EMI v UPC. THE DECISION AND CONSEQUENCES FOR IRISH ISPs AND COPYRIGHT HOLDERS

EMI v UPC THE DECISION AND CONSEQUENCES FOR IRISH ISPs AND COPYRIGHT HOLDERS Sally-Anne Hinfey, DFMG Solicitors, IE 1 Introduction EMI v UPC 2 is a particularly controversial intellectual property judgment which the Irish High Court issued in October 2010. The case involved the music company EMI as Plaintiff and the Irish telecom and internet service provider UPC as Defendant. The case presented several questions regarding the legal interpretation of the Irish Copyright and Related Rights Act 2000 ( the Irish Copyright Act ) and the limits of Internet Service Provider ( ISP ) liability for copyright infringement. The decision details the various technologies available to assist in the detection of online copyright theft including DtecNet (which is the system currently being used by Irish telecom provider Eircom in implementing a three strikes protocol). This system allows rightsholders to identify an IP address which corresponds to an internet user who has employed peer to peer technology to facilitate unauthorised/unlawful downloads or file sharing. The judgment also indicated that Irish copyright legislation currently does not provide appropriate remedies for copyright owners in respect of online infringement of their rights. The case also examined the mere conduit defence provided for in the E-Commerce Directive 2000 which has so often been relied upon in recent times by ISPs. 3 Legislative Background The issue of ISP liability for copyright infringement was addressed in the InfoSoc Directive (at Recital 27) 4 which provides that: The mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Directive. The Irish Copyright Act, at Section 40(3), purported to address this same issue and was intended to ensure that Irish law was in line with the provisions of the InfoSoc Directive. S.40(3) provides that: the provision of facilities for enabling the making available to the public of copies of a work shall not of itself constitute an act of making available to the public of copies of the work. 5 Both the terms of the InfoSoc Directive and the provisions of Section 40(3) of the Irish Copyright Act are then bolstered by the mere conduit exception in the E-Commerce Directive (at Article 12). 6 The E-Commerce Directive provides that: Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, Member States shall ensure that the service provider is not liable for the information transmitted This exemption is conditional the service provider: (a) not initiating the transmission; 7 (b) not selecting the receiver of the transmission; 8 and (c) not selecting or modifying the information contained in the transmission. 9 It was the provisions of both Section 40 of the Copyright Act and Article 12 of the E- Commerce Directive (as introduced into Irish law in SI 68/2003) which were to the fore in the EMI v UPC case and I will examine the judgment in the EMI v UPC case in some greater detail below. ECTA Secretariat, Rue des Colonies 18/24, 9th Floor, BE- Brussels, Belgium Tel 32/2-513 52 85 Fax 32/2-513 09 14 E-Mail ecta@ecta.org Internet http://www.ecta.eu A company limited by guarantee. Reg. in England and Wales No. 1520996. Reg. address: 15 Southampton Place, London WC1A 2AJ, England. VAT No. BE0851518062

