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Jeffery J. Daar, Daar & Newman, Los Angeles

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1 What Consulegis Members Should Know About the Liability of Internet Service Providers (“ISPs”)
Jeffery J. Daar, Daar & Newman, Los Angeles Helmut Redeker, Heinle, Baden, Redeker & Partner GbR, Bonn Julian Cockain-Barère, Morvilliers Sentenac, Toulouse David Weiguo, D&S Law Firm, Guangzhou Eduardo E. Represas, Brons & Salas Abogados, Buenos Aires Cassandra Ching, Meister, Seelig & Fein LLP, New York Hamish Rotstein, Rotstein Lockwood Reddy, Melbourne

2 The Internet Is Now Everywhere In Our Society
Business deals and transactions are done on the internet Personal contacts Games Political Activity

3 Virtually All Aspects of Legal Issues
Can Now Be Involved With the Internet Torts such as defamation Crime, including fraud Copyright infringement Trademark infringement.

4 What is an ISP? Internet Service Providers (or “ISPs”) provide internet access service typically in exchange for fees ISPs may store data for their customers’ use ISPs may provide processing services, such as search services, chats, forms, payments, marketing and design services

5 As technology develops, the term “ISP” further involves an increasing convergence of communication and content in digital markets, including peer-to-peer networks

6 For this presentation, the term “ISP” will include all sorts of online intermediaries that facilitate internet communication, such as traditional telephone companies, mobile phone companies, backbone providers and cable companies

7 ISP Liability The panel will address ISP liability in different parts of the world The panel will also explore ISP liability for the activities of ISP customers Does ISP liability require awareness or is ignorance sufficient? Remedies that may be available against ISPs

8 The panel will also explore:
The balance of rights of ISPs and the rights of consumers Free speech issues

9 A Professional Law Corporation
Jeffery J. Daar Admitted in California, 1982 University of California at Davis, J.D., 1982 Claremont McKenna College, B.A., 1979 Positions include: - Principal of Daar & Newman, P.C. - Chairperson, Consulegis Intellectual Property, Entertainment Law and Information Technology Specialist Group - Immediate Past Chair, International Law Section of the Los Angeles County Bar Association - Programs Chair and member of Executive Committee, International Law Section, State Bar of California - Chairperson, City of Los Angeles Rent Adjustment Commission International Litigation and Arbitration track record for more than 20 years Contact: Daar & Newman, A Professional Law Corporation 21700 Oxnard Street, Suite 350 Woodland Hills, California, USA Tel: 818/ Fax: 818/ 9

10 Dr. Helmut Redeker Rechtsanwalt Specialist attorney for IT-Law
Liability of Internet Service Providers in Germany Dr. Helmut Redeker Rechtsanwalt Specialist attorney for IT-Law

11 Introduction Mainly two different claims: Statutes
Claims for an injunction Claims for damages Statutes Section 97 Copyright Act (UrhG) Section 14 Trademark Act (MarkenG) Section 1004 Civil Code (BGB) (Injunction) Section 823 Civil Code (BGB) (Damages)

12 Introduction There is a special act concerning Internet Services, the telemedia act (TMG). Section 7 para. 2 TMG: A provider of telemedia services is not obliged to monitor the information which he transmits or stores to seek facts or circumstances indicating illegal activity.

13 Introduction Section 9 – 11 TMG: Liability rules for different providers The telemedia act is based on the EU-Directive on electronic commerce (Directive 2000/31/EC of the European Parliament and of the Council). Art. 15 E-Commerce directive = Section 7 TMG

14 Claims for Injunction According to settled case law the telemedia act is not applicable to claims for injunction. A person or firm injured can get a cease and desist order, if the service provider stores illegal content in his web presence or do not monitor the content stored by his users although he has to. He has to monitor the content if there has been an similar infringement before and there are reasonable tools to monitor.

15 Claims for Injunction The settled case law seems to differ from the European Directive. But the Federal Court of Justice (BGH) has not presented this question to the European Court of Justice.

16 Claims for Injunction Examples: Online auction websites:
BGH, , I ZR 304/01: If there has been a trademark infringement known to the provider, the provider must monitor his presence for similar infringements (e.g. by using filters) hereafter. BGH, , I ZR 139/08: The provider is not obliged to monitor the content of his presence manually.

17 Claims for Injunction You tube: LG (Regional Court) Hamburg, , 308 O 27/09: You tube is liable for the content stored by its users because this content has to be treated as You Tube´s own content. A regular user does not know that the content of You Tube is mainly stored by the users.

18 Claims for Injunction Internet forums: BGH, , VI ZR 101/06 : An internet forum provider may be liable for the content posted by users. There is no decision of the BGH concerning monitoring the content. But: There is no filter for insults or defamations. OLG Hamburg, , 7 U 50/06: A publisher who provides an internet forum has to monitor the user generated content manually, if he has published a harsh (but legal) critic provoking insults.

19 Claims for Injunction The decision of the OLG Hamburg is arguable, especially for constitutional reasons (freedom of speech; Art. 5 GG) Freedom of speech is important in this context: BGH, – VI ZR 196/08 („Spick mich“). „Spick mich“ is a internet platform on which students can grade their teachers. Freedom of speech makes this possible.

