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Piracy and private copy levy: the European Court of Justice makes an important ruling

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According to the European Court of Justice, the amount of the levy payable for making private copies of a protected work may not take unlawful reproductions into account. This principle has been stated today in the decision ACI Adam BV and Others v Stichting de Thuiskopie, Stichting Onderhandelingen Thuiskopie vergoeding (case C-435/12).

According to the court, the fact that no applicable technological measure to combat the making of unlawful private copies exists is not capable of calling that finding into question. The decision at stake involves a couple of relevant consequences for national policy makers and jurisdiction in the matter of private copy levies and fight to online piracy.

Facts

The current legislation in the Netherlands imposes a private copying levy on electronic devices with storage devices in order to compensate copyright holders for the unlawful reproduction of their works. The decision of the ECJ, following the AG opinion of January 9th, 2013, maintains that such Dutch legislation is detrimental to the functioning of the internal market as far as it allows reproductions for private use from unlawful sources. Moreover, the court noted that “national legislation which makes no distinction between private copies made from lawful sources and those made from counterfeited or pirated sources cannot be tolerated”. This indiscriminate application effectively penalises users who lawfully reproduce their digital content from authorized sources as they also pay the private copy levy and creates a disincentive for business based on legal content.

Consequences for private copy legislations 

This ruling will have an impact in countries where the private copy levies mechanism has been arbitrarily used as a compensation for the potential losses deriving from online piracy. In various countries (for instance Italy) the right-holders are lobbying the government to increase the levies on the grounds that their revenues are declining because of pirated content on the iNternet. By doing so, however, the industry blurs the difference between legal and illegal content and creates a contradiction: if pirated content is illegal it should be stopped, not remunerated, both things together are not possible. Some legislators or governments did not understood such distinction and believed that the such kind of mechanism may be a way to make everybody happy: rights-holders and pirates. Right holders may be happy about this solution, because at the very end they want money and not principles: but they stop to fight piracy then.

The ECJ correctly quashed the above reasoning and reinstated the correct interpretation and application of the private copy exception.

Consequences for pirated content

Clearly, the hidden result of the Dutch legislation was to legalize illegal content. In fact, if illegal content is taken as a basis to remunerate rights-holders via the private copy mechanism, then it will not illegal any longer: it will be part of the business. In this case, however, one should stop to fight piracy, which will become a licit business remunerated via a peculiar way. From policy point of view, it is an interesting perspective, however such approach requires a correct legal basis to go ahead.

And in fact, the ECJ rebutted this reasoning, because the private copy mechanism (which is an exception to copyright, but he way, applicable only in some countries and in different ways) has not been deemed for this purpose. Of course Netherlands could decide to legalize illegal content (like drugs!), but they have to choose another legal basis.

Other consequences: filtering?

Following the ECJ’s decision, some stakeholders and commentators have started saying that now Dutsch ISP should start to filter Internet traffic in order to intercept and block users making illegal download. To this purpose, someone has evocated the latest ECJ’d decision on web-blocking (the UPC case). See for instance the director of Brein, the Dutch anti piracy committee:

It’s BREIN to do about the fact that there are illegal traders on the internet (sites and services) that make it their business to facilitate access to illegal content ,” said BREIN director Tim Kuik. “Obviously it’s of the utmost importance that we can claim blocking of access to persistent illegal websites. Blocking [of Pirate Bay] was recently rejected by the appeal court in The Hague. BREIN asked the Supreme Court to annul that decision

This approach is not correct. Monitoring/filtering was admitted by the ECJ in the well-known Sabam case only under strict criteria which, to my opinion, make this measure not really enforceable in practice. In any case, it should be up to the national courts/legislators to foresee a blocking mechanism allowing ISPs to detect illegal downloading without infringing the principles laid down by the European court.

This new Dutch case does not add anything to this perspective. In many countries pirated downloading is already an illegal practice, even a criminal fact: whether ISPs may be required to intercept such conducts is still the same old story. In any case, the reference to the UPC case is inappropriate, because:

- filtering of content to block it (like in Sabam); and

- filtering of Internet traffic for the sole purpose to block the access to a forbidden website (like in the UPC case);

are technically not the same thing. Filtering like in the Sabam case requires a kind of DPI, because intercepting illegal downloading involves an intrusive analysis of IP packets; by contrast, blocking Internet traffic towards a given destination should be in principle less intrusive, depending on the kind of technology chosen to implement the measure. In any case, in the UPC case the European Court made clear the web-blocking should not interfere with individual rights, including privacy – this should prevent ISPs from applying DPI technologies to implement web-blocking measures.

