A link too far: CJEU rules that sale equals communication and streaming from unlawful sources is illegal (C-527/15, Filmspeler)
By Bernd Justin Jütte
In its judgment on 26 April the CJEU extends the scope of the right of communication to the public under Article 3 of the Information Society Directive (Directive 2001/29/EC), which grants a right holder the exclusive right to communicate a work or a related right to the public, to cover the sale of devices which contain pre-installed software that provides its users with links to unlawful streaming content. It further found that viewing such content is not privileged by the exception of Article 5(1) for temporary reproduction of the same directive, thereby rendering the provision as well as the streaming of unlawful content illegal, and thus increasing the circle of persons who can be held liable.
The defendant in the proceedings in this case was selling a device in the Netherlands, the Filmspeler, which can be connected to a television screen. The device contains pre-installed open-source software and add-ons which include links to websites that offer hyperlinks to streaming content, which is made available without the consent of the copyright holders. In this way, purchasers of the Filmspeler can access, freely and easily, unlawful streaming content, which is a characteristic of the device the defendant, Mr Wullems, actively advertises. The claimant is a foundation that protects the interests of copyright holders. It alleges that by selling the Filmspeler the defendant makes an act of communication to the public under Article 3 of the Information Society Directive (InfoSoc Directive) as implemented into Dutch law, which requires authorisation from the right holder. The defendant argued that streaming, even from an unlawful source, was covered by the exceptions for temporary reproductions under Article 5(1) InfoSoc Directive.
By its first two questions, the referring court, the Rechtbank Midden-Nederland (District Court, Midden-Nederland, Netherlands), asks in essence whether the selling of a device such as the Filmspeler, which includes pre-installed software containing links to streaming websites with unlawful content, constitutes an act of communication to the public within the meaning of Article 3 InfoSoc Directive, and whether this assessment is influenced by the fact that:
- the works have not been previously published or only through authorised subscriptions services;
- the add-ons containing the hyperlinks are freely available and can be installed by the users themselves;
- the unlawful content is accessible without the Filmspeler.
The second set of questions inquires whether the streaming of content that has been made available without the consent of a right holder constitutes an “unlawful use” within the meaning of Article 5(1)(b) of the InfoSoc Directive and whether such uses of works fall foul of the three-step test of Article 5(5).
As a general rule, the communication of a work to the public under Article 3 InfoSoc Directive requires that the right holder of the work that is communicated authorizes this act. In certain instances, many of which are listed in Article 5, such authorization is not necessary. A communication to the public which is not authorized by the right holder, or which is not covered by an exception infringes and creates liability. Furthermore, temporary reproductions made in the course of such a communication, be that on a server or on a device of an end user, also require authorization – again, unless covered by an exception.
Communication to the Public
Article 3 InfoSoc Directive has already produced a number of preliminary references (Rafael Hoteles, Del Corso, Svensson, BestWater, Reha Training, GS Media), which can be considered as some of the more controversial rulings of the CJEU in copyright matters. The CJEU has established a set of criteria that have to be taken into consideration when a national court assesses whether an act of communication to the public has taken place. Most recently, the Court restated these criteria in GS Media (reported on this Blog). Pursuant to established jurisprudence an act that requires authorization under Article 3 Directive 2001/29/EC Directive is composed of two elements: an act of communication, which is directed towards a ‘new’ public.
In Filmspeler, the Court summarizes the applicable criteria and stresses that the “concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, requires an individual assessment“ (para. 28) and that such assessment must take into consideration “several complementary criteria, which are not autonomous and are interdependent.” (para. 30) It highlights amongst the criteria the “essential role played by the user” who makes such communication by an intervention “in full knowledge of the consequences” (para. 31).
It further clarifies that a ‘public’ refers to an indeterminate number of people (para. 32) and that a public is ‘new’ if that communication is made using technical means different from those used in a previous communication; or, alternatively, that the communication is made to an audience which has not been taken into account when the original act of communication was authorized by the right holder (para. 33). Finally, a court must take into consideration whether the communication was made for profit (para. 34). Having established and summarized these criteria, the Court goes on to analyse each of them in turn.