20 Claims for Injunction Google adwords: Google is a service by Google. You can book a word and your advertisement is placed near the first search results if a internet user searches using this word (keyword advertisement). Does Google have to check whether your „adword“ could cause a trademark infingement? BGH, – I ZR 139/07: This is not the case, if you use a descriptive word not completely identical with the registered trademark and the commercial character of the advertisement is transparent. There are many questions to be answered in this field.

21 Claims for damages There are only rare decisions concerning claims for damages. The Telemedia Act is applicable on such claims.

22 Claims for damages Access Providers are not liable for contents they transmit, if they do not initiate the transmission does not select the receiver of the transmission; and does not select or modify the information contained in the transmission. (Section 8 para. 1 TMG)

23 Claims for damages Host providers are not liable for user generated content, if the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the activity or information is apparent; or the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information. Section 10 TMG

24 Claims for damages Section 10 ist apllicable to Google Adword Service according to a decision of the European Court of Justice ( Rs. C 236/08; 237/08; 238/08). The Telemedia Act is not applicable for links.

25 Thank you Dr. Helmut Redeker Rechtsanwälte Heinle, Felsch, Baden, Redeker und Partner GbR Koblenzer Str. 99 – 103, Bonn Telefon: Telefax: Internet:



28 1. LEGAL FRAMEWORK The Law of 21 June 2004 promoting Confidence in the Digital Economy (“Loi pour la Confiance dans l’Economie Numérique” or “LCEN”) The HADOPI Law of 12 June 2009 or the Creation and Internet Law (“Loi favorisant la diffusion et la protection de la création sur internet” or “Loi Création et Internet”) The Law of 6 January 1978 relating to Data Processing, Data Files and Individual Liberties (“Loi relative à l'informatique, aux fichiers et aux libertés” or “Loi informatique et libertés de 1978”)

29 The LCEN of 21 June 2004 makes a distinction between two kinds of internet service providers:
“the access providers” - persons whose activity is to provide someone with access to internet services; “the host providers” - persons who provide, even free of charge, storage of signals, written material, images, sound or messages of any nature provided by internet service users.

No general obligation of supervisory (Art. 6-I-7 LCEN)‏ TGI Paris, 22 September 2009, Omar et Fred v. YouTube : Art expressly releases the host provider of any obligation to carry out pro-active searches in order to identify unlawful content on user's site Special obligation of vigilance (Art. 6-I-7 al.3 LCEN) Obligation to inform the public authorities of content that is manifestly unlawful (inciting racial hatred, child pornography, violence, violation of human dignity)‏

31 Obligation of identification and conservation of data (Art. 6-II LCEN)
TGI Paris, ord. réf., 13 April 2010, Hervé G. v. Facebook France (first condemnation in France of Facebook as host provider): the Tribunal ordered, subject to 500 € daily penalty, communication of data permitting identification of the creator of the Facebook page “Running naked in a church chasing the Bishop” as well as the data permitting the identification of the authors of the comments appearing on the page Decree of 25 February 2011 relating to conservation of data: detailed specification of what should be conserved pursuant to Art. 6-II of LCEN

Obligation to inform of the existence and to propose to the internet service subscribers (Art. 6-I-1 LCEN, modified by the HADOPI Law) : Technical systems permitting restricted access to certain services; Security systems permitting prevention of copyright infringement.

Principle : no civil or criminal liability for host providers (art.6-I-2 et 3 LCEN)‏ the liability of access providers is governed by the same rules as those applying to their host activities (blogs, personal pages, site creation etc.)‏ Exception to non-liability principle : the host provider may be liable if : it is informed of illegal content on a website; and it does not intervene promptly to withdraw or prevent access to such illegal content.

34 The LCEN provides for presumption of liability by a two step notification mechanism (Art. 6-I-5 LCEN) : notification of illegal content to the host provider with formal notice to promptly withdraw such content; evidence of failure of the host provider to promptly withdraw the content.

35 Cass. 17 February 2011, Amen v. K. : stated that the notification had to contain all the information specified in Article 6-I-5 of the LCEN and that non-compliance resulted in the invalidity of the notification and absence of liability for the host provider CA Paris, 4 février 2011, Google France et Inc. v. : as soon as the host provider receives notification of the works giving rise to the infringement, it must take necessary measures to ensure withdrawal and to ensure that they are not put back on-line

Creation of a new governmental agency: High Authority for the Transmission of Creative Works and Copyright Protection on the Internet (“Haute Autorité pour la Diffusion des Œuvres et la Protection des Droits sur Internet” or “HADOPI”) Introduction of the “Three Strikes” procedure, leading to eventual suspension of infringing user's access to the internet

37 2.1 First Strike An message is sent, known as a “recommendation”, to the offending internet access subscriber, derived from the IP address involved in the claim The ISP is then required to monitor the access subscriber's internet connection who is also invited to install a filter on his internet connection If, in the 6 months following the first step, a repeated offence is suspected by either the copyright owner, its representative, the ISP or HADOPI, the second step of the procedure may be invoked

38 2.2 Second Strike A registered letter is sent to the offending internet access subscriber with similar content to the original message In the event that the offender fails to comply during the year following the reception of the registered letter, and upon accusation of repeated offences by the copyright owner to a representative of the ISP or HADOPI, the third step of the procedure may be invoked

39 2.3 Third Strike Upon application, the Court may : Authorise the ISP to suspend the internet access of the offending internet connection for a specified period of up one year, with the prohibition to subscribe to another access provider (suspension does not affect the other services : phone, TV);‏ Fine up to € 300,000; Prison up to 3 years.

