article
The sinking of Pirate Bay
22 April 2009
Summary of Article
- This judgment is certainly significant. However, whilst
tempting, it is premature to state that this judgment necessarily
has wider effect.
- Illegal downloading has thrown the creative arts industry into
crisis.
- Pirate Bay is a BitTorrent Tracker, ie it does not store
copyright infringing material in any way.
- The 4 individuals (Neij, Warg, Lundstrom and Sunde) have been
convicted of "assisting making available copyrighted content".
- One of the key issues is whether they are entitled to rely upon
the E-Commerce Directive as “mere conduits” of infringing
material.
- The fact that they have not been able to do so does throw into
question whether sites such as Google, YouTube, or eBay could be
similarly criminally liable.
- However, this decision is inevitably going to be appealed and
the ultimate decision remains uncertain.
- Even if the 4 individuals are ultimately convicted, the finding
that they have “assisted” the dissemination of infringing material
is a decision on its facts to some extent.
- Moreover, it is unlikely that decision would be repeated in
other jurisdictions, such as the UK, where caselaw has found that
the charge of authorising copyright infringement has a high
threshold.
Introduction
The decision by a Swedish court to convict Frederik Neij,
Gottfrid Svartholm Warg, Carl Lundstrom and Peter Sunde of
assisting making available copyrighted content" is potentially
significant, but caution needs to shown in immediately suggesting
it will have wider effect.
Facts of the Case
Pirate Bay is a well-known Swedish filesharing site, which uses
BitTorrent technology to allow its users to share and therefore
download content.
Pirate Bay has been the target of the music industry, and the
Swedish authorities, for some time. On 31 May 2006, the website's
servers were raided by the Swedish police, causing the site to
close down for three days.
Despite mounting pressure, however, the site remained generally
operational, and its founders have consistently argued that the
site is doing nothing illegal.
However, on 31 January 2008, charges were filed by Swedish
prosecutors against four individuals, Peter Sunde, Fredrik Neij,
Gottfrid Svartholm and Carl Lundstrom, for "promoting other
people's infringements of copyright laws”.
There followed a high profile trial, dubbed a 'Spectrial' by
Pirate Bay itself (a combination of spectacle and trial).
On 17 April 2009 the four men were convicted and each sentenced
to one year in jail each and ordered to pay a total of 30 million
SEK (3.6 million USD). Inevitably, an appeal has now been
lodged.
Crisis in the Music Industry
The case is yet the latest round in an ongoing battle between
the creative arts industry and filesharers.
It is a widely held view that the creative arts industry, and
the music industry in particular, is in crisis because of the
decline in CD sales and exponential rise in copyright infringement
over the internet. A report by Enders Analysis from last year
estimated that global CD sales, for example, are likely to
stabilise at around £23 billion in 2009, down from a high of £45
billion in 1997.
Put simply, the internet has created a bootleg crisis in the
creative arts industry that threatens to overwhelm it.
Filesharing
Principally, illegal downloads are effected through filesharing:
the activity of trading digital files with other users over the
internet. First generation filesharing protocols, such as Napster,
used a central server to access materials. It was thus easy to
identify a central source of copyright infringing materials.
Second, third and fourth generation filesharing protocols do not
use a central server. Instead of users being dependent upon
receiving content from a central source, they are able to exchange
data with each other. Moreover, they can achieve anonymity by
routing traffic through other users' clients.
Fourth generation filesharing allows streams instead of files to
be transmitted over a P2P network. Therefore, it is possible, for
example, to listen to live video or audio without any server being
involved. In order to do this, swarming technology is used, which
involves use of the BitTorrent protocol to download segments of
data from a variety of other users and then put it together to
create the data stream.
Pirate Bay operates on this basis, and indeed is widely regarded
as the world's largest Bit Torrent Tracker.
The Legal Context
It is important to remember that online infringement can never
be looked at within the boundary of a single jurisdiction. It is a
multi-jurisdictional, international issue. Copyright protection in
other jurisdictions, whilst unified to extent through the Berne
Convention and the Universal Copyright Convention, is not subject
to the same tests.
That said, copyright works generally must be original, and they
must have a fixed material form. They do not, however, generally
need to be registered. Therefore, no forms need be completed nor
are there any fees payable to obtain copyright protection.
As such creative works such as music or videos invariably
attract copyright protection, which means that such works
downloaded from sites such as Pirate Bay in an unauthorised manner
infringe the copyright of the owner of those works (artists, or
more often, record companies and musical producers'
organisations).
Infringement of copyright can occur in numerous different ways.
