Out-Law News 1 min. read

File hosts that encourage copyright infringers should have to monitor for similar infringement, rules German court


Cloud computing providers and suppliers of hosting services should have to monitor for the illegal uploading of copyright infringing files where they are found to have incentivised that activity, a German court has ruled.

The Federal Court of Justice ruled that Rapidshare's file hosting service had attracted users to infringe rights belonging to music rights group GEMA in more than 4,800 songs. Rapidshare had "benefited significantly" from operating a service which did not charge users for storing files but where revenues generated stemmed from selling premium accounts from which users could infringe copyright, the court said. The fact that users could set up premium accounts on an anonymous basis also served to attract infringers, it added.

"The specific configuration of the service of [Rapidshare] creates a significant incentive to use it for massive rights violations," an automated translation of the Federal Court of Justice's ruling said. It said that Rapidshare had estimated that 5-6% of files uploaded by users were infringing, meaning that about 30,000 files a day were being illegally shared.

The Federal Court of Justice ruled that Rapidshare, having been made aware of the infringing files, should now formulate search queries for using on services such as Google, Facebook and Twitter to try to pinpoint further, related cases of infringement.

GEMA described the ruling as a "landmark judgment".

Munich-based copyright law expert Igor Barabash of Pinsent Masons, the law firm behind Out-Law.com, said that Rapidshare had last year changed its business model to place a "strict download limit" on stored files. Since then the company has lost a significant number of customers and recently dismissed a large proportion of its workforce in Germany.

Barabash said that the ruling would prompt EU-based cloud providers to assess their business models, but he said that most EU-based providers do not have a business model similar to Rapidshare's prior to the changes the company made in November last year.

For non-EU based cloud providers that may be deemed to have infringement-incentivising business models, those companies are not likely to adapt their operations "due to the small chances of success in bringing an enforcement against them", Barabash added.

Barabash said that it is "not feasible" for cloud providers to identify all existing infringing links available online because of the "infinite number of websites" on which they are located on the internet.

One way cloud providers could help dissuade infringers from using their services would be to require users to provide real, identifiable information about themselves when registering with the service, the expert said. However, Barabash warned that this could scare prospective customers away.

He also said that providers that place "technical limitations", such as storage or traffic data caps, on their service will dissuade people from using their service to engage in mass infringement.

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