Criminal Prosecution and Online Copyright Infringement

January 19, 2010

On 17 April 2009, the District Court of Stockholm, Sweden announced its verdict in the so-called ‘The Pirate Bay’ case against four individuals associated with a file-sharing web site and service called ‘The Pirate Bay’, directed at the file-sharing community. The Court found all four guilty of contributory copyright infringement, and each was sentenced to one year in prison. In addition to imprisonment, the defendants were ordered to pay damages in the amount of 30 million Swedish kronor ($3.6 million, €2.7 million) to a handful of entertainment companies, including Sony Music Entertainment, Warner Bros, EMI and Columbia Pictures, for the infringement of 33 specific movie, music and gaming titles.

This was, however, not the first time that the courts in the Nordic region had produced case law regarding BitTorrent services. The Finnish courts had reached a similar conclusion in 2008 when, in the first European judgment against administrators of a BitTorrent service in June 2008, the Turku Court of Appeal affirmed the decision of the District Court of Turku which held the Finnish ‘Finreactor’ BitTorrent-based peer-to-peer network illegal.

The judgment in the The Pirate Bay trial has, together with the earlier Finreactor case, put the Nordic countries in the limelight and the avant garde of case law on file-sharing globally. These two rulings show that, although Sweden (especially) has been declared a ‘pirate wonderland’, it seems that legal practice in the Nordic countries still protects copyright holders and frowns upon ‘the pirates’.

What is Pirate Bay?

The Pirate Bay service provides, inter alia, an indexing and search functionality for torrent files, some of which are additionally stored on the web site’s own server. With some 3.5 million registered users, 22 million users in total and a self-proclaimed status of ‘the world’s largest BitTorrent tracker’, The Pirate Bay was an obvious target for the entertainment industry.

The service also took pride in the fact that it would not adhere to copyright proprietors’ take-down demands and maintained a separate page where the administrators posted the copyright holders’ take-down letters and the administrators’ answers, on which the copyright holders were ridiculed.

Investigation and prosecution

The defendants, three of which were administrators or otherwise closely linked to the web site and one of which was alleged to be the financier of the service, were prosecuted under the Swedish Penal Code and Copyright Act.

To establish criminal liability under the Swedish law, the prosecution needed to demonstrate that the defendants had been aware of the infringements, had with their actions contributed to the copyright infringements and that they had intended to earn and gain financial benefit from the file-sharing service. All these prerequisites were naturally disputed by the defense attorneys.

Primarily, the prosecutor’s and the plaintiffs’ case on contributory infringement was built on three grounds: the prosecutor claimed that the defendants had contributed to copyright infringement (i) by offering a database that was linked to a catalogue of torrent files pointing to infringing content, (ii) by enabling the users to search and download the torrent files and (iii) by offering a tracker functionality through which the file-sharing users could contact each other.

Infringing material on The Pirate Bay?

During the trial, the prosecutor provided evidence and witness testimonies that most of the torrent files indexed on The Pirate Bay during the time period 1 July 2005 to 31 May 2006 pointed to copyrighted materials.

The Court concluded that The Pirate Bay had indexed a very large amount of torrent files during 2005-2006. Further, the Court found that, in order to prove that the majority of these torrent files pointed to actually infringing materials, a reliable study of every file, or at least a majority of them, would have to be conducted. owever, the Court found that the witness’ statements and parts of the defendants’ e-mail correspondence showed that the most popular torrent files pointed almost exclusively to infringing materials.

What was the actual offence? 

One of the main legal questions in this case was whether someone can be found guilty of contribution to an offence which he/she is specifically unaware of?

According to the prosecutor, the defendants should be held liable for assisting in offering (infringing) copyright-protected works to the public. However, the defendants claimed that they were totally unaware that any of the works at issue were illegally distributed via The Pirate Bay between July 2005 and May 2006 and no contribution could, thus, have taken place.

In response to this, the prosecutor acknowledged that no infringing material was technically stored on or passed through The Pirate Bay servers, but he compared the case to past prosecutions of criminal accomplices. In a Swedish Supreme Court decision from 1963, he noted, a defendant who had held a friend’s coat while the friend assaulted a third person was considered an accomplice. Further, the prosecutor cited a ruling from 1996 in a case where copyrighted material was illegally stored on a Bulletin Board System, whose owner was found liable and a case from year 2000 involving mp3 files linked from a web page. The prosecutor argued that the cases showed that mere linking to infringing material was enough to find the defendants guilty.

In assessing the intent, the Court further found that it must have been obvious to the defendants that there were torrent files that pointed to copyright-protected works on the web site’s directory. The Court noted that it had become clear from the witness statements and the evidence presented in the case (such Adjudication on the defence of the e-Commerce Directiveas the takedown notices of copyright owners and responses thereto) that the defendants had been aware of the existence of copyright infringing material on the web site and that such material was shared via The Pirate Bay’s tracker.

