Injunctions Against Intermediaries in theEuropean Union
Accountable, But Not Liable?

Tokyo, Nov/Dec 2018

Talk Preview• A special type of remedy that is taking-off in Europe, especially inthe context of online IP enforcement;• EU is eager in exporting it (ACTA, BTAs) and also US right holders
are increasingly demanding it;

It allows to target those who did nothing wrong
with the expectation that they can offer some help
• The basis of their duty is only the fact that they can do something• Hence <accountable (for help), not liable>• Third category next to secondary/primary liability

2[context]3

Enforcement Measures

How to tell these apart?

4

Enforcement Measures

PROXIMATE

REMOTE
5

Mostly remote providers

Websiteblocking

Internetdisconnection

Passwordlocking

Filtering6

[injunctions againstintermediaries]

7

Legal basis●European Union law

Art. 8(3) InfoSoc;- also Art. 11 EnforD; [Art. 63(1) UPCA]“Member States shall ensure that rightholders are able to apply for an injunction to
be addressed to intermediaries whose
services are used by third parties to infringe
an intellectual property right.”

Everyone is someone’s intermediary

Websiteblocking

Internetdisconnection

Passwordlocking

Filtering9

At first ..

• ‘dynamite’ (Spindler 2002)• ‘the reach of this inconspicuous Article is hardly
foreseeable’ (Spindler 2002)• Broadly misunderstood provision, to some extent
downplayed/misconstrued by national legislators• Popularized by website-blocking• NEW policy intervention > seeking accountability for help
where no (tortious) liability exists

10In the meantime ..

“[the provision] obliges Member States to ensurethat an intermediary whose services are used by athird party in order to infringe an intellectual
property right may, regardless of any liability of its
own in relation to the facts at issue, be ordered totake measures aimed at bringing those
infringements to an end and measures seeking toprevent further infringements” (Tommy Hilfiger,para 22)
11Legal Innovation?
Position to assist by taking particular steps• Finds support in civil law and common law jurisdictions (Husovec
2017 CUP)●(DE) in rem remedies in property law (Section 1004 BGB)●

●Over 100 years of history(UK) Lord Reid in Norwich Pharmacal Company & Ors v
Customs And Excise [1973] UKHL 6 (26 June 1973):“if through no fault of his own a person gets mixed up in the tortious
acts of others so as to facilitate their wrong-doing he may incur no
personal liability but he comes under a duty to assist the person
who has been wronged by giving him full information and disclosing
the identity of the wrongdoers. (..) But justice requires that heshould co-operate in righting the wrong if he unwittingly facilitatedits perpetration.”

Goals• NEW: legally PROACTIVE [to avoid or prevent wrongdoing]a) Double identity standard – same right, same infringer (AG,L’Oreal v eBay)b) Hilfiger standard [?] - same nature infringement by the samemarket-traderc) Stay-down standard - similar infringement, regardless of thewrongdoer (BGH)• pending relevant: C-18/18 Glawischnig-Piesczek

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Limits• General limit on IPR remedies• Art 3 EnfD = Article 41 TRIPS [but instrumentalized]• Art 15 EcommD – prohibition of general monitoring• Human rights law• Right to privacy/data protection (Sabam; Scarlet)• Right to freedom of expression (UPC)• Right to conduct a business (UPC; Tommy Hilfiger)

14[let’s see injunctions inaction]

15

Case 1Websiteblocking

Internetdisconnection

Passwordlocking

Filtering16

Case 1: Website Blocking
Remote providers●

Mere conduits do not have to act upon notice- could be explained > they provide general infrastructure with a great
potential for innovation●●●

Internet access providers are being sued to block a
specific website or to disconnect users;

ARGUMENT: voluntary measures are scarce; INT don’t
want to negotiate and if they do, they lead to unfair
conditions;
Proposal > allow such enforcement measures to be
imposed by courts (mandatory assistance)

Case 1: Website Blocking
Illustration: website blocking-C3

By far, the most popularcourt

C1

C2[EU] lot of variation (see Husovec & Dongen 2017)[UK] typical:-

RH goes to court and asks for a website block-

RH bears only C1, C3 (ap. 5-10.000 EUR);-

RH does not have to prove effectiveness;-C2 born by INT; higher with smaller intermediaries (5-6 zero sums)

Case 1 = Problem 1 [waste of resources]• Allocation of resources will be an improvement if E(π) > C• This would mean requiring the effectiveness equal to overall costs;• The courts don’t have enough information to do suchassessment (most E(π))• RH know the benefits of measures (E(π)); can assess theeffectiveness of the measures looking at the impact on its sales;• PROBLEM: current allocation does not force them to do so;• Self-interested right holders apply as soon as the expected benefit
from the proposed measures is higher than the cost they bear(E(π)>C(own))• IF E(π) is not higher than overall costs, enforcement measures arecontinuous waste of resources (even after RH figure that out)Case 1: Opportunities
Allocation of the entitlement-

Coase theorem > irrelevant, as long as TC zeroright holder- right to sue for cooperationintermediary- voluntary measuresa) agreementsb) unilateral

Case 1: Opportunities---

Impact on voluntarymeasures (if re-design.)
giving a credible threat
to voluntarynegotiations; so it
incentivizes them;
if cost are reimbursed atmargin, then collective
action is very likely forbigger projects due tohigh upfront costs

Case 2

Websiteblocking

Internetdisconnection

Passwordlocking

Filtering22

Case 2: Internet Disconnections

C3
court

C1

[Spain] individual lawsuit•(see Husovec & Peguera 2015)•Right to fair trail?

[Ireland] imposing an entire three strikes scheme-(see Kelly 2016)-Injunctions givnig power to legislate?

C2

Case 3

Websiteblocking

Internetdisconnection

Passwordlocking

Filtering24Case 3: WiFi Locking•

German Federal Supreme Court(2010) I ZR 121/08 (open WiFi)•

Mere conduits not liable under the ECommerce Directive for damages, but
you can impose injunctions on them
[ECD [x] Section 512(j) DMCA]•A WiFi hot-spot operator has toprevent third party infringements bypassword protecting the hotspot

 Germany has a very low availability ofopen wireless Repeated attempts to overrule caselaw by legislator
 CJEU says not against EU law

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Case 3: WiFi Locking
Potential impact on …

26

Case 3: WiFi Locking

How much do we trust our courts when it comes toprotecting new sources of innovation?
» CJEU doesn’t pick up the argument
27

Case 4

Websiteblocking

Internetdisconnection

Passwordlocking

Filtering28

Case 4: Filtering
Proximate providers
●●

●

●

●

E.g. hosting providers/information location tools providers
INT obtain a valid notice (stage 1) and have to take down
the infringing content (stage 2) in order to avoid own
liability;
Injunctions against intermediaries are used to rewrite theprocess by forcing INT to implement various filters
unilaterally
ARGUMENT: Related to policy efforts both in the US/EU tointroduce stay-down (one notification per work [not per aninfringement] with a permanent effect)

German courts are gravitating towards stay-down alreadyfor some time – based on injunctions

Case 4: Filtering- YouTube’s Content ID

Art. 8(3) InfoSoc

DMCA+

DMCA
NTD
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Problems Summary

Injunctions against innocent intermediaries:
1. can grant measures that are waste of resources
2. can grant RHs power to de facto legislate
through court orders

3. can stifle innovation by means of enforcement
measures
4. can rewrite boundaries drawn by tort law31

[solutions within thesystem?]

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Solutions 1 & 4•

Waste of resources [Problem 1] & Rewriting boundaries [Problem 4]•OUTSOURCE the costs & benefit analysis to RHs•

INTUITION: IF the courts cannot asses cost and benefits, thenoutsource that decision to the party that can best do such estimations;for this, full exposure to direct costs is necessary;•USEFUL:• prevents over-use of remedy instead of tortious ones

• In-builds time-limitation•Has historical backing: UK + DE
• But CJEU not willing to prescribe it for the EUSolutions 2 & 3• Legislating in disguise [Problem 2]• Tighten the “prescribed by the law” scrutiny and reject complex,
abstract and too far-reaching measures• E.g. reject three-strikes scheme if not legislated• Endangering innovation [Problem 3]• The most difficult to solve• Require periodical review• E.g. abandon password-locking due to long-term costs• Allow to challenge based on innovation grounds

34Thank you for your attention!

Contact details
martin@husovec.eu
Blog: www.husovec.eu
http://ssrn.com/author=1912670
twitter.com/hutko