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01 October 2013
One-click hosting services have a catchy English nickname in Germany – 'sharehosters'. It is an expression akin to the 'file-sharing' euphemism that, in legal terms, mostly boils down to copyright infringement. Most such services can be used with some degree of anonymity, and copyright owners have therefore often tried to go after the hosting services themselves to stop the illegal distribution of copies of protected works. However, the extent of liability and copyright compliance requirements for one-click hosting sites have been the subject of extensive legal discussion and shifting case law for at least five years in Germany.
If users infringe copyright by sharing their files, one-click hosting providers also face legal exposure under German law.
In 2012 Germany's highest civil court, the Federal Court of Justice, handed down its first ruling on the liability of one-click hosting services, which provides some practical guidelines to determine the duties of care of one-click hosting providers. A second decision followed in Summer 2013. However, liability depends highly on the individual case, so there is still no fixed checklist for one-click hosting services to confirm compliance.
Normally, liability for copyright infringement requires the unlicensed distribution, or at least willing and knowing participation in the unlicensed distribution, of protected works. It is common consensus that one-click hosting services themselves do not distribute files as a perpetrator or participant. In fact, these services are considered only as intermediaries for the reproduction and distribution of files by users.
However, hosting providers can be held liable for users' uploads in Germany on the basis of a legal theory known as 'interferer's liability'. According to long-established case law, an 'interferer' is someone who, without being a perpetrator or participant, contributes wilfully to a violation of rights in a sufficiently causal manner. The interferer does not automatically owe damages for the initial copyright infringement itself, but must cease and desist and pay damages for legal fees associated with such cease and desist requests or injunctions, as well as damages for any breach or violation of a cease and desist undertaking or injunction. However, the courts have made it clear that this liability cannot be extended unreasonably to third parties which are neither perpetrators nor participants. Thus, interferer's liability requires breach of a reasonable duty of care (a duty to audit), the precise extent of which depends on the individual case. However, one of the guiding principles set forth by the Federal Court of Justice in consistent case law is that duties of care must be reasonable and cannot be so extensive that they would destroy an otherwise legitimate business model.
The extent of these audit duties is the key aspect of the debate about hosting providers' liability and is probably the main cause of legal disputes in this field in Germany. There have been several contradictory court decisions on the extent of audit duties for one-click hosting sites in the past five years, most of them involving Swiss one-click hosting company Rapidshare. As the following list shows, the scope of these court rulings was quite broad:
In its 2012 and 2013 rulings, the Federal Court of Justice(5) stated that a one-click hosting provider must take all technically and economically reasonable measures to prevent future uploads of files that have been reported to be illegally distributed through its service. The court held that the following audit duties were reasonable:
Although the court has issued precise guidelines on the audit duties of one-click hosting providers, it must be emphasised that these will depend on the specific design and business model of the particular service at issue. Audit duties might, for example, go further if the one-click hosting service were to play an active role in terms of knowledge of or control over data.(6)
At the same time, it must be taken into account that cloud computing has become a part of everyday life, as the Hamburg Higher Regional Court pointed out in its 2012 decision. The mere fact that a service allows file sharing does not automatically lead to extensive audit duties. However, although it was less harsh regarding the legitimacy of the business model in light of these new developments, the court did not consider Rapidshare to be a normal cloud storage service.
Consequently, the Federal Court of Justice emphasised in its recent 2013 decision that Rapidshare is encouraging copyright violations and abuse of its service, in particular because it goes a long way to protect the anonymity of its users. As a result, the court also clarified that in case of any dispute, the host provider must supply evidence that all audit duties have been fulfilled in the specific case, which significantly eases the burden of proof for rights holders.
The audit duties laid out by the Federal Court of Justice in its 2012 and 2013 decisions are not an exhaustive checklist for all types of one-click hosting, but rather a reasonable minimum standard. Any one-click hosting provider that falls short of these measures will most likely face liability under the interferer's liability theory, and could be targeted by cease and desist letters on behalf of copyright owners.
(5) Federal Court of Justice, Urt v, July 12 2012 – I ZR 18/11, MMR 2013, 185 – Alone in the Dark; Urt v, August 15 2013 – I ZR 80/12 - Rapidshare, http://tlmd.in/u/1413.
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