Response to: Consultation on the future of electronic commerce in the Internal market and the implementation of the Directive on electronic commerce

Transcription

1 Response to: Consultation on the future of electronic commerce in the Internal market and the implementation of the Directive on electronic commerce November 2010

2 UK Music. UK Music is the umbrella organisation which represents the collective interests of the UK s commercial music industry - from songwriters, composers, artists, musicians, music producers and music managers to music publishers, record labels and collecting societies. UK Music consists of: the Association of Independent Music representing 850 small and medium sized independent music companies; the British Academy of Songwriters, Composers and Authors with over 2,200 songwriter and composer members; the BPI representing over 440 record company members; the Music Managers Forum representing 425 managers throughout the music industry; the Music Producers Guild representing and promoting the interests of all those involved in the production of recorded music including producers, engineers, mixers, re-mixers, programmers and mastering engineers; the Music Publishers Association, with more than 250 major and independent music publishers representing close to 4,000 catalogues; the Musicians Union representing 32,000 musicians; PPL representing 42,000 performer members and 5,000 record company members; and PRS for Music representing 73,000 songwriters and composers and music publishers. Summary. UK Music raises concerns about the broad limitations of liability extended to Internet intermediaries. In practice the provisions are inhibiting the development of a coherent value chain; they are providing additional protection for illegitimate service providers. Reference to the applicability of the limitation of liability is used by service providers to delay licensing discussions and to drive down the price they pay for licensing, even if the activities concerned fall outside the scope of Articles Our concerns could be addressed by the Commission offering further clarification of the e-commerce Directive to create further certainty and to advance the development of a functioning market with legitimate business models which will ultimately benefit consumers and citizens. 2

3 The review of the e-commerce Directive should also provide an opportunity to address the following issues: o A clear definition of information society services taking into account the technological developments of the digital world as well as the activities of service providers building their activities on the illegitimate use of creative works. o Clarification that the e-commerce Directive and the limitation of liability therein does not supersede copyright law. o Member states could be encouraged to impose sanctions for service providers not complying with the requirements set out in Article 5 (1).# o Beyond their corporate and social responsibility, ISPs should be under a statutory duty to provide information and education concerning the implications of linking to illegitimate sites even if this is not intentional or deliberate. o We recommend that Article 15 be clarified in order to ensure that filtering and monitoring is possible given current technological capabilities. o A extension to also include hyperlinkers and location tool providers as provided in Article 21 is unnecessary and would be ill advised given the damage that would inevitably be caused by enabling infringing services to seek to invoke the safe harbour. o The European Commission should encourage co-operation between ISPs and right holders to further the functioning market by creating legislative incentives for all players to contribute to the legitimate European online market. As it stands the development of the online market is slowed down by service providers who want to provide a legitimate service having to compete with illegitimate and mainly free services. There should not be any protection provided in European law for service providers operating illegal ventures. 3

4 Background. The Single Market Act published on 27 th October 2010 refers to the limited uptake of the e-commerce market within individual member states and even less uptake of cross border e-commerce activities between member states. The UK e-commerce market in general is well developed and in particular the market for legal services for music is developing quickly with over 60 digital services now available in the UK. Whilst the situation within member states differs re uptake of e-commerce there are other factors which prevent cross border e-commerce in the European Union such as different languages or lack of payment systems, or uncoordinated tax systems. Another crucial point relates to the trust of consumers and citizens in the legitimate e-commerce market; the review of the e-commerce Directive is key to achieve this trust as well as ensuring the functioning of the e-commerce Market. The main objective of the e-commerce Directive is to ensure that clear legal rules across the EU exist to ensure that legitimate online markets prosper. In that regard, a healthy e-commerce market is the key pillar for the European economic recovery, and the creative industries are a main driver for these developments as recently highlighted by the Digital Agenda and the recently published Single Market Act. Whilst the e-commerce Directive, and in particular the country of origin approach, has certainly helped establish an e-commerce market based on the certainty of applicable law, UK Music respectfully raises concerns about the broad limitations of liability extended to Internet intermediaries and the incentives the safe harbours provide for ISPs to avoid any knowledge of what is carried on their network, despite the availability and development of technology which could be adopted to enhance the ability of networks to support a functioning market. In addition, the provisions are not adapted to deal with new forms of copyright infringement on the internet such as illegal peer-to-peer exchanges. Web 2.0 services, etc. It is therefore necessary to clarify the actions that ISPs can be required to take when their services are used for such illegal activities. The creative industries are an essential component in the development of a prospering e-commerce-based economy. This has been highlighted by recent research, showing the valuable economic contribution made by the creative industries and great potential of the creative knowledge economy. 4