 

Search neutrality: the new frontiers of the #netneutrality debate

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I just gave an interview to Euractiv in the matter of search neutrality, here my answers:

Net neutrality is a key topic in the EU debate and will likely remain so with the next Commission and Parliament. Can you give us a simple explanation of what it’s about?

Net neutrality means that internet service providers (ISPs), i.e. the telecoms operators providing internet access, are prevented from controlling which services or applications their subscribers can access on the internet. ISPs may affect such freedom by blocking, limiting, throttling access to services, or by differentiating the price of internet traffic for a given online service, favouring one service over another.

This means that for having a neutral internet, data traffic should be treated the same way?

This is a misleading debate. Internet bits are currently treated differently because of technological and routing reasons, and especially to avoid congestion. But net neutrality is not impaired if such bits management is not aimed at controlling what users want to access. Traffic management should not be a taboo, provided no specific services are discriminated.

Would net neutrality be preserved if ISPs were transparent about their traffic management?

Transparency does not solve the issue, because for a consumer it is not satisfactory to be informed about restrictions. Consumers just want to get an open Internet.

Is the consumer not free to change their ISP?

There are hundreds of ISPs in Europe, but they are just a few for a given consumer due to national barriers. Moreover, once an ISP is chosen, consumers are reluctant to migrate to other ISPs because of technical, contractual and timing reasons. This so-called lock-in is a fundamental barrier which limits consumers’ choices more than in other markets. For instance, the online search market is also under a kind of neutrality threat, but at least does not have the further anti-competitive pattern of the lock-in.

Where is the problem in the online search market?

The online search market is dominated by one player, Google, which potentially has the capacity of conveying web traffic, like a dominant ISP can do with internet traffic. The moment when Google starts to privilege one destination, rather than another, it is posing a threat to the “neutrality” of online search.

Can we therefore draw a parallel between net neutrality and search neutrality?

I would be cautious about this. In my opinion, internet search can never completely be neutral. Search tools and criteria are never completely objective, since they are designed, in a way, to meet the profile of users. If this is done well, the search engine will be successful, and consumers will recognise it.

Where does Google pose a risk then?

The main problem with search activities is transparency. Consumers may accept that some search results are displayed in a privileged manner, for example, to show advertisements. However, if advertising is done in a non-transparent way, search results may be misleading.

But consumers remain free to switch to other search engines?

True. Indeed, the main difference between the internet and the search sector is the lock-in factor. While for ISPs the lock-in is a fundamental barrier for changing provider, in the search engine market the lock-in does not work. If there is an alternative search engine, a simple “click” is enough. This is the main threat and weakness for Google.

Why then Google is so dominant, if the lock-in does not apply?

Google is dominant because customers recognise that it is the best service, not because they are locked. This success has been built through important investments in software and hardware, especially huge data centres. The continuing search activities all over the years reinforced its position, creating a kind of “information barrier” for potential competitors. This is a problem for online service providers, which are de facto locked into the dominant platform.

Will Google maintain its dominant position?

Things could change, if results displayed by Google became all for-pay, so that you have to scroll through various pages to find non-advertised results. In the long run, this would damage Google’s reputation. The same effect would come if Google diminished the transparency in distinguishing paid results from neutral material. Another problem is privacy and profiling, if the users start to think that the “personal data in exchange of free services” deal is not convenient anymore.

 

 

The annulment of the data retention directive and the messy consequences on national legislations

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(see the update below of April 11, 2014)

Today the European Court of Justice has declared invalid the European data retention directive (Directive 2006/24/EC), i.e. the entire set of rules obliging in Europe ISPs and telcos to retain data and information about citizens using electronic communications networks.

