On 17 December 2020, Advocate General (A-G) Szpunar delivered his opinion on the highly anticipated Mircom International Content Management v Telenet and others case (C-597/19) before the European Court of Justice (CJEU) thus shedding a first light on several current hot topics in copyright law.
The opinion highlights to what extent users are making a communication to the public when sharing peer-to-peer files and emphasizes the importance of a company’s business model as to (i) the entitlement to exploit its copyrights and (ii) finding a balance between the right of information and the right to respect for private life and protection of personal data.
In brief, the A-G concluded in his opinion that
- users downloading files in a peer-to-peer network, and hereby making pieces of a file containing a protected work simultaneously available for download (even before the users have themselves downloaded that file in its entirety) are making communications to the public for which the rights holder’s consent is needed,
- undertakings whose economic business model depends on the existence of piracy and not on the exploitation of copyrights may be denied legal rights under the EU Enforcement Directive 2004/48, and
- the business model of such undertakings should be taken into consideration when striking a fair balance between copyright on the one hand and the right to respect for private life and protection of personal data on the other hand.
Preliminary questions referred
Mircom, a Cypriot company, holds licences for the communication to the public of erotic films of several producers on peer-to-peer and internet file-sharing networks in Europe. According to its licencing conditions, Mircom is not just entitled, but even required to take legal action, in its own name, against infringements by users of these producers’ exclusive rights committed on these platforms and networks in order to obtain compensation for damages, 50% of which it must pass on to the producers.
Mircom brought a legal action before the Commercial court of Antwerp against the Belgian internet service provider (ISP) Telenet for the peer-to-peer file sharing of certain films from the Mircom catalogue using the BitTorrent protocol. Mircom asked Telenet, amongst other ISPs, to hand over identification data of those customers whose internet connections had been used to share these files. The Commercial court of Antwerp referred the following questions to the CJEU for a preliminary ruling:
- Can the downloading of a file via a peer-to-peer network and the simultaneous provision for uploading of parts (‘pieces’) thereof (which may be very fragmentary as compared to the whole) (‘seeding’) be regarded as a communication to the public within the meaning of Article 3(1) of Directive 2001/29?;
- Can a person who is the contractual holder of the copyright (or related rights), but does not himself exploit those rights and merely claims damages from alleged infringers — and whose economic business model thus depends on the existence of piracy, not on combating it — enjoy the same rights as those conferred by Chapter II of Directive 2004/48 on authors or licence holders who do exploit copyright in the normal way?;
- Are the specific circumstances set out in questions (1) and (2) relevant when assessing the correct balance to be struck between the enforcement of intellectual property rights and the rights and freedoms safeguarded by the Charter – such as respect for private life and protection of personal data, particularly on the assessment of proportionality?; and
- Is, in all those circumstances, the systematic registration and general further processing of the IP-addresses of a “swarm” of “seeders” (by the licence holder himself, and by a third party on his behalf) legitimate under EU GDPR Regulation 2016/679, and specifically under Article 6(1)(f)?
Hereinafter, we are looking into the A-G’s advice with respect to the first three copyright related questions.
Communication to the public by users on peer-to-peer networks
When a user shares files on peer-to-peer networks, it can use the BitTorrent protocol. This protocol relies on a network of users (“the swarm”) which connect with each other through a platform to share files in a decentralised manner. Typical of this protocol is that until an entire file has been downloaded, it cannot be uploaded in its entirety, but is broken down into small pieces (“seeds”). These small fragments are uploaded simultaneously to other peers, until the entire file has been downloaded.
In this regard, Telenet disputed that there has been any communication to the public on the part of users who download files on peer-to-peer networks. Rather, the initial uploaders of those files and the peer-to-peer platform itself should be held responsible. Telenet argued that the downloaders only provide facilities (i.e. their computer and their network connection) and are often not even aware that by downloading, they simultaneously upload the files as well. In response to the latter, the A-G states that it is irrelevant that the users of peer-to-peer networks may not be fully aware that by downloading works, they are uploading them simultaneously. With reference to the Stichting Brein v Ziggo (“The Pirate Bay”) case of 2017, the A-G confirms that full knowledge of the facts and the indispensable role of the user are indeed conditions which must be fulfilled in order to establish that there has been an act of communication to the public. However, this requirement of deliberate intervention is only necessary in order to establish whether an act of communication has taken place by players who are, as opposed to the case at hand, not responsible for the initial communication of the work. Thus, the general rule applies according to which the deliberate nature of the infringement of an intellectual property right is not a decisive element.