5 It is of fundamental importance that creative industries work together with the Internet service provider community to ensure that the economic objective addressed in the e- Commerce Directive will be upheld in a balanced manner. A balanced approach will incentivise all stakeholders to further develop a functioning e-commerce market based on cooperation. It is worth reminding ourselves that at the time of the adoption of e-commerce Directive there was some uncertainty of how the online market would develop. Many of the music services which are available in 2010, for instance Spotify or We7, could not have been delivered or arguably even conceived at that time. On the other hand, the development of activities and services such as unauthorised peer-to-peer file-sharing, blogs, Web 2.0 services, rogue websites located in other countries, had not been envisaged at that time either. Nor were the essential role played by access providers and the technological possibilities of ISPs to monitor activities on their networks. Back in 2000 and in the years leading up to the adoption of e-commerce Directive the objective of legislative intervention was to limit the liability of Internet intermediaries in order to facilitate the development of the then nascent market for intermediaries. At this point in time, the potential of the internet was huge, although no one could foresee how the digital market would develop. Napster had been in existence for less than a year. Boo.com had gone into receivership, after burning through $135m in 18 months. Amazon was yet to turn a profit. And Google was in the process of linking advertising to search with the launch of Ad-Words (which now accounts for 90+% of the search engine s revenues). The number of UK households with an internet connection was estimated to be around 30%, less than half of home internet users logged-on on a daily basis, and most connections were dial-up. The most advanced MP3 player could store up to 25 songs. The position in 2010 is very different: several intermediaries are now in an overwhelmingly strong economic position, particularly in comparison to individual composers/ performers and music publishers/ record companies who face significant challenges in protecting and enforcing their rights in the online environment. Research carried out by Boston Consulting commissioned by Google and published on 28 th October 1 estimated that e-commerce is now worth 100bn a year and accounts for 7.2% of the UK's gross domestic product. This success is also due to the creativity of European creators who produce the works consumers want to have

6 Substantive comments. With the benefit of hindsight, it is evident that the limitations of liability provided in Articles need to be clarified and adapted to take into account the technological evolution of the internet and the new activities and services which emerged since the adoption of the e-commerce Directive in Careful consideration must be given to the disparities between operating internet services. On the one hand, there are legitimate licensed services that exist to help citizens access legal content; whilst on the other there are specifically tailored tools that exist merely to making available illegal files as well as making pirated physical products more readily accessible using the internet as shop window. It is mainly the latter who benefit from the alleged applicability of the limitation of the e-commerce Directive. In addition to the specific comments on Article 5 (1) and the Country of Origin approach, we focus our comments on current issues surrounding the interpretation of the provisions concerning the limitation intermediaries liability in the Directive. Articles 12 14: The limitations on liability under Articles are in practice used to influence commercial negotiations between composers, performers and right holders and service providers, encouraging the latter to procrastinate and stall negotiations. This is incongruent with the original spirit of the e-commerce Directive, which had the initial intent of fostering further dialogue between composers, performers and right holders and ISPs. On the contrary, this has had the opposite effect of further polarisation given the wide range of safe harbour protection afforded to ISPs. The complex reality of the online world in which intermediaries may have a number of roles and may be technically capable of having requisite knowledge requires a clarification of the definitions of information society services. Such clarification should provide guidance to interpret the differences between mere conduit, access providers and content providers/ hosting providers which is both necessary and desirable. In our view the current one-size-fits-all definition of information society services does not correspond with the more complex reality of the online world. A new look at the definition of information society services would be useful to deal with the new services and activities, such as P2P, rogue sites located abroad, cyber lockers, etc. that have emerged since the adoption of the Directive. We suggest it is necessary to clarify the definition of information society services. 6

