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On 6 July 2011 the Italian Communication Regulatory Authority, AGCOM1, approved a draft of a new regulation (Res. no. 398/11, the "Regulation") regarding the protection of copyright within electronic networks. On 13 September, the scheduled 60 day public consultation period expired. Discussions between AGCOM and the stakeholders who requested a hearing concerning the final amendments are currently underway. The final text of the Regulation is expected to be issued before the end of 2011.
Below is a summary of the Regulation's main provisions.
The Regulation is divided into two parts: the first concerns the measures to be undertaken to encourage access to legal
content. The second sets out the "notice and take down" process modelled on the US Digital Millennium Copyright Act (DMCA) and based on the following four steps:
- The copyright owner shall notify the hosting provider of the breach by using the standard form made available by AGCOM
- the hosting provider can (but is not obliged to) remove the content within 4 days following notification
- If the content is not removed, the copyright owner can file a claim with AGCOM within seven days following the expiry of the four day period
- Having collected the necessary evidence and contributions from the parties, AGCOM shall issue a decision within a period of 10 days following the filing of the claim (this can be extended for a period of up to 25 days) and order the removal of all or part of the interested content, or reject the request.
It is important to highlight the following points:
- the procedure does not foresee the possibility of issuing any order which blocks or prevents access to websites; however, a "removal of selected flagged content" order may be issued
- the procedure does not substitute or replace judicial proceedings, rather it constitutes an alternative to the latter; the parties remain free to commence judicial proceedings at any time in lieu of advancing a claim before AGCOM.
Furthermore, the procedure has a limited scope of action and does not apply to:
- websites which are not of a commercial nature
- content regarding the freedom to report, comment, criticise or discuss
- content which has scientific or educational purposes
- the partial reproduction, both with regard to quantity and quality, of the original content that is not detrimental to its commercial exploitation (fair use).
In contrast to the regime implemented in most European countries, once the copyright owner has notified the hosting provider of the breach, the "uploader" of the allegedly unlawful content receives an alert notification and can start a counter-notification procedure. If the hosting provider removes the content, the uploader can challenge such removal by filing a claim with AGCOM according to the procedure described above.
The Regulation provides different regimes depending on the location of the hosting provider (interestingly, reference is made to the place of residence of the registrant of the domain name of the hosting provider):
- where parties are located in Italy, AGCOM "may order...,the removal of selected flagged content which was made available in violation of copyright laws" (Art. 13)
- if the violation is committed by a party located abroad, AGCOM may: (a) request the webmaster to comply with the Copyright Act; (b) If the violation continues for more than fifteen days after the request described in (a), it can order the removal of the selected flagged content which was made available in violation of copyright laws; (c) If the violation persists notwithstanding the order described in (b), it shall report the breach to the Judicial authority for its evaluation (Art. 14)".
Legal commentators have expressed their concerns about a number of provisions of the Regulation. The main issues are
- AGCOM is not a Court but an Administrative Authority and should not have the power to order the removal of content;
- AGCOM is not adequately staffed to deal with the very large number of claims that will most likely be filed in the following months;
- AGCOM has supervisory and regulatory functions but not necessarily the expertise and competence to rule on intellectual property disputes; and
- AGCOM's powers do not seem to be based on a law issued by the Italian Parliament.
Hosting providers have generally shared the views and concerns of legal commentators, but have also expressed their approval for the general principle set out in the law, according to which content can only be taken down upon receipt of a specific notice which identifies the individual content (e.g. URL) subject to removal. This principle is not currently adopted by Italian courts which tend to issue preliminary injunction orders based on generic, rather than specific, indications as to the presence of infringing material, thus obliging hosting providers to monitor and actively retrieve the content subject to removal.
On the other hand, copyright owners have welcomed the initiative and have highlighted how the Regulation will give parties the possibility of finding a solution without necessarily adhering to the judicial system and thus avoiding associated time and costs.
AGCOM's chairman, Mr. Calabrò, said: "We have issued a carefully fine-tuned text, from which we deleted possible ambiguities and problems, thus dispelling any doubts about the proportionality of the measures and limits of AGCOM's powers and about the relationship between administrative interventions and the prominent powers of the Judiciary. The text will now undergo a new broad term public consultation aimed at acquiring comments and suggestions. It is AGCOM's intention to stimulate a thorough debate, open to all types of contributions and all the voices of society, the Web community and all the relevant Stakeholders. With this in mind, I have also expressed my availability to be heard by the competent Parliamentary Committees on the draft regulation as the Parliament deems appropriate."
Update on Italian case law
The remainder of this article will summarise the legal framework and the recent case law in Italy regarding the role of hosting providers, and particularly video hosting platforms, and their duties and liability for illegal content.
In line with the E-Commerce Directive, the Italian E-Commerce Decree No 70/2003 provides that hosting providers are not
subject to a general duty to monitor the information which they transmit or store, nor a general duty to actively seek out facts or circumstances indicating illegal activity (art. 17).