The Court has recognised that retention of personal data for purpose of investigations is per se compatible with the European framework, although it may potentially interfere with basic fundamental rights such as privacy. However, the Court also found that the set of obligation laid down by current directive is disproportionate and contrary to some fundamental rights protected by the Charter of Fundamental Rights, in particular to the principle of privacy, because “the wide ranging and particularly serious interference of the directive with the fundamental rights at issue is not sufficiently circumscribed to ensure that that interference is actually limited to what is strictly necessary” (NB: since the entry into force of the Lisbon Treaty in December 2009, the Charter of Fundamental Rights has the same value as the EU treaties, thereby forming part of the EU primary law). In particular, the Court challenges the following:

-       the directive covers, in a generalised manner, all individuals, all means of electronic communication and all traffic data without any differentiation, limitation or exception being made in the light of the objective of fighting against serious crime;

-       the directive fails to circumscribe, from both procedural and substantial point of view, the notion of “serious crime” and opens risks to potential abuses in the Member States;

-       also the data retention period (from 6 to 24 months) is too generic and should be adapted to the specific objectives (crimes to be fought) to be pursued.

Interestingly, the question is what will happen with the current national legislations which have been enacted as transposiiton of the invalid directive.

Although one could think that also these legislations have become invalid, this is not an automatic effect from the annulment judgment. My comments hereinbelow.

- The effects of invalidity ruling of a EC directive over the implementing national provisions 

Neither the EC Treaties nor the precedent of the European court give clear guidance to this purpose.

According to art. 249 of the Treaty: “A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods”.

This means that, in case of the annulment of a directive, it is up to the Member State to evaluate how to proceed. For the time being, we can see 2 main scenarios:

- in case of national provisions transposing EC rules declared void because they conflict with other prevailing EC rules (preeminence of privacy, for instance, as in the present case), the Member State has very little discretion. The national provisions must be abrogated quickly: if not, apart from a potential risk of infringement procedure by the European Commission, national courts and administrations shall dis-apply them immediately from now. In other words, following a well-established jurisprudence, such national provision remain formally in force but without effects vis-à-vis individuals;

- to the opposite, if a directive is annulled because of a procedural reason, or if some of their provisions are not incompatible with the EU ruling, then Member States could make the necessary adjustments and maintain the national legislation in force.  It will be a case-by-case evaluation, which may be complicated in practical circumstances. Fact is, some valid provisions can make sense only with other provisions which, however, have been maybe declared incompatible with EU law.

- The consequences for Member States

Thus, in the present data retention case, Member States seem to have the alternative between:

1. abrogating the entire national data retention legislation; or:

2. modify that legislation in order to meet the “proportionality concern” of the European Court.

If a Member State does not act quickly, it will be potentially subject to an infringement procedure by the European Commission. This will be quite paradoxical, because the Commission imposed fines on Member States for not complying with  the directive.  Some countries refused to implement the directive because of internal constitutional reasons (Germany, Romania, Czech, and in part also Cyprus and Bulgaria). For the European Commission is an embarrassing situation.

- The consequences for the operators

In the meanwhile, if an operator claims that the national data retention cannot applied against it, it has an interesting case to defend. As stated above, the national data retention provisions have not been abrogated by the European Court, however they have become ineffective as far as they do not pass the “proportionality test” indicated in the judgement. In my opinion, most of the national data retention legislation enacted in Europe after the 2006 directive do not pass that test. As a consequence, these data retention obligations are still in force but not effective anymore. What will happen in practice? While the central government will wait time before taking a decision, at local level law enforcement and public prosecution services might still order the retention of data under the cybercrime convention regulation and defend their point until a court declare that such provisions are not applicable any longer. As a result, if ISPs refuse to enforce the (ineffective but non abrogated) data retention local legislation they might be fined and required to challenge in court the punishment.

On the other side, the same operators are in a messy situation, because individuals could argue that the retention of their personals data on the operators’ servers is now illegal. One should remind that until the 2006 data retention directive came into force, retaining data was a voluntary or administrative practice aimed at some limited scopes like billing. However, with the annulment of the data retention directive such practice may be seen as an infringement of European privacy rules, that would amount to a criminal liability in some countries. In order to avoid such risks, operators could better decide to delete all the traffic data currently recorded on their servers.

