Economic growth, legal liability and freedom of expression: which role for intermediaries in the Digital Single Market?

Speakers: Roche-Laguna Irene, Kleinwege Helge, Reda Julia, Jeppesen Jens-Henrik
Moderator: Newman Matthew

On Wednesday, November 18th, PubAffairs Bruxelles hosted a discussion on the role of intermediaries in the Digital Single Market, with a special focus on their growth, legal liability and responsibility for freedom of expression, with Mrs Irene Roche Laguna, European Commission, DG CONNECT, Mr Helge Kleinwege, European Commission, DG GROW, Mrs Julia Reda MEP, Member of the Committee on Legal Affairs (Greens/EFA), and Mr Jens-Henrik Jeppesen, Representative and Director for European Affairs of the Centre for Democracy and Technology. The event was moderated by Matthew Newman, Senior Correspondent for MLex.

Matthew Newman introduced the speakers and opened the debate with a quick introduction and a definition of intermediaries with regards to the Digital Single Market (DSM) strategy released by the European Commission earlier this year. Following a thorough introduction on the state of play of the issues at stake, a first point of discussion concerned whether the EU institutions will find a satisfactory response to ensure that the rules covering legal liability for intermediaries are fit for purpose.

Mrs Reda MEP stated that it was possible to have progress in the area by pointing at international examples that the EU could learn from, such as the DMCA in the US, which has laid down the ground rules for “Notice and Take Down” procedures. She further stated that it persists a naïve view which do not take into account the way automated take down procedures are working at the moment. In her opinion, it should be possible to create a system that functions fairly swiftly and allows not to remove online material erroneously. She stressed, however, that this would require the harmonisation of substantial underlying laws, such as copyright rules, in order to prevent the over-blocking of content.

Mrs Roche Laguna stated that the discussion should first establish whether the current rules and laws are or are not fit for purpose, notably the aim of the current public consultation. She pointed out that the consultation is not a new initiative of the Commission, as the previous European Commission already begun the work in this particular domain as the public consultations in 2010 and 2012 witness. She pointed out that from the outcome of the 2010 public consultation emerged that there was no need to amend the E-commerce Directive, although some responses claimed a certain degree of legal fragmentation with regards to “Notice and Action” (or “Notice and Take Down”, Ed.), was occurring and further clarification of some of the relevant Articles of the directive was needed. She continued by stating that, in the 2012 public consultation, the Commission decided to propose a legal initiative on “Notice and Action”, without amending the E-commerce Directive. Mrs Roche Laguna clarified that the Commission is still using the replies received during the previous public consultations, however the current public consultation aims at providing clarification to national and European court decisions, which so far have provided contrasting opinions, as well as updating the legislation to a changed environment. Mrs Roche Laguna concluded by stating that a higher degree of legal certainty is needed for job and growth creation.

Mr Jeppesen began his opening statement by describing the Center for Democracy & Technology (CDT), the organisation he represented, as well as the work it undertook in promoting an open, innovative and free web by upholding the value of freedom expression on the online world. He stated that when his organisation has looked at the issues of legal liability of intermediaries, their basic belief and view is that the liability limitations provided by legislation have been a corner stone of growth of the Internet. This fact, in his opinion, has helped the Internet to grow into a platform for debate, education, expression, commerce and entrepreneurship. Mr Jeppesen further added that, when looking at the Digital Single Market (DSM) strategy, the ethos of the strategy is the removal of barriers to intra-European trade. Mr Jeppesen revealed that the CDT is preparing a response to the public consultation, which would urge extreme caution when altering the policy balance that was struck in the E-commerce directive. He believed that the “Notice and Action” procedures could anyway be made more effective and consistent, and concluded that achieving this would also be the best way for achieving the DSM strategy.

Mr Kleinwege started his intervention by providing a perspective on the IPR Enforcement Directive (IPRED), which also used the notion of intermediary, although without clearly defining what such an entity should be but by interpreting the notion of intermediaries as all entities that provide services and are used by third parties in order to infringe intellectual property rights.  Mr Kleinwege also clarified that the general view is that an intermediary is also a broader concept compared to the definition provided in the E-commerce Directive as it can also apply to off-line entities. He continued by acknowledging that there are certain overlaps between the two directives, but he maintained that the application of the IPRED was broader than the E-commerce Directive. Mr Kleinwege went on to discuss the abilities of the IPRED, and specified that the directive allows right holders to seek an injunction on the services provided by intermediaries, if such services infringe on the intellectual property rights (IPRs) of the rightholder. In his opinion, this setting could also be used for future potential infringements. Mr Kleinwege also acknowledged that the future potential application of the directive is a complicated issue and that it was not working in all Member States as it requires further clarifications by the European institutions. He revealed that the approach undertaken by the Commission in this domain has so far been based on a voluntary basis by bringing right holders and intermediaries together and figuring out how to prevent IPRs infringements from happening. Mr Kleinwege further stated that the Commission has put in place a scheme that applies to Internet sales platforms and maybe will apply it to other types of intermediaries, such as advertising and payment service providers. He then clarified that the application of the above-mentioned scheme principles should be inevitably horizontal and applicable to all domains, hence not just concerning IP rights, as it focuses on commercial scale infringements. Mr Kleinwege made specific reference to the use of “commercial scale infringements”, as he believed that they should be the focus of the debate surrounding intermediaries as well as any other rights that may be relevant. With regard to the DSM strategy, Mr Kleinwege concluded that whether the role of intermediaries will be subject to a modernisation of the intellectual property legal framework would have to be debated in the upcoming year.

A second point of discussion, concerned whether the “Notice and Take Down” procedures should be automated, and how this approach would relate to the risk of removing legal content and potential censorship.

Mrs Reda MEP opened her statement by affirming that such an approach would be difficult to mandate, and she premised that in the so called “take down” procedures companies have to make rational decisions when faced by liability, as no company is willing to be liable. For these reasons, Mrs Reda believed that there is a structural danger of censorship, although not due to the fact that an entity would willingly remove legal content, but because in such situations companies are more likely to over-block than under-block or remove. She also maintained that automatic “take down” procedures would have to be constructed in such a way that they become cost-effective for the intermediary. Mrs Reda  continued by stressing the need to clarify the definition of illegal content across the EU in order to prevent intermediaries to be overly cautious and hinder the removal of legal content and censorship. Mrs Reda concluded that she would not be opposed to a “Notice and Take Down” procedure, as it could be a proportionate enforcement tool, however she considered that imposing too many burdens on intermediaries is likely to err on the side of caution and would favour the over-blocking of online content. Mr Jeppesen agreed different types of illegal content existed, and remarked that recent discussions, have concentrated on hate speech and radicalising content. This fact has led policy makers to ask why the same automatic “Notice and Take Procedure” similar to the ones of specific cases, such as in the example of child abuse, could not be used in such instances. Mr Jeppesen believed that automatic procedures would not be able to sufficiently distinguish between the typology of content, unlike human judgement, and expressed his scepticisms with regard to automatic take down procedures as a it can led to important limitations of freedom of expression. Mrs Roche Laguna clarified that the principle of “Notice and Take Down” procedures is a suitable option, as entities are not liable for content placed on their platform until they receive actual knowledge of the illegality. Consequently, the directive requires the company to act expeditiously and remove the illegal content. The problem, Mrs Roche Laguna stated, is the ability for smaller intermediaries to interpret the illegality of certain material present on their platforms, which puts smaller sized intermediaries at risk of being exposed to unfair disadvantages. Mrs Roche Laguna also distinguished between the different procedures available, such as “Notice and notice”, “Notice and Judicial Review “Notice and Take Down” and “Notice and Stay Down”, and what the implications and costs of such procedures  would be in an automated system.

On the same issue, Mrs Reda replied by stating that cease and desist procedures, such as “Notice and Stay Down”, provide a good example of what rightholders are wishing for. Nonetheless, she urged caution when using such measures due to their far-reaching implications, as smaller players would be driven out and leave only larger players being able to comply, while Mr Jeppesen stated that for his group, a “Notice and Stay down” would not be a viable option as it violates a basic principle of the E-commerce Directive and would have a chilling effect on free expression. Mrs Roche Laguna stated that somehow the notion of “Notice and Stay Down” is present in the E-commerce directive but limited to court decisions, in the form of court injunctions, and stated that it would be important for courts to determine the scope of the obligation.

A third point of discussion touched upon the issue whether should intermediaries be held responsible for illegal content without any prior notification.

Mrs Reda stated they should obviously not be held responsible as it would basically outlaw communications infrastructure, and would subsequently limit the Internet’s innovative power. Mr Kleinwege clarified that the starting point, when talking about IPR infringements, is the requirement by the rightholder to identify that an infringement has occurred. Mr Kleinwege also clarified that in the directives the determination of future injunctions would be based on the assessment by a court. He further added that the Commission is asking itself if there are any possibilities in involving intermediaries on a voluntary basis by creating a common interest between intermediaries and rightholders to make it easier for them.

The final part of the debate and the Q&A session also covered the following issues: Should the rules for accountability on-line be inspired by rules found off-line, whether there is a need to differentiate between the different types of content and their illegality, whether the current copyright system creates artificial barriers towards consumer demand, geo-blocking, whether it would be possible to introduce a duty of care which would be proportional, whether different procedures could be established based on the types of illegal content, where the pressure for a duty of care is coming from, whether there are intermediaries that are facilitating illegal content, whether the E-commerce Directive could be amended.

Do you want to go further into the issues discussed in our debate? Check our list of selected sources which we have provided for you 

Digital Agenda for Europe – Consultation, European Commission

Digital Agenda Blogs, European Commission 

Results from the 2010 public consultation on notice and action

Julia Reda – Reda Report draft – explained

Centre for Democracy and Technology Blog

Commission takes first steps to broaden access to online content and outlines its vision to modernise EU copyright rules

Allegro Group Blog

EU should be cautious about regulating Internet platforms, Vestager says, Mlex

MLex market insight