Case Background EMI v Eircom 11 The Irish High Court had previously dealt with a similar case to that of EMI v UPC during the trial between EMI Records (Ireland) Limited and Eircom Limited 12 ( the Eircom Case ) which was before the Court in less than a year before the UPC proceedings were initiated. Unfortunately, the Eircom case never came to trial due to the fact that the parties reached a settlement. This controversial settlement agreement required Eircom (the country s largest telecom provider) to implement a three strikes policy. This involved the identification of unlawful downloaders online by an IP address specific to the particular telecom customer paying for the internet connection used to make the download. EMI was to use DetecNet technology to identify these IP addresses which are then notified to Eircom who is contractually bound to notify customers (identified by their IP address) that they have been detected unlawfully downloading copyright materials. Eircom was to notify customers each time they are detected in this way and on the third notification temporary restrictions are placed on that particular customer s internet connections. The Court was asked, as a consequence of the settlement in the Eircom Case, to determine compatibility of the settlement provisions with the Data Protection Acts 1988 2003 ( the Data Protection Acts ). The Irish Data Protection Commissioner set out several concerns regarding the settlement provisions in a letter. Justice Charlton held that the settlement provisions would not affect that Eircom customer s right to privacy under the Irish Constitution and would not be in breach of the terms of the Data Protection Acts. 13 In an earlier judgment in 2009, Justice Charlton also granted an order against Eircom obliging it, pursuant to the settlement agreement, to block access to The Pirate Bay website (which is a website offering file sharing software to permit users to download copyright content). 14 In that judgment Mr. Justice Charlton analysed the wording of Section 40(4) of the Irish Copyright Act. This provides that: where a person who provides facilities referred to in that subsection [40(3)] is notified by the owner of the copyright in the work concerned that those facilities are being used to infringe the copyright in that work and that person fails to remove that infringing material as soon as practicable thereafter that person shall also be liable for the infringement. 15 The Judge held at that time that the provisions of Section 40(4) must be read in light of the terms of the InfoSoc Directive and, in particular, Article 8(3) which provides that: Member States shall ensure that right holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right. Accordingly, Justice Charlton ordered that Eircom block The Pirate Bay as he was of the view that such measures were envisaged pursuant to Section 40(4) of the Irish Copyright Act. The UPC Litigation After its victory in the Eircom Case, EMI wrote to other internet service providers including UPC who is the second largest ISP in Ireland after Eircom. Eircom requested that UPC agree to a similar three strikes protocol to that signed up to by Eircom under the settlement agreement. UPC refused to agree to implement a three strikes protocol. EMI then gave UPC notice (as required under Section 40(4) of the Irish Copyright Act 16 ) of the fact that its network was being used to infringe copyright in sound recordings. Within this notification, EMI detailed user names, IP addresses and dates when users were online and downloaded files. UPC again refused to participate in a three strikes protocol arguing that it was only a mere conduit and any such a protocol would seriously undermine its customer s right to privacy. Thereafter, EMI issued proceedings against UPC seeking an injunction obliging UPC to block access to Internet sites, to disable access, to interrupt a transmission over the Internet, to divert a transmission and to cut off Internet access in controlled circumstances. ECTA, June 2011 2

The Judgment By way of preliminary argument, UPC produced expert evidence that the Dtecnet system (which Eircom proposed to use to pinpoint IP addresses) was not sufficiently accurate to operate effectively and might not always correctly identify UPC customers. Justice Charlton examined a number of technical solutions for detecting and monitoring unlawful file sharing. The primary solution put forward by EMI (the DtecNet technology) is used to search peer to peer files sharing networks on the Internet and identify copyright files being downloaded from these networks. DtecNet also downloads a copy of the file and identifies the IP address of the user who was undertaking the download. Normally such downloads will be performed using the file sharing software. EMI would provide UPC with a list of these IP addresses and EMI then expected UP to match these IP addresses to their customer data and contact customers who had been identified as downloading copyright material unlawfully. Mr. Justice Charlton rejected arguments that encryption and other methods of avoiding DtecNet would hinder the effectiveness of this system and he was, accordingly, satisfied that, based on the expert evidence before him, the Dtecnet system appeared to be most accurate means to detect unlawful file sharing over the internet. 17 The other solutions examined by the Judge were the Global File Registry and CopySense. The Global File Registry is a database of copyright files which are likely to be downloaded. The system then detects when any of these files are being searched online and the user is automatically redirected to a site where the file is lawfully available. CopySense technology, in use on campus in the University of Florida and also facilitated a variation of the three strikes policy. Although the Judge remarked on the success and potential of both systems, in his view, both solutions were still in need of further testing and development and as such he could not make an order for either system to be put in place. 18 UPC next argued that the remedy sought by EMI would infringe UPC s customers right to privacy and be a breach of citizens fundamental freedoms pursuant to the European Convention for the Protection of Human Rights. 19 Throughout the Judge s analysis of all the above technical solutions, he emphasised that they would not intrude upon the right to privacy on the internet (given that EMI could, at no time, use an IP address to identify an individual s name or address). On that basis, Mr. Justice Charlton upheld his previous decision that the three strikes protocol would not be a breach of the Irish data protection laws. 2 The Judge held that: Privacy is not infringed as the system simply reads numbers which identify the illicit nature of the transmission. Integral to that, I infer from the other evidence presented to the Court, is that a relevant computer address can also be recovered, as it is part of the transmission. There are, therefore, no privacy issues involved as no aspect of the system described involves the identification of a customer. 21 The Judge, furthermore, held that: If the response is a graduated one, as opposed to a blocking of communications merely on a basis of identifying its nature and the relevant IP number, no privacy implication arises. 22 The Judge opined that no personal data was available to EMI but rather that any resolution to the downloading activity identified at various IP addresses is achieved by the ISP (in this case UPC) addressing the matter directly with its customer. 23 Mere Conduits and Remedies The most interesting and anticipated element of the case was the examination of UPC s mere conduit defence and its defence that there was no injunctive relief of the sort sought by EMI available under Irish law. In particular UPC argued that an injunction could not be granted against it on a non-individualised basis (i.e. as regards un-quantified and unnamed customers) through an unverified, automated process. 24 ECTA, June 2011 3