7 The creative industries have endeavoured to work with service providers to explore innovative ways in which to deliver the content that users wish to access. However, the current approach under the e-commerce Directive means that inventive licensed services risk being hampered by the prevalence of infringing activity made possible by the out-of-date approach to liability limitation. We propose the Commission sets out further clarification with respect to the fact that the e-commerce Directive and the limitation of liability therein does not supersede copyright law. Beyond their corporate and social responsibility, ISPs should be under a statutory duty to provide information and education concerning the implications of linking to illegitimate sites even if this is not intentional or deliberate. Article 12 - Given rapidly changing technological developments and the reality of Internet service providers interfering with the data and information carried, if not actively bundling access with content; few, if any Internet service providers legitimately can rely on mere conduit status. Moreover, many Internet service providers have publicly boasted that they are not mere conduits and that they should not be considered as such. 2 Mere conduit status cannot any more be used as an absolute defence. Articles 13 and 14 - As currently drafted, these Articles predominantly benefit information society services which operate illegitimately, or use the limitation of liability as a tool in commercial negotiations with composers, performers and right holders. Reliance upon the lack of actual knowledge on behalf of the information society service has been an impediment for the commercial cooperation between information society services and right holders, given that they had little incentive to engage in view of the broad limitations available to them. Whilst, in 2010, we are optimistic that commercial cooperation has become more prevalent in light of information society services' economic interests in offering creative content legitimately, European legislation should underpin this collaborative endeavour. Overall the Directive should make it clear that ISPs, even if they incur no liability, can and must play a role in helping to prevent or eliminate illicit activities and services. For this Articles 12.3 and 14.3 and Article 15 must be appropriately interpreted, to ensure that terms are correctly understood and adapted to current realities and that injunctive relief is fully available

8 This review should address the facts that there remains much uncertainty regarding the interpretation of the e-commerce Directive. Several legal cases have been mounted in the EU and United States to test the limits of the liability of ISPs. None have settled the question unequivocally the problem has been that uncertainty and polarisation of the value chain has been created for all parties involved. Instead, rights holders and ISPs should be working together in partnership. Legislation was required in the UK, in the form of the Digital Economy Act 2010, to establish two important principles: that creators play a vital role in the continued evolution of a sustainable digital market and they should be rewarded for their work; and that the ISPs have specific responsibilities to take action against copyright infringement on their networks. Regretfully, the cost apportionment for implementation the Digital Economy Act provisions, however, are burdened on the copyright owner at a 75:25 ratio. More recently a Belgian case has been referred to the highest European Court where a decision is still pending (Sabam v Tiscali) this highlights the problems with the interpretation of the provisions of the e-commerce Directive. In the meantime, while the legitimate market suffers ISPs and some service providers are able to use our music free of charge in order to increase the value of the Internet subscriptions they are marketing, often with the support of heavy advertising, without any remuneration for the copyright owners... Article 15 Filtering technologies to monitor are already being applied and internet intermediaries would be best placed to filter their networks e.g. for spam mail. This can be done without a general obligation to monitor...information in the sense of Article 15. We recommend that Article 15 be clarified in order to ensure that this is possible given current technological capabilities. Article 21(2) - Likewise, a reflection upon the comparative positions of composers, performers, right holders and service providers is essential to revisions pursuant to Article 21(2) of the Directive. Since the initial enactment of this EU legislative regime, technical developments and the character of information service providers have considerably altered the ways in which the public consumes creative content. An extension to also include hyperlinkers and location tool providers as provided in Article 21 is unnecessary and would be ill advised given the damage that would inevitably be caused by enabling infringing services to seek to invoke the safe harbour. 8