3. CURRENT JURISPRUDENCE 3.1 QUALIFICATION OF HOST PROVIDER Question : according to which criteria may Web 2.0 operators (Wiki’s, E-commerce platforms, video sharing platforms…) be considered as host providers and benefit from specific status provided by LCEN?

41 GOOGLE ADWORDS - ECJ, 23 March 2010 : the European Court of Justice has examined the relevant criteria to determine whether a Web 2.0 provider may be qualified as a host provider within the meaning of Directive 2000/31/EC. Indifferent Criteria Paying services Advertising Structure of the website Services offered Relevant Criteria Effective activity Passivity

42 EBAY - CA Paris, 3 September 2010 (Ebay v
EBAY - CA Paris, 3 September 2010 (Ebay v. Louis Vuitton Malletier) : refusal to recognise Ebay as a host provider in view of its “active intervention in the assistance, follow-up and promotion of sales” DAILYMOTION - Cass. 1ère Civ. 17 February 2011 (Nord-Ouest Production et UGC v. Dailymotion) : recognition of an on-line video platform as host provider

43 CONCLUSION : Web 2.0 operators are not liable under the LCEN if they: do not select the content that is put on-line; do not exercise any choice regarding the content that the subscriber intends to put on-line; do not determine or check the content of the site.

44 The notion of “active role” is used to determine whether the provider benefits from the protection of the “no liability” principle under the LCEN or is treated as an editor and therefore subject to the general rules of law (“droit commun”) The Courts accept that a host provider may have a role that is not classed as “active” if it only provides technical services with technical functions (re-encoding of video, formatting content, putting in place framework of presentation, classification of contents)

3.2 “GOOGLE SUGGEST” AND “GOOGLE SEARCHES RELATED TO...” (DEFAMATION AND LIBEL)‏ Question : Is Google liable for terms appearing in “Google Suggest” or “Google Searches related to...” ? CA Paris, 9 December 2009, Direct Energie v. Google: Google held liable in relation to “DIRECT ENERGIE ARNAQUE” on the basis that the user's search against “DIRECT ENERGIE” would not have lead the user to search for “ARNAQUE”, this word being suggested to the user by Google before Google knew the user's real intention.

46 TC Toulouse, 17 June 2010, Akerys Participations v. Google Inc
TC Toulouse, 17 June 2010, Akerys Participations v. Google Inc. (currently pending before the Toulouse Court of Appeal) : The company AKERYS PARTICIPATIONS discovered that when the word “AKERYS” was searched, Google systematically associated “AKERYS” with the word “ARNAQUE”. Google refused to remove the association despite receiving a letter before action. Judgment: Google found responsible for the apparition of the word and ordered to remove any association between “AKERYS” and “ARNAQUE”.

47 Tribunale di Milano, 31 March 2011 : "the software is only apparently "neutral", due to the fact that it is based on an automatic system of mathematic algorithms, because it loses its neutrality when, as a result of the applicability of such automatism based on criteria selected by its creator, it generates inappropriate search results".

48 3.3 GOOGLE IMAGES Question : Does the referencing of photos by Google Images constitute an infringement of the photographer’s copyright ? CA Paris, 4 February 2011 : As Google did not withdraw the photos until 2 weeks after notification, it could not benefit from the specific regime for host providers and therefore was subject to the general rule of law. Google found liable for infringement of copyright by the referencing of images and the consequential successive transmission of the photos.

In 2009, France has considered a special "right to forget" law, which would give the right to the deletion of personal information after a certain period of time. This right-to-forget would compel on-line and mobile telephone companies to dispose of s and text messages after an agreed length of time or on the request of the individual concerned. Signature in October 2010 of a Charter on Digital Right-to-Forget between the French Government and professionals (Pages Jaunes, Benchmark Group, Microsoft (Bing)…) but without participation of Google or Facebook (not legally binding)‏

50 TGI Montpellier, 28 October 2010, Madame C. v. Google France and Inc. :
Even if Google Inc. is not obliged to verify the sites referenced by its search engines, given that such verification would be materially impossible, it is nevertheless obliged as a processor of personal data to facilitate the withdrawal or correction of data in accordance with Article 38 of Law of 6 January 1978 relating to data processing, data files and individual liberties.

The French Data Protection Agency (CNIL) condemned Google to pay a fine of € 100,000 due to it having collected personal data during the operation of Google Street View, its interactive cartographic service.