Therefore, based on a literal interpretation, Italian law requires both actual knowledge of illegal activity (though it does not
specify how such knowledge may be obtained) and an order from the competent authority to remove the content. Furthermore, such literal interpretation exempts hosting providers from carrying out any preventive monitoring activity.
However, ambiguous wording and inconsistent case law has generated confusion among hosting providers as to what remedies should be available to the rights holder:
- How far should the hosting provider go to avoid liability?
- Is a cease and desist letter sufficient or is a Court order necessary to prompt the removal of content?
- Is the hosting provider liable upon receipt of the cease and desist letter?
- In case of removal, can the uploader of the contested video file a claim against the hosting provider or only against the person who requested the removal?
- If the cease and desist letter only contains a list of films or TV shows without specifically indicating the URLs, is the hosting provider obliged to actively retrieve the infringing content? If so, how?
These are some of the most frequently asked questions by hosting providers who are often required to make difficult decisions.
During the early years following the promulgation of the E-Commerce Directive, Courts generally interpreted the law
Various parties v. Yahoo - court of Milan, 16 July 2007
This was one of the first cases in Italy dealing with the E-Commerce Decree. It was issued in response to a Yahoo!
user publishing several pictures of images taken from a TV show. The Court ruled that hosting providers are required to
remove infringing material only after a specific order is issued by the competent authority and that hosting providers have no legal obligation to remove the material after receiving a mere complaint by the interested rights holder.
RTI v. YouTube - court of Rome, 15 December 2009
The ruling, issued by the Court of Rome in December 2009, set a precedent which interpreted the law in a dramatically
different way to previous rulings.
The case was brought by the most important Italian private broadcaster (RTI, part of the Mediaset Group owned by Silvio Berlusconi) against YouTube. RTI sued YouTube for copyright infringement based on the Italian Copyright Act and asked the Court to issue a preliminary injunction ordering YouTube to remove all videos reproducing the 11th edition of the well-known TV show "Big Brother".
The Court held that YouTube could not qualify for the liability exemption set forth in the E-Commerce Decree because its
activity is not limited to the mere passive "hosting" of the videos uploaded by users, considering it also filters, organizes,
and streams the content for commercial purposes. Also, YouTube had failed to take action notwithstanding its actual knowledge of the ongoing infringement, following receipt of notifications sent by RTI.
In the Court's opinion, the hosting provider's level of involvement surpassed that which European and Italian legislators intended to protect from liability claims.
The Court affirmed that no duty of active prevention is owed by a truly neutral hosting provider; however, all hosting providers are legally bound to effectively take action post-factum, diligently and expeditiously, and remove the cause of harm. In the Court's opinion, any alternative "would overburden the content owners", who do not have any right or technical ability to disable access to the content made available online.
Therefore, the Court ordered YouTube to retrieve and remove all videos relating to the TV show Big Brother which were available on YouTube.
RTI v. Libero and RTI v. Yahoo - court of Milan, 16 June 2011 and 18 September 2011
In accordance with the precedent above, the Court of Milan recently issued two separate decisions in two cases brought by the TV broadcaster RTI against Libero and Yahoo! respectively in relation to the presence of a number of video-excerpts of RTI's programs which had been made available daily online via the video hosting portals' "Libero Video" and "Yahoo Video".
The two decisions are very similar and can be summarised as follows:
Although Yahoo and Libero invoked the liability limitation foreseen for hosting providers under art. 16 of the E-Commerce Decree, the Court classified the two hosting providers as "active" hosting providers and, as such, ineligible to benefit from the Decree's safe harbor.
In this respect, the Court made reference to recital 42 of the E-Commerce Directive, which states that "the exemptions from liability established in this Directive cover only cases where the activity of the information society service provider is limited to the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the information society service provider has neither knowledge of nor control over the information which is transmitted or stored".
Based on the above recital, the Court held that the EU legislator had intended for only "passive" hosting providers to benefit from the limitation of liability. Such hosting providers were common in 2000 when the Directive came into effect. However, the Judges held that this description is now out-dated and no longer representative of current hosting providers, like Yahoo and Libero, which do not merely offer a platform on which third party content is hosted, but rather offer a broader range of services and are more involved in the organization, editing and presentation of such content, which is financed by advertisements connected to such content. To this end, the Court made reference to an intermediate status, a so-called "active" hosting provider (a term already used by the criminal Court of Milan in well known decision against the directors of Google for the presence of a bullying video on Google Video) which on the hosting provider spectrum lies between "passive" hosting providers and content providers.