UPC argued that they could not be the subject of injunctive relief in circumstances where they did not facilitate EMI s procedure for identification and notification and/or disconnection of infringers on the UPC network because they were a mere conduit for their customers and exercised no control over the communications in question. Mr. Justice Charlton rejected a solution which involved outright blocking of websites offering peer to peer file sharing software (such as The Pirate Bay) and indicated that the use of such a severe remedy would inevitably lead to the infringement on the right of communication through the Internet. 25 It is likely that the Judge had in mind here the provisions of the Intellectual Property Enforcement Directive which provides that measures, procedures and remedies for the protection of intellectual property rights shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade. 26 The Judge concluded that to block peer to peer file sharing communications ab initio on the Internet would not be proportionate to the aim of preventing copyright infringement and might stifle the right to communicate lawfully over the Internet. The Judge examined the mere conduit defence in Article 12 of the E-Commerce Directive 27 and in particular the provisions which demand that the ISP must not select or modify the information contained in the transmission. 28 The Judge acknowledged that Recital 15 of the E-Commerce Directive provided that no monitoring obligations should be imposed on an ISP. However, the Judge held, without elaboration, that this Recital was irrelevant to the issues arising in the case in hand. The Judge did agree that UPC was a mere conduit and explained his reasoning as follows, with particular emphasis on the function of the deep packet inspection technology used by UPC: the technical processes involved in stop and start, in terms of ordering the packets of information and their transmission, and their analysis by deep package inspection is not the modification or selection of any information. Tacking on an advertisement to a transmission, or modifying it so that some of it is lost, as opposed to being transmitted slowly, would disable the mere conduit defence. 29 The Judge went on to explain that deep packet inspection technology was used merely to aid the proper transmission of data over the network rather than to facilitate a general search of information. The fact that UPC could, in theory, identify file numbers for copyright works and divert searches for those works to legal sites, was merely a normal use of deep packet inspection technology which did not result in a selection or modification of the data transmitted by UPC (according to the Judge). The decision therefore acknowledges that automatic functions are necessary to operate an internet service and distinguishes between those functions which are necessary for a basic service and those which are tacked on to added value internet services (e.g. sponsored advertising services). Accordingly, the mere conduit defence did present a genuine threat to the EMI case and the remedies sought. 3 However, the Judge held that by reason of Recital 45 of the E- Commerce Directive, the mere conduit defence did not prevent him from ordering injunctive relief against an ISP. Recital 45 of the E-Commerce Directive provides that: The limitations of the liability of intermediary service providers established in this Directive do not affect the possibility of injunctions of different kinds; such injunctions can in particular consist of orders by courts or administrative authorities requiring the termination or prevention (emphasis added) of any infringement, including the removal of illegal information or the disabling of access to it. 31 The Judge then examined the relevant legislation for the purposes of considering the Plaintiff s request for an order forcing UPC to implement a three strikes policy which would result in a customer s internet connection being disconnect for repeat offences. ECTA, June 2011 4

The Judge was satisfied that the wording of Section 40(4) of the Irish Copyright Act did not contain language which was as broad as that of the E-Commerce Directive (above) which anticipates that authorities could order the termination or prevention of infringement. The Irish Copyright Act merely provides that any person providing the facilities for infringement, who fails to remove that infringing material upon request, may be liable as an infringer himself. 32 The language of Section 40(4) of the Copyright Act anticipated that infringing materials should be removed, where they are being made available, by the person who has provided the facilities for such making available. By reason of the expert evidence in the case an, the Judge was convinced that content available over the Internet could not be removed by an ISP unless that provider had access to the server or hard drive from which the originating material was communicated. Accordingly, the Judge concluded that the Irish Copyright Act did not provide for the relief sought by EMI, namely the injunction forcing UPC to either disconnect customers where they continually download or an order forcing UPC to block the particular websites which offer file sharing facilities. By reaching this conclusion the Judge was directly reversing his earlier decision in EMI v Eircom 33 where he held that an order to block The Pirate Bay was permissible under Irish law. The judgment demonstrates clear favour for the adoption of a legislative solution to the problems presented in the UPC case. The judgment sends a clear message that Irish legislation does not currently provide a satisfactory remedy for rightsholders as against online infringers and the Court was unwilling to fill the gaps in this legislation. Conclusions The Irish government is now facing pressure from the recording and music industry in Ireland and abroad and this will continue if it does not take action in relation to the perceived lacuna in the Irish law. The Director General of IRMA (The Irish Music Rights Association), Dick Doyle, has said in a press statement that IRMA reserves its right to seek compensation for the past and continuing losses from the State. 34 However, the government has said little on plans for rushed legislation. It is possible that the government may await the outcome of the current judicial review of the Digital Economy Act in the UK before taking any definitive action in relation to this matter. However, such hesitation will not prevent the Irish ISPs from eventually taking a similar challenge to any future Irish legislation introduced to deal with this problem of internet piracy. Irish legislation does not currently provide for any effective remedy requiring ISPs to block websites or restrict their customer s internet connection in a proportionate manner (or otherwise). The ISP is therefore currently shielded from any obligation to take action against internet piracy (except in circumstances where it has entered into a private agreement with the rightsholder as Eircom has done). Sally-Anne Hinfey DFMG Solicitors Embassy House Ballsbridge, Dublin 4 Ireland Tel: +353 1 637 6600 Fax: + 353 1 637 6601 E-mail: shinfey@dfmgsolicitors.ie Internet: www.dfmgsolicitors.ie ECTA, June 2011 5

