INTERNET LAW - Despite the E-Commerce Directive, Germany Applied its Precedents in the GEMA v. YouTube Case

Martha L. Arias, Attorney at Law; IBLS Editor
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Last week, a German court ordered YouTube to filter copyrighted works uploaded in its site in violation of copyright laws. This is a huge win for GEMA, a German copyright organization that represents copyright holders. This case was pending for long time in a German court, and an appeal is expected. The ruling has two major consequences: first, GEMA is expected to receive some share of YouTube advertising revenues; and second, it imposes a burden on YouTube regarding copyright violations by its users.

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Last week, a German court ordered YouTube to filter copyrighted works uploaded in its site in violation of copyright laws.  This is a huge win for GEMA, a German copyright organization that represents copyright holders.  This case was pending for long time in a German court, and an appeal is expected.  The ruling has two major consequences: first, GEMA is expected to receive some share of YouTube advertising revenues; and second, it imposes a burden on YouTube regarding copyright violations by its users. 

In 2010, GEMA and other organizations that defend copyrights filed a lawsuit against YouTube alleging that YouTube helped infringing copyright on several music clips. YouTube argued that they are only a platform available for users to publish content and that YouTube is not responsible for copyright violations. Further, YouTube argued that they are not responsible for monitoring their users' uploads.  The court did not agree with YouTube"s arguments and ordered this company to install new software to help prevent users from uploading copyrighted works. Although YouTube currently has a system that helps copyright holders identify infringed works, the court ordered the company to implement a new system that does not allow the upload of copyrighted works that contain keywords such as the artists’ names or song title.

The decision did not hold YouTube as directly responsible for copyright infringement, but it held that YouTube contributed to copyright infringement by providing users with its platform to upload the copyrighted material and by not removing unlawful content when promptly notified.

According to press statements, YouTube is willing to negotiate a royalty agreement with GEMA and other copyright organizations.  The company said "we remain committed to finding a solution to the music licensing issue in Germany that will benefit artists, composers, authors, publishers and record labels, as well as the wider YouTube community.”  

This German ruling is reached despite European Union laws that protect service providers from liability for their users’ violations.  Concretely, according to the E-Commerce Directive, service providers are not liable for their users’ violations if they do not have “actual knowledge” of the violations.  When the service providers have actual knowledge of their users’ violations, they have to promptly remove or disable access to the information.  Germany incorporated the E-Commerce Directive into German law by the Electronic Commerce Act.  According to the German law, actual knowledge means positive human knowledge rather than negligent ignorance or contingent intent.   According to German precedent decisions, however, once an intermediary obtains knowledge of an infringement, it is obliged to remove the unlawful content and take any technological measure necessary and reasonable to prevent future infringement.  Therefore, it seems that YouTube was defeated by this precedent because GEMA argued that YouTube had previous notice of the users’ copyright violations.

This German ruling teaches us that despite the E-Commerce Directive service providers must review the local precedents regarding actual knowledge of copyright infringement for this type of business. It is a general principle that service providers are not liable for their users’ infringement; however, when the service provider has actual knowledge of the infringement, the analysis turns on the company’s actual knowledge and failure to act.

Martha L. Arias, Attorney at Law; IBLS Editor

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