- Next steps (UPDATE 11 APRIL 2014)

On Friday 11, 2014 a meeting between Commission, privacy authority and stakeholders took place in Brussels in order to discuss the consequences of the judgement. In the reality, the meeting had been scheduled since time in order to monitor the implementation of the data retention directive, however following the judicial annulment of the same the agenda was adapted accordingly. As far as I know, the European Commission informally declared the following:

1. the national legislations are still valid despite the annulment judgement. MY COMMENT: this is debatable, because most of the national legislation have implemented the annulled directive without changes and modifications; a legal mess is now emerging because individuals may challenge the retention of data by ISP and use of that by public authorities;

2. The European Commission will not adopt guidelines in relation to the consequence of the annulment. MY COMMENT: this is disappointing. The Commission created a problem (and costs for the ISPs) and now they do not see the reason for intervening to limit damages.

Most probably, it will up to the national data protection authorities to intervene in order to provide some certainty, if possible.

In the meanwhile, some Swedish operators have announced that they will stop the data retention activity following the annulment of the directive,

- Reactions

Commissioner Malstrom, competent for Hoime affairs, has declared the following:  “The judgment of the Court brings clarity and confirms the critical conclusions in terms of proportionality of the Commission’s evaluation report of 2011 on the implementation of the data retention directive. The European Commission will now carefully asses the verdict and its impacts. The Commission will take its work forward in light of progress made in relation to the revision of the e-Privacy directive and taking into account the negotiations on the data protection framework“.

Also the President of the European Parliament, Schulz, intervened with a statement urging  the Commission for a new proposal:  “Today’s judgment must be carefully examined and the Commission will have to make a proposal which strikes the right balance between the legitimate interests at stake. Any new proposal must respect in every detail the guarantees laid down in the Charter of Fundamental Rights. It should in particular enshrine a high level of data protection – which is all the more essential in the digital age – thus avoiding disproportionate interferences with the private lives of citizens. It is only by upholding the highest standards at home on such issues that we can project our common values to the outside world.”

EDPS, the European Data Protection Authority, stressed that new directive should this time be complying with privacy rules:

The EDPS welcomes the ruling of the Court of Justice of the EU in Digital Rights Ireland and Seitlinger and Others (Joined cases C-293/12, C-594/12) on the invalidity of the Data Retention Directive (Directive 2006/24/EC). It follows the input given by the EDPS in these proceedings.
We consider this a landmark judgment that limits the blanket government surveillance of communications data (telephone, texts, email, internet connections etc.) permitted under the Directive. It highlights the value placed on the protection of fundamental rights at the core of EU policy in this critical area.
We are particularly satisfied that the Court has underlined that the Data Retention Directive constitutes a serious and unjustified interference with the fundamental right to privacy enshrined in Article 7 of the EU Charter of Fundamental Rights. When an act imposes obligations which constitute such interference, the EU legislature should provide for the necessary guarantees rather than leaving this responsibility to the member states.
We are pleased that the Court has ruled that the retention of communications data should have been duly specified and the EU legislator should also have ensured that such data can only be used in very specific contexts.
The retention of communications data for the purposes of the combat of crime should always be precisely defined and clearly limited. The EU cannot leave the full responsibility for the use of the data with the member states.
Among other things, the concept of serious crimes should have been more precisely described in the Directive and at the very least, basic principles governing access to and the use of the retained data should have been set out.
We anticipate that the Commission, taking into account the Court’s judgment, will now reflect on the need for a new Directive, which will also prevent member states from keeping or imposing the same legal obligations nationally as laid out in the now invalid Data Retention Directive.
The judgment also means that the EU should take a firm position in discussions with third countries, particularly the U.S.A. on the access and use of communications data of EU residents“.

 

The confused meaning of “Open Internet” in the European net neutrality debate: my 5 cents

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Today (2 April) or tomorrow (3 April) the European Parliament will take an important decision in the matter of Net Neutrality in the EU. While voting in the frame of the well-known Single Market proposal, the MEPs will have to decide amongst various options: a main proposal tabled by the rapporteur Pilar del Castillo (a Spanish parliamentarian of the PPE – populars); counter-amendments tabled by Socialists, Liberals and Greens (Amds 234-236 and 237-244); and the complete rejection of the proposal.