Essentially, the Court took the following factors into consideration in qualifying Yahoo as an active, rather than passive/neutral, provider with respect to the illicit content stored on its portal:
- it was possible to search for content via a search engine based on key words corresponding to the names of the shows in question
- a "Correlated videos" section was offered to users which automatically proposed similar videos to those being viewed by the latter
- the portals' Terms & Conditions: (a) granted a license in favor of the hosting provider over content uploaded by third parties, (b) gave the hosting provider the right to remove uploaded content that conflicts with third party rights, and (c) offered a specific service for users to flag illicit videos
- certain videos had been uploaded by the hosting provider itself in connection with the "Correlated videos" service.
The Court clarified that, although current technology does not allow hosting providers to carry out measures which assure the legality of content uploaded by third parties, it determined that Yahoo and Libero had violated the Italian Copyright Act at the moment they failed to respond or react to RTI's cease and desist letter which notified both hosting providers of the presence of unauthorized content on their respective portals and requested its removal.
In both decisions the Court ruled in favor of the plaintiff and held that each of the hosting providers were liable for copyright
violations, ordering the removal of RTI owned videos (and imposed a penalty of 250 for every video not removed and for
every day of non-compliance) and compensatory damages, to be assessed separately (such proceedings are currently pending).
Interestingly, in the Yahoo decision the Court held that cease and desist letters (addressed to active hosting providers) do not need to specify the URLs where such flagged content is located, and that an indication as to the titles/key words associated with the content shall be deemed sufficient. Although there is no general duty to monitor content pursuant to art. 17 of the Decree, such notification triggers a duty on behalf of the active hosting provider to undertake some type of remedial action or directly remove the flagged content. Otherwise, as it turned out in the Yahoo case, an hosting provider which fails to follow up with the notification or delete the flagged content will be held liable for the underlying violation. The Court therefore stated that the generic cease and desist letter sent by RTI which included the names of the TV
shows to be removed was sufficient to trigger a verification/follow-up control on Yahoo's part.
The Court clarified that based on current technology it is not possible for hosting providers to carry out a preventive control on the legality of content uploaded by third parties considering the amount of information involved and the risk of encroaching upon freedom of expression rights. However, in this case, the Court determined that upon receiving RTI's cease and desist letter containing the names of the shows portrayed in the nonauthorized video clips, the hosting providers were fully capable of identifying the precise location (URLs) of such clips and removing them from the portal via the hosting providers' internal search engines. They considered further that the hosting providers in question profited from the advertisements which featured in such videos.
PFA Films v. Google, Yahoo and Microsoft - court of Rome, 11 July 2011
A media company, PFA films, brought a claim against the three main search engines (Google, Microsoft and Yahoo!) claiming that, without the right holder's consent, the three search engines provided links to websites allowing downloading and streaming of a movie ("About Elly").
Even though the decision concerns a matter involving search engines rather than video hosting portals, the Court set forth
certain important and general principles which apply to all types of Internet Service Providers.
The Court confirmed that hosting providers that provide any of the services described in the E-Commerce Directive neither have a duty to monitor transmitted or stored information, nor an obligation to actively seek out facts or circumstances which indicate illegal activity. The Court recognized that this is designed to prevent hosting providers from an unlawful form of "objective liability".
The Court acknowledged that the judicial system has the power to request hosting providers to terminate or prevent an
infringement as a matter of urgency. However, with reference to the specific claim filed by the plaintiff, the Court stated that PFA Films, had not been able to give any indication as to the exact location of the allegedly illegal links either in its cease and desist letter or during the proceedings.
On the basis of the abovementioned provisions set out in the E-Commerce Decree, a mere indication as to the location of the content such as "all the material which related to About Elly" or " all content reproducing sequences of the film About Elly" is not sufficient to enable the Court to assess the illegality of the contents.
The requirement to precisely identify the allegedly unlawful content derives, first, from the general principle concerning
burden of proof according to which the person who acts to obtain the enforcement of a right must provide evidence of the
infringement of such right, and, secondly, from the general legal framework governing hosting providers which provides that the Court is to assess whether certain content is illegal. In order to do this, however, the plaintiff must identify the specific URLs of the allegedly illegal content.
According to the Court, this also avoids compromising third parties' rights (i.e. users and/or other licensees) which are
entitled to diffuse the content on the web.
The Court also clarified that the burden of proof remains with the rights-holder claiming infringement. Accordingly hosting providers cannot be required to identify the allegedly unlawful content, since this is explicitly excluded from the obligations foreseen by the E-Commerce Decree.
Since PFA Films did not clearly identify the allegedly unlawful content and nor did it provide evidence as to the presence of such content on the internet, the Court rejected the relief order requested by PFA Films.
In light of the inconsistency between Court decisions and the ambiguity of the provisions of the E-Commerce Decree, the
recent initiative of the Italian telecommunications regulator, AGCOM, to adopt a new procedure for the protection and
removal of copyrighted content in the online environment could be the solution to many problems. As explained elsewhere in this issue, however, the draft regulation could actually create more problems than it solves.