The ISP’s responsibilities in protecting copyright

The diverse international interpretations of responsibilities online have created problems for internet service providers (ISPs) that are not easily resolved.

Considering the contradictory judgments of the early generation of cases before courts in the United States, France and other jurisdictions, and the importance of the internet and the great need for its governance, the US Government adopted the Digital Millennium Copyright Act (DMCA) in December 1998. This included a regulatory framework dedicated to online intermediaries, creating four new limitations on copyright infringement by ISPs, dispensing monetary damages and restricting injunctive relief. Also adopted was the Directive of the European Union on Certain Aspects of Information Society Services, in Particular Electronic Commerce, in the Internal Market (the E-Commerce Directive).

The DMCA and the E-Commerce Directive do have some features in common. Both legal instruments regard ISPs as indirect copyright infringers, and provide a number of safe harbours depending on such intermediary activities as transmitting, caching, hosting, linking or search engine (the E-Commerce Directive excludes linking and caching). It has also provided a system of notice and take-down. Under the DMCA, ISPs are required to adopt and implement a policy of terminating accounts of subscribers who have repeatedly infringed copyright. Under the DMCA, liability limitations are restricted to the intermediary activities described above, but not to other kind of activities, in particular those which are not strictly intermediary activities, but rather content provider activities, such as using online stores for selling products.

The DMCA recognises two definitions of ISPs, depending on whether they offer transmission, routing or connections for digital online communications or whether they are "a provider of online services or network access, or the operator of facilities therefor". On the other hand, the E-Commerce Directive defines service provider more broadly, as "any natural or legal person providing an information society service". According to the DMCA, ISPs are those who might become involved as a third party in infringement. The E-Commerce directive is not limited to such a definition.

On the other hand, France adopted HADOPI and later HADOPI 2, with the purpose of protecting authored works on the internet. Under HADOPI 2, a government agency called HADOPI has been appointed in order to follow a so-called gradual response, or three-strike procedure, upon request of copyright owners who file claims against unauthorised downloading or other use of works. HADOPI will ask ISPs to investigate websites and in case of infringement, it will ask a competent court to approve that HADOPI itself can order the ISP to suspend the internet service or cancel accounts. Rather than utilising copyright infringement to render protection, the French Government has developed a strategy which is the obligation to control one's own internet access. Under this system, internet subscribers have a duty to monitor their internet access connection, to ensure that copyright is respected. Sanctions consisting of the termination or suspension of service accounts will be applied if the obligation is not fulfilled. This system works on the basis of contract rather than copyright law: every service contract entered into between ISPs and subscribers requires an obligation to monitor and respect copyright. The law also provides that anyone in the position to stop infringement can be compelled by the courts to filter or block works deemed to be infringing. The provision targets any person or corporation involved with the internet and that includes both intermediary and content providers. In keeping with this, ISPs can be found responsible of illegal behaviour if they do not fulfill their duties to control internet access, which is very different from the safe harbours regime of the DMCA.

DMCA has worked efficiently in protecting copyright on the internet. The E-Commerce Directive has also provided sufficient levels of protection. Despite the success of the DMCA, newer issues have come up since infringers have become more sophisticated. The DMCA, and also the Stop Online Piracy Act (SOPA), conceived after DMCA but never passed by the US Congress, provide a set of remedies based on cancellation of accounts, location of files or blocking of websites, with the purpose of tackling infringement at various points such as peer-to-peer or cyber-locking. All such effective remedies are consistent with the complexities of the newer internet technologies that facilitate the use of copyrighted works.

One year ago (and after two unsuccessful attempts), in Mexico, IFPI and MPAA successfully agreed with ISPs, broadcasters and telecom companies, among others, to update the Copyright Law to be consistent with international trends on digital rights. In keeping with this, the groups drafted a consultation paper to explore the need for a reform to the Copyright Law. In general terms, the paper provides a system of gradual response or so-called preventive notice. What is different from similar models (in particular the HADOPI model) is that: i) IMPI would be the agency in charge of managing the system; ii) IMPI would send out one notification per request of the copyright owner or ex-officio; iii) the copyright owner would be required to provide an IP address or other information that identifies the account of the alleged infringer; and iv) if the copyright owner or IMPI do not have at hand the address of the alleged infringer, IMPI would ask the ISP who connects or hosts the files containing the infringed work to reveal it. Under the proposed document the holder of an account used for connecting or hosting the files with the infringed work would be liable of infringement. The Mexican paper differs from the DMCA in terms of liability of ISPs, considering that their responsibility does not result from indirect copyright infringement, but rather on the violation of their obligation to furnish information as requested by the competent authority in managing the gradual response system. The Mexican paper rather resembles HADOPI, but at the same time is restricted to an obligation on the ISP to reveal the IP address of customers, when copyright holders or IMPI have not been able to obtain said information on their own. The Mexican document considers certain forms of suspension of accounts, and would perhaps allow the blocking of web pages or the location of files in bit Torrent or similar technologies.

