FTD legal? Probably not...

A few weeks ago, the Usenet community FTD (Fill Threads Database) sued BREIN, a Dutch anti-piracy organisation under the guise of ‘attack is the best defence’. The reason was a statement made by the BREIN director about the illegality of FTD. FTD claims that because downloading copyrighted works is legal in the Netherlands, pointing each other to downloadable, copyrighted files is also legal. According to BREIN, parties such as FTD encourage and facilitate the illegal distribution of music and films and are thus illegal.

According to legal consultant Arnoud Engelfriet, who assists FTD, BREIN’s claims are based on ‘legal quicksand’. He states that it has not yet been decided whether the facilitation of copyright infringements is forbidden. Engelfriet claims that FTD operates legally, because:

1.    Downloading is legal in the Netherlands, so drawing attention to downloads is also legal.

2.    FTD is merely a communication tool for users and cannot be held liable for its users behaviour.

Although Engelfriets’ claims are not without merit, his claims that FTD cannot lose the case are premature in my opinion. In this contribution I aim to analyse the claims made by Engelfriet and FTD and check whether their claims are indeed watertight.

What is FTD?

FTD is a service, which helps users find interesting content on the Usenet. Because Usenet is a relatively inapprehensible for the average user, it is useful that peers direct users to the content they search. FTD offers the infrastructure for this communication. FTD consists of two components: the application and the forum.

FTD Application

The FTD application indexes Usenet posts, to make them easy to search through. This way, users can find the music, movies, software or other content they seek in a straightforward way.  FTD doesn’t automatically index the whole of the Usenet, but only posts that have been ‘spotted’ by users. When a user finds an interesting post on Usenet, he can enter it into the FTD application to make it findable for other FTD users. However, the application doesn’t link to files, a user needs to download the files using a separate Usenet reader.

FTD Forum

Discussions about the spotted files (quality, background information over the file etc.) and requests can be made on the FTD forum. The forum is linked with the FTD application.

Analysis

The important question is, if FTD is responsible for the behaviour of its’ users. Two questions need to be answered: 1) is it a valid argument to state that downloading is legal, so the act of offering the functionality to ‘spot’ files is also legal, and 2) is the architecture of FTD as such, the we can consider it to be facilitating copyright violations?

Downloading legal? Not really.

Downloading is a violation of the reproduction right of the author/rights holder and is thus forbidden in many countries. In the Netherlands, the act of downloading for private use is considered to be a so-called ‘home-copy exception’. This is an exception on the copyright of the rights holder, which gives the consumer the right to make copies for private use (for instance copying a book with a copier). The Dutch legislator has decided that in general the downloading of files falls under the home copying-exception.:

"The internet user who uses the possibilities offered by Napster, KaZaA and comparable peer-to-peer services to copy works of literature, science or art for private use generally operates within the margins of copyright law. This is also applicable when the copy for private use is made from an illegal source, which means that it has been published without the rights holders consent.” (Kamerstukken II 2002-2003, 28 482, nr. 5, p. 32)

According to the legislator, the home copying exception does not require the source to be legal for the consumer to claim the “home copy” exception. (Kamerstukken II 2002-2003, 28482, nr. 5, p. 33). In other words, downloading from an illegal source is, in principle, covered by the home-copy exception. However this does not entail that downloading files from an illegal source is always ‘legal’. A consumer who downloads from an illegal source can commit tort (or: an unlawful act) towards the rights holder (Answers of the Minister of Justice to MP Gerkens, uittreksel 5494375/07/6).

Also, The question remains whether the Dutch interpretation of the home-copy exception can withstand the test of the international copyright law. The so-called ‘Berne three-step-test’ indicates that an exception to copyright law may not conflict with the normal exploitation of the work. It is highly likely that downloading for private use (certainly from an illegal source) does conflict with the normal exploitation of the work. This was also the conclusion the Court of the Hague reached in its verdict about home copying which is currently under appeal (Rechtbank ’s-Gravenhage, 25 juni 2008,  HA ZA 05-2233).

Also, a ‘reasonable compensation’ needs to be paid to the rights holder for a ‘home copy’. In the Netherlands, this reasonable compensation is made possible through the ‘home copy-levy’. This levy is paid for on blank media (such as empty DVD’s, etc.), which makes sure the reasonable compensation is achieved indirectly. However, music is usually stored on hard discs and mp3-players and movies on the hard disc. There is no levy on these storage devices. In other words, the home copy-levy does not work properly anymore for music and films. This is a situation the legislator cannot ignore indefinitely. It leaves two options: levies on hard discs and MP3 players, or prohibiting downloading.