Consequently, the Court found that, while it had not been shown that the defendants would have been aware of the public offering of the specific works named in connection with the damages claims, it was clear that the defendants were aware of the existence of copyright infringing material on The Pirate Bay. As the defendants had not taken any measures to prevent immediate copyright infringements, their intent to contributory copyright infringement offence had been proven.

Adjudication on the defence of the e-Commerce Directive

The defendants raised the question whether the Swedish Act on Electronic Commerce and Other Information Society Services and the EC’s e-Commerce Directive ‘safe harbors’ were applicable to The Pirate Bay, as they claimed that the service was just an intermediary. According to the aforementioned provisions, service providers and intermediaries could not, in principle and subject to specific conditions, be held liable for any offences committed by their users.

The primary questions to be resolved in this respect were (i) whether The Pirate Bay is a service provider as described in the Act on Electronic Commerce and the e-Commerce Directive, and (ii) whether the services it provided could be deemed to fall within the scope of the Act and the Directive. The District Court answered both these questions in the affirmative. According to the Court, the services provided by The Pirate Bay clearly fulfilled the criteria for information society services set forth in the Directive.

The non-liability provisions are found in sections 16 to 19 of the Act on Electronic Commerce, which correspond to articles 12 to 14 of the e-Commerce Directive. The Court found that the services provided by The Pirate Bay did not fall within the scope of sections 16 or 17 of the Act.

Instead, the District Court found that The Pirate Bay provided a service where a user could upload and store torrent files on the web site, and the service was, consequently, deemed to be a ‘hosting’ service in accordance with section 18 of the Act and article 14 of the Directive. According to the provision, a service provider shall not be liable for the information stored at the request of a user, under the condition that the provider does not have actual knowledge of the illegal or infringing activity and, as regards damage claims, is not aware of facts or circumstances from which the activity is apparent. Further, in order to fulfil the prerequisites set out in the provision, the provider must, upon obtaining knowledge of such activity, act expeditiously to remove or disable access to the illegal or infringing material.

As pointed out above, the Court found that it must have been obvious to the defendants that there were torrent files on the web site that directed users to copyright-protected works made available without the owners’ authorisation. Yet, the defendants did not, in spite of several requests to do so, take any actions to remove infringing content, and could thus not be afforded the protection of the non-liability provisions.

Further, according to section 19 of the Act on Electronic Commerce, criminal liability of an intermediary or a service provider as meant in sections 16 to 18 of the Act can only occur if the unlawful act has been intentional. In this regard, the Court concluded that the defendants had knowingly ignored that copyrighted material was made available through the web site and found that their act was intentional.

Concluding remarks

As noted above, the liability of online service providers and intermediaries for copyright infringement remains a highly debated topic even after this judgment. In the United States, section 512 ‘safe harbor’ provisions of the Digital Millennium Copyright Act are widely disputed, most notably in the current litigation between Viacom and Youtube. Section 512, as well as the e-Commerce Directive, provides limited copyright immunity to service providers on the Internet, but the definition of service provider is far from clear.

The judgment in this case seems to indicate that The Pirate Bay could have fallen under the scope of the liability exemption of article 14 of the e-Commerce Directive if it had implemented and enforced sufficient notice and takedown procedures. The Pirate Bay’s approach was entirely different, ie to ridicule copyright holders, which certainly did not strengthen their case. However, the question still remains: should services like YouTube and eBay be required to take action such as automatically filtering content and removing infringing content without notice? Or should the liability be even stricter, demanding that the service provider hosts only content that it has scrutinised and found non-infringing in advance? How specifically are these IP protection mechanisms to be implemented (what is a reasonable ‘cost’ in terms of money, time, usability and resources in comparison to the protected interested; and does this even matter)?

Should services providing BitTorrent directories, without actually hosting or acting as a transmitting intermediary of copyrighted works over the Internet, be subject to the same requirements? If so, how far does this stretch, especially in terms of personal responsibility under criminal law? To Google? And if so, how do we avoid problems with copyright exceptions, such as the fair use doctrine and, significantly in the global Internet, freedom of speech?

Even though it is clear that technological advances will always precede legislation, it is safe to say that defining just and balanced decisions in this arena poses one of the most challenging IP-related tasks the judiciary has seen to date.

Be that as it may, using public prosecutors, the police and other public resources to address unresolved legal issues in online distribution services is clearly a strategy that is being more and more employed in the Nordic region, as it has proven to be cost effective and to have rather stronger deterring impact than any ‘mere’ financial liability.

Mikko Manner is an Attorney at Roschier Attorneys Ltd in Helsinki: