The Legality of Peer-to-peer under EU Law

IPG MeetingBerlin, November 4, 2005

Thibault VerbiestULYS Partner

University of Paris I (Sorbonne) www.ulys.net

Legality of P2P under EU Law

P2P Case study: Music online EU Initiative

Copyright protection Directive 2001 on the harmonisation of certain aspects of

copyright and related rights in the information society

Internet licensing Recommandation 2005 on collective cross-border

management of copyright and related rights for legitimate online music services

P2P

What’s P2P?From user to user implies that either side can initiate a session and has

equal responsibility confusing term, because it has always been contrasted

to a central system that initiates and controls everything In practice, two users on a peer-to-peer system often

require data from a third computerThe two major categories of peer-to-peer systems are

file sharing and CPU sharing

P2P

P2P success story?Napster popularized P2P in 1999Called a "peer-to-peer network," but its use of a

central server to store the public directory made it both centralized and peer-to-peer

P2P second generation: KazaaFrom Kazaa to large files protocols: BitTorrent,

eDonkey

P2P

Case study: Music online

Music onlineGlobal music industry sales declined by some 22% over

five years to 2003, a reduction of over US$ 6 billion870 million unauthorised music files on the internet (all

services), January 2005 8.6 million concurrent users on P2P networks offering

unauthorised music files as of January 2005 (6.2 million in January 2004)

36 million of the 40 million people downloading (9/10) in Europe are still not paying for music they download

The collapse of music industry ?

The collapse of music industry?

The collapse of music industry?

The Empire strikes back!

Industry responseRecord companies have digitised and licensed

over a million songs in 2004Number of online services where consumers

can buy music has increased four-fold to more than 230 worldwide –and over 150 of those are in Europe

In 2004 downloaded tracks rose more than ten-fold over 200 million in the US, UK and Germany combined

The Empire strikes back!

The Empire strikes back!

The Empire strikes back!

EU Initiative

Copyright protection

Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the Information Society Gradually implemented in all the countries of the

European Union!

Copyright protection

RightsReproduction rightRight of communication to the public of works

and right of making available to the public other subject-matter

Distribution right

Copyright protection

ExceptionsTemporary acts of reproductionLibraries, educational establishments, museumsHospitals, prisonsFor teaching or scientific researchQuotations for purposes such as criticism or reviewUse for the purposes of public security….

Copyright protection

Back door to P2P: exception for private use art. 5, §2 (b) of the DirectiveReproductionmade by a natural person for private useand for ends that are neither directly nor

indirectly commercial, on condition that the rightholders receive fair

compensation

Copyright protection

Exception for private use Implemented in many national legislations

France, Belgium, Germany,…Exception invoked by many P2P users dowloading

and/or uploading unauthorised music filesNo clear case lawMost recent example in France

TGI de Meaux 21 April 2005 P2P users sanctioned for having uploaded illegal files but

released for the dowloading of illegal files on the exception for private use

Copyright protection

Action against ISP & P2P server administrators Article 8, § 3 of the DirectiveMember States shall ensure that rightholders

are in a position to apply for an injonction against intermediaries whose services are used by a third party to infringe a copyright or related right

Copyright protection

Landmark case in Belgium (2004)SABAM v. TISCALI Action grounded on Article 8, §3 of the

DirectiveIllegal music file-sharing through P2PTISCALI sanctioned as ISP whose services are

used by a third party to infringe music copyright

Internet Licensing

Improving cross-border licensing for music servicesAbsence of EU-wide copyright licences for

online content services makes it difficult for legitimate online music

services to take off Increase the revenue gap between the US and the

EU• US online music market is expected to grow to €1.27

billion by 2008 >< € 559 million in the EU by 2008

Internet Licensing

July 2005 Study on a community initiative on the cross-border collective management of copyright

October 2005 Commission recommandation on collective cross-border management of copyright and related rights for legitimate online music services

Internet Licensing

Online music service includes any music service provided on the Internet such assimulcasting webcastingstreamingdowloading online « on-demand » service or provided to mobile phones

Internet Licensing

Services provided by collective rights managers (CRM) includeThe grant of licences to commercial usersThe auditing, monitoring of rights by ensuring

payment and terms of licensing; and pursuing infringers (enforcement)

The collection of royaltiesThe distribution of royalties to rights-holders

Current situation in Europe

• Services provided by collective rights managers (CRM) include– The grant of licences to commercial users;– The auditing, monitoring of rights by ensuring

payment and terms of licensing; and pursuing infringers (enforcement);

– The collection of royalties;– The distribution of royalties to rights-holders

Top ten CRMs

• Services provided by collective rights managers (CRM) include– The grant of licences to commercial users;– The auditing, monitoring of rights by ensuring

payment and terms of licensing; and pursuing infringers (enforcement);

– The collection of royalties;– The distribution of royalties to rights-holders

Market share of CRMs

• Services provided by collective rights managers (CRM) include– The grant of licences to commercial users;– The auditing, monitoring of rights by ensuring

payment and terms of licensing; and pursuing infringers (enforcement);

– The collection of royalties;– The distribution of royalties to rights-holders

Issues and Answer

Commercial online services require a licence for more than one territory which gives legal certainty and insurance against infringements suits for all territories (multi-territorial licence)

This demand for a multi-territorial licence cannot be satisfied within the currrent structure of traditional reciprocal arrangements

Right holders should benefit from digital transmission technologies by having a choice as to which collecting society to join and to give mandate to for the multi-territorial online management of their rights

• Give right-holders the choice to authorise collecting societies of their choice to online rights for the entire EU!!!

Objectives of the EU initiative

Legality of P2P under EU Law

ConclusionEU Initiative

Harmonization of copyright protection• exception for private use: back door for P2P users?

• Injonction against intermediaries: potential actions against ISP and P2P server administrators?

Encouragement to multi-territorial online licensing and multi-territorial CRMs

• Facilitate the growth of legitimate online services is the most efficient answer to P2P

Legality of P2P under EU Law