As the representative body of composers, songwriters, music publishers and their collecting societies in the UK, British Music Rights (see note 1) contests the need for extending the scope of Articles 12 - 14 of the e-Commerce Directive to limit the liability of hyperlinkers, location tool services and content aggregators. Following some general observations, we provide answers to the specific questions posed in the DTI consultation.

The contribution of the creative industries to the UK knowledge based economy is significant. An extension of the limitations of liability of intermediaries potentially interferes with this broad economic objective.

Internet piracy falls into two main categories; in both right holders require the co-operation of internet intermediaries with an effect on Articles 12-14 of the e-Commerce Directive:

- Mail-order trade in illegal optical discs using the Internet as shop window
- Online piracy, i.e. trade in illegal musical files

The MCPS Anti-Piracy Unit, the organisation that investigates the illegal use of works on behalf of individual composers, songwriters and music publishers has ever increasing dealings with Internet intermediaries when pursuing the infringement of copyright. Based on their experience, we strongly advocate the following recommendations:

1. The changed circumstances of Internet intermediaries do not merit a dilution of responsibilities. Any extension of Articles 12 - 14 in the UK is unwarranted, in particular in so far as it is exceeds any foundation in European law. Additionally, the implications for right holders need to be balanced with the as yet to be justified benefits of the extension of protection in a comprehensive Regulatory Impact Assessment. If anything should be discussed in the context of the review on the e-Commerce Directive in 2006 it should be the restriction of Articles 12-14 of the e-Commerce Directive given the changed factual and economic circumstances for Internet intermediaries.

2. Potential benefits of extension of protection are limited to illegitimate service providers. The paper does not differentiate between legitimate and illegitimate services; in our view only the latter will profit from the proposed extension of the limitation of liability. Additionally, different and inaccurate definitions of internet intermediaries with different applicable rules will establish a grey area which illegitimate Internet intermediaries will invariably exploit.

3. Limited experience with Articles 12 -14 in the UK and other member states. As stated in the Commission report in November 2003, practical and jurisdictional experience of the application of Articles 12 - 14 for internet intermediaries is limited. The existing law is sufficient to address the concerns of legitimate internet intermediaries as the potential beneficiaries of the proposed extension.

Introduction:
Before any amendment is made to the law limiting the liability of hyperlinkers, location tool services and content aggregators, careful consideration must be given to the disparities between operating internet services. On the one hand there are legitimate services that exist to help the general law-abiding citizen locate legal content, whilst on the other there are specifically tailored tools that exist merely to make illegal files and pirated physical products more readily accessible via the internet. Comparing a general web resource tool to a customized site designed specifically for linking to illegal content is not comparing like with like.

As part of their corporate and social responsibility ISPs should be under a duty to provide information and education concerning the implications of linking to illegitimate sites even if this is not intentional or deliberate.

1) Do you agree with the EU Commission conclusions in their 'First report on the application of the Directive concerning Articles 12 to 14?' Please give reasons for your answer.

We agree with the general conclusion of the report which refers to "very little practical experience on the application of Article 12-14" highlighting the lack of conclusive jurisprudence in member states following the implementation of the e-Commerce Directive. Any expansion of Articles 12 - 14 in the UK is premature and also unwarranted, in particular in so far as any such extension exceeds a legal basis: neither Articles 12 - 14 nor Article 21 of the e-Commerce Directive refer to content aggregators. It is also an inappropriate approach to policy-making to consider solutions for difficulties that have not yet been shown to exist. Different definitions of the beneficiaries of protection within the European Union, based on technology specific terms, will only create further problems. We are not convinced that the claim that "Articles 12 - 14 establish precisely defined limitations on the liability of internet intermediaries" is accurate following the implementation in member states. As the examples given in the DTI consultation from Austria, Spain, Portugal and Hungary clearly demonstrate, the implementation and the definitions are not harmonised, not to mention the different legislative framework in member states in which internet intermediaries operate.

