Video Sharing Websites – Another Defeat

After the decision against YouTube in 2009, the Court of Milan has now issued a decision to the benefit of R.T.I., the television arm of the Italian Mediaset group, (again!) in a dispute against Italia On Line, a company that manages the website http://www.video.libero.it/ where users can upload videos (as occurs on YouTube) since apparently some of these video reproduce R.T.I.’s TV programs and therefore are in breach of their copyrights.

Interestingly, the Court – after having mentioned the liability exemption for hosting providers and the prohibition to oblige Internet Service Providers to monitor the contents published by users on their websites prescribed by the Legislative Decree 70/2003 implementing the EU E-Commerce Directive 2000/31 in Italy – adds some new concepts.

The view of the Court is that the EU E-Commerce Directive is out-of-date as it does not consider the case when the hosting provider is not merely “passive” and “neutral with respect to the organization of the management of the contents published by the users” but is “active” in the management of such contents from whose advertising exploitation it gains profits.

According to the Court, Italia On Line would be an active hosting provider as:

• it implemented a system allowing the publication of advertising materials in connection with the display of videos corresponding to specific keywords purchased by advertisers;
• the licence granted by users to Italia On Line in relation to the videos uploaded by users grants to the video sharing website very broad rights on the videos that go beyond the mere display of videos;
• it has implemented a notice and take down system allowing the removal of potentially unlawful videos following a notification of users which would be the evidence that Italia On Line undertakes to monitor the published contents even if only after their publication;
• it adopted a search engine allowing the identification by users of videos indexed on the basis of keywords; and
• finally it would have uploaded itself some videos on the website breaching R.T.I.’s rights.

The number of services provided by Italia On Line mentioned above would qualify it as an “active hosting provider” and according to the Court the protection granted by the EU E-Commerce Directive would not be applicable to this kind of entities as they are framed only to regulate “passive” hosting providers which would be entities merely providing a web space on the Internet where users can publish their contents.

The “active” hosting providers would not be obliged to monitor the users’ videos prior to their publication as this would be impossible, but they have to adopt measures when they receive a notice from right holders and are obliged to notify to the competent authorities the unlawful contents published on their website.For this purpose, a notice from a party alleging to be a right holder and merely mentioning the types of programs infringing its rights would be sufficient to trigger an obligation to control and likely remove the infringing videos.

This decision is likely to lead to considerable discussions because even if it reproduces some of the concepts already covered in the YouTube case, it seems to go beyond and to exclude the applicability of the principles of the E-Commerce Directive to any operator offering search, advertising and any management services with reference to the contents published by users. Since this category of operators is likely to include almost all the Internet Service Providers hosting user generated contents, it will be interesting to see what the consequences of this decision will be.

Finally, the same notice and take down procedure criticised by the Court seems to recall the procedure that the Italian Communications Authority is likely to introduce shortly and it will be interesting to see how the contents of this decision are aligned to the measures to be implemented by the Italian Communications Authority.We will follow the side-effects of this decision very closely and as usual if you need further information on the above feel free to contact me, Giulio Coraggio.