Copyright law
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This article is written by Vanya Verma from Alliance University, Bengaluru. This article talks about RapidShare, the case filed against it due to copyright infringement in the Courts of Switzerland, Hamford, and Düsseldorf, and then the copyright laws in various countries.

Introduction

RapidShare was founded in Switzerland in 2002. Christian Schmid was the one who came up with the idea of establishing RapidShare. Formerly it was known as ezShare and was one of the first cloud storage providers on the market.

It was one of the first and most popular one-click file-hosting services on the internet. Along with file hosting, it also operated in other services like cloud storage and online backup service under the RapidShare brand. RapidShare was capable of simultaneously serving a huge number of users and was accessible in English, French, German, and Spanish, among other languages. 

RapidShare, like most similar sites, was often used by users to share copyright-infringing material. Due to this, the company got into trouble on multiple occasions. The site used to give a relatively simple manner of storing and sharing files with others, which made it popular among those who were anxious for copyright-infringing content to be distributed. This became the primary source of negative feedback from numerous copyright holders. The United States Trade Representative (USTR) eventually designated RapidShare as a “notorious market.”

RapidShare was involved in numerous legal disputes with entertainment businesses aiming to make the company liable for the acts of its users. The company responded by implementing a wide range of anti-piracy measures to restrict the ability of users to share infringing content. These measures seemed to work, but RapidShare’s visitor counts and income decreased that eventually cost most of RapidShare’s employees their jobs as customers chose to frequent more liberal platforms.

When copyright holders put a lot of pressure on the site providers, the company chose to close its business in early 2015. RapidShare went offline after providing users with a few weeks’ notices to back up their files. While many people have forgotten about the site, it has stayed in the sights of Swiss law enforcement. 

Mass copyright infringement case against RapidShare

In the Zug court of Switzerland

RapidShare’s operators and their lawyer were put on trial in Switzerland just three years after the company was shut down. They were all just acquitted by the court. In Switzerland, however, a criminal complaint was lodged after multiple rightsholders, including several academic publishers, filed complaints demanding financial penalties on behalf of copyright holders. Christian Schmid, the site’s founder, his wife Alexandra, and one of their former lawyers were the three people who were charged in a Swiss criminal court 

As an internet services platform, RapidShare always insisted that it had no control over the material being uploaded by its users on the platform, an assertion that sometimes had courts in agreement.

The three executives were accused of “commercial misconduct by multiple offences against copyright,” by the public prosecutor of the court in Zug, Switzerland.

The founder of RapidShare preferred to stay silent on the issue. According to Bote Reports, the 38-year-old said at the start of the trial, “I don’t want to make any statements.” Instead, the company’s former lawyer did the majority of the talking.

According to the prosecutor, RapidShare’s business placed profit over copyright, and the three defendants were accused of supporting copyright infringement. According to the prosecution, the creator and two other conspirators were in a position to prevent copyright infringements but failed to do so appropriately. As a result, they were all accountable and subject to heavy fines.

During the hearing, the judge inquired about the functioning of RapidShare’s filter system. The company’s former lawyer explained to the judge that files could no longer be uploaded following the takedown notice. The lawyer responded no when the judge questioned if this would still be the case if the filename was altered.

RapidShare’s founder finally spoke up at that point. He rushed in to clarify that to bypass the filter, the file itself had to be altered in addition to the name. Despite the company’s management being ultimately held accountable, RapidShare was profitable.

According to reports, the public prosecutor of the Zug court accused the trio of helping in mass copyright infringement. He also asked the court for financial sanctions on behalf of the copyright holders’ behalf. He also claimed that RapidShare made a lot of money, drawing the court’s attention to the fact that RapidShare’s gross payout was approximately $53 million in 2009. With this in mind, the copyright holders’ damages demand of 190,000 francs ($197,000) seemed reasonable. In addition to the monetary damages, the prosecution sought a restraining order in the hundreds of thousands of francs as a fine.

He further stated that the company was in a win-win situation at the expense of other content companies and that the company’s management could put an end to infringement, but chose to ignore all instances of infringement. They valued money over everything else, including morality and ethics. As a result, the public prosecutor accused the site’s founder of paying more than 700,000 Swiss Francs alone.