Pursuant to Article 3(1) InfoSoc Directive the right of communication to the public includes “any communication to the public of their works, by wire or wireless means” which includes “the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.” It was ruled in Svensson and confirmed in BestWater that hyperlinking constitutes such an act which makes works accessible to users. Such a function, so the Court, is already provided by the device offered for sale by Mr Wullems (para. 38), and this function goes beyond the mere provision of physical facilities (cf. Recital 27; e.g. the mere provision of hardware without pre-installed software: in Rafael Hoteles the Court held that TV sets installed in hotel rooms, to which a television signal was communicated, goes beyond the mere provision of physical facilities because it made access to broadcasts possible, para. 46).
With reference to the AG’s Opinion (paras 53-54) the judgment underlines that without the knowing intervention of Mr Wullems, who pre-installed add-ons containing hyperlinks on the Filmspeler which make it easier for users to access protected works, users would have difficulties locating the linked websites on the Internet (para. 41). This communication by way of the pre-installed software is already directed towards a ‘new’ public. The Filmspeler was purchased by a large number of individuals and, in any case, the communication would extend to all persons with Internet connection who could have acquired the device (para. 45).
It is then also relatively clear, considering the recent ruling in GS Media, that this communication is also one directed to a new public. As a reminder, in that case the Court had ruled that links directing to content, which has been uploaded with the consent of the right holder, do constitute a communication, but not to a new public. However, when links direct the user to content, which has been made available without the right holder’s consent, this constitutes a communication to the public (see GS Media, paras 42-43). For commercial operators, the Court specified in GS Media, a rebuttable presumption exists that the poster of a hyperlink acts in full knowledge of the illegal nature of the content to which the link directs. This means that, unless rebutted, Mr Wullems exercises an act of communication to the public by offering for sale his Filmspeler device and installing on it software that contains links which, as he is fully aware of, lead the user to illegally uploaded content (paras 50-51).
Streaming from Unlawful Sources
The second important issue the Filmspeler case raises is that of the legality of online streaming. As explained above, Article 5(1) InfoSoc Directive exempts users from liability for certain temporary acts of reproductions that fulfil a set of criteria. In this case the referring courts asked whether temporary reproductions made on the Filmspeler in the course of online streaming fall under the exception of Articles 5(1) and further comply with the conditions o the three-step test in Article 5(5). The cumulative conditions of Article 5(1) exempt such acts of reproduction that are (1) temporary, (2) transient or incidental, (3) integral and essential parts of a technological process, (4) that have the sole purpose of enabling a transmission in a network between third parties by an intermediary or a lawful use of a work or protected subject matter, and (5) that do not have any independent economic significance (para. 61).
The exceptions of Article 5 InfoSoc Directive, as derogations from the general rule that reproductions require authorisation, must be interpreted strictly (Infopaq II, paras 56-57, FAPL/Murphy, para. 162, PRCA, para. 23). According to the Court, this is supported by an interpretation of the exceptions in light of Article 5(5), which mandates that exceptions must only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject matter and which do not unreasonably prejudice the legitimate interests of the right older. In Filmspeler, the Court focuses solely on the second option of the fourth criterion of Article 5(1), which requires that a temporary reproduction is necessary for a lawful use. Lawful is a use that is authorised by the right holder or that is not restricted by the applicable legislation (see Recital 33 InfoSoc Directive, cf. para. 65).