The big telco industry (ETNO, ECTA, GSMA and Cableurope) is unanimously against the reform, although is not clear what the single telecom operators really want in practice. Unified in rejecting, confused in proposing.

Libertarians, civil rights and consumers organization support the Socialists, Liberals and Greens amendments against the proposal tabled by the rapporteur Del Castillo.

Neelie Kroes, the commissioner which made the initial proposal, just wrote a letter to the MEPs recommending how to vote. An unusual move, I believe, which could irritate some of them.

Remarkably, everybody plead in favor of an Open Internet. Apparently, the notion of Open Internet may vary significantly amongst institutions and stakeholders.

It is worth-noting that, according to Mrs. Kroes, Open Internet just means “no blocking and no throttling”. Unfortunately, this is a just a basic, limited vision about how the Internet environment works. Fact is, the same result of blocking could be simply achieved by telcos by charging in different way the Internet connectivity used by users or Internet providers to reciprocally connect. To make an example, if an ISP started to charge 10 Euro upon users for using Skype, this commercial behavior would be equal to a block: people would stop to use Skype because nobody would pay for a service which is normally for free. Such abusive practices happened sometimes in the past, but they did not kill Skype, because they were enforced irregularly and too late, when Skype was already sufficiently strong to resist. But: if in 2004 Internet users had systematically to pay 10 Euro or more to access Facebook in its infancy, they would have immediately given up, even if the alternative service proposed by their ISP was totally crap, because nobody had a clear idea about social networks. In other words, this kind of discriminations may kill start-up, new entrants and innovative services, while consolidated operators, irrespective whether OTT or telcos, would survive in any case. This is why the Open Internet is not a battle between OTT and telcos, is rather a battle for the citizens and their rights.

Would the above abusive charging mechanism become the norm in the market, then users would have to pay a less expensive Internet subscription to access services agreed by the ISP, and a more expensive Internet subscription to access all the rest. The Internet would be completely different now.

Mrs. Kroes does not seem aware of the above. By contrast, her initial proposal encouraged such kind of price discrimination by way of data caps and other instruments. Remarkably, the net neutrality legislation currently existing in her country, the Netherlands, prohibit the discrimination of Internet connectivity, contrary to Kroes proposal.

The proposal of Pilar del Castillo confirms the Kroes’ approach, while the counter-amendments proposed by Socialist, Liberal and Greens try to address the problem. However, the matter remains a bit unclear. An Open Internet legislation should clearly state that ISPs cannot discriminate the price of Internet connectivity in order to favor an Internet service over another. The amendments proposed by Socialists, Liberals and Greens reinforce the non-discrimination obligation in relation to network management practices. However, differentiating the price of Internet connectivity is not technically a form a traffic shaping, it is rather a pure commercial practice. Therefore, this issue remains open in my view, however we should recognize that the counter-amendments of Socialists, Liberals and Greens have the merits to get closer to the problem.

PS: The net neutrality debate appears polarized by the definition of specialized services. I am not fascinated by this debate and by defining specialized services. Technology in the Internet is complex and evolve continuously, therefore getting an appropriate, correct and neutral definition of specialized services is an hard job and risks to be become frequently outdated. In this respect, a fair and correct analysis about specialized services has been carried out by EDRI and it can be found here. Such analysis served as a basis for the definition of specialized services proposed in the counter-amendments by Socialists, Greens and Liberals.

Whatever the definition may be, it would be better to state that the price of specialized services (managed services other than best effort) should be incremental, i.e. they should not cost less than best efforts, because quality services should cost more than unmanaged connectivity. If this principle is fairly applied (it would be for the national regulators to supervise it), I do not see the risk that ISP may use specialized services to subvert the Internet environment. Whatever the definition is, specialized services could not be used to replace Internet best effort.

Web-blocking and copyright protection: the European court sets the limits

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 Court of Justice of the European Union has finally determined the limits under which national courts can require ISPs (Internet access providers) to block access to websites in order to prevent or impede copyright infringements. The decision of the Court (Judgment in Case C‑314/12 UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbHis of February 27, 2014) is not surprising, because the relevant European directives allow implicitly such kind of national interventions in order to repress piracy. However, today’s decision is very important because for the first time the European court has set forth some mandatory principles that national courts must comply with when ordering ISPs to block access to websites for copyright protection purposes.