While RapidShare is no longer active, the current case may affect other hosting services. This includes Uploaded.net, which is also based in Switzerland, as Tarnkappe pointed out. Martin Steiger, a well-known Swiss IT lawyer, confirmed this. 

Steiger told local media, “Depending on the verdict, the liability of service providers in Switzerland would be strengthened in favour of the providers or the rights holders”.

The Zug court found all three RapidShare associates to be innocent and not guilty. The Swiss court, on the other hand, did not rush to render its decision, instead took its full time in delivering the verdict. This decision brought an end to a two-and-a-half-year legal fight. The judgment, which discloses that the court found all three defendants, Christian and Alexandra Schmid, as well as their former lawyer, not guilty.

Alexandra Schmid was represented in this lawsuit by Zurich lawyer Andreas Meili. The ruling left him speechless, and he described it as a wonderful relief. He also voiced his deep concern over his client’s legal fees expended in the course of defending the case. 

“You are entitled to compensation if you are acquitted, not the other way around,” he told Tablatt. Although the result is in RapidShare’s favourharbourhould not rule out the possibility that the public prosecutor and copyright holders would refuse to accept the Zug court’s decision. There is also the option of filing an appeal against the verdict.

The Schmids’ transactions show that the trial had little impact on their way of living. Eugensberg Castle, valued at 36 million Swiss Francs ($40.5 million), was purchased by the couple in 2019. To acquire the castle, they paid this sum to Thurgau’s bankruptcy office. The previous owner of this 18th-century castle was entrepreneur Rolf Erb, who was convicted of various crimes. 

Thus, RapidShare Defendants were found not guilty in Zug Court.

In the Regional Court of Hamburg

In 2009, GEMA (Gesellschaft für musikalische Aufführungs), a German royalty collector, filed a lawsuit against RapidShare in Hamburg Regional Court, alleging copyright infringement in connection with 5000 recordings that GEMA said were shared over the website. GEMA contended that despite RapidShare’s use of MD5 hash filtering, it had contacted RapidShare several times about instances of copyright infringement occurring over the website and that RapidShare had taken no action to prevent the infringement.

While the Hamburg Regional Court found that RapidShare was not directly responsible for copyright infringement, the court held that it was RapidShare’s legal responsibility to ensure that copyright infringement did not arise through the website’s use. RapidShare’s usage of the MD5 hash filter, according to the Court, was insufficient to properly prohibit users from sharing files that had copyright subsisted. RapidShare was needed to take further steps to prevent users from illegally uploading the files that are copyright-protected to its servers and thus making the infringing works available to the public to avoid the court’s injunction.

The Court ordered an injunction requiring RapidShare to stop making the recordings identified by GEMA in the proceedings public, as well as a requirement that RapidShare prevent its users from making the recordings available, or risk the punishment of up to EUR250,000 for each instance of infringement. RapidShare was required to implement a stricter filter to specific types of files (RAR files) and uploads that contained the words in the titles of the tracks designated by GEMA to prevent such responsibility. RapidShare filed an appeal against the ruling.

In the Higher Regional Court of Düsseldorf

In April 2010, RapidShare was not held accountable for the activities of its users, according to the Higher Regional Court of Düsseldorf, which held that RapidShare stipulates that users choose how their content should be transmitted rather than making it available to the public automatically. The court also determined that the lower court’s filter was ineffective since specific file types can be used for legitimate reasons rather than only infringing purposes. Other methods of filtering were investigated by the court, but all of them were found to be ineffectual (including IP address, file name, and content scanning).

Legislative developments to counteract online copyright infringement

Due to litigation’s high cost and uncertainty, entertainment companies have resorted to legislative measures to combat copyright infringement. Despite being historically limited by “safe harbour” laws, several countries have adopted legislation requiring ISPs (International Ship and Port Facility Security Code) to take action against copyright infringement or face penalties.

Internet service provider’s liability for copyright infringement in various countries

India

According to Section 79(1) of the Information Technology Act of 2000 and Rule 3 clause d of the Intermediary Guidelines Rules, 2011, when performing his obligations, the intermediary must exercise due diligence to ensure that no patent, trademark, copyright, or other intellectual rights are infringed.