52 LIABILITY OF ISPs IN FRANCE Prepared by the Morvilliers Sentenac
Internet Group : Philippe Wallaert & Sophie Stambouli Presented by Julian Cockain-Barère Philippe Wallaert Sophie Stambouli Julian Cockain-Barère 18 rue Lafayette 31000 Toulouse 5 rue Duplessy 33000 Bordeaux 33 rue de la Bienfaisance 75008 Paris

53 Legal Liability of ISP in the People’s Republic of China (PRC)
Min Weiguo D&S Law Firm,China Copyright © D&S law firm, all rights reserved.

54 Basic Legislation Related to ISP’s Liability
Tort Liability Law of the PRC. Copyright Law of the PRC. Regulation on the Protection of the Right to Network Dissemination of Information. Interpretation of the Supreme People's Court on Issues Concerning the Application of Laws in Cases Involving Copyright Disputes over Computer Network. General Principles of the Civil Law of the PRC. Criminal Law of the PRC.

55 ISP and Its Business According to the Regulation on the Protection of the Right to Network Dissemination of information, ISP is the one who provides cyberspace for others to keep informations , and/or searches for , links to some other address on the internet, as well as to show its visual and/or aural works at the address of the ISP's own cyberspace. So, the contents of services for the ISP is mainly to: provide cyberspace for keeping and showing informations; search for some contents ;and link to some other net address.

56 Tort Liability of ISP Article 36 of Tort Liability Law of the PRC:
Where network users or Internet service providers utilize network to commit a tort to other’s civil rights and interests, they shall be subject to tort liability; Where network users utilize the network to commit a tort, the infringee shall have the right to notify the Internet service provider to take necessary measures such as deleting, blocking, disconnecting, etc. If the Internet service provider fails to take necessary measures in a timely manner after receipt of the notice, it shall be subject to joint and several liability with the users for the expanded damages; Where an Internet service provider is aware that users are utilizing its network to commit a tort to other’s civil rights and interests, the provider shall be subject to joint and several liability with the users if it fails to take necessary measures.

57 Direct and Indirect Liability
According to the Regulation on the Protection of the Right to Network Dissemination of information, legal liability of the ISP could be classified as: Direct Liability: The liability for its operative action when ISP offers infringing contents to its customers, and/or provides searching tools and/or linking services both of which would be aggressive. Indirect (Joint) Liability: The liability of control and management of the ISP when it provides cyberspace for a third party to service its customers with its works, and/or when it offers searching, linking services for its customers for the informations from a third party.

58 Direct Liability The direct liability generates from the ISP's tortious act infringing mainly upon other one's civil rights , such as copyright, privacy, portrait, and reputation, mainly the right to network dissemination of Information.

59 Indirect (Joint) Liability
According to article 3 and article 4 of the Interpretation of the Supreme People's Court which is stated above, behaviors of the ISP that would lead to indirect liability are as: Attendance: to take part in the action of infringement with others and usually share the interest directly from it if there is. Instigation: to tempt, encourage, inspire others' infringement by the ISP's services. Assistance: to offer mainly a technic assistance to the infringer,for the ISP's customers, usually not get any direct profit. Connivance to leave the infringement uncontrolled after the ISP's knowledge of it.

60 Determination of Indirect (Joint)Liability
According to the Regulation on the Protection of the Right to Network Dissemination of information, the indirect (joint) liability of the ISP would be identified by: Knowledge to know the infringement definitely , or should know it logically . Helpful Behavior to attend, instigate, assist, and especially connive the infringement. Right and Ability to Control reasonably could get aware of and take some effective action against the infringment. Direct Benefits to benefit directly from the ISP's helpful behavior for the infringement.

61 Conditions of Irresponsibility
According to article 20 to article 22 of Regulation on Network Dissemination of information, the ISP would not be responsible for the infringement, only if he/she has: been controlling and managing the customers according to the statute. not chosen or changed the information on the ISP's own initiative, leaving it to the third party for its independent linking, uploading, processing of the information by its own. and for providing cyberspace, more conditions as: not known, and there been no reasonable ground to know. not got or intended to get a direct benefit. adopted reasonable and timely actions after their knowledge of tort.

62 Civil Liability According to Article 134 of General Principles of the Civil Law of the PRC, the ISP with tortious act may be subject to some consequential obligation or obligations as: cessation of infringements; removal of obstacles; elimination of dangers; return of property; restoration of original condition; compensation for losses; elimination of ill effects and rehabilitation of reputation; and/or extension of apology. The above methods of bearing civil liability may be applied exclusively or concurrently.

63 Administrative Punishment
According to Article 18 and Article 19 of Regulation on network Dissemination of Information, the ISP with some illegal act should be: given a warning; In case the public security is injured, ordered to stop the infringement; confiscated the illegal proceeds and may impose thereupon a fine of 100, 000 yuan;and/or confiscated the illegal facilities or equipment(In the event of any serious circumstances )

64 Criminal Behaviors Where any crime is constituted, the ISP shall be subject to criminal liabilities according to Criminal Law of the PRC,Including,but not limited to: Insult, slander; The Crime of copyright Infringement; The Crime of Producing, Selling, or Disseminating Obscene Materials; The Crime of False advertising; Crimes of Endangering National Security; The Crime of Destruction of computer information systems; The Crime of impairing other people’s commercial reputation and commodity reputation.