According to the European Court, when national courts impose a web-blocking measure against an ISP for copyright reasons, they must guarantee a fair balance balance between the protection of copyright, on one side, and other rights which are protected under European law, such as:

1. the (ISP’s) freedom to conduct business and;

2. the fundamental rights of citizens.

The freedom to conduct business

In this context, freedom to conduct business means whether in ISP should support costs and charge of any kind in order to help right-holders to achieve their objective (namely the “isolation” of the illicit content). The question arise because ISP are mere intermediaries and, as recognized by the court itself, are not liable for the illicit behaviors of pirates. Why and how much should an ISP pay for that? The European court already addressed this problem in a previous cases (particularly the Sabam-Scarlet decision concerning Internet filtering) ruling – in general terms – that ISPs are not working for the benefit of right-holders, they  run a different business. Therefore, they should not be required to carry on expensive investments and activity on behalf of third parties.

In the present case of web-blocking, the European court says that the ISP can choose to put in place measures which are best adapted to the resources and abilities available to him and which are compatible with the other obligations and challenges which he will encounter in the exercise of his activity. In order words, the ISP cannot be obliged to bear significant costs, or deploy investments having considerable impact on the organisation of his activities or require difficult and complex technical solutions. It will be for the national judge to examine whether the involvement of the ISP is, in terms of costs and assistance, justified and proportionated.

In addition, the ISP must have the possibility to show and prove that he has taken all reasonable measures in order to avoid liability. In other words, ISPs cannot be deemed responsible if the blocking measures are circumvented and users continue to access pirated content through the blocked website, since technology provides several instruments for this purpose. A national judge cannot therefore pretend that an ISP guarantees that a blocking measure will be effective: “ad impossibilia nemo tenetur”. According to European Court “That possibility of exoneration clearly has the effect that the addressee of the injunction will not be required to make unbearable sacrifices, which seems justified in particular in the light of the fact that he is not the author of the infringement of the fundamental right of intellectual property which has led to the adoption of the injunction”.

The above limitation is particularly relevant in those countries where the judges require the iSP to have an “active role” in blocking website, for instance by monitoring whether the illicit it website migrates in order to escape the blocking measures.

The fundamental rights

In the mentioned Sabam-Scarlet case, the European court had stated that piracy repression in the Internet must be balanced with fundamental rights of individuals, such as piracy, freedom to speech, freedom to information ecc.

In the present case, the European court recalls that web-blocking measures do not have to “unnecessarily deprive” (sic) users of the possibility of lawfully accessing the information available in the Internet. In other words, such measures must be “strictly targeted”, in the sense that they must serve to stop copyright infringement but without thereby affecting internet users who are using the provider’s services in order to lawfully access information. Otherwise, according to the court “the [ISP]’s interference in the freedom of information of those users would be unjustified in the light of the objective pursued“.

In theory, this principle is clear and acceptable when we are dealing with a website or a platform which is entirely and maliciously intended to commercialized pirated content. However, the reality look a bit different, because illicit content is frequently available on websites and social platforms which users access for licit purposes. In this respect, the  European court seems superficial about the social and business reality, and unaware of the technological implications of its decision.

Blocking the access to a specific content or page, in the context of a larger website or platform, it is no so technically easy. The capacity to target a specific content is normal in the case of content removal, i.e. Notice and Take Down, when the removal is carried on by the social platform or by the manager of the website. By contrast, a selective web-block is not easy from the point of view of Internet access: in this case, the problem is blocking the Internet traffic to a specific page/URL or whatever (which will continue to exist, since it is not removed). Some ISP could say that this operation is not possible from technological point of view or it is too costly, and in such a case they would claim exoneration (as seen above). Thus, this is a bug of the European sentence which will cause controversies in front of national judges and maybe a new preliminary ruling by the same court of Luxembourg.

Is web-blocking an effective remedy?

Interestingly, the European court has recognized the web-blocking is not an effective remedy in order to “isolate” illicit websites: “it is possible that a means of putting a complete end to the infringements of the intellectual property right does not exist or is not in practice achievable, as a result of which some measures taken might be capable of being circumvented in one way or another“. However, the court finds that even though the measures taken when implementing an injunction are not capable of leading, in some circumstances, to a complete cessation of the infringements of the intellectual property right, they cannot however be considered to be incompatible with EU law and therefore can be adopted in any case.