The other ISPs further argued that the pieces exchanged on peer-to-peer networks are unusable in themselves and should therefore not be treated as a work or even a part of work that enjoys copyright protection. The A-G however states that this reasoning is unfounded, pointing out that the pieces are parts of the files containing the copyright protected work. As those parts are the mechanism of transmission of the files and result in the making available of the files containing the work in itself, it is irrelevant whether the transmitted pieces are unusable in themselves. Furthermore, the A-G states that it is not relevant whether or not the transmission of the file of the work in question has actually taken place for the purposes of determining whether it has been made available to the public. In this regard, the A-G refers to the earlier CJEU case-law stating that “in order for there to be an act of making available, it is sufficient that a work is made available to the public in such a way that persons comprising that public may access it, from wherever and whenever they individually choose, irrespective of whether they effectively avail themselves of that opportunity”. In this regard, reference can be made to the SGAE case of 2006 of the CJEU.
The A-G hence concludes that the act of sharing pieces of a file containing a protected work by a user through the BitTorrent protocol, even before the user concerned has himself downloaded that file in its entirety, may be considered a communication to the public. The user’s knowledge of the facts is thereby not decisive.
‘Copyright trolls’ are persons who have acquired limited exploitation rights of copyright protected works for the sole purpose of being able to seek compensation from individuals who infringe those rights, particularly on the internet. Moreover, such trolls bring legal proceedings in order to obtain the names and addresses of those infringers, based on the previously identified IP addresses in order to then offer them an amicable settlement in return for the payment of a certain sum, in most cases without pursuing those court proceedings. Whilst copyright trolls are quite common in the United States, the phenomenon is little known in EU law.
In order for persons to be able to apply for the application of measures, procedures and remedies following an infringement of IP rights, they must be entitled to do so under Article 4 of the Enforcement Directive 2004/48. The A-G stresses the importance of the nature of Mircom’s business model as a ‘copyright troll’ in assessing whether it has legal enforcement rights. In this regard, the A-G refers to the general legal principle in EU law of abuse of rights, where provisions of EU law are relied upon “not for the purposes of achieving the objectives of those provisions but with the aim of benefitting from an advantage in EU law although the conditions for benefitting from that advantage are only fulfilled formally”.
Therefore, the A-G states that although Mircom was not only a licensee of the film producers but also an assignee of the producers’ infringement claims, it does not have the status to benefit from legal rights provided for in the Enforcement Directive 2004/48 since, it was not “using” the IP rights. Consequently, Mircom cannot order Telenet to produce the identification data for its customers whose internet connections have been used to share files on a peer-to-peer network. The A-G however emphasises that this assessment is up to the discretion of the national courts as the Enforcement Directive merely establishes a minimum level of protection and does not preclude Member States from attributing enforcement rights to companies operating in the way that Mircom does.
Balancing of rights
In striking a balance between the right of information as per Article 8(1) of the Enforcement Directive 2004/48, on the one hand, and the right to respect for private life and protection of personal data, on the other hand, the A-G cites the wording of the Article itself, which provides that “the request for information must be justified and proportionate”. According to the A-G, the business model of Mircom should be taken into account in this assessment. In this regard, the A-G states that if this business model is regarded to be abusive by the referring court, its request should be found to be unjustified. In the event where the court considers Mircom’s status as a licensee valid, it should still be taken into account that Mircom did not actually suffer any prejudice, making its action devoid of purpose and its request unjustified as well.
In our opinion, the A-G adopts a very strict approach as to the balancing of rights between intellectual property rights and the right to privacy in general, regardless of the nature of the business model of an undertaking, and this by referring to the La Quadrature du Net and Others case of 2020. In this case, the CJEU sets a high standard of protection of personal data by only allowing an interference to prevent serious threats to public security and to safeguard national security. The A-G mentions in this respect that “it is doubtful whether the interests relating to the protection of intellectual property rights are as important as those underlying the safeguarding of national security, combating serious crime and preventing serious threats to public security”. It remains to be seen how the CJEU will apply the A-G’s strict approach, and/or if it shall shed more light on finding this right balance. On top of that, the interaction with Article 126 of the Belgian Act on electronic communication of 13 June 2005, which legally prohibits ISPs to make available the identification data to anyone other than the authorities listed in the article, will have to be clarified as well.
As the Stichting Brein v Ziggo (“The Pirate Bay”) case of 2017 did not provide guidance on the question whether users of a peer-to-peer network themselves make a communication to the public when sharing copyright works via these platforms, the CJEU’s ruling will certainly provide legal guidance on a highly important and problematic issue within copyright law. Whilst the A-G’s opinion regarding the interpretation of communication to the public in this respect is progressive, it seems to be in line with the CJEU’s established case law. The opinion further is a clear hint to the Court to strengthen the position of copyright holders in the digital landscape where peer-to-peer technology is pervasive.
Secondly, the CJEU’s ruling will provide clarity regarding the rather new phenomenon of ‘copyright trolls’ in intellectual property law and their legal rights to benefit from the measures, procedures and remedies under the Enforcement Directive.
Lastly, it will be interesting to see whether the CJEU will provide clarity on the relevance of the La Quadrature du Net and Others case in search of the right balance between the enforcement rights of intellectual property and the right to privacy. If the Court is to follow the opinion of the A-G, the right of information for rights holders of intellectual property may potentially be significantly eroded.