CJEU rules that unauthorized re-posting of protected content may be an infringement

First posted by Eleonora on the IPKat on 7th August 2018

The Cordoba photo at issue in Renckhoff

Today the Court of Justice of the European Union (CJEU) issued its last copyright judgment [but also - incredibly - the first copyright judgment of 2018] before the summer break. 

In Renckhoff, C-161/17 it ruled - contrary to the Opinionof Advocate General Campos Sanchéz-Bordona [here and here; ALAI thought it was very bad, and criticized it here] - that in a situation like the one at issue the unauthorized re-posting of a copyright work would be an act of communication to the public within Article 3(1) of the InfoSoc Directive.

Background

As readers might remember, this case had a fairly odd factual background. The national 
proceedings relate in fact to copyright litigation that a photographer has brought in Germany
against a school over the use, by one of the pupils, of copyright-protected material without 
authorization. 

More specifically, one of the pupils found an image of the city of Cordoba online 
and used it for an assignment for her Spanish class, providing acknowledgment 
of the website from which she had downloaded the photograph (though not of the 
photographer, because the website where the photograph appeared did not provide any). 

Upon finishing her work, she and her teacher uploaded it on the school's
website, but the photographer came forward claiming infringement of his copyright in
the photograph, and that he had just granted a licence to use to the image to the website 
from which the pupil had downloaded it.

Litigation has gone all the way up the German Federal Court of Justice, which 

decided to stay the proceedings and refer this question to the CJEU:

Does the inclusion of a work — which is freely accessible to all internet users on a 
third-party website with the consent of the copyright holder — on a person’s own 
publicly accessible website constitute a making available of that work to the public 
within the meaning of Article 3(1) of [Directive 2001/29] if the work is first 
copied onto a server and is uploaded from there to that person’s own website?

The CJEU response

Today the Court answered in the affirmative, noting that:

1. The reposting of protected content freely available with the rightholder's consent on a third-party website is a new act of communication to the public (I'd also add that it is also an act of reproduction, and in fact this has been already established in the national proceedings) and no analogy with linking to lawful and freely accessible content in a Svensson sense may be drawn. Here the point is not - as it was, instead, in Svensson whether there is a communication to a new public, because there is a new communication to the public tout court.
2. Holding otherwise would mean that a copyright owner would lose any control over their work once this has been made available online the first time. This would basically amount to an undue exhaustion of the right of communication to the public, contrary to Article 3(3) of the InfoSoc Directive, and would also be in breach of the principle according to which economic rights are preventive in nature (in a Souliersense)
3. The fact that a work has been initially published online and made available with no restrictions is irrelevant: holding otherwise would be akin to imposing formalities to the enjoyment and exercise of copyright, and this would go against the prohibition in Article 5(2) of the Berne Convention.

If that was ever possible, 
now school may become even more stressful

The Court also recalled that copyright
protection in a photograph only arises when 
the photograph is its author's own 
intellectual creation, in the sense that it 
results from the making of free and 
creative choices and carries the author's 
personal touch, in the sense clarified 
in Painer. Readers will remember that 
the AG doubted that the one at issue 
would be a copyright-protected 
photograph. However, Article 6 of the 
Term Directive leaves EU Member States free to protect sub-original photos.

Implications

Overall, the judgment is good news for copyright owners, in that it gives them reassurance 
that the control over their works is not reduced over the internet. 

The ruling is also interesting in relation to the practice of certain websites (including newspapers) 
that directly host third-party video content in respect of which they neither own the rights nor 
do they have a licence, in lieu of displaying such videos by means of embedded links. While 
the latter might be lawful (depending on whether the requirements set in Svensson and
 GS Media are fulfilled), the former might pave the way to a finding of liability. This 
may be something that we knew already, but that now the CJEU has confirmed.

Adeokin Records v Music Copyright Society of Nigeria: No CMO licence required for an exclusive licensee of copyright to enforce its licence

News from the collective rights management world, this time from Nigeria!

1709 Blog friend and fellow blogger Chijioke Okorie explains what happened in the recent decision of the Nigerian Supreme Court in Adeokin Records v Music Copyright Society of Nigeria [Chijioke is happy to provide a copy of the judgment upon request].

Here’s what Chijioke writes:

Last month the Nigerian Supreme Court delivered its judgment in the case of Adeokin Records & another v Musical Copyright Society of Nigeria Limited (MCSN) SC/336/2008, holding that MCSN had the capacity (locus standi) to institute the suit as owner, assignee and exclusive licensee of copyright. The outcome of this case was rooted within two main grounds. First of all, because it was an issue of locus standi, the court rightly held that only the statement of claim may be considered and extraneous documents outside the statement of claim cannot be considered. Given the fact that Adeokin Records did not challenge MCSN’s averment in its statement of claim that it was “owner, assignee and exclusive licensee of copyright”, the court took the issue as established.