Additionally, technological developments will have an impact on the conduct and subsequent liability of internet intermediaries; it is premature to revise limitations in such a way that catches future types of technologies when the future uses are not always possible to predict. A more flexible approach is required under which case law should be allowed to develop - this allows legal principles to adapt in line with changing circumstances.

2) In your experience what are the advantages and/ or disadvantages of the transpositions of the Member States that have already included the liability limitation cover for hyperlinks, location tool and content aggregation services? I.e. what has been the impact for service providers, rights holders and individuals alike with regard to their transpositions?

We understand from the experience of right holders in Hungary that one of the problems dealing with intermediaries is the fact that if an internet service is qualified as a mere conduit services provider, he will a) not be in a position to remove any content and b) not be obliged to provide information about the content providers offering illegitimate services. This creates a catch 22 for right holders who are consequentially unable to stop the distribution of infringing material. This could be effectively addressed by way of reviewing Article 15 of the e-Commerce Directive.

Articles 12- 14, and in particular Article 15 currently put the burden of monitoring activities on the Internet on composers and music publishers. However, most of these businesses are SMEs without the financial and human resources to do so to any significant extent. It seems reasonable and appropriate that the burden to monitor activities on the Internet should fall on the intermediaries which have the technological means to do so and whose business models and profits are premised on the making available of copyright content; as financial beneficiaries the responsibility to monitor the activities on their services readily lies with them. There is an increasing tendency to use "free" music as a means of promotion i.e. by giving away music for free in order to entice consumers to buy goods and services. Service providers sell broadband access off the back of the improved accessibility to music it provides. As their profits rely so heavily on consumer demand for music, it is only reasonable that they should bear some responsibility in ensuring that their services are not misused.

We have also sought the opinion of the Spanish authors' rights society, SGAE, on the implementation of the E-Commerce Directive in Spain. SGAE views the transposition of the Directive into Spanish law as blatantly incorrect and argues that it has created a haven from immunity in Spain that seriously impinges upon the protection of intellectual property. This is not only because the transposition exceeds the mandate of the Directive by limiting the liability of hyperlinkers and location tool providers, but because (a) "actual knowledge" only exists when a court declares this to be the case; (b) there is no provision for "awareness of facts and circumstances"; and (c) the condition that illegal material is removed "expeditiously" has been watered-down. The consequences of this in terms of SGAE's ability to enforce the rights of its members are dire.

3) With other Member States' transpositions in mind, which of the liability limitations in Articles 12 to 14 (if any) should apply to each of the following intermediary service providers if the UK were to ahead and provide legislative cover?
i) Hyperlinkers;
ii) Location tool providers; and
iii) Content aggregation providers Please give reasons behind your answer.

We strongly contest the need for any extension; there is no legal justification nor any proven need for this. The existing law is sufficient to address the concerns of legitimate internet intermediaries as the potential beneficiaries of the proposed extension. Only if a court decides in light of the specific facts of the case and the substantive law that an intermediary is liable does the limitation of liability under the e-Commerce Directive become relevant. In other words, there has to be liability in the first place and as regards hyperlinking, location tools and content aggregation, it is by no means clear that this is the case. Accordingly, the general onus is on the rights holder to show that a restricted act has been done or authorised by the service provider - if the rights holder can show this then the service provider should be prima facie liable. He can then rely on the various exceptions and defences that already exist under substantive law. A further limitation on the liability of intermediaries, placing the onus on rights holders to contest this, is misplaced and should certainly not be extended.

4) Do you think that providers of hyperlinks and location tool services need the extension of any of Articles 12 to 14? If so, what liabilities would be limited? And how significant are the problems currently caused by the lack of this extension? Please explain your reasons, examples would be helpful.

We are not aware of any convincing factual or economic arguments which would justify the proposed extension of the limitation of internet intermediaries to providers of hyperlinks and location tool services.

5) Alternatively, would an extension of any of Articles 12 to 14 of the Directive be detrimental to rights-holders and individuals? Please explain your reasons with examples if possible.