9 The UK Department of Trade and Industry drew this conclusion following a comprehensive review in Article 5 (1) - Whilst legitimate businesses will always provide the information required pursuant to Article 5 (1) as good practice, illegitimate business will not comply with the requirements of this article of their own volition. As it stands, Article 5 as implemented does not trigger any consequences for business who fail to adhere to the provisions of this requirement. This could easily be addressed through further guidance for member states pertaining to how to enforce the requirements of Article 5, e.g. by providing penalties for non compliance. Though the Country of Origin rule may complicate issues surrounding applicable law with respect to its interaction with private international law, the areas of intellectual property and contractual obligations concerning consumer contracts have been explicitly exempted from this principle, and thus pose little issue for composers, performers and right holders. Furthermore, the Rome Convention provides that the parties' choice is valid with regard to other contracts. This is again preserved by the exception on the freedom of the parties to choose the law applicable to their contract in the E-commerce Directive. Consequently, at present, UK Music does not challenge the current implications of the Country of Origin rule and recommends that this exception remains in place. 9

10 Questionnaire. 52. Overall, have you had any difficulties with the interpretation of the provisions on the liability of the intermediary service providers? If so, which? In our experience there is a complete lack of clarity as to how these provisions should be interpreted: The main concern with interpretations of the provisions on the liability of intermediary service providers relates to the exploitation of any uncertainties as to whether the application of the provisions in commercial licensing negotiations with right holders. Reference to the limitation of liability is being utilised by Internet service providers to drive down the price of licence fees and/or claim immunity from any copyright liability for aspects of their services, with the result that licensing negotiations can be long drawn out for many months covering first the need for a copyright licence, then the scope of the licence, before the question of valuing the licence is negotiated. Services profit from the distribution of unlicensed content and avoid liability through turning a blind eye to the reality of the use of their service. The Commission should be aware that during multiple negotiations the e-commerce Directive continues to be specifically invoked by large and small innovative music services with the sole purpose of delaying licensing discussions. It may also be having an adverse impact on the design of new business models since it provides incentives for operators to shape their business models to qualify for immunity as defined by the parameters of the Directive. Equally, intermediary service providers argue that the e-commerce Directive absolves them from any liability for the data and information passing through their networks. However, this does not correspond with the technological reality in It is not acceptable that internet service providers are allowed effectively -to turn a blind eye on the rights of the creative industries whilst they already have the technological means to control the data and information passing through their networks. We note the ongoing legal action between SABAM and Tiscali in front of the European Court of Justice. Notably, regardless of the limitations of liability it should be possible to ask ISPs to take action against illicit services or activities. Whilst such possibility already exists under the provisions on injunctive relief and Article 15 of the e-commerce Directive, these provisions should be clarified and consistently interpreted. 10

11 53. Have you had any difficulties with the interpretation of the term "actual knowledge" in Articles 13(1)(e) and 14(1)(a) with respect to the removal of problematic information? Are you aware of any situations where this criterion has proved counter-productive for providers voluntarily making efforts to detect illegal activities? At present, it seems that intermediary service providers are not reviewing content passing through their networks in order to avoid actual knowledge. Given that they are the party closest in the value chain to the activities occurring on their networks, it is enormously damaging that despite new technological opportunities they continue to exploit reference to actual knowledge as an excuse not to monitor infringement. It seems that the approach taken under the guidance on red flags based on the DMCA with a similar red flag standard as the one provided in the e-commerce Directive provides a more comprehensible approach for the level of knowledge required. We suggest some interpretative assistance accompanying the e- Commerce Directive which describes red flags would provide useful assistance and help create legal certainty. Reference to constructive knowledge instead of actual knowledge would not only prevent the problems currently caused by Articles 13 and 14 but also create a level playing field in which all parties of the Internet value chain engage in discussions and negotiations. The current system in the e-commerce Directive discourages ISPs to look at traffic which negatively impacts on technologic developments. Tools and technologies which could assist the development of a legal market are being left unused deliberately. 54. Have you had any difficulties with the interpretation of the term "expeditious" in Articles 13(1)(e) and 14(1)(b) with respect to the removal of problematic information? In our view, the classification of expeditious remains problematic. By the nature of release schedules in the creative industries, the expeditious removal of infringing content is clearly case specific. For example, the expeditious removal of a sound recording, which has not yet been released, is obviously more time sensitive than the removal of book transcript which was released to the public a number of years ago, with the former having the potential to cause significant financial damage within only a few hours. 11