The second ground for the decision of the Supreme Court was that at the time the suit was instituted, the provisions of section 17 of the Nigerian Copyright Act which mandated “pseudo” collecting societies to obtain a collecting society licence from the Nigerian Copyright Commission (NCC) had not been promulgated and so was not in effect and/or applicable to the suit. Section 17 refers to entities involved in the business of negotiating and granting licences, distributing royalties or having more than 50 members who are copyright owners.

Readers would recall that until April 2017 when the NCC issued MCSN with a collecting society licence, MCSN had resorted to describing itself as an “owner, assignee and exclusive licensee of copyright” and has been suing in that capacity. See here.

Comment

With this decision, it appears that a description in the Statement of Claim as an exclusive licensee of copyright will confer locus standi on a party that would otherwise have required a collecting society licence. However, it is to be noted that the issue of locus standi is an issue of jurisdiction, which may be raised at any time in court proceedings. So, it might turn out at the end of the day that an exclusive licensee may escape the collecting society licence hurdle at the beginning of the suit but would find itself challenged during trial when evidence is led as to the nature of its business. More importantly MCSN, having been issued licence to operate as a collecting society, will no longer need to continue describing itself as an exclusive licensee of copyright in order to sue for copyright infringement. It would only be a new and intending collecting society that may apply such description in suing for copyright infringement.

Nevertheless, it is to be noted that the Copyright Act restricts the discretion of the NCC in issuing collecting society licences. By virtue of section 39(3) of the Copyright Act, the NCC may not issue licence to another collecting society for any class of copyright owners if it is satisfied that the existing collecting society adequately protects the interest of that class of copyright owners. Following the issuance of collecting society licence to MCSN, COSON had instituted Suit nos. FHC/L/CS/1259/2017 against MCSN, the NCC and the Attorney-General of the Federation contending that because COSON’s operating licence covered musical works and sound recording, MCSN should not have been issued licence for the same rights. The Federal High Court dismissed the suit holding that NCC’s issuance of licence to MCSN did not violate the provisions of the Copyright Act.

There is also the issue of impending revocation of COSON licence in view of its refusal to comply with NCC’s directive. See here. A few days ago, the Music Publishers Association of Nigeria (MPAN) urged the NCC to reconsider the suspension of COSON’s licence as it has prevented copyright owners from earning royalties for the use of their works. If COSON’s licence is revoked, the music industry will be left with one collecting society until COSON gets its act together or NCC issues licence to another entity. Would existing associations such as MPAN, which has many copyright owners as members yet give COSON a run for its money?

French and Faux? Balenciaga or JFK Souvenir Shop?

You may have heard of high and low fashion styling, where we are urged to wear our diamond tiara with a Zara top.  This story is a twist on the theme, as Balenciaga offers you a way to spend some serious money on a leather bag somewhat similar to plastic bags sold in New York City souvenir shops and airport stores. Copyright infringement suit ensued. The case is City Merchandise, Inc., v. Balenciaga America, Inc., 1:18-cv-06748 (SDNY).

City Merchandise, a New York City company designing souvenirs goods had created a plastic bag featuring the New York skyline over a pink sky, and the words NEW YORK CITY towering above the image. This how Plaintiff’s attorney describes it in the complaint, in legal yet poetic prose:

“Design encompasses a collage of portions of recognized NYC landmarks prominently featured in the forefront with several other buildings interspersed therein. The Design also features an airbrushed hot pink sky, accented with clouds. In addition, large, purple, fanciful cursive letters, unevenly bordered in white, float above the skyline. The letters opulently glisten and fittingly read, "New York City".”

Source: Balenciaga

The design was used by Plaintiff on several models, a tote, a coin purse, which Plaintiff started selling in late 2014, early 2015. This season, Balenciaga sold a bag and a hoodie, featuring a New York skyline over a pink sky, and the words NEW YORK CITY in a font in large cursive letters. City Merchandise deemed these goods to be infringing and filed a copyright infringement suit in the Southern District of New York against Balenciaga. 

Is it copyright infringement?

City Merchandise’s design is registered with the Copyright Office. It is certainly original enough to be protected by copyright (remember, one only needs a “modicum” of originality for a work to be protected by copyright).