65 Criminal Penalty The respective penalty to the possible crimes of the ISP stated in last piece of this ppt, are specified in the Criminal Law of the PRC, and the penalties would be mainly fine, deprival of political right( both of which would be applied exclusively or concurrently with others), punishment against liberty.



68 There is no specific legal regulation about the matter
Two projects in the Congress

69 Application of General Liability Principles of the Civil Code
Section 1109 of Civil Code Any person who performs an act that, through his fault or negligence, causes damages to another, is obliged to repair the damage. Damage (material – moral) Fault or Negligence Relationship between the act and the damage

70 Section 1113 of the Civil Code
In cases of damages caused by things, to avoid liability the owner or custodian must evidence that he has not acted with fault or negligence. If the damage is caused by a risky thing or by a defect in the thing, to avoid liability the owner or custodian must evidence the fault or negligence of the victim.

71 CASES Most of the Court cases relate to persons (models – actors) claiming damages because their name/image has been linked with pages of sexual content. First Step Injunction Second Step Principal case - damages

72 LAW 26,032 The search, reception and supply of information and ideas of all kind, through an internet service, must be considered as included within the free of speach constitutional rights.

73 CASE LAW Case Law mainly makes difference among:
(i) The author or editor of the information (ii) The access provider (iii) The service providers (search / host)

74 The service providers are neither editors nor owners of the sites where the damaging information is published Therefore before any damage claim by the victim to the ISP no fault or negligence may be attributed to the ISP

75 ISP Liability in the United States
U.S. Panelist: Cassandra Ching

76 Questions to Consider How should an ISP be viewed in order to determine liability? How should the ability to control and/or the ability to police factor into a liability analysis? How should actual or constructive knowledge factor into a liability analysis?

77 In a Nutshell… “Ignorance is Bliss”
Liability is generally based on knowledge by the ISP of the customer’s activities. If the ISP is not aware of the wrongful behavior, then courts are reluctant to hold the ISP liable. Once the ISP becomes aware or should become aware of the wrongful conduct with reasonable diligence, then courts are much more likely to hold the ISP liable for its customer’s actions.

78 Are ISPs Liable for the Acts of Subscribers?
ISPs are publishers like newspapers or magazines so they must take responsibility for the material on their servers. ISPs are like telephone companies because they are simply carriers that provide a means of sending information. YES NO

79 What is favored so far in the U.S.?
Congress and the U.S. courts favor the ISPs’ position that they are simply carriers that provide a means of sending information. There is a split circuit court view on this issue with respect to trademark infringement.

80 Main types of ISP Liability
Copyright Infringement Contract and Fraud Defamation Trademark Infringement

81 How can an ISP avoid liability for copyright infringement?
By following the “notice and takedown” provisions of the Digital Millennium Copyright Act if one of its subscribers is offering an infringing copy online. An ISP must designate an agent to receive notices from disgruntled copyright owners. ISPs should register its agent’s name and address in the U.S. Copyright Office. Once the ISP receives notice of the copyright infringement, it must take down the unauthorized material. Example: YouTube has the right to remove any illegal post or unauthorized copy that is posted in its site.

82 Requirements to avoid liability for copyright infringement
The ISP must not obtain financial benefit from the infringement. The ISP must not have actual knowledge or awareness of facts indicating infringing transmissions. Upon learning of the infringing transmission, the ISP must act quickly to remove or disable access to the infringing transmission. The ISP must implement a policy of terminating the accounts of subscribers who are repeat infringers.

83 U.S. Cases on Copyright Infringement by ISPs

84 Contract & Fraud ISPs are generally liable for:
Protecting their customers and can be held accountable for upholding service contracts. Protecting private customer information. “Deliver on all of the promises you make to your customers, and only promise what you can deliver.”

85 Defamation - Libel Libel is the publication of an untrue statement that cause an injury to the reputation of a person or business. ISPs are shielded from liability in libel lawsuits by the Communications Decency Act (CDA). Section 230 of the CDA states that no ISP “shall be treated as the publisher or speaker of any information provided by another information content provider.” Basically, ISPs are not responsible for what users post online.

86 U.S. Cases involving Defamation by ISPs

87 Trademark Liability Direct Liability: Secondary Liability:
ISPs are liable if they advertise their services under a trademark that is confusingly similar to a mark of another party. Secondary Liability: Contributory Trademark Infringement – ISP is liable if it causes or contributes to the infringing conduct of another with knowledge of the other party’s infringing activities.

88 Are these advertisements sponsored by Harry Winston Jewelry?
Google: Harry Winston Jewelry Are these advertisements sponsored by Harry Winston Jewelry?