In the UK, copyright infringement is governed by s.16 Copyright
Designs and Patents Act 1988. Primary acts of infringement
include:
- Copying the work;
- Issuing copies to the public;
- Renting, lending the work to the public;
- Performing, showing or playing the work to the public;
- Communicating the work to the public;
- Making an adaptation of the work or doing any of the above in
relation to an adaptation.
...or authorising any of the above acts, which is a key
point.
Secondary acts of infringement include:
- Making;
- Importing into the UK;
- Possessing in the course of business;
- Selling or letting for hire;
- Deliberate copyright infringement is, under s.107 the Act, a
criminal offence.
Similarly, in Sweden, criminally infringing acts include
assisting copyright infringement and assisting making available
copyrighted content. It was these offences that were brought
against Neij, Warg, Lundstrom and Sunde. On the second day of the
trial prosecutors were forced to drop the charge of assisting
copyright infringement because they were unable to prove that
.torrent files submitted as evidence used The Pirate Bay’s tracker,
nor were they able to fully explain the technology involved to the
Court.
However, the charge of assisting making available copyrighted
content (Or “Assisting in violation of copyright law” as an English
translation of the judgment reads) remained (as did “Preparing for
a violation of copyright law”). Neij, Warg, Lundstrom and Sunde
were convicted of “assisting” but cleared of “preparing for”.
There is no legal difference between a hard copy and a digital
copy of a copyright work. To that extent, copyright is technology
neutral.
However, there are some differences in the extent to which
copyright infringement of such material will occur. Clearly, whilst
the transmission of physical copyright works can be easily tracked,
that is less easy with electronic works. The question is the degree
of involvement that websites such as Pirate Bay have in
facilitating the downloading by individual users of infringing
copyright content.
The EU directive 2000/31/EC (the E-Commerce Directive) provides
that information society services providers are not liable for
damages in certain circumstances, where that provider is a "mere
conduit" of that content, is involved in “caching” that content, or
is a “host” of such content.
Article 15 states that there should be no obligation on such
entities “to monitor the information which they transmit or store,
nor a general obligation actively to seek facts or circumstances
indicating illegal activity”.
However, member states may “establish obligations for
information society service providers promptly to inform the
competent public authorities of alleged illegal activities
undertaken or information provided by recipients of their service
or obligations to communicate to the competent authorities, at
their request, information enabling the identification of
recipients of their service with whom they have storage
agreements”. Therefore, there is an obligation on such information
society service providers to institute systems for dealing with
copyright complaints.
These ‘safe harbour’ provisions have been used in defence of
internet service providers. They have also been used to defend eBay
and Google. In Belgium, for example, the Lancôme/Ebay judgment of
the Brussels Court of Commerce found that Ebay qualified as a
"host" under the E-Commerce Directive, that it benefited from ‘safe
harbour’ provisions in the E-Commerce Directive and was entitled to
rely on Article 15 in its defence against claims that it had
allowed sales of trade mark infringing goods.
It was also the ‘safe harbour’ provisions, and in particular
Article 12, upon which Pirate Bay's lawyers – in part - relied in
arguing that they were not liable for any damages. On the third day
of the Trial, in what has become known as the "King Kong Defence",
defence attorney Per Samuelson stated to the Court:
"EU directive 2000/31/EC says that he who provides an
information service is not responsible for the information that is
being transferred. In order to be responsible, the service provider
must initiate the transfer. But the administrators of The Pirate
Bay don’t initiate transfers. It’s the users that do and they are
physically identifiable people. They call themselves names like
King Kong.... According to legal procedure, the accusations must be
against an individual and there must be a close tie between the
perpetrators of a crime and those who are assisting. This tie has
not been shown. The prosecutor must show that Carl Lundström
personally has interacted with the user King Kong, who may very
well be found in the jungles of Cambodia..."
In finding that Pirate Bay was indeed a commercial information
service provider, the Court held that the failure by Pirate Bay to
establish a system for dealing with copyright complaints meant that
it could not rely upon the ‘safe harbour’ provisions.
What Does this Decision Mean?
Per Samuelson argued that, under Swedish law, the charges must
be brought against individuals and there must be a close tie
between the perpetrators of an offence (the downloaders of
copyright infringing material) and those accused of "assisting".
Per Samuelson argued that, importantly, Pirate Bay can be used for
downloading legal files as well as illegal files.
Clearly, the Swedish Court has taken a different view. The
immediate and obvious response is therefore that sites like Google,
eBay and sites containing user generated content (UGC sites) may
also be criminally liable for IP infringements.
However, it is impossible to state – at this stage – that the
Pirate Bay decision is either right, is not merely limited to its
own facts, or that the application of legal principles is
necessarily applicable across other jurisdictions.