Featuring landmark buildings on a design, such as the Empire State Building, the Flatiron Building and the Freedom Tower, along with the Statue of Liberty (technically in New Jersey harbor, but still a New York symbol) is not original per se, but the way the buildings are placed, the use of a bright pink sky, the fanciful font used for NEW YORK CITY, all make the design original enough to be protected by copyright.

Balenciaga’s design features the same buildings, but shown from different angles, and arranged in a somewhat different way: for instance, the Statue of Liberty is at the left in Balenciaga’s design, whereas it is featured at the right of Plaintiff’s design.

Plaintiffs claim that the “total concept and feel” between its original design and Balenciaga’s are identical. Courts in the Second Circuit apply an "ordinary observer test to determine if two works are substantially similar, but apply a “more discerning test” if works have both protectible and unprotectible elements or if, as in our case, copying is not exact. Judges then mustn’t dissect the works into separate components and compare only copyrightable or similar elements, but must instead compare the allegedly infringing design’s “total concept and overall feel'” with that of the original design.

Could Balenciaga assert fair use as a defense? Interestingly, the fourth fair use factor, the effect on the market, would likely be in Defendant’s favor, as using the protected design on goods sold in the luxury category would indeed have effect on the market, but a positive one (I will look for the original bag next time I am at JFK!).

The economic purpose of copyright

You may remember Balenciaga offering for sale its own version of the blue Ikea bag, and Ikea’s humorous response. One of Plaintiff’s exhibits, an article about this episode explains that Balenciaga also reproduced in leather a colorful Thai laundry bag originally made out of plastic. 

Plaintiff’s bags retail from $19.99 to $5.99, while buying Balenciaga’s versions will set you backfrom $500 to $2,000. Does Plaintiff lose its economic incentive to create a design if a third party use it to make a more expensive version? Copyright law does not care about the price of the object, and a Van Gogh is protected as well as a pattern used for airplane interiors.

Balenciaga saved costs by not having to create the design. It probably did not copy the design to save money, to “free ride”, but more likely to comment on “what makes fashion fashion”: is it the design, or is fashion and style in the eye of the beholder?  After all, Balenciaga head designer is Demna Gvasalia, who became famous thanks to his Vetement brand, which once famously sold once a DHL tee-shirt.

Balenciaga seems to use now tourist goods to comment on fashion: it currently sells a Paris sweatshirt, resembling those found at Parisian tourist shops and showed in its Fall 2018 a model wearing a World Food Program sweat shirt and fanny pack. Reverse snobbism?  Copyright infringement? Or both?

Cox targeted again by rights owners

The three major recorded music companies and numerous of their labels have launched a new legal action against US internet service provider Cox Communications for copyright infringement. The move follows the earlier 2014 action from BMG, who took umbrage at  what it considered was Cox's poor and ineffective approach to dealing with customers who used Cox's services to infringe their copyrights. Cox, the privately owned subsidiary of Cox Enterprises, provides digital cable television, and telecommunications services in the United States, has more than 4 million subscribers and relied on the 'safe harbor' defence in US law.

Whilst BMG acknowledged Cox had policies in place to deal with users who repeatedly infringed copyrights, it accused  Cox of failing to implement it's own policies and argued that this meant the ISP should be denied safe harbor protection and should be liable for the infringement of its copyrights  by Cox's customers. 

And at first instance BMG prevailed and in August 2016 Cox Communications were ordered to pay a $25 million dollar penalty for copyright infringements to the music rights management company by a federal judge. The ruling followed a jury decision which found Cox liable for illegal movie and music downloads by its customers and the court found that the company's behaviour amounted to wilful infringement of copyright.

The Eastern Virginia District Court dismissed Cox’s appeal of the earlier verdict, and ordered Cox to pay BMG $25m in damages for copyright infringement - a ruling which at the time was thought to have widespread repercussions for online copyright infringement in the US. The court decided that Cox did not do enough to stop users pirating music from BMG, and therefore did not qualify for Digital Millennium Copyright Act (DMCA) ‘safe harbor’ protections. Crucially, BMG provided evidence that its agent, Rightscorp,  had identified individual infringers and then alerted Cox to their wrongdoing - which Cox then failed to act on.  

However, that ruling was subsequently overturned on appeal - but it was an interesting ruling: The decision, by a three-judge panel of the 4th Circuit Court of Appeals, returned the case to the District Court for a new trial, based on a decision that there was an error in jury instructions. Irrelevant of arguments about safe harbor protection at the heart of the case, Cox might not been responsible for users' infringement as companies are only liable for contributing to infringement if the companies either know about acts of infringement, or are wilfully blind to them, and the appellate court ruled that the trial judge, District Judge Liam O'Grady, had incorrectly told the jurors that they could find Cox liable if it knew or should have known about infringement by users. "The formulation 'should have known' reflects negligence and is therefore too low a standard," the appellate judges wrote. "Because there is a reasonable probability that this erroneous instruction affected the jury’s verdict, we remand for a new trial."