89 You are most likely a savvy internet user like most everyone else these days!!

90 Does the Sale and Purchase of Another Trademark as a Keyword Constitute a Commercial “Use” of the Mark? The Ninth Circuit held that the use of trademarks to trigger the display of banner advertising creates initial interest confusion. Several district courts found “use in commerce” Purchase of keyword was a commercial transaction that occurred in commerce trading on the value of the owner’s mark. Use is tied to the promotion of infringer’s goods and/or retail services. Use of a trademark as a metatag constitutes use of the mark. Courts in the Second Circuit have uniformly held that the use of a trademark in keywords where the use is strictly internal and not communicated to the public does not constitute “use.” YES NO

91 U.S. Cases Involving Trademark Infringement by ISPs

92 Key Victory for Keyword Ad Programs
March 8, The U.S. Court of Appeals for the Ninth Circuit decided Network Automation, Inc. v. Advanced Systems Concepts, Inc., No Ruling is significant because it limits trademark holders’ ability to challenge competitors and search engines who use the trademark holders’ marks as “keywords” in search engine advertising programs. The court determined that it is not inherently deceptive or likely to cause consumer confusion.

93 Things to Consider… Proposals for legislation addressing online liability Reconcile the split circuit views about secondary liability Possible amendment of the Lanham Act Compulsory licensing scheme

94 Cassandra Ching Contact Information: Cassandra Ching, Esq. Meister Seelig & Fein, LLP Two Grand Central Tower 140 East 45th Street, 19th Floor New York, NY U.S.A. Tel: (646) Fax: (646) Practice Areas: Intellectual Property, Entertainment, New Media and Corporate Law Education: Wake Forest University School of Law (J.D.) Duke University (B.A.) Cassandra Ching practices in the intellectual property, entertainment, new media and corporate areas, handling general business and commercial matters and transactions, including negotiating deals and drafting contracts in licensing, endorsements, sponsorships, engagements, employment termination, publishing, promotion, advertising, interactive media, theater, motion pictures, documentaries, film, television, and music; counseling on trademark prosecution and enforcement, copyright, right of publicity, and right of privacy issues, domain name disputes, and compliance with privacy protection laws and data retention; and handling all phases of corporate matters and transactions including entity formation, drafting shareholder and operating agreements, resolutions, asset purchase agreements, assignments, confidentiality and non-competition agreements. Ms. Ching works with private and public companies and individuals, including manufacturers, designers, retailers, distributors, software developers and consultants, as well as celebrities, fashion models, producers, entertainers, performers, writers and artists.

95 Hamish Rotstein Rotstein Lockwood Reddy Melbourne, Australia
What Consulegis Members Should Know About the Liability of Internet Service Providers (“ISPs”) Australia Hamish Rotstein Rotstein Lockwood Reddy Melbourne, Australia Rotstein Lockwood Reddy 2011 ©

96 The Internet poses many challenges to Owners and Distributors of Copyright and other IP
In just a few years, the internet has transformed: entire industries (music, news media, travel, software and retailing among them) the manner in which businesses interact with their suppliers and customers the way in which individuals socialize, interact and communicate with each other. The internet is posing challenges for those industries that rely on the distribution and sale of copyright material. The rise of internet-based peer-to-peer (P2P) file sharing technologies – which enable music, movies, TV shows, software and other digital content to be rapidly and efficiently distributed across the internet, has been blamed for billions of dollars in lost revenue. Rotstein Lockwood Reddy 2011 ©

97 The iiNET Case ISPs may be liable for online Infringements
Roadshow Films v iiNet Ltd [2011] FCAFC 23 (iiNet Case) – Full Court of Federal Court of Australia iiNET case understood to be the first case in the world to proceed to trial and judgement in which it has been alleged that an Internet Service Provider (ISP) is liable for the unlawful downloads of its subscribers On 24 February 2011, by majority (2-1) the Full Court of Federal Court of Australia upheld a trial judge’s conclusion than an ISP (iiNet) was not liable for authorising copyright infringement However the Full Court rejected many of Trial Judge’s reasons for initial decision and has clarified that in certain circumstances an ISP may be held liable for the copyright infringement of its subscribers. Rotstein Lockwood Reddy 2011 ©

98 iiNet case: Background facts
iiNet is Australia’s third largest Internet Service Provider (ISP) The Australian Federation Against Copyright Theft (AFACT), on behalf of 34 movie studios and a TV network, gathered evidence of copyright infringement by iiNet users occurring by means of the Bit Torrent protocol, which is a highly efficient means of distributing and sharing large quantities of data over the internet The Court accepted that this evidence showed that the infringements related to various films and television programs in which the applicants owned copyright Based on its own investigations of copyright infringement by iiNet's subscribers, AFACT sent weekly notices to iiNet in which it requested iiNet to send warnings and to suspend or terminate the internet services of offending subscribers (AFACT Notices), which iiNet declined to do.

99 Primary Issue: Was there Authorisation of Copyright Infringement by iiNet?
Under Australian copyright law, a person who authorises the infringement of copyright is treated as if they themselves had infringed copyright: s101 of Copyright Act 1968 (Cth) (“Act”) The primary issue raised by the Proceedings was whether iiNet by failing to take any steps to stop the infringing conduct authorised the infringement of copyright by its subscribers when they downloaded films in a manner which infringed copyright? Rotstein Lockwood Reddy 2011 ©

100 Statutory Criteria The Court was bound to consider the statutory
criteria set out in s101(1A) of the Act in determining whether there was authorisation of copyright infringement by iiNet: To what extent did iiNet have the power to prevent the infringements; the nature of the relationship between iiNet and the infringers; and whether iiNet took any reasonable steps to prevent the infringement including whether they complied with relevant industry codes of practice.

