The Legality of Peer-to-peer under EU Law IPG Meeting Berlin, November 4, 2005 Thibault Verbiest ULYS Partner University of Paris I (Sorbonne)

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 computer  The two major categories of peer-to-peer systems are file sharing and CPU sharing

P2P  P2P success story?  Napster popularized P2P in 1999  Called 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: Kazaa  From Kazaa to large files protocols: BitTorrent, eDonkey

P2P

Case study: Music online  Music online  Global music industry sales declined by some 22% over five years to 2003, a reduction of over US$ 6 billion  870 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 Empire strikes back!  Industry response  Record companies have digitised and licensed over a million songs in 2004  Number 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!

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  Rights  Reproduction right  Right of communication to the public of works and right of making available to the public other subject-matter  Distribution right

Copyright protection  Exceptions  Temporary acts of reproduction  Libraries, educational establishments, museums  Hospitals, prisons  For teaching or scientific research  Quotations for purposes such as criticism or review  Use for the purposes of public security  ….

Copyright protection  Back door to P2P: exception for private use art. 5, §2 (b) of the Directive  Reproduction  made by a natural person  for private use  and 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 files  No clear case law  Most 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 Directive  Member 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 Directive  Illegal music file-sharing through P2P  TISCALI sanctioned as ISP whose services are used by a third party to infringe music copyright

Internet Licensing  Improving cross-border licensing for music services  Absence 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 as  simulcasting  webcasting  streaming  dowloading  online « on-demand » service  or provided to mobile phones

Internet Licensing  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

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  Conclusion  EU 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