Nevertheless, the above can be claimed by ISP to avoid liability in case the infringements continue.

Conclusions

The present European decision will be perceived in different ways by the industry. Rights-holders will welcome the confirmation that web-blocking for copyright protection is possible under European law, but they will be less happy that a series of condition have been fixed. The European court leaves some discretion to national courts about the implementation in the concete circumstances. This means that in the European States where web-blocking is already largely applied (Italy for instance), this European decision may create a reason to moderate such practice. Conversely, in countries where web-blocking is not familiar, such as Germany and Austria for instance, this decision may encourage national court to start to intervene upon request of right holders.

Regarding the facts: the litigation arose in Austria where some rightholders, Constantin Film Verleih Wega Filmproduktionsgesellschaft, became aware that their films could be viewed or even downloaded from the website “kino.to”  without their consent. At the request of those two companies, the Austrian courts prohibited UPC Telekabel Wien, an Austrian ISP from providing its customers with access to that site. UPC Telekabel appealed the injunction.

 

Lights and darkness of the (EP) net neutrality reform

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Today the ITRE committee of the European Parliament approved a draft reform of Net Neutrality supported by Pilar del Castillo, a Spanish rapporteur (EPP) who is in charge of the Connected Continent Proposal.

The approved draft is more advanced than the proposal tabled by Commissioner Kroes in September 2013, a proposal which instead would have created a catastrophe for the Internet environment and the rights of citizens. However, even the proposal of Del Castillo presents numerous and relevant problems which are of concern for libertarians, pro-citizens and pro-competition stakeholders. Let’s try to enumerate the most important ones:

- discrimination: telcos are still able to discriminate online services by simply charging or differentiating the price of the Internet connectivity with the scope to favor a servicer over another. The problem already arose with the initial proposal of Kroes and specifically with art. 23(5) of the proposed regulation, and it has not been addressed yet. Thus, the  current version of the provision still empowers an ISP to establish a 2-tier Internet environment: a discounted Tier-1 Internet with selected online service, and a more expensive Tier-2 with all the rest. In order to avoid this problem, it should be clearly stated in the draft regulation that ISPs cannot differentiate the price of Internet connectivity unless there are objective justifications (i.e. quality, not just commercial deals between the ISP and a few online providers). Such an amendment had been proposed by Amelia Andersdotter, a Swedish MEP (Pirate Party), however it was not retained. A similar solution is currently envisaged by the Dutch net neutrality legislation.

- open character of the Internet: it is not sufficient for a legislator to say that we want an Open Internet, it should be clearly stated in writing what “Open Internet” really means. An amendment of Mrs. Trautman, rapporteur for S&D, tried to link some features of an Open Internet (enumerated in a recital) with the definition of Internet Access present in the draft regulation. The amendment was rejected and in any case it was not enough.  An “Open Internet” means that ISP cannot control, in any way, which and how their subscribers select online services in the Net. Therefore, not only blocking, throttling and bandwidth limitation should be forbidden: the principle must be more far-reaching and should cover any potential instrument which ISP can use to control the choices of the users (including any kind of price discrimination, as mentioned above). To achieve this scope, a clear legal clause, not a simple recital, should be inserted in the proposed regulation.

- what specialized services are: the current approved definition is an improvement with respect to the Kroes’ one, however it still leave the rooms for ISP to market as “specialized services” product and services which are normally accessible in the open Internet. This capability could allow a dominant ISP to create a 2-tier Internet. An amendment of Mrs. Trautman likely aimed at resolving this issue, however it was not sufficiently explained in the recitals.

Marjette Schaake, a Dutch liberal MEP very active in Internet matters, claimed that the current draft is very dangerous.

The draft approved today will now be submitted to the plenary session scheduled in Strasbourg  for April 3rd, 2014 and then be examined by the Council. However, the grey areas of the draft may create the basis for a rejection by the general assembly. Approving a draft which is still potentially dangerous for NN could be a risk for many MEPS which will be soon into elections (May 2014).

The controversial truth about the end of international roaming

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(See Update at the bottom of then post)

There is lot of excitation about the fact the roaming tariffs should disappear soon in the European Union, with lots of benefits for consumers in terms of easiness of travels and saving. An important – however non final – decision will be taken by the European Parliament (ITRE Committee) on March 18, 2014. Before starting to clap, it’s worth to remind how the situation really is.

The initial proposal by the European Commission

The matter started with Commissioner Neelie Kroes launching in September 2013 the so-called Connected Continent proposal, which included a revision of the current regulatory framework of international roaming (basically, EC Regulation 531/2012).  The proposal basically provides for some incentives to mobile operators to make “roam like at home offers”, i.e. tariffs plan without differentiating domestic and roaming retail prices. The communication department of cabinet Kroes have been announcing this reform “as the end of international roaming”, but the reality looks a bit different: whether or not roaming will end, this would be a choice of mobile operators, it depends whether the incentive provided by the Commission works or not; however, even if it works, there would be lot of exceptions in terms of timing (entry into force of the reform), territorial coverage (which countries to be covered) and quantity (only a portion of traffic would be covered by the reform: so-called fair usage). In other words, the real end of international roaming is much more far than expected according to the Commission’s schedule. In addition, the reform designed by Commissioner Kroes is based on a system of alliances which would reinforce the position of larger groups (such as Vodafone, Telefonica, Deutsche Telekom and Orange), while kicking out of the market smaller mobile companies (including MVNO). This is quite surprising, because the roaming issue exists because of historical agreements between dominant mobile operators. Consolidating the market position of the same companies which created the problem should not be the best solution, however Commissioner Kroes has other visions. Apparently, in the Netherlands they fight alcolism by protecting the alcool suppliers.

The counter proposal by the Parliament

The European Parliament never liked the Connected Continent proposal for a variety of reasons (timing, complexity, lack of a positive impact assesment, institutional jalousies, ecc). However, it was clear for many MEPs that the International Roaming story was a good thing to sell to electors in light of the incoming elections. Therefore, the counter proposal coming from the competent committe, the ITRE one, has been much more aggressive than the proposal of Kroes: retail roaming should finish at a certain date, irrespective of the conveniences of  mobile operators. At the end, the chosen deadline for the end of international roaming was fixed for December 15, 2015.

Will mobile tariffs change or not? Where is the problem with the Parliament’s position?

The ITRE Committee did not take on on board the issue of wholessale roaming tariffs (i.e. the price that mobile operators have to pay abroad when accessing a foreign network in order to provide roaming to its travelling customers). As long as such wholesale price remains high (as it is presently), only a few operators will be effectively able to provide roaming like at home thanks to historical bilateral agreements. In other words, 2 operators reciprocally decide the access price on their respective networks, however this will not apply to third operator. Thus, the latter will not be able to compete if such access price is so high to make impossible to provide a retail service, whose tariff should entail such costs. As a consequence, should the text be approved in its current form, it is likely to lead to the disappearance of dynamic smaller players who serve as a force for competition and who are committed to deliver roam-like-at-home packages to all European consumers.  By contrast, the consolidation of the market around few dominant players – the same which historically created the high roaming charges – will likely bring to a rise of tariffs. In other words: consumers will not pay roaming any longer, however this advantage will be adverselly compensated by more expensive mobile tariffs and less choice.

It is interesting to see that the European Commission addressed this problem with its first Connected Continent proposal in July 2013, which was however modified after fierce lobbying by dominant mobile operators.

The problem connected with this problem has been outlighted by a coalition of competitive mobile and MVNO operators, named Roaming Coalition, see here the press release.

 What are the next steps?

After the ITRE vote,  a final decision should be taken by the European Parliament in the plenary session scheduled for April 2nd, 2014 (if not, the entire reform risks to fail). Then, the Parliament’s position should be approved by the Council, which will likely submit some amendments. Therefore, a second plenary votation from the Parliament will be necessary, likely in October 2014. In other words, this reform will came into force only on the second part of the year, provided that the new Parliament (elected with the election of May 2014) accepts to acknowledge the work done until now by the previous assembly.

UPDATE 18 March, 2014: the ITRE committee approved the roaming reform. However, the rapporteur Del Castillo was not granted mandate to negotiate with the Council. This is a sign that some games are still open in the EP