101 iiNet: Was there Authorisation?
Did iiNet have power to prevent infringement? Yes. All judges held iiNet had the technical power to prevent copyright infringement, including sending warning notices, blocking websites, suspending and terminating customer accounts. Did iiNet have Contractual Power? Yes. All judges held iiNet also had contractual power, under its customer relationship agreement, to restrict, suspend or terminate the internet service without liability for the subscriber’s breach, including use of the service to infringe another person’s rights or for an illegal purpose. Rotstein Lockwood Reddy 2011 ©

102 iiNet: Was there Authorisation? (cont)
3. Did iiNet take reasonable steps to prevent infringement? The Majority (2-1) held AFACT had not provided sufficient information to support its allegations, including information about its methodology. iiNet was not required to independently investigate and verify AFACT’s information. Thus, while iiNet had a general knowledge of the copyright infringement, the AFACT notices did not bring about the requisite level of knowledge necessary to invoke iiNet’s duty to take steps to warn, suspend & terminate internet access. Rotstein Lockwood Reddy 2011 ©

103 The crux of the iiNet case: Knowledge
The Majority Justices were dissatisfied with the content of the copyright owner’s infringement notices to the ISP. The notices gave rise to ‘reason to suspect’ infringements on the part of iiNet’s users but not knowledge of specific acts of infringement sufficient to warrant iiNet acting to suspend or terminate their accounts

104 Crux of iiNet case: Knowledge (cont)
The Court expressly recognized that the outcome of the iiNet case may be different in a future proceeding. Justice Emmett stated, “Even though the Copyright Owners are not entitled to the relief claimed in this proceeding, it does not follow that that is an end of the matter. It is clear that the questions raised in the proceeding are ongoing. ... It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby iiNet might in the future be held to have authorized primary acts of infringement on the part of users.

105 What should an infringement notice contain?
The Court (majority) suggested four (4) steps that a copyright owner should take that would make it reasonable for an ISP to suspend or terminate a customer's account in response to an infringement notice: Provide particulars of specific primary acts of infringement of copyright of the copyright owners, by use of particular IP addresses of its customers. Request the ISP in writing to communicate with its customer certain information and warnings. Provide unequivocal and cogent evidence of the alleged primary acts of infringement by use of the service in question, including information adequate to enable the ISP to verify the accuracy of the allegations. Undertake to reimburse the ISP for the reasonable cost of verifying the particulars of the primary acts of infringement alleged and of establishing and maintaining a regime to monitor the use of the service to determine whether further acts of infringements occur, and to indemnify it in respect of any liability it reasonably incurred as a consequence of mistakenly suspending or terminating a service on the basis of allegations made by the copyright owner. In the iiNet case, the AFACT notices did not provide a means of verification of copyright infringement, nor did the copyright owners offer to reimburse iiNet. Rotstein Lockwood Reddy 2011 ©

106 Other Defences: iiNet Safe Harbour Provisions Telco Act Defence
The Act limits the remedies that are available against carriage service providers such as ISPs for infringement of copyright that relate to the carrying out of certain online activities. The court found that if iiNet had authorised the infringement of copyright by iiNet's subscribers, iiNet would NOT have been entitled to take advantage of these "safe harbour" provisions because it did not have a written repeat infringer policy that was reasonably implemented. Telco Act Defence Sections 270, 276 of the Telecommunications Act 1997 (Cth) (Telecommunications Act) operate to prohibit communications and disclosures by carriage service providers such as ISPs of certain information. iiNet claimed that the Telecommunications Act prohibited it from complying with the notices sent to it by AFACT and from using that information for the purpose of warning its subscribers of allegations of copyright infringement or for the purpose of terminating subscriber accounts. The court rejected this argument because of the operation of the exceptions in the Telecommunications Act. Rotstein Lockwood Reddy 2011 ©

107 Other Defences: iiNet (Cont)
Facilitator of Communications Defence Section 112E of the Act provides that a carriage service provider such as an ISP which provides facilities for making, or facilitating the making, of a communication is not taken to have authorised any infringement of copyright in an audio-visual item merely because another person uses the facilities to do something which is included in the copyright. The section has the effect of expressly limiting the authorisation liability of persons who provide such facilities. However, the court was of the view that the protection afforded by s.II2E of the Copyright Act was not available to iiNet by reason of iiNet's knowledge of the infringements occurring on its facilities. Rotstein Lockwood Reddy 2011 ©