12 UK Music requests further clarification is made in this regard, addressing the case specific definition, which recognises the potential damage caused by the current ambiguity of the term expeditious. 55. Are you aware of any notice and take-down procedures, as mentioned in Article 14.1(b) of the Directive, being defined by national law? In the UK there is no statutorily defined notice and take-down procedures. Information Society services who are hosting content offer notice and take-down procedures but these do not contain any of the legally binding enforcement provisions which a codified procedure approach would. UK Music was involved with the RightsWatch project which attempted to draft a European Code on notice and take-down procedures under Article 16 of the e-commerce Directive, but at the time an agreement between the various stakeholders proved impossible (2002). However, UK Music is confident that the parties' positions have become closer, and that the relation between Information Society services and composers, performers and right holders is increasingly based on the recognition that all parties including consumers are best served by negotiations at a business-to-business level. In addition, there is now extensive experience to draw on from other jurisdictions. Any notice and take-down procedures must to be straightforward and simple to use in order also to enable smaller right holders such as individual composers and artists to utilise their benefits. An existing model is presented by ebay, and in particular their notice and take-down procedures for verified rights owners (VERO). Under this model, verified right holders have simplified access to the notice and take-down procedures offered by ebay. 56. What practical experience do you have regarding the procedures for notice and take-down? Have they worked correctly? If not, why not, in your view? At the moment, notice and take-down procedures which are critical to the business are difficult to operate effectively on a consistent basis, and are always subject to the willingness of the ISP to cooperate. Also, a more active role for an ISP is critical given the sheer amount of infringing content subject to notice and take-down. Furthermore, without the explicit codification of procedures, these measures lack the teeth necessary to make them consistently effective. Moreover, smaller right holders which make up a significant proportion of the market are invariably at a financial disadvantage when attempting to enforce their rights. 12

13 Additionally, Article 14 does not provide an appropriate remedy for the type of Internet related infringement which takes place in today's online environment. Composers, performers and right holders not only have to make notifications of hundreds of thousands of infringements occurring on various networks, but must also face the reality that infringing material which was taken down pursuant to their request is often times immediately reposted. Further involvement of the intermediary service providers would be invaluable to address these concerns. Intermediary service providers are best placed within the e-commerce value chain to prevent the immediate reposting of infringement material. Once a notification been submitted to the information society service, they are in the best position to act accordingly, without the need of subsequent notifications, to ensure unauthorised material remains off their networks. We suggest that the requirements for Article 14 could be adapted accordingly. This is already good practice as highlighted in the example in our response to question Do practices other than notice and take down appear to be more effective? ("notice and stay down"13, "notice and notice"14, etc) 58. Are you aware of cases where national authorities or legal bodies have imposed general monitoring or filtering obligations? MySpace, which hosts musical content and video files, has successfully implemented a take-down and stay down procedure. Upon reception of notice about an unauthorized upload of copyrighted material, MySpace will remove the allegedly infringing file and takes a digital fingerprint of the content. This fingerprint is then stored in a database ensuring the content will not be subsequently reposted on the provider s services. This system is incredibly beneficial to copyright owners because it eliminates the onerous task of sending multiple notices for subsequent reposted content by those clearly infringing copyrighted material. The use of such technologies are advantageous to both intermediary service providers and copyright owners due to the protection they afford rights holders and the cost savings for ISPs who would be empowered to identify and isolate users of P2P networks in terms of managing their high bandwidth usage. Furthermore, such technologies can give intermediary service providers positive leverage with licensors by providing more attractive opportunities by controlling infringing activity. 13

