For the first time a hosting and internet service provider is held liable for damages in an anti-piracy case in the Netherlands (District Court of The Hague (the "Court"), 24 October 2012, BREIN v XSN). The Court ruled that it is unlawful that provider XS Networks ("XSN") refused to promptly quit hosting the (BitTorrent) website Sumotorrent after it became aware that this website facilitated infringement of copyrights and certain related rights. Also XSN's (repeated) refusal to provide BREIN ("BREIN") with all identifying information regarding Sumotorrent is unlawful. The Court held that XSN has to compensate right holders for damages caused by its unlawful acts.
XSN hosted a number of "evidently unlawful" websites of which Sumotorrent was the largest. As a hosting provider it hosted these websites on its server and connected them to the internet, thus providing access to the public. Sumotorrent is a BitTorrent website with 4.5 million torrent links, the majority of which give access to copies of protected works (such as film, music, books and games), also by uploading these copies. (Downloading by the public is generally not considered unlawful in the Netherlands.)
BREIN is a content protection foundation representing the majority of Dutch right holders for film, music, digital books, software and other multimedia works. Since 2008 BREIN had repeatedly asked XSN to stop its services to Sumotorrent and to provide BREIN with information to enable it to identify the owner(s) of Sumotorrent. XSN systematically refused to do so: it continued to host Sumotorrent until after BREIN had started legal proceedings, giving the unlawful website ample time to shift to a Ukrainian provider. XSN only started supplying identifying information after the start of the proceedings, and this information was clearly incomplete and incorrect.
Provider committed unlawful acts
The Court held among other things that XSN, as an internet service provider, has a certain responsibility regarding the websites it hosts. Although XSN itself did not infringe copyrights or related rights, it committed an unlawful act by knowingly and willingly keeping Sumotorrent online, although it had been made aware that the site was unlawful. In addition, the Court ruled that XSN's refusal to cooperate to provide all identifying information it had regarding Sumotorrent is unlawful. The Court ordered XSN to provide all identifying client information it possesses regarding Sumotorrent to BREIN and gave an injunction preventing XSN from hosting a website identical to the Sumotorrent website for the same client, on pain of a penalty of EURO 10,000 per day.
Provider is liable for damages
During the time the site remained available due to XSN unlawful acts, it continued to cause damage to right holders who make their works available for payment (both online and offline). The Court declared XSN liable for those damages, the amount of which is to be assessed in follow-up proceedings. These damages are likely to concern compensation for millions of unlawful uploads and downloads.
Following this decision, right holders in the Netherlands now have an effective tool to stop providers from hosting unlawful websites. The fact that – also – the provider can be held liable is a novelty that is likely to have a considerable impact on the willingness to cooperate on the part of providers. However, the option for the (torrent) website owners to shift to providers in countries where enforcement is less obvious remains.
For providers the decision means that they should act promptly when alerted to unlawful acts on a website they host. Failure to do so can result in liability for damages; the same applies to repeated refusal to provide identifying information. In addition, providers have an interest in registering contact details of their clients well in order to be able to recover possible damages.