An extension of the limitation would have considerable repercussions for right holders struggling to insist that their rights are respected in the online scenario. An extension of the limitation of liability to hyperlinks will make it virtually impossible for UK right holders to stop the activities which they encounter on a regular basis: Numerous sites promoting illegal infringements exist both in the UK and other EC territories, providing links solely to illegal mp3 music files, download sites, P2P services and sites selling pirate or counterfeit discs. These links are more often than not based in foreign territories with little or no copyright legislation or actual enforcement in practice. Where websites contain links to foreign based sites offering illegitimate music files right holders need some form of redress. In our practice we come across apparently innocent websites, providing information, for example, about a specific town in the UK (bed & breakfasts, maps, history etc) but also linking to infringing third party material (illegitimate MP3s) provided by Russian or Swedish websites. An extension of the limitation of intermediaries would be akin to granting an implied consent to any such linking activities and at the same time making it impossible for right holders to exercise their rights in practice.

Limiting link site liability will potentially result in many such sites and links becoming available with huge resource implications for right holders in addition to the serious losses in terms of royalty revenues.

6) If you think there is a need to extend limitations on liability to hyperlinkers and location tool providers should this be achieved by an extension of Article 12 or by 14?

As mentioned previously, we believe that any proposed extension of the limitation of liability is neither required nor justified.

7) Is there any action that would give providers of hyperlinks and location tool services the protection they seek, other than through the extension of Article 12 to 14 to these services? Please explain your answer.

Intermediaries providing legitimate services, be it providers of hyperlinks or location tool services, already benefit from protection under the respective substantive laws, and hence do not require further protection through the e-Commerce Directive. We are of the view that if an intermediary commits an infringement they should not be able to evade liability and benefit from a vague definition of Articles 12- 14.

8) What (if any) would be the detrimental consequences caused by the extension of Articles 12 - 14 to providers of hyperlinks and location tool services? I.e. would it seriously impact on your profits/ viability or provide a major irritation? Please explain your reasons with examples if possible.

Please refer to our examples in question 5.

9) Do providers of content aggregation services agree with the assumption that if they are to be covered under Article 12 - 14 , then the legislative vehicle will need to be primary rather then secondary? Please explain your reasons for your answer.
10) If you think there is a need to extend limitations on liability to content aggregation services, should this be achieved by an extension of Article 14 of the Directive? Please explain your reasons for your answer.

We can see no justification for an extension of protection for content aggregators. Content aggregators' profit is reliant on the making available of copyright content; as such they are content providers and should therefore be responsible for the material they supply.

11) There is any course of action that would give providers of content aggregation services the protections they seek other than through the extension of Article 14 to these services? Please explain your answer.

In the area of copyright, more specific, vertical provisions exist that cover hyperlinkers, location tool providers and content aggregators in the CDPA 1988 as amended by the implementation of the Copyright Directive. We are mindful of the fact however that the E-Commerce Directive is horizontal in its application and that service providers' concerns are not limited to their potential liability for copyright infringement. We believe that sufficient protection is however already provided in other relevant legislation. By way of example, section 1 of the 1996 Defamation Act sets down the conditions under which a person may have a defence to an action for defamation i.e. that (a) he was not the author, editor or publisher of the statement complained of; (b) took reasonable care in publication; and (c) did not know and had no reason to believe that what he did caused or contributed to the publication of a defamatory statement. If a service provider is not a publisher (e.g. if he is only involved as the operator or provider of access to a communications system by means of which the statement is transmitted, or made available, by a person over whom he has no effective control) then he may be able to rely on the defence provided the second and third criteria are also met. These principles were applied in Godfrey v Demon Internet where the court agreed that Demon was not a publisher. Demon's defence failed however because they had knowledge of the defamatory statement but failed to remove it.

As regards hyperlinking, location tools and content aggregation, it is apparent that legitimate and responsible operators which have no control over material communicated via their services already have adequate protection. Any attempt to extend this, particularly through a horizontal instrument, would be deeply concerning.