14 Whether currently required by law or not, ISPs can and do generally take action to filter their networks. Technologies are presently utilised to filter spam and pornographic images, as well as to limit access of subscribers who download a disproportionate volume of content. These initiatives could be employed to filter the unauthorised use of copyrighted works with relative ease. Likewise, the comparative position of right holders has shifted drastically since the original drafting of the e-commerce Directive over ten years ago with technological developments which make the filtering of copyrighted content not only practical but also financially viable. The symbiotic relationship between copyright owners and ISPs is largely defined by the content provided by the creative industry for which users pay service provides to access. In that regard, service providers could be given incentives to take further steps to discourage illegitimate use through filtering technologies which can direct users to licensed services with shared benefits and outcomes. Thus, UK Music submits that further clarification of Article 15 is necessary to provide guidance that filtering commitments can and should be left to national law. 59. From a technical and technological point of view, are you aware of effective specific filtering methods? Do you think that it is possible to establish specific filtering? Technical measures such as those discussed in the example in question 57 can easily be implemented to better protect right holders and the development of new legal services both of which are damaged by the widespread availability of infringing content. Specifically, acoustic fingerprint technology takes a condensed digital summary of a musical work which is stored in a database and used to identify unauthorised uses in its original and digitally altered forms. Service providers using acoustic fingerprints can be easily used to monitor the use of specific musical works and performances on various types of information society service providers including p2p networks. Likewise, similar technologies exist for other categories of works such as digital video fingerprinting for video content, and feature extraction for visual art works. 60. Do you think that the introduction of technical standards for filtering would make a useful contribution to combating counterfeiting and piracy, or could it, on the contrary make matters worse? On a general note, we support the approach in the e-commerce Directive not to mandate any technical standards for any specific technology. 14

15 The choice of technology should remain voluntary which will enable the constant adaptation to technological developments. Technical standards for filtering would not only make a useful contribution to combat counterfeiting and piracy but also represent the most cost-effective measures to address these issues. These technologies already exist and are presently employed to remove other types of content such as spam. Moreover, filtering technology specific to the music industry already exists and is implemented by a handful of service providers (See question 59). Furthermore, service providers are in a superior position due to their control over their services to implement these technologies. By implementing digital fingerprint technology, ISPs can reduce the bandwidth costs associated with unlicensed file sharing and lay the foundation for a more diverse range of legitimate content delivery services. 62. What is your experience with the liability regimes for hyperlinks in the Member States? Existing law provides already more than sufficient protection for legitimate intermediary service providers; any extension would be unjustified and damaging, providing protection for illegitimate actors who deliberately offer infringing services. 63. What is your experience of the liability regimes for search engines in the Member States? Whilst we have no direct experience with the liability regime of search engines we refer to the recent decision of CBS et alia vs. Newzbin which confirmed the liability of a search engine providing hyperlinks. We have grave concerns about the practice of certain search engines to provide links to illegitimate websites following a request for a copyrighted work such as a song. Given that algorithms are available and used to manoeuvre users to legitimate sites, it would be helpful if search engines were given further incentives to provide users with search results which present legitimate locations for content before illegal ones. The music industry feel that search engines can and should do more to give priority to sites that are legitimate and safe. 15

