At the end of July, the German Federal Court handed down its judgment in a copyright case having huge impact for operators of open Wifi services. For the first time, the judges had to deal with Sec. 7 (4) and Sec. 8 (1) s. 2 of the German Telemedia Act (hereinafter “GTA“) as lately amended. The Court held that:

• respective operators of public Internet access points (wireless and via cable) are not liable for a violation of copyrights by third parties using those access points, and that this finding is compliant with EU law.
• However, according to the Court, instead of the intermediaries being liable for injunctive relief or damages, copyright owners could demand the blocking of operators’ “access to information” as provided in Sec. 7 (4) GTA.

This is truly remarkable, for in fact, this is likely to burden the operator in just the same way as if indirect liability had been affirmed. The question therefore is whether the legislator’s goal to create a safe harbor may still be achieved.

Background

The German legislator is known to pursue the goal of nationwide wireless network coverage in Germany by legislative means. However, since the public provision of an Internet connection via wireless network poses a risk for the provider to be held liable for legal infringements of others, in particular file sharing, private individuals and companies are hesitant to contribute to this goal. For this reason, the German legislator decided to abolish the liability of intermediaries for operators of public Internet access points. After an unsuccessful first legislative attempt which was heavily criticized by the German legal commentators, a few weeks later, the respective provisions of the GTA were amended. This revised law came into force on 13 October 2017.

The Case

The plaintiff is the owner of the exclusive rights of use with regard to a certain computer game called “Dead Island“. The defendant offers a publicly accessible Internet connection. Via this Internet connection, the computer program in question was offered on a file sharing platform for downloading in 2013. The plaintiff sent a warning letter to the defendant and requested the submission of a cease-and-desist declaration with a penalty clause.

The defendant claims not to be the perpetrator of the infringement himself. He claimed that he did nothing beyond operating five publicly accessible wireless network hotspots and two wired channels from the “Tor” network.

The Decision

While the Higher Regional Court of Düsseldorf had held that the defendant (a) had to cease-and-desist enabling a third party to offer the computer program on a file sharing platform via the defendant’s Internet access, and (b) also had to pay the fees for the warning letter, the German Federal Court overturned the ruling with regard to the cease-and-desist-order. It reasoned that because of the newly enacted Sec. 8 (1) s. 2 GTA, an injunctive relief no longer existed.

The Court argued that since a cease-and-desist-order is directed towards future action, unlike the costs of the warning letter, the legal status at the time of the last oral hearing is to be applied, i.e. Sec. 8 (1) s. 2 GTA as amended. According to that provision, the intermediary of an Internet access cannot be held liable for damages, removal or omission of an infringement due to an unlawful act of a user. The Court based its decision on this section.

In addition, the Court commented on the concerns expressed by legal commentators regarding the compatibility of sec. 8 (1) sentence 2 GTA as amended with European Union law and rejected them. The judges acknowledged that according to Art. 8 (3) of Directive 2001/29/EC and Art. 11 s. 3 of Directive 2004/48/EC, the holders of IP rights must have the possibility of issuing court orders against intermediaries whose services were used by a third party to commit copyright infringements. However, due to the newly enacted Sec. 7 (4) GTA, the right holders were not left unprotected. That provision contains a claim against wireless network operators, permitting requests to block the operator’s “access to information”. The Court held that the provision needs to be interpreted in conformity with the named directives. Thus, it does not only apply to operators of wireless Internet access points but also to those of cable-bound Internet access points. The Court noted that the “claim of blocking” is not limited to certain measures, but could also lead to the result that in extreme cases, the complete access of an operator is blocked.

Since the Court was not in a position to determine whether the requirement of reasonableness of such a block was met due to a lack of sufficient collection of facts, the German Federal Court referred the case back to the Higher Regional Court.

Comment

This case constitutes a landmark decision. The Court removes the objections raised by EU law with regard to liability of intermediaries and strengthens the position of operators of publicly available Internet connections: they are no longer liable for injunctive relief and damages. Thus, the German Federal Court lends great weight to the effectiveness of the new law.

However, the Court’s ruling does not constitute a carte blanche for possible copyright infringements. In addition to the fact that the operator of publicly accessible Internet connections must further clear itself with regard to the perpetrator’s presumption, a “blocking order” (as mentioned above) according to sec. 7 (4) GTA as amended may take the place of the liability of intermediaries.

In this respect, it remains unclear when a block of an (Internet) access is reasonable. In this regard, the German Federal Court referred the matter back to the Higher Regional Court of Düsseldorf, but stressed that intellectual property did not always have to prevail. Following the upcoming decision of the Higher Regional Court of Düsseldorf, it is likely that the German Supreme Court will have to return to the “Dead Island” case with regard to the question of reasonableness. We can expect that the Court will set the next legal cornerstone when doing so.

[View source.]