All clear, but too late? CJEU rules on online platform liability for copyrighted content (pre-DSM)

Decisions of Europe’s highest court are often eagerly awaited. The CJEU’s latest judgment on copyright liability of online platforms, however, certainly ranks among the most anticipated decisions of the last decade. The responsibility of online platforms for content uploaded by their users (also referred to as UGC, short for user generated content) is increasingly the subject of passionate public debate – be it in the context of new legislation, such as the ongoing drafting of the EU’s Digital Services Act (see our dedicated topic center on the DSA here), and the Digital Single Market Directive (see our previous blog on the DSM here), or in court proceedings. This latest landmark ruling will surely take its place in the CJEU hall of fame.

Background and previous CJEU case-law

The CJEU was tasked to decide in joined cases (C-682/18 and C-683/18) whether video-sharing and sharehosting platforms can be held directly liable for making available copyright infringing content uploaded by their users.

The cases started in Germany a long time ago, in 2009 and 2014. In both cases, the platform operators generally prohibited the upload of infringing material and were not aware of the illegal nature of the contested content when it was uploaded.

So while the facts sound rather simple, the German courts had diverging opinions. The appellate courts eventually ruled that only the uploading users can be held primarily liable for copyright infringement, whereas the platforms were merely liable to cease and desist under a special German form of secondary liability (so-called Störerhaftung).

In the meantime, however, the CJEU’s case-law on copyright in the online sphere evolved further: in Filmspeler (C-527/15) and The Pirate Bay (C-610/15), the CJEU held that intermediaries can be primarily liable, too, when they play an essential role in making infringing content available. As a result, the primary liability for disseminating infringing content online was expanded significantly, with unclear boundaries.

Yet both Filmspeler and The Pirate Bay concerned services that were clearly designed to be used for the access to, and dissemination of, copyright infringing content. The German Federal Court of Justice (Bundesgerichtshof) therefore struggled to fully apply their ratio to lawful business models involving video-sharing and sharehosting in general, and referred corresponding questions to the CJEU.

The CJEU’s decision

The CJEU took its time – two and half years – but has now issued a decision that provides legal clarity while keeping in line with the court’s prior case-law. Regarding primary liability for making available copyright infringing content, the court found the following:

• Online platforms may primarily liable only if they act in “full knowledge” with regard to the dissemination of illegal content through their services. This has to be assessed on the basis of all relevant factors. General knowledge of protected content being uploaded to the platform does not trigger liability.
• A platform does not have “full knowledge” when it credibly and effectively takes measures to counter copyright infringements, such as implementing appropriate technological measures, prohibiting infringing content in T&Cs, or suspending repeat infringers. So the more steps a platform takes to ensure compliance, the less likely it is to be found primarily liable.
• Indexing, ranking and categorizing of (illegal) content do not trigger primary liability, nor does generating revenue with such content.

The Court also had to address the hosting privilege of Article 14 e-Commerce Directive. It ruled as follows on the question of which activities result in a platform losing the hosting privilege:

• If a platform is found primarily liable due to having “full knowledge”, it cannot benefit from the hosting privilege.
• A platform enjoys said the hosting privilege until it obtains actual knowledge of the specific illegal content. The platform does not have such knowledge just because it is indexing, ranking and categorizing content.
• Own-initiative (“good Samaritan”) investigations of a platform against illegal content do not result in its forfeiture of the hosting privilege. But if the platform does find clear illegal content, it must act on this knowledge.

Finally, the CJEU had the opportunity to decide whether German Störerhaftung as developed by the German Federal Court of Justice is compatible with EU law. The concept of Störerhaftung effectively entails that right holders cannot seek an injunction against an intermediary without first requesting that intermediary to take down the infringing content – in which the German court saw a conflict with Article 8(3) InfoSoc-Directive. Several commentators have already predicted the end of the Störerhaftung for this very reason. Yet the CJEU did not share these concerns. On the contrary, it found that Störerhaftung is particularly suited to achieve a fair balance of interests and to avoid general monitoring.

Outlook and relevance after Article 17 DSM-Directive

Some of this guidance arguably comes too late: EU lawmakers have meanwhile already addressed these liability questions in the highly debated Article 17 DSM-Directive. This provision sets out that certain online platforms shall be directly liable for making available copyrighted content uploaded by their users. To avoid liability, operators must (a) obtain prior authorization from right holders the copyrighted content shared on their platform, and (b) take preventive measures against any content not covered by an authorization. The Member States are currently implementing this system into their national copyright laws (for Germany, see our blog here).

Still, the CJEU’s judgment remains highly valuable for several reasons. First of all, its remarks on platform due diligence against infringing content may have an impact on what courts will consider “best efforts” under the new regime of Article 17 DSM-Directive. Second, Article 17 DSM-Directive does not cover all online platforms; some platforms, like online marketplaces, are explicitly excluded from its scope. For these platforms, the InfoSoc-Directive and the CJEU’s ruling remain good law. Third, the judgment provides much needed clarity for the application of the hosting privilege, which is relevant for all illegal content beyond copyright infringements and which looks set to be adopted essentially unchanged under Article 5 of the upcoming Digital Services Act. And fourth, the judgment remains particularly relevant for platform liability under German law, since it has endowed the concept of Störerhaftung with renewed legitimacy.

Some parts of the judgment will certainly fuel the ongoing debate about the Digital Services Act, the next big leap of EU lawmakers for regulating the Internet. Stay tuned for our updates on the DSA and take a look at our dedicated topic center.

Authored by Anthonia Ghalamkarizadeh and Florian Richter