ISP Liability for Copyright Infringement- Sharing the Burden

The China Internet Network Information Centre (CNNIC) has reported that the number of active Chinese Internet users was 111 million at Dec. 31, 2005. According to a recent statement made by Charles Zhang, chairman and CEO of Sohu.com, Chinese Internet users actually number over 150 million, perhaps even 200 million, since the CNNIC does not take account of mobile users connecting online. Either way, there seems little doubt that the PRC is on its way to, or has already surpassed, the US in internet usage. Nielsen NetRatings reports that the U.S. had 154 million active users in January 2006 and only a fraction of the Chinese population are currently online.

The infringement of IP rights through online platforms has become an increasingly visible problem. The PRC Government has worked hard to strengthen the online IP protection regime. Under the Copyright Law, copyright owners have exclusive rights to distribute their works over information networks and the copyright regime seeks to balance the interests of Internet Service Providers (ISPs) and copyright owners. However, the recent billion dollar lawsuit filed by Viacom against YouTube, the decisions in the Baidu cases last year (where the Chinese internet search engine was sued for copyright infringement in 8 separate cases) and the Cooper v Universal Music Australia Pty Ltd decision in February this year, highlight the difficulty of determining the role played by ISPs in copyright infringement.

The Measures for the Administrative Protection of Internet Copyright ("the Measures") introduced in 2005, specifically provide for administrative penalties to be imposed on ISPs in certain circumstances. The Measures are supplemented by the Regulations on Protection of Information Network Transmission Right of 1 July 2006, ("the Regulations") which help to clarify the extent of liability for ISPs in the PRC. The Measures and Regulations are similar to some provisions contained in the US Digital Millennium Copyright Act ("DMCA") and indicate that the PRC is following the international trend. It is interesting to note that a recent Consultation Paper issued by the Hong Kong Government suggests adopting measures similar to the DMCA.

ISPs, ICPs and OSPs
An Internet Service Provider ("ISP") is a business or organization that provides consumers with access to the Internet and related services, such as domain name registration and web-hosting. ISPs are distinct from Internet Content Providers ("ICP") who actually create information, educational or entertainment content for the Internet, CD-ROMs or other software-based products. ISPs that simply connect users to the Internet also need to be distinguished from Online Service Providers ("OSPs") such as America Online (AOL) who provide access to the Internet but also have their own independent online content.

The Measures make clear that they apply to those service providers that deal only with the uploading, storage, linkage and searching of works, audio and video contents, but have no part in editing, revising or selecting the stored or transmitted content. The direct provision of internet content falls to be governed by the Copyright Law.

Liability of ISPs
Under the Regulations, some specific activities of ISPs are exempted from liability:
- where the ISP merely transmits copyrighted material provided by a third party by an automatic, technical process without selecting or modifying the content of the material and the material is provided to designated parties and access by others is prevented;
- system caching through an automatic process, whereby the ISP temporarily stores material on its network for the purpose of improving network efficiency.

Generally, the Measures and the Regulations provide that ISPs may be subject to administrative penalties if they do not comply with specific conditions. A copyright owner may serve a notice on the ISP identifying infringing content on the ISP’s service platform. Upon receipt of the copyright notice, the ISP should immediately remove or disable access to the alleged infringing works and at the same time forward the notice to the relevant content provider. For webhosting, there is also a requirement that the ISP does not derive economic benefit directly from the works uploaded by the users.

Obligations of ISPs
There is an obligation on the ISP to keep the copyright owner's notice for 6 months. Records of the information provided, the time of dissemination, the content provider’s time of access, user account number, internet address or domain name and contact details must also be preserved for 60 days.

Article 13 of the Regulations provides that the copyright administrative authorities may require ISPs to hand over this information when investigating suspected infringement. This is extremely significant for copyright owners who face great difficulties identifying online infringers.

Counter Notice
If the provider of the alleged infringing content is of the view that there is no infringement, it can send a counter notice to the ISP and the copyright owner. Upon receiving such a counter notice from the content provider, the ISP may restore the removed content.

Penalties for ISPs
If an ISP disseminates internet content with actual knowledge that the content is infringing, or if the ISP does not have knowledge, but fails to take the steps outlined above when notified by the copyright holder that the contents are infringing, the ISP will be jointly liable with the content provider. The administrative authorities may order it to remove the content and may confiscate illegal income and impose a fine of not more than 3 times the illegal revenue, or a maximum of RMB 100,000, if the illegal revenue is difficult to calculate.

ISP Knowledge
Article 12 of the Measures states that if there is no evidence to indicate knowledge on the part of the ISP, or if the ISP removed the relevant content after receiving the copyright owner's notice, the ISP shall not bear any administrative or legal liability.

However, it should be noted that Article 22 of the Regulations concerning "hosting" activities only exempts the ISP’s liability provided that it "is not aware and has no reason to be aware that the works provided by the content providers are infringing". Article 23 concerning searching and linking services, also provides that "a network service provider which is or should be aware that the linked works, performances, audio and video products are infringing shall bear joint tort liability". This suggests an element of "constructive notice".

In the Baidu cases (7 of which were determined after the Regulations came into force), the courts held that the function of a search service is to locate target information and that the ISP cannot be held responsible for the legality of content on third-party websites over which it has no control.

This is in contrast to the Australian Cooper case, which involved the provision of hyperlinks to copyright sound recordings. The court held that the ISP hosting the site was liable for authorising copyright infringement as it had knowledge of its contents, high usage and copyright problems, as well as the power to remove the website. The ISP also gained a commercial advantage from advertising on the website. The Chinese legislation should catch the cases where the ISP had actual knowledge.

But to what extent Article 22 and 23 introduce the possibility of ISPs having "constructive notice" of infringements, remains to be seen. This is particularly interesting in light of the reported comments by YouTube that the DMCA gives online service providers protection from copyright lawsuits so long as they comply with requests to remove unauthorised materials.

As the number of Internet users in the PRC grows, it may be that ISPs will have to share the burden of eliminating infringing materials from the Internet.

http://www.wptn.com/Mailing/May_2007_3/details/copyrights/china.htm

Karuturi Networks buys Delhi-based ISP provider

MUMBAI: Wholesale bandwidth supplier Karuturi Networks on Friday said it has acquired 100 per cent stake in Delhi-based internet service provider (ISP) Estel Communications for an undisclosed sum.
With the acquisition, which was jointly promoted by a Nasdaq-listed firm and a Delhi-based business group, Karuturi Networks will expand into several locations across the country, the company said in a communique to the Bombay Stock Exchange (BSE).
Estel focuses on providing end-to-end network solutions to several corporates in the IT and ITeS sectors (BPO, call centres) and has presence in Delhi, Noida, Gurgaon, Mumbai, Bangalore and Hyderabad.
The company has also developed and deployed various SMS-based business applications for sales, marketing, finance, CRM, Supply Chain Management (SCM) and HR functions.
"This acquisition attains significance as it helps expand the client base and provide a major boost to the company's Internet Services and Network business," Karuturi said.
This move will contribute significantly to the revenues and bottom line of the company starting from the second half of this financial year, it said.
Shares of the company were last trading at Rs 180.90, up 3 per cent, on the BSE.


http://economictimes.indiatimes.com/News/News_By_Industry/Telecom/Karuturi_Networks_buys_Delhi-based_ISP_provider/articleshow/2059408.cms