One pertinent question is whether financial or advertisement service providers can be liable in connection with copyright infringement like any other ISP. There are various ways to answer this question, depending on the system involved or how strict jurisdictions apply the rules on liability.

At first glance, financial and advertising service providers may not fall within the DMCA and as a result, the DMCA would need include them expressly. Neither financial nor advertising activities are listed as a safe harbour. Likewise, it is not clear if financial or advertising service providers carry out intermediary activities within the DMCA, or other sorts of activities. Financial and advertising service providers may provide on their initiative notice and take-down or similar measures, or even adopt in contracts with customers policies protecting copyright, but still not be safe harboured.

As an example, Ebay and Google AdSense have adopted terms and conditions concerning financial and advertising providers. In keeping with this, Pay Pal has recognised copyright infringement as a restricted activity that may lead to blocking or suspending accounts or retaining of funds. Likewise, Google AdSense prohibits the insertion of publicity ads in websites displaying works without authorisation by copyright holders. The same is true regarding linking activities. Google has actually produced, with other companies, a document entitled Best Practices and Guidelines for Ad Networks to Address Piracy and Counterfeiting, with the purpose of disabling and serving offending sites and preventing their financial gain.

SOPA, and the Online Protection and Enforcement of Digital Trade Act (the Open Act), have made two attempts to fix the inconsistencies and loopholes in the law, which in the end were not passed. SOPA established a mechanism that forced financial and advertising providers to prevent, prohibit or suspend payment transactions by infringing users or websites (in the case of payment network providers) or to cease making available advertisements for infringing websites, or paid or sponsored search results, links or other placements that provide access to infringing websites (in the case of internet advertisement services). On the other hand, the Open Act proposed the inclusion of safe harbours.

There is no reason why the gradual response system of HADOPI should not extend to financial and advertising service providers. Both are in the position to prevent infringement by cutting off their services to parties that infringe. They might also be in the situation where they need to monitor the activities of customers, by virtue of their service contracts.

Like other countries, Mexico does not follow indirect liability systems. HADOPI has been a system that is more compatible with the Mexican reality. As mentioned above, Mexico has many issues in connection with the liability of copyright infringers and ISPs. Matters like notice and take-down or notice and notice have remained unresolved, not to mention issues such as cyber lockers or bit Torrent. The Mexican paper is one step forward in aligning the Copyright Law with international trends, but the system still requires improvement. Firstly, the system appears to be restricted to access and host providers. Secondly, the responsibility of an ISP is limited to revealing the IP address of customers. However, Mexico's music industry has sought and agreed on a solution. Based on previous efforts where record labels have entered into agreements with users (like discos, bars and restaurants) where the latter have agreed not to accepted use pirated records, the music industry has now tried a similar solution with the digital ad industry.

The Trans Pacific Partnership Agreement (TPP), will represent complications for the Latin American members of the treaty. This is because the TPP will likely impose a safe harbour regime with notice and take-down and in addition, it will perhaps not address other topics such as the blocking of websites. In keeping with this, most of the Latin American members will be required to adjust their national legislation or even start from scratch by adopting the DMCA model. The Mexican paper will be left redundant in many areas, in particular the gradual response system. Mexico will be required to provide notice and take-down plus safe harbours. But outside the TPP, the Mexican Government and Congress will need to work on issues like blocking, to provide a system that is useful in enforcing copyright on the internet. In counties like Chile or Canada, the system of notice and notice that they have followed so far, and that both countries seem to protect so hard, will need to be changed for a notice and take-down.

Luis C Schmidt
		Luis C Schmidt holds a JD from Universidad Nacional Autónoma de México (UNAM), as well as a Master's in Intellectual Property Law and other post-graduate studies at diverse prestigious academic institutions, including Georgetown University, the University of Amsterdam and Universidad Panamericana. He has been a partner with Olivares & Cia. for 20 years. Luis has developed his work in the entertainment law since 1985, discovering his interest in copyright law while he was working for Televisa. Since then he has represented the world's leading companies in the industries of music, film, software, television, shows, publishing, fine art, design and the Internet. Some of his Clients include Motion Pictures Association of America; IFPI / RIAA / Amprofon; Warner Brothers / CN / Turner; Universal; Sony / Sony Music / Sony TV; Dish / MVS Multivision; Microsoft; Ocesa; Telmex / América Móvil / Grupo Carso / Uno TV; Spotify; Quality Films; Cinemex and Cinepolis / Festival of Morelia. Luis has participated as a litigator or consultant on the most relevant copyright cases in recent times, including a Supreme Court case versed on remuneration rights and the case of Presunto Culpable. In addition Luis has represented clients before the Congress related to the Federal Copyright Law of 1996 and the reforms in camcording, copyright in the Internet and "must carry must-offer". Furthermore, Luis teaches at several post-graduate courses in Mexico and he is the author of over 100 articles published in journals and magazines of various universities and institutions in the world, and the author of two books in copyright and entertainment law. Luis has led discussions, resolved arbitrations, given lectures in the most distinguished academic and professional forums in the world, such as WIPO; Max Planck Institute; INTA; AIPPI / AMPPI; the International Bar Association or ALAI.