1 Sally-Anne Hinfey (BCL, PhD) is a law graduate with a PhD from University College Dublin which involved research in copyright and competition law. Sally-Anne is an Associate Solicitor with DFMG Solicitors in Dublin, Ireland. Sally-Anne advises on all aspects of intellectual property to include trade marks, designs, patents and copyright. She is also a registered trade mark agent and European trade mark and design attorney. For further discussion of this topic please also see the authors article: Blocking progress: the Irish High Court decision in EMI v UPC, JIPLP 10th May 2011 (10.1093/jiplp/JPR049) 2 EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Court Case No. 2009/5472P, Unreported decision of Mr. Justice Charlton on 11 th of October 2010) 3 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, Article 12 4 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society 5 Copyright and Related Rights Act, 2000, Part II, Chapter 4, Section 40(3) 6 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, Article 12 7 Ibid, Article 12(1)(a) 8 Ibid, Article 12(1)(b) 9 Ibid, Article 12(1)(c) 1 S.I. No. 68/2003 European Communities (Directive 2000/31/Ec) Regulations 2003 11 EMI Records (Ireland) Limited v Eircom Limited (High Court Case No. 2008/1601P) 12 ibid 13 EMI Records (Ireland) Limited v Eircom Limited [2010] IEHC 108 14 EMI (Ireland) Limited v Eircom Plc [2009] IEHC 411 15 Copyright and Related Rights Act 2000, Part II, Chapter 2, Section 40(4) 16 Copyright and Related Rights Act, Part II, Chapter 2, Section 40(4) 17 EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Court Case No. 2009/5472P, Unreported decision of Mr. Justice Charlton on 11 th of October 2010), p.18 18 Ibid, p.20 19 See: The new Telecommunications Package has now been enshrined in two directives: Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 amending Directive 2002/22/EC on universal service and users rights relating to electronic communications networks and services, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws AND Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009 amending Directives 2002/21/EC on a common regulatory framework for electronic communications networks and services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorisation of electronic communications networks and services. 2 EMI Records (Ireland) Limited v Eircom Limited [2010] IEHC 108 21 Ibid, p.19 ECTA, June 2011 6

22 EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Court Case No. 2009/5472P, Unreported decision of Mr. Justice Charlton on 11 th of October 2010), p.35 23 Ibid, p.32 24 EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Court Case No. 2009/5472P, Unreported decision of Mr. Justice Charlton on 11 th of October 2010), p.41 25 EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Court Case No. 2009/5472P, Unreported decision of Mr. Justice Charlton on 11 th of October 2010), p. 15 26 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, Article 3(2) 27 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market. 28 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, Article 12(1)(c). 29 EMI Records (Ireland) Limited, Sony Music Entertainment Ireland Limited, Universal Music Ireland Limited, Court Case No. 2009/5472P, Unreported decision of Mr. Justice Charlton on 11 th of October 2010), p. 57 3 Ibid, p. 61 31 Ibid, Recital 45 32 Copyright and Related Rights Act, 2000, Part II, Chapter 4, Section 40(4) 33 EMI (Ireland) Limited v Eircom Plc [2009] IEHC 411 34 See: http://irma.ie/breaking_news.htm ECTA, June 2011 7