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November 2017

Federal Court of Justice: Third Decision on Thumbnails in Search Engine Image Search

On Sep. 21, 2017 the German Federal Court of Justice (Bundesgerichtshof, FCJ) ruled that the displaying of thumbnails in search results does not qualify as public reproduction (öffentliche Wiedergabe) as laid down in Sec. 19a Copyright Act (Urhebergesetz).

The FCJ’s judgment is based on case law from the Court of Justice of the European Union (CJEU). In the “Svensson” decision, the CJEU ruled that the posting of a hyperlink is not a copyright relevant act (urheberrechtsrelevante Handlung). Later, the CJEU expanded on this premise in the “GS Media” decision and held that it is essential whether or not the person setting the link knew or should have known that the linked content was made available without prior consent of the copyright owner. Such knowledge shall be refutably presumed (widerleglich vermutet) if the relevant link was posted with the aim to generate profits, i.e., with a commercial intent.

Against this background, the FCJ ruled that such presumption of full knowledge, does not apply to search engines and any hyperlinks which are posted on search engines. According to the FCJ’s press release, the theory of a refutable presumption (widerlegliche Vermutung) is incompatible with the importance of search engines for the functionality of the internet. Thus, the providers of search engines cannot be expected to examine whether the thumbnails – which can be found by the search engines by automated means – were legally posted on the internet in the first place. The FCJ’s full rationale is not yet available, thus it remains to be seen how the court justified why it did not present the case for a ruling to the CJEU.

German Network Enforcement Act Becomes Effective

On Oct. 1, 2017, the controversial Network Enforcement Act (Netzwerkdurchsetzungsgesetz, NetzDG) became effective. Social networks are now obliged to provide an easily recognizable, directly accessible, and permanently available procedure to users with respect to complaints received concerning allegedly unlawful content. Further, social networks now have to remove or block obviously illegal content, such as hate speech, defamation, and incidents of violence within 24 hours after receipt of the notice or face heavy fines. NetzDG applies to all social networks that offer their services in Germany and have more than two million registered users in Germany. Any telemedia service will qualify as social network if it operates profit-orientated internet platforms which are designed to enable users to share any content with other users or to make such content available to the public.

EU Commission: Agenda on Fair Taxation of the Digital Economy

On Sep. 21, 2017, the EU Commission presented an agenda aiming (in the EU Commission’s view) at a fair and growth-friendly taxation of the digital economy (A Fair and Efficient Tax System in the European Union for the Digital Single Market). The agenda is supposed to pave the way for a legislative proposal on EU principles concerning the taxation of profits in the digital economy. The EU Commission as well as the finance ministers of several Member States argued that the fiscal framework needs to be adapted to the modern environment and practical requirements. From their perspective, the current tax regime, which was designed for the traditional economy, does not cover activities which are increasingly based on intangible assets and data. The envisaged changes, that suggest taxation of turnover at the place where turnover is actually made, rather than where the relevant company is resident or has its relevant business establishment, has already caught the attention of critics: both the International Chamber of Commerce and the American Chamber of Commerce in Europe stated that a higher taxation of internet giants might damage the economic growth in Europe, would impede the global efforts on creating uniform tax regulations and would have a negative impact on the economic partnership between the EU and the United States. The finance ministers of some other Member States, including Ireland and Luxembourg, have also criticized the proposals, arguing that the EU should align itself with the international work being done in this area by the OECD, rather than acting unilaterally.

EU Commission Demands Use of Proactive Filtering Technologies

On Sep. 28, 2017, the EU Commission called for extensive measures to detect and remove illegal content online. The Commission encouraged online platforms to take a proactive approach and “do their utmost” in order to decrease the amount of illegal content, rather than merely following the “Notice and Takedown” procedure. The Commission published a set of guidelines titled “Tackling Illegal Content Online – Towards an enhanced responsibility of online platforms” (COM(2017) 555 final). In the near future, the Commission has indicated that it wants to implement automatic detection and filtering technologies to remove illegal content from the internet as fast as possible.

EU’s Highest Court to Decide Validity of Standard Contractual Clauses

On Oct. 3, 2017, the Irish High Court ruled that the European Court of Justice (ECJ) should decide whether Standard Contractual Clauses (SCC) used to legitimize the transfer of personal data of residents of the European Union and European Economic Area (EU/EEA) to the United States are valid for that purpose.

In its ruling, the Irish High Court stated that the decision regarding the validity of the SCC raises “very major, indeed fundamental, concern to millions of people within the European Union and beyond.” It pointed out that the issue is “relevant to the data protection rights of millions of residents of the European Union”. The Irish Court also acknowledged that the decision also has “implications for billions of euros worth of trade between the EU and the US” and other non-EU countries. Continue Reading.

CJEU: Jurisdiction for Violation of Personality Rights Claims

On Oct. 17, 2017, the CJEU (C-194/16) ruled that a company which claims its personality rights (Persönlichkeitsrechte) to be infringed by content available via the internet may bring action for all damages sustained before the courts of the Member State in which its centre of interests is located. However, the CJEU stressed that a company may also bring an action before the courts of any Member State in which the relevant content was or still is available. Should the latter be the case, the courts only have to consider the damages within their specific territory and jurisdiction.