The Court of Cassation and the keystones of hosting provider’s liability
With its decision no. 7708 of 19 March 2019 in the lawsuit brought by RTI against Yahoo! Inc. and Yahoo! Italia Srl (herein, Yahoo!) the Italian Court of Cassation established key principles on the hosting provider’s liability; the decision will probably become the landmark precedent for online infringement litigations in the next years.
The ruling builds on the long line of decisions that have created the distinction between “active” and “passive” providers and the related different conditions of liability for infringing contents made available through online services. Starting from some fundamental European decisions (among all, L’Oreal vs eBay, Case C-324/09), this issue had a particular development in the Italian case law (see for example Court of Rome ruling no. 693/2019, Court of Rome ruling no. 3512/2019).
The case appealed before the Court of Cassation had at its center the alleged liability of Yahoo! for the infringement of RTI’s copyrights through the making available, on the defendant’s portal, of excerpts taken from the plaintiff’s TV programs.
Ruling on the appeal, the Court, first of all, identified some elements that would identify a hosting provider as “active” and thus not benefiting from the ordinary liability exemption for illegal contents made available through its websites. Among these elements, the Court indicates, for example, the filtering, selecting, indexing, organizing, cataloguing, aggregating, evaluating of the contents, carried out with a professional management of the service, and, in any event, every behaviour directed to expand and improve the user’s experience in a non-passive way.
In this regard, and in upholding the appealed decision (issued by the Milan Court of Appeal), the Court found that the activities carried out by Yahoo! in the case at issue had been correctly identified as those of a “passive” hosting provider: Yahoo! had solely provided a public online video sharing service, giving users the possibility to upload contents and comment upon contents uploaded by others, but without any manipulation of the uploaded information.
Going forward, however, the Court addressed the scope of Article 16 of Legislative Decree no. 70/2003, which implements Article 14 of Directive 2000/31/CE and sets out an exception (other than the “active host” one above, created by case-law) to the general liability exemption granted to providers. The Article in question provides that the hosting service provider (regardless of whether or not it is “passive”) is in any case liable for infringing contents hosted on its services when it:
has actual knowledge of illegal activity or information and, as regards claims for damages, is aware of facts or circumstances from which the illegal activity or information is apparent;
it doesn’t act expeditiously to remove or to disable access to the information, upon obtaining such knowledge or awareness, by communication from the competent authorities (notably, the part in italics is not included in the corresponding provision of the Directive).
Falling in line with European case law and the most recent national case law, the Court stated that there are two different cases of provider’s liability, in light of the wording of Article 14 of Directive 2000/31/CE, which provides for the disjunctive “or” between the two. The case before it was concerned with the first of the two.
As regards the illegality of the activity or of the information, the Court explained that it derives from the infringement of third party’s personal rights (which, in the case at issue, had been found to have occurred in the proceedings on the merits). The required knowledge of this illegality entails that it is not a form of so-called strict liability or vicarious liability, but liability for omission, in other words for not having prevented the protraction of the infringement (by removing the information or disabling access to the same). The “actual knowledge”, the Court continued, coincides with the existence of a communication or perception of the infringement, and thus not necessarily a formal warning letter; the presumption of knowledge is rebuttable only if the service provider proves that it was impossible for him to obtain actual knowledge, due to causes outside of its will. The Court further explained that the adjective “apparent” confines the provider’s liability to the sole cases of gross negligence or intent. Otherwise, in the Court’s opinion, if the illegality is “non-apparent”, the service provider has the only duty to inform the competent authorities as per Article 17 paragraph 2 of Legislative Decree no. 70/2003.
Finally, in response to a cross-appeal by Yahoo!, the Court clarified that the knowledge that implies liability may be acquired by any means, and not only through a communication issued by the authorities; this, following an interpretation compliant with the wording of the relevant provision in the 2000/31/EC Directive, which doesn’t provide for the requirement of a “communication by the competent authorities”.
In addition, the Court clarified that the service provider’s liability for omission implies the finding that it could have acted usefully and efficiently as it had adequate information and powers to prevent the relevant third party’s infringement. In fact, the Court stated, “assessing the provider’s liability requires the assessment of its founding elements : namely, the behaviour, consisting in inactivity; the event, i.e. a harmful and unlawful act of others; the causation, to ascertain through a so called counterfactual judgment, when acting would have prevented the event, including its protraction; and the subjective element”. With respect to the last element, it consists of two components: the representation of the event as an infringement, irrespective of the way and the type of knowledge channel, and the conscious omission in preventing its continuation.
As regards the content of a notice of an infringement by the affected right-holder , in the Court’s opinion, it must allow the recipient to appreciate and identify the illegal contents. Such an assessment has to be made by the court in charge of the merits of the case and, in the case at hand, involved the assessment of whether videos infringing third party’s copyright could be identified only by the title of the concerned TV program or other simple descriptive elements, or if the “URL” address was necessary.
Finally, the Court stated that a service provider must refrain from making available illegal contents of the same kind as the ones previously found to be so and that nothing prevents a judge from requiring a provider to block access to any future URL address showing illegal contents, of which the provider may become aware. In view of the above, the Supreme Court annulled the appealed decision referring the case back to the Milan Court of Appeal for it to assess whether, in light of its ruling, Yahoo! Should be find liable for the infringement of the appellant’s copyrights.