Foreign Territory for U.S. Digital Media Providers: The Legal Terrain in Italy

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In this ever-growing world of global digital media, U.S. digital media providers are increasingly finding themselves subjected to the varying, and in some instances, evolving laws related to intellectual property protection in the far ends of the earth.  Well, maybe not that far, but it may feel that foreign when suddenly dealing with Italian law and European Union (EU) legislation and, in many ways, even more oddly, the Italian courts.

 

U.S. Copyright Law and EU Legislation

 

For starters, U.S. copyright law provides a safe harbor for website hosting providers, such as YouTube, which provide online platforms for users to upload and transmit materials on the web.  Through Section 512 of the Digital Millennium Copyright Act (DMCA), service providers can be protected from liability for protected information posted or transmitted by subscribers if the providers meet certain qualifications.  These qualifications primarily require that the provider (1) have no knowledge of, or financial benefit from, the infringing activity on its network; (2) have a copyright policy and enforce a proper “take-down” notification procedure policy on its subscribers; and (3) list, on its website, a designated agent that deals with copyright complaints.

 

While EU legislation does not contain a similar safe harbor provision, the E-Commerce Directive issued by the European Parliament does contain some guidance for service providers seeking to avoid a lawsuit.  Under Directive 2000/31/EC (otherwise known as the “E-Commerce Directive” or “ECD”), adopted in June 2000, member states of the EU shall ensure that service providers are “not liable for the information stored at the request of a recipient of the service, on condition that (a) the provider does not have actual knowledge of illegal activity or information…or (2) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.”  E-Commerce Directive 2000/31, art. 14, 2000 O.J. (L 178) 1, 16 (EU). Further, member states “shall not impose a general obligation on providers…to monitor the information which they transmit or store, nor a general obligation to actively seek facts or circumstances indicating such illegal activity.”  E-Commerce Directive 2000/31, art. 15, 2000 O.J. (L 178) 1, 16 (EU).

 

The E-Commerce Directive was adopted by the Italian Parliament under Article 16 of the Italian Legislative Decree No. 70/2003, dated April 9, 2003.

 

Slew of Litigation in Italy Against Digital Media Providers

 

Notwithstanding some of the favorable provisions under both U.S. and EU law, in the last five years, Italian television and radio network Reti Televisive Italiane S.P.A. (RTI) has been on a litigation rampage.  RTI has initiated copyright infringement lawsuits against various Internet and digital media service providers, many of whom are U.S.-based entities.  According to RTI, online platforms that provide video-sharing services for users to upload and view digital content should be held liable for any infringing copyrighted material featured on their webpages.  In many cases, RTI has not only been demanding the immediate removal of such allegedly protected material, but has also sought compensatory and punitive damages sometimes in the millions of euros.

 

The Earlier Lawsuits

 

In December 2009, RTI filed for interim injunctive relief in the Court of Rome against Google UK Ltd., YouTube LLC, and YouTube Inc. alleging that RTI’s exclusive rights to the television program and reality show “Big Brother” was violated when the content at issue was displayed on the defendants’ online-streaming website.  Court of Rome, sez. un., 15 dec. 2009, n. 54218, Giur. It. 2010, 4.  RTI alleged that in just two days (October 26 to 27, 2009), 542 minutes of the “Big Brother” television programming was broadcasted and made publicly available on YouTube and Google Video websites. According to RTI, this constituted copyright infringement, resulting in serious harm to RTI in the form of lost market share and customers.  The Court of Rome held in favor of RTI, finding that although an Internet service provider (ISP) is not obliged to monitor the content published by its users on websites, a provider should still be held liable whenever “it does not merely provide a connection to the internet but offers additional services such as cashing or hosting and/or monitoring of information.”  Ultimately, the court issued the injunction against the defendants in light of the court’s finding that the defendants did manage the video content for a variety of reasons, including for advertising purposes, notwithstanding RTI’s warning letters.

 

In June 2011, the Court of Milan found online service provider On Line S.R.l. (IOL) liable for copyright infringement based on RTI’s allegations that certain copyrighted excerpts of RTI’s television shows were uploaded in the video section of a portal managed by IOL. Court of Milan, sez. un., 20 jan. 2011, n.7680, Giur. It. 6, jul. 2011.  The court ruled in favor of RTI, finding that IOL was an “active” hosting service provider and therefore not entitled to the hosting defense provided for under the E-Commerce Directive issued by the European Parliament (see below for further information).  IOL was considered “active” (as opposed to “passive”) because it organized and selected the materials uploaded by users and provided further services related to the videos for advertisers to show advertisements related to the content of the videos. The court issued an order against IOL, granting RTI’s requested injunctive relief and imposing a penalty of €250 for each video and for each day of delay in the removal of the infringing videos.

 

In September 2011, the Court of Milan in Italy likewise found Yahoo! Italian S.R.l. liable for copyright infringement due to certain excerpts from RTI’s television shows appearing on Yahoo’s video platform. Court of Milan, sez. un., 22 mar. 2011, n.10893, Giur. It. 9 sept. 2011. The court found it significant that Yahoo did not immediately respond to, and comply with, RTI’s initial demand notice. The court also found Yahoo was an “active” service provider because it not only included advertisements in the videos, but also suggested related videos and provided a procedure for users to report violations.  Yahoo was similarly penalized €250 for each video and for each day of delay in the video’s removal and RTI obtained its requested injunctive relief.

 

Possible Hope for U.S. Companies

 

Despite the seemingly unfavorable legal landscape in Italy for digital media providers, recent cases have suggested a possible light to what providers could only hope is the end of the tunnel for RTI’s litigation rampage. In December 2011, the Court of Rome issued an important decision in yet another RTI case.  Court of Rome, sez. un., 14 dec. 2011, n. 40724, Giur. It. 2012.   RTI had filed a lawsuit alleging that certain copyrighted materials owned by RTI were unlawfully streamed by Blogger, one of Google’s blog-publishing service providers.  RTI demanded immediate removal of such content. 

 

This time, however, the Court of Rome found against RTI, relying on Sabam v. Scaret, a case decided by the European Court of Justice in November 2011 (additional details provided below).  Following the Sabam v. Scarlet case, the Court of Rome denied RTI’s requested relief, finding that such an order would be contrary to European Union legislation that explicitly provides that member states must not impose a general obligation on ISPs to monitor and filter content uploaded by third-party users in order to prevent future infringement of intellectual property rights, including copyrights. The court reasoned that a general monitoring obligation is prohibited under Article 15 of the E-Commerce Directive, as well as under Article 3 of the IP Enforcement Directive, which specifically provides that all measures used to prevent future infringement of intellectual property rights must be conducted in a fair and proportionate manner, not comprising of excessive costs or burdens.

 

Future for U.S.-Based Online Service Providers

 

Thus far, none of RTI rulings have addressed how to properly calculate an award for compensatory damages, if any.  Previous RTI cases have only involved the issue of injunctive relief and/or punitive damages, such as in the RTI vs. Yahoo lawsuit.  However, as current proceedings initiated by RTI continue in the Court of Rome, a decision regarding proper calculation of compensatory damages award is anticipated to be issued before the summer of 2013.

 

As cases filed by RTI still remain pending in the Court of Rome, the rest of the world can only hope that this hotly contested, and seemingly conflicting, area of law will soon be reconciled by what one can only hope will be a decision providing further clarity and guidance for online service providers.