16 Search engines, such as Google, perform to a set of instructions, or algorithms, that determine which sites come up and in what order when a search is made. Working with digital music experts Music Ally, PRS for Music recently carried out research into how illegal and legal music content ranks on some popular search engines in the UK. A series of searches based around music, varying the keywords to gauge the prevalence of infringing links on the four search engines were conducted. The findings highlighted that there were considerable discrepancies in the results provided. 3 In essence, some search engines like Yahoo and Bing rank legal sites higher than others. This indicates that there is much greater scope for technology players in the value chain to signpost consumers toward legal offerings. The technology to elevate legal rankings already exists: Google India recently launched a trial to help users search and explore (legal) music across thousands of Hindi Bollywood songs at Google Music Search (India) Labs. 4 Further, it would reduce the unfair competition which licensed music services face from illegal services and free music, which significantly undermines their ability to develop the market fully or to gain a return on their financial investment. Given that algorithms are available and used to manoeuvre users to legitimate sites, it would be helpful if search engines were given further incentives to provide users with search results which present legitimate locations for content before illegal ones. The music industry feel that search engines can and should do more to give priority to sites that are legitimate and safe 64. Are you aware of specific problems with the application of the liability regime for Web 2.0 and "cloud computing"? We don t think that Web 2.0 and cloud computing require different liability regimes to the one outlined above. Providers of such services should be encouraged to obtain licenses rather than trying to rely on outdated limitation of liability. It is regrettable that the scope for arguing the application of the e-commerce Directive delays the negotiation on what should become new innovative business models. 3 Music Ally Research, Commissioned by PRS for Music, September When users enter any music-related query (such as the name of a song, artist or album) at Google Search the search results will provide a single click access to the songs. Users can stream these songs unlimited number of times on their computers. Songs will be streamed directly by Google s partners to the user s computer. This streaming will be fully legal as Google Music Search (India) Labs offers music from partners who have legal permission to stream online 16

17 65. Are you aware of specific fields in which obstacles to electronic commerce are particularly manifest? Do you think that apart from Articles 12 to 15, which clarify the position of intermediaries, the many different legal regimes governing liability make the application of complex business models uncertain? Data protection rules must enable the fight against piracy and the enforcement of rights: privacy cannot be used as a shield against illicit activities (e.g. Section 35 of the UK Data Protection Act). Date protection rules must be clarified if and where necessary. The Internet has given counterfeiters and those involved in piracy new and powerful ways of selling their products, such as the unlicensed use of "peer to peer" technologies, electronic commerce sites, on-line auction sites and e-spamming. The digital environment is attractive to counterfeiters and pirates for several reasons, in particular: anonymity, the possibility of creating sites anywhere in the world, removing or moving them if need be to States where the legislation on intellectual property or its application are lax, the huge size of the markets (number of electronic commerce sites and number of references), the relative ease of misleading consumers in the target market, etc. 66. The Court of Justice of the European Union recently delivered an important judgement on the responsibility of intermediary service providers in the Google vs. LVMH case. Do you think that the concept of a "merely technical, automatic and passive nature" of information transmission by search engines or on-line platforms is sufficiently clear to be interpreted in a homogeneous way? 68. Do you think that the classification of technical activities in the information society, such as "hosting", "mere conduit" or "caching" is comprehensible, clear and consistent between Member States? Are you aware of cases where authorities or stakeholders would categorise differently the same technical activity of an information society service? Whilst the classification seems quite clear, the existence of mere conduits and mere caching services does not reflect the reality. Additionally we suggest to restrict the limitation of liability to services which do not commercially benefit from the activity (similar to the approach under the DMCA). 17

18 69. Do you think that a lack of investment in law enforcement with regard to the Internet is one reason for the counterfeiting and piracy problem? Please detail your answer. Further law enforcement presence is not the foremost concern facing counterfeiting and piracy. Instead, UK Music believes the focus should remain on effective civil law measures to encourage cooperation amongst right holders and service providers. Specifically, we submit to the Commission that the current language of Article 5 (1) provides no repercussions for non-compliance. At present, only legitimate reputable providers furnish this information to its recipients of their services and competent authorities as a standard business practice. However, under the current provisions of the e-commerce Directive a service provider s failure to provide this vital information does not preclude it from claiming limited liability under Articles Thus, UK Music submits that compliance with Article 5 should be interpreted as a precondition to the availability of limited liability. In fact, this approach has been successfully adopted in the United States through the Digital Millennium Copyright Act. Under this legislation, ISPs are required to designate an agent to receive notifications of claimed infringement in order to qualify for the safe harbour provisions. Implementing a similar approach in the EU would add ramifications for the failure of service providers to supply the information required pursuant to Article 5. Contact: Florian Koempel contact@ukmusic.org British Music House 26 Berners Street London W1T 3LR 18