piracy offerings in the digital world and disrupt their accessibility from the outside. The possibility of prohibiting search engine providers such as Google from displaying illegal offers is also being discussed, in the same way that advertising illegal products is not permitted.
In light of the many varied activities in other countries of the Western world aimed at combating the problems of online piracy, it is astonishing that the legislator in Germany, a hub of knowledge and creativity, has so far not taken any steps to do so. The people responsible for video portals such as kino.to are not harmless computer geeks who just want to "play". The portals are run by organised criminals: professionals with connections to other criminal sectors who not only infringe copyright but also palm off malware onto the unsuspecting users in order to harness their computers for their own purposes. These criminals entice their users into subscription traps where they are forced to pay-up in a fraudulent way, and who disregard all youth protection provisions (shouldn't the Commission for the Protection of Minors in the Media [Kommission für Jugendmedienschutz - KJM] become more active in this respect?). The measures do not "criminalise our school playgrounds", but rather aim to protect consumers (including children and young people) against contact with criminal associations. Action must therefore be taken against providers of illegal offers, to prevent targeting users.
Internet providers are also profiting from illegal actions. Such providers possess the technical means to combat obvious infringements of rights in the sphere over which they have control, but have so far firmly refused to enforce this. The current German CDU/FDP coalition government supports them, refusing to implement measures which the Federal Constitutional Court has already approved, such as storing dynamic IP addresses.
Why are service providers not legally required to prevent online access to pirated material which is found to be illegal? Why are prosecutors and regulatory authorities not equipped with the means to effectively combat organised content crime? In any case, this is not about censorship or a replication of China's approach. The implementation of such measures does not even require data to be retained. A court order is sufficient to tap telephone calls or to enter private living space, so why can it not be used to block illegal websites?
By declining to take action, the German Federal Government is permitting massive damage to be done to the creative industry and risks violating EU law. The rights holders who have suffered damage should consider whether the Federal Republic of Germany can be held liable for this legislative failure. It would be more productive to emulate measures already taken in other countries in order to prevent any further damage caused by piracy offerings - irrespective of any "old" or "new" business models.