From the above, we can cautiously conclude that downloading, especially from an illegal source, is not by definition legal. Moreover, in the long term, the current situation will likely be changed. By this, the conclusion of FTD that the spotting/linking to downloads is legal by definition has become uncertain.

FTD cannot be held liable for its’ users behaviour

Currently, there is much discussion about the liability of internet providers. For example, the administrators of The Pirate Bay were held liable for the behaviour of their users and in the Netherlands, the administrator of an internetforum (internetoplichting.nl) was held liable for not removing unlawful messages of its’ users.

When determining whether a service provider is liable for the behaviour of its users, a few criteria need to be considered. The first is the degree to which the service is based on illegal content. Although the judges consider a search engine –even if it refers to illegal content- not to be illegal by definition, in the ZoekMP3-case, the judge ruled that when the search engine is primarily geared towards illegal files, this could indicate that the search engine acts are unlawful towards rights holders.

In the case Marktplaats/Stokke (which was not related to Bit Torrent or file-sharing), the court formulated a few criteria, which can be used to conclude if a service provider acts unlawfully towards third parties. These criteria are:

1.    The role of the service provider related the law-breaching activities; 

2.    To what extent the service provider profits from the violations;

3.    To what extent the service provider has implemented a Notice & Take-down procedure.

Ad 1)

It seems like FTD does indeed play a role in the violations of copyright laws on its service. When we take a closer look at the FTD application, it could be argued that it has been designed to make it easy to find spots that refer to illegal content. One such indication is the tab under which you can spot console games, which are illegal to share by definition (the home copying exception does not apply to software). Furthermore, when spotting movies, terms such as CAM, Telecine, Telesync can be selected. These terms are generally (if not exclusively) used to describe illegal copies of movies. Finally, the administrators actively remove fake spots, but do not act to remove spots that violate copyright.

Ad 2)

FTD profits from the actions of its users through advertising income and donations. FTD has created a comprehensive advertising system and also uses Google Ads. FTD indicates that this income is used to pay for their internet and hosting costs. However, it is not certain how much FTD generated with its advertising and donation programmes.

Ad 3)

It is unclear whether FTD has an effective notice & take-down procedure in place.  While moderators pro-actively remove fake or outdated spots, they do not remove requests for spots of films, which are frequently not yet released in cinemas, and other infringing content. While FTD claims it has an effective NTD procedure, it is unclear whether it is actually effective.

The way FTD has been designed and the (lack of) enforcement by the administrators, makes one presume that the liability for facilitating of copyright infringements is not as far fetched as FTD and Engelfriets’ claims.

Spotting = linking?

From the above, we can ascertain that FTDs’ arguments are at least questionable. But the key question in this case is ultimately: is the ‘spotting’ of files the same as linking to files? FTD is an index for spots, but these spots don’t link directly to files. If the user wants to download a file, he needs to use a Usenet reader. He can insert the information contained in a ‘spot’ into this reader to download the file. The question is thus if spotting can be treated in the same way as linking. I do not think this is the case, but if a spot is a simple reference to a file, which can be found by carrying out a few actions, this need not matter. If it is sufficiently easy, a spot may well be treated as a link by the judge.

Conclusion

With its lawsuit, FTD supports the interests of file-sharers in the Netherlands. Because downloading is legal, the spotting of downloaded material should also be legal. According to FTD, the fact that they are not involved with the source (the act of uploading), is enough to be dismissed for liability. Their legal advisor claims that FTD ‘have the law on their side’. However, their position is less secure than they claim. First of all downloading isn’t ‘legal’ by definition. The Dutch copyright act does not mention downloading, and the fact that the home copying exception applies, is based solely on a controversial statement by the Minster of Justice. This statement is increasingly under pressure, as the ruling by the court in The Hague suggests, since it will probably not withstand the Berne three-step-test.

Even if downloading would be completely legal, FTD would still not be dismissed from liability. Such as the ZoekMP3 case suggests (along with other cases), by the act of referring to infringing content (or the facilitation of the referrals to infringing content) the service provider risks liability, because he doesn’t act with the required care towards rights-holders.

The design and organisation of FTD suggests that they –to a certain extent- facilitate copyright infringements. The tabs for games in the FTD application, which cannot be offered legally online, referring to copies of films from an illegal source (Cam, telesync, etc.), earning revenue from advertising and donations, stimulating ‘interesting spots’ via a ‘kudo system’, moderating spots and the absence of a notice & take-down procedure; are all evidence that FTD is primarily geared to offering interesting, infringing content.

Is offering a platform for spots the same as referring to linking to infringing files? No. Does this mean FTD doesn’t facilitate copyright infringements? This is difficult to answer. The court will have to decide whether FTDs’ functionality is as such, that copyrights are infringed quicker and easier. An active community of more than 450,000 users does make one presume so…