108 Impact of iiNet Decision
Although iiNet won the appeal, this was simply because of the shortcomings in the way that the notices had been given. The decision puts ISPs on notice that they cannot simply “sit on their hands” when they receive an infringement notice. ISPs can be held liable for the known repeat copyright infringements of their customers. iiNet decision has provided guidelines to copyright owners for their dealings with ISPs Legal Incentive now for ISPs to co-operate with copyright owners to deter infringement Industry Code of Practice is currently being developed by Internet Industry Association (Australia) on a “warning, suspension, termination” scheme for for internet intermediaries, including ISPs, search, hosting and social media providers (such as those in place or being considered in France, UK and NZ) Rotstein Lockwood Reddy 2011 ©

109 Impact of iiNet Decision (cont)
Legislation current being considered in Australia with proposals to legislate to broaden the safe harbour provisions In the interim, ISPs should re-consider their measures for addressing online copyright infringement, including repeat offender policies to accord with the decision and guidelines in the iiNet case. Following the iiNet ruling, several major Australian ISPs have refined their approach to piracy infringement warnings. iiNet decision has been appealed by AFACT to the High Court of Australia – appeal is likely to be heard in second half of this year – Watch this space!

110 Liability of Search Engines for IP Infringement
Google AdWords is a paid referencing service provided by Google which allows advertisers to purchase selected "keywords" which, when entered into Google's search toolbar, trigger that advertiser's advertisements alongside or above Google search results. Google AdWords drive web traffic to specific websites to increase page views and sales Since 2007, in Australia Google will now not allow anyone else to use a registered trade mark as AdWords after notification of the trade mark owner's rights. This is not the case in Europe. This policy was implemented shortly after Google was sued by the Australian Competition and Consumer Commission (federal competition regulator). A decision in this case is currently pending (discussed below). Rotstein Lockwood Reddy 2011 ©

111 Google Adwords and Sponsored Links
In Australia: Courts consider whether the trade mark was 'used' as a sign to indicate to consumers that the competitor's website was associated with the registered trademark, and courts may once again consider the likelihood that consumers would be confused in this manner. Sponsored Links may also be considered to be misleading and deceptive conduct under the Trade Practices Act 1974 (Cth).

112 Litigation against Google Inc. for Adwords
Australia Competition Consumer Commission (ACCC) v Trading Post Australia, Google Inc & Others Google's liability for allowing traders to purchase AdWords and sponsored links that comprise their competitors' registered trade marks is under present consideration by the Federal Court of Australia in a proceeding commenced in 2007 by the Australian competition regulator against the Trading Post Australia, Google Inc and others. The ACCC alleged that The Trading Post contravened sections 52 and 53(d) of the Trade Practices Act 1974 in 2005 when the business names "Kloster Ford" and "Charlestown Toyota" appeared in the title of Google sponsored links to Trading Post's website. Kloster Ford and Charlestown Toyota are Newcastle car dealerships who compete against Trading Post in automotive sales.

113 ACCC v Google Inc. & Others (cont)
While the Trading Post Australia accepted that it had engaged in misleading and deceptive conduct by purchasing AdWords for the names of car dealerships against whom it competes in the automotive sales industry, the case has continued against Google Inc and others with the Federal Court to shortly hand down its eagerly anticipated decision. The ACCC is alleging that Google, by causing the Kloster Ford and Charlestown Toyota links to be published on its website, engaged in misleading and deceptive conduct in breach of section 52 of the Act. The ACCC is seeking various declarations, but essentially, its major allegations are that Google: Wrongly implies an association between advertisers where one doesn’t exist; and Fails to distinguish “organic” search results from “paid” search results (referred to as “sponsored links”).

114 ACCC v Google Inc & Others (cont)
While this case does not concern whether the conduct alleged amounts to trade mark infringement, this case has the potential to change Google's liability for unauthorized use of registered trade marks in advertisements Australian courts have held in two recent decisions that the purchase and use of Google Adwords incorporating a competitor’s trade mark can can be a trade mark infringement, answering the question of whether the mere purchase of an AdWord (which is not actually used on the purchaser's website) constitutes "use" of that mark for the purpose of trade mark infringement. (Mantra v Tailly; Kennards Hire v Caruso Nominees & Ors) It is hoped that when the Google decision is handed down it will clarify for traders whether Google has any liability for allowing competitors to purchase AdWords that infringe another trader’s registered and un-registered intellectual property rights. Watch this space!

115 Speaker Profile: Hamish Rotstein
Hamish Rotstein BA LLB, Accredited Specialist (Com Lit), is the founding and managing principal of Rotstein Lockwood Reddy Lawyers, a commercial law firm based in Melbourne, Australia with affiliate offices across Australia and New Zealand. Hamish acts for clients in the following industries, many of whom are market leaders in their fields: pharmaceuticals, health, financial services, property, resources, food technology and distribution, advertising, sports marketing, retail, manufacturing and telecommunications In 2010, the Law Institute of Victoria accredited Hamish as a specialist in commercial litigation (one of 40 such practitioners in Melbourne). Hamish is a member of the following professional bodies: Law Institute of Victoria (LIV) Law Council of Australia Specialist Accreditation Education Committee (LIV): Intellectual Property Society of Australia & NZ Licensing Executives Society of Australia and NZ Financial Services Institute of Australasia Advertising Federation of Australia.

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