But, and its a big but, the 4th Circuit took a long hard look at how and why Cox would be protected by US  "safe harbor" provisions that protect service providers from liability when users infringe copyright. - and here the Court ruled against Cox on a key point. The DMCA provides a degree of protection to ISPS and other platforms that respond expeditiously to takedown requests. But one of the requirements is that the ISP and other intermediaries have "adopted and reasonably implemented … a policy that provides for the termination in appropriate circumstances of subscribers … who are repeat infringers." The appeals judges said that as it stood, Cox wasn't entitled to rely on safe harbor because it did very little if anything even when told about repeat offenders, re-affirming the jury decision that sided with BMG and against Cox when they found the broadband carrier liable for piracy by its subscribers. 

Indeed despite 'losing' the case, many in the entertainment sector were pleased with the February 2018 decision and the appeal court's conclusion that the safe harbor provision of the Digital Millennium Copyright Act require a meaningful implementation of a policy that terminates the service of repeat copyright infringers - not least because the appellate judges agreed with BMG that Cox wasn't entitled to rely on the safe harbor protections, writing that the broadband provider's policy was lacking. Cox had in place a "13-strike" repeat-offender policy, meaning that the company would consider terminating subscribers after they received 13 notices of copyright infringement. In practice, it has been alleged the company went to great lengths to avoid disconnecting people with the court acknowledging  "Cox formally adopted a repeat infringer 'policy,' but ... made every effort to avoid reasonably implementing that policy ...... Indeed, in carrying out its thirteen-strike process, Cox very clearly determined not to terminate subscribers who in fact repeatedly violated the policy." It was alleged that Cox really maintained an "under the table policy purporting to terminate repeat infringers while actually retaining them as high-speed internet customers." 

Judge Diana Motz was clearly unimpressed with Cox's efforts to stem piracy by its customers saying: "Indeed, the risk of losing one's Internet access would hardly constitute a 'realistic threat' capable of deterring infringement if that punishment applied only to those already subject to civil penalties and legal fees as adjudicated infringers" and saying a "ISP has not 'reasonably implemented' a repeat infringer policy if the ISP fails to enforce the terms of its policy in any meaningful fashion. Here, Cox formally adopted a repeat infringer 'policy,' but ..... made every effort to avoid reasonably implementing that policy. Indeed, in carrying out its thirteen-strike process, Cox very clearly determined not to terminate subscribers who in fact repeatedly violated the policy." Motz added that failure to implement a consistent and meaningful repeat infringer policy essentially means it has no policy and can't be entitled to a safe harbor defence.

In the wake of the appellate court's ruling, the Recording Industry Association Of America (RIAA) used the appeals court judgement in an action against another ISP,  Grande Communications. In am April 2018 filing related to that case, the RIAA argued that the appeals court ruling in BMG v Cox "affirmed the holdings ... that [we] rely on here, and expressly rejected the central arguments [Grande] advance in their motions to dismiss" and accused Grande of “refusing to take meaningful action against repeat infringers”,  users who repeatedly downloaded music illegally over BitTorrent networks.

Now Sony, Universal and Warner are also using the BMG decision to underpin a new lawsuit against Cox (Sony Music Entertainment et al v. Cox Communications, Inc. et al). The claimants say that while Cox claims to have an internal procedure to deal with repeat infringers in its customer base, the earlier case confirmed this process to be a "sham" and the labels say that Cox "knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers" and that when the labels notified Cox of infringements by its users "rather than working with plaintiffs to curb this massive infringement, Cox unilaterally imposed an arbitrary cap on the number of infringement notices it would accept from copyright holders" and this, the labels say, meant Cox was "wilfully blinding itself to any of its subscribers' infringements that exceeded its 'cap'" and the only justification for the arbitrary cap is alleged to be that "rather than stop its subscribers' unlawful activity, Cox prioritised its own profits over its legal obligations".

http://the1709blog.blogspot.com/2018/02/us-appeals-court-tells-isp-that-safe.html

https://www.mediapost.com/publications/article/313895/court-reverses-25-million-copyright-verdict-again.html

https://jolt.law.harvard.edu/digest/bmg-v-cox-court-of-appeals-denies-dmca-safe-harbor-in-landmark-copyright-case

https://www.billboard.com/articles/news/7768055/riaa-suing-grande-communications-copyright-infringement

http://www.completemusicupdate.com/article/major-labels-sue-cox-communications/