Transient or incidental storage of a work or a performance to provide electronic links, access, or integration, where such links, access, or integration have not been expressly prohibited by the right holder, falls under the purview of fair use of copyright, according to Section 52(1)(c) of the Copyright Act, 1957.

However, the proviso to the section states that if the person responsible for the storage of the copy receives a written complaint from the owner of copyright in the work alleging that such transient or incidental storage is an infringement, he must refrain from facilitating such access for twenty-one days or until he receives an order from the owner of copyright in the work. As a result, when information is received that certain illegal / pirated material is available on its website, the safe harbour afforded to intermediaries is pierced.

France

The French parliament passed a law in May 2009 called HADOPI law, encouraging the distribution and preservation of creative works on the internet. ISPs were required by law to contact account holders through email and then letter to warn them that they were infringing on copyright, with the account being suspended for up to a year if the warnings were ignored. In June 2009, the Constitutional Council declared legislation unlawful, stating that unfettered access to online communications services is a human right and that any decision to revoke that access must be reviewed by a judge. Furthermore, requiring the ISP to conduct monitoring would infringe on the right to privacy of French individuals.

The Constitutional Council approved a revised version of the Act in October 2009, requiring that any suspension or termination of user accounts be approved by a court before an action can be taken.

Republic of Ireland (ROI)

Following settlement negotiations with the Irish Recorded Music Association (IRMA) in January 2009, Irish ISP Eircom agreed to implement a graduated response mechanism. According to the graduated response system, Eircom agreed to: 

  • notify its broadband subscribers that their IP address had been detected infringing copyright; 
  • warn the subscriber that unless the infringement ceases, the subscriber will be disconnected; and
  • disconnect the subscriber if the subscriber does not comply with the warning.

During the trial phase, Eircom agreed to process 50 IP addresses per week that IRMA and Dtecnet recognized as addresses used to share and not simply download a specific list of copyrighted works over peer-to-peer networks. According to the High Court judgment, no regulation in Ireland forces ISPs to disconnect consumers.

New Zealand

The Copyright (New Technologies) Amendment Act, 2008, passed by the New Zealand parliament in October 2008, included a “three strikes” law for copyright infringement.

South Korea

South Korea implemented a graduated response system in July 2009 due to changes to the Copyright Act. The revisions empower the Korean Copyright Commission to advise ISPs to ban accounts belonging to repeat copyright infringers for up to six months. Account holders’ email accounts may not be suspended under the Act.

United Kingdom

The Digital Economy Act, 2010 came into effect on April 8, 2010, after two years of controversy and heated debate. ISPs with 400,000 or more subscribers are obligated to monitor file sharing and use the “Three Strikes” method, which may result in consumers’ internet bandwidth being curtailed or even terminated if they continue to infringe on copyright. Two British ISPs, TalkTalk and BT, have asked the High Court for a judicial review of the Act to see whether it violates the EU’s e-commerce directive, which limits ISP responsibility.

Australia

Despite calls from the Australian Federation Against Copyright Theft (AFACT) and the film and television industries since the iiNet ruling. The government has stated that it will wait to see if the businesses can reach an agreement before intervening, but it appears that the ALRC will be asked to evaluate copyright laws to see if they should be altered in light of technological advancements. Meanwhile, the Attorney General’s office is keeping a close eye on international developments.

Conclusion

The copyright case cited above highlights some fascinating features of ISP liability for account holders who breach copyright regularly. It appears that an ISP will be liable for authorizing or inciting copyright infringement if account holders are provided with the means to infringe copyright and the ISP appears to have been founded specifically to permit copyright infringement to occur. However, the rulings suggest that an ISP may be exempt from responsibility if its services are given or can be utilized for legal reasons (eg, RapidShare).

The Australian television, music, and film industries were pressing for legislation that would require ISPs to control their users’ file-sharing activities. However, because copyright legislation has only been enacted in other nations, there is little proof that it is effective in preventing or deterring copyright infringement. For the time being, it appears that entertainment companies have little choice except to rely on lawsuits against ISPs that were set up explicitly to aid copyright infringement.

Reference


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