We are not aware that existing legislation has caused problems for intermediaries in general in the past. Furthermore, with regard to content aggregators, we would expect them to protect their position through appropriate clauses within their agreements with information providers including conditions to ensure that material does not infringe intellectual property rights and is not defamatory or illegal in any other way. Content aggregators may also seek indemnities from information publishers.

12) Do providers of content aggregation services believe they are primary or secondary publishers? Please explain your reasons for your answer.

n/a

13) Would parties most affected by these proposals provide in their reply to the consultation, facts and figures that illustrate the benefits and costs that you/your sector would incur if the UK Government either went ahead (or not) with a legislative measure to cover the liability of providers of hyperlinks, location tool and content aggregation services.

It is difficult to put exact costs on the existing limitation of liability, let alone with any future extension; it is noteworthy that the MCPS Anti Piracy Unit which investigates infringements on behalf of UK composers and music publishers now spends 96% of time and resources on Internet related infringements (as compared to 25% five years ago). This puts a considerable strain on its resources. Additionally, most composers and music publishers are SMEs and do not have the financial, technological or human resources themselves to monitor and subsequently pursue Internet infringements.

We are concerned that intermediaries providing legitimate services will have to compete with intermediaries claiming to be within the limitation of liability but providing illegitimate services; this is detrimental to the development of a legitimate market for intermediaries.

14) Would service providers who provide hyperlinking, location tool or content aggregation services, please indicate the number of notices/ claims of illegal content that they have received from August 2002 to February 2005? Of these, were there any settled in a UK Court of law? If not, did the out of court settlements reached cause any major detriment to your business turnover? Please would providers give examples to show the scale of the problem for your business.
15) Do you know of any jurisprudence in Member States of the European Economic Area on the liability of Internet service providers since August 2002, that has a direct impact on providers of hyperlinks, location tool or content aggregation services established in the UK?

The French collecting society, SACEM/SDRM, has informed us of three cases in which criminal proceedings were brought successfully against hyperlinkers who were found to infringe copyright (see note 2). Although only one of these cases post-dates August 2002 and none of them have been shown to have any impact on UK services, it is an indication of how rights holders rely on the general provisions of civil and criminal law in their fight against piracy. Our contacts at the French society believe that any limitation of hyperlinkers' liability would greatly undermine the ability of copyright owners to take action for copyright infringement. Regarding the liability of location tool providers, in a decision issued by the Appeal Court of Paris (15 May 2002) a search engine was deemed not responsible for the infringement of copyright by a website to which it gave access.

16) Are there any other issues the UK Government should take into account when considering its policy on liability cover for providers of hyperlinks, location tool and content aggregation services?

The factual changes of the circumstances in which internet intermediaries offer their services since the adoption of the e-Commerce Directive in 2000 in fact justify the reduction of the scope of Articles 12 - 14 rather than its extension. This needs to be addressed during the European review of the e-Commerce Directive, scheduled for 2006.

The current scope of Articles 12 -14 is too wide and the UK Government should advocate a reduction of the scope in view of the changed circumstances. The limitation of liability for intermediaries was provided in the e-Commerce Directive because it was felt necessary at the time to facilitate the development of the then nascent market for intermediaries. The position in 2005 is very different with several intermediaries being in a strong economic position, particularly in comparison to individual composers and music publishers who are struggling to protect and enforce their rights in the online environment. With the benefit of hindsight, it is evident that the limitation of liability provided in Articles 12 -14 was disproportionate and unduly geared towards the supposed needs of intermediaries. We would strongly suggest that a thorough review of the current provisions is undertaken before any extension of the limitation of liability is even considered.

Notes

1. British Music Rights is the consensus voice of Britain's composers and songwriters, music publishers and their collecting societies. The members of British Music Rights are the British Academy of Composers and Songwriters, the Music Publishers Association (MPA), the Mechanical-Copyright Protection Society (MCPS) and the Performing Right Society (PRS), together representing some 37,000 composers/ songwriters and over 2,500 music publishers.

2. Court of First Instance of St Etienne (6 December 1999); Court of First Instance of Epinal (24 October 2000); Court of Appeal of Aix-en-Provence (10 March 2004)