As opposed to FAPL/Murphy (paras 170-172) and Infopaq II (paras 44-45) where the Court found that temporary acts in satellite decoders, on TV screens and for the purpose of drafting summaries of newspaper articles satisfy the conditions of Article 5(1), the Court comes to a different conclusion in Filmspeler. Because, as it had argued already in the context of the first two questions, the reproductions were necessary to enable access to unauthorised offers of protected works, for which the device was explicitly advertised, the exception could not apply. Neither would such reproductions fulfil the criteria of the three-step test of Article 5(5) as, failing at least one of the steps, the Filmspeler would adversely affect the exploitation of the works in the course of legal streaming offers. Accordingly, the streaming from websites which offer works without the consent of the respective right holders are not covered by the exception of Article 5(1) InfoSoc Directive.
The judgement in Filmspeler is an important one (see also The IPKat), and this is for two reasons. First, the CJEU further extends the scope of Article 3’s right of communication to the public to the sale of devices that contain software with hyperlinks. It also makes clear that the criteria established in preceding case-law are mere guidelines which interrelate and have to be discussed against the background of the respective facts of each individual case. This does not provide for much legal certainty particularly now because pursuant to Filmspeler even the sale of devices containing software linking to unlawfully uploaded content can constitute an act of communication to the public if the seller knows about the infringing nature of these links. There is much to be said about the fact that the sale of such devices seems ‘wrong’, but this must not necessarily be a prohibited act under Article 3 InfoSoc Directive. In other words, similar legal effects of the extension of the notion of ‘communication to the public’ could be achieved through different means outside the law of copyright, or possibly through different mechanisms within. Redress for injured parties could, for example, be sought directly from those who unlawfully upload and link to unlawful content, although this might be difficult or burdensome; or through injunctions against intermediaries who would be required to block access to such content (an argument unsuccessfully made by AG Wathelet in GS Media, paras 80-87).
Second, after having ruled in ACI Adam (see Quintais/de Leeuw) that downloading from unlawful sources amounts to copyright infringement, the Court now has decided that streaming from unlawful sources also violates the right of reproduction without being covered by an exception under Article 5. Whereas in ACI Adam the private use exception of Article 5(2)(b) for permanent reproduction failed to apply (although the exception does not expressly refer to lawful uses), in Filmspeler the Court rules that the exception for temporary reproductions would also fail to apply. In an argument that paralleled the reasoning in ACI Adam, the Court refuses the application of the exception under Article 5(1) when the user was fully aware that the source for streamed content is an unlawful one. This makes sense, also in light of the application of the three step-test, considering that unlawful streams can have a negative impact on the economic exploitability of lawful offers for the same content and thereby adversely affect the normal exploitation of those works (see also ACI Adam, paras 38-39). What is not entirely clear, though, is whether the user must have knowledge of the infringing nature of the content made available for streaming and whether a rebuttable assumption similar to that established in GS Media for hyperlinking exists.
This judgement is likely to create mixed feeling among the IP community. Whereas the finding that streaming from unlawful sources might be welcomed as a reasonable continuation of the Court’s jurisprudence, the further extension of the scope of Article 3 is likely to produce criticism. The outcome of this extension might still be subject to argument, but what is certainly confusing is the analysis the Court has developed to identify acts of communication to the public. This multi-factor test, in which the individual criteria are considered more or less liberally, does nothing to provide legal certainty. The subjective element introduced by GS Media and now confirmed in Filmspeler further adds to the already rather confusing construction of the right to communication to the public.
Whereas the practical consequence of this wide interpretation of Article 3 might be limited to such exotic devices as the Filmspeler (which is no longer available pursuant to the judgement of the CJEU), the ruling is upsetting the widely held belief that watching streams from unlawful sources is not illegal (a position argued, amongst other, by the Commission, see the AG’s Opinion in Filmspeler, paras 38-39). The remarkable impact of the judgement is that it renders the provision as well as the use of illegal streaming services unlawful. This increases the circle of persons who can be held liable and further increases the number of targets for predatory litigation. This might prove to be a new fertile hunting ground for (especially German) aggressive lawyers for enforcing the copyright of their clients against individual users of all sorts of streaming websites. However, some of the motivations for the use of unlawful streaming sites might disappear with the likely adoption of directive on the portability of online content across borders.