Firstly, it is important to understand that the case relates to
criminal liability, and therefore involves the fusion of copyright
infringement (or rather assisting copyright infringement), which is
essentially a civil offence, and criminal liability for assisting
that essentially civil offence. Further, as regards damages it
involves a rejection of the argument that liability can be
discharged by the ‘safe harbour’ provisions set out in the
E-Commerce Directive.
Moreover, the Swedish statute being applied is a new category of
copyright infringement termed (in the Google translation of the
Swedish Judgment at least) as “transfer to the general public”,
which is perhaps similar to “Communicating the work to the public”
under UK law. This was only introduced on 1 July of 2005 by
implementation of the EU Copyright Directive, and therefore remains
relatively untested by the Swedish Courts.
Further, the conviction is actually for more than just copyright
law. One of the defendants, Gottfrid Svartholm Warg was also
charged and convicted of a “Violation of the law banning certain
health-hazardous goods”, ie possession of amphetamines, that no
doubt swayed the Court to some degree.
All sorts of other issues were raised during trial, such as
whether the defendants had acted in concert or independently. The
chaotic structure of Pirate Bay contributed to these arguments.
Fredrik Neij and Gottfrid Svartholm Warg essentially ran the site.
Peter Sunde Kolmisoppi’s liability stems from advertising payments
and the issuance of invoices. Carl Lundstrom purchased servers and
bandwidth. Therefore, since this matter is going to appeal, this
issue will be tested again.
In reality, Pirate Bay is a fairly extreme example, as a website
which – arguably at least - openly allowed its users to access
infringing material. The factual position is much different for
sites such as Google, eBay, and YouTube, for which such
infringements are – even if widely known about – genuinely
inadvertent. Recital 42 of the E-Commerce Directive makes clear
that the ‘safe harbour’ exemptions are only intended to cover cases
where the activity of the information society service provider is
limited to the technical process of operating and giving access to
a communication network over which information made available by
third parties is transmitted or temporarily stored, for the sole
purpose of making the transmission more efficient:
“…this activity is of a mere technical, automatic and passive
nature, which implies that the information society service provider
has neither knowledge of nor control over the information which is
transmitted or stored.”
Therefore, Pirate Bay, whose very name arguably implies its aim
is to facilitate pirate copies of copyright works, is not the sort
of entity whom that legislation was envisaged as protecting from
damages payments. Even in that context, it is far from certain that
the prosecutions of Neij, Warg, Lundstrom and Sunde will be upheld
on appeal.
Moreover, even if they are, the legal position is not
necessarily the same across other jurisdictions. We do not, for
example, have a law in the UK for facilitation of copyright
infringement, although authorisation of copyright infringement is
an offence and has a higher threshold than merely facilitating. In
the well known case of CBS Songs –v- Amstrad (1988) RPC 567 the
House of lords held that a twin cassette deck that could be used
making copyright infringing tapes did not constitute the
authorisation of copyright infringement because the cassette deck
has legitimate uses. The decision mirrors a similar decision in the
US, Sony –v- Universal City Studios 104 US 774 (1984) in which the
legality of a Betamax video recorder which could both play recorded
films was upheld.
That is not to say that copyright owners have no form of redress
in the UK. The ‘safe harbour’ provisions, or example, merely
prevent liability for damages or any other pecuniary measure, or
for criminal sanctions. They do not however, prevent the
possibility of injunctive relief. The Copyright Directive, which
was implemented in UK through the Copyright and Related Rights
Regulations 2003 inserted s.97A into the Copyright Designs and
Patents Act 1988. S.97A gives the High Court the power to grant
injunctions against internet service providers where there is
actual knowledge of a third party using its services to commit a
copyright infringement offence. Such knowledge can be effected
through a notice to the ISP from the copyright owner. The
Electronic Commerce Regulations require ISP's provide such contact
details so that notices can be served.
However, the possibility of criminal liability in the UK for
individuals such as in the Pirate Bay case is much more remote.
Conclusion
The Pirate Bay decision is a high profile, somewhat unexpected,
and significant decision in a relatively new area. It is therefore
a landmark decision of sorts. It potentially creates a new
landscape for downloaders of infringing copyright material and
providers of technology and services to assist that process. To
that extent, the creative arts industry has won a major battle and
will no doubt trumpet its success.
Yet, it is unwise, at this stage, to draw wider conclusions. It
will be interesting to see what outcome emerges from the appeal
(which could take up to 6 years) and even if the convictions are
upheld the facts of this case are, to an extent, unique.
However, this is certainly a decision that will send shockwaves
through the internet community. Moreover, it perhaps heralds a day,
not too far distant, when internet users will no longer have easy
access to free, illegal copyright material. For an internet
generation that has grown up expecting such easy access, that may
be a difficult prospect to contemplate.
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