WEB 2.

0, UGC, MASH UPS:

Who owns the data, who is responsible?

Text of presentation given at the European Association of Directory and Database Publishers’
Conference in Barcelona on 29 May 2009.

Introduction
On the face of it, these are purely legal issues. Of course, they are legal issues but they also raise fundamental
questions about how business models can be built and sustained in the digital world.

Can any kind of content be taken using web technologies such as search, web scraping and harvesting freely
and without permission? Just because file sharing, search engines and other technologies make it possible to
‘grab’ content, does it mean that it is automatically permissible?

Does the notion of “ownership” mean anything if content owners give their content away free and users are
not willing to pay for content and is the answer any different if content is advertising supported?

Who are “publishers” and who are “intermediaries” in the online world? This is an important distinction. It’s
the publishers who can claim ownership of directory and other data and who may have to take liability for
any illegal content they publish whereas “intermediaries” may be able to claim immunity from claims for
damages for any illegal content they carry or make available.

Do the roles played by search and UGC in the online world, and the shift in power to the User, fundamentally
change the legal rules of the game? The driving force behind all the changes we’ve been discussing is the
user. Never before has the citizen/consumer been so empowered by technology. He or she can search,
‘tweet’, get data delivered via news feeds and a multitude of other ways and can publish to PC, i-pod, mobile
phone and other devices. And when we discuss “User Generated Content”, we need to draw a clear
distinction between “User Created Content” and third party copyrighted content which is distributed illegally
by a user via ‘Peer to Peer’ or pirate websites.

I think this is a significant moment in time to be discussing these issues. There is growing demand to consider
the dominance of Google and to understand the role which new intermediaries play in the digital world. The
newspaper industry is again raising the prospect of paid-for content. At the same time, the rise of social media
means that the boundaries between publishers, intermediaries and users have become blurred and the law has
become confused.

In today’s business climate shareholders want performance, performance, performance. That may encourage
some to disregard the boundary between the legal and illegal use of content or, at the very least, not to want to
find out where that boundary lies.

But I think there is a fundamental principle here which goes to the heart of online businesses like directories and
databases which are driven by content. And it’s this: every player in the content chain who creates or adds value
to content should have the right to benefit from their contribution. The challenge is to translate that principle
into revenue.

But that’s enough high level strategising for the moment. We all of us here have to deal with the world as it is,
and not as it should be or may become. So in the remaining part of my presentation, I want to look at all of
these issues in relation to an imaginary online “B2C” directory site – ‘let’s call it “Barcelonaconference.com” –
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which has the following features:-

“User generated Content” in the form of forum posts, videos and ratings of restaurants and other local
services.

Directory content held in its own databases, consisting of data licensed in from data suppliers and
aggregated data obtained by desk-based research and by using technical means such as web scraping.

It has a search function which enables the user to search against the names of people and local businesses
and the results are displayed ‘on the fly’ from web sources including social network sites.

You’re Vice President, Business Development, of ‘Barcelonaconference.com’. Your day has not started well: a
deal you were working on has just fallen through and your promising assistant has just given notice that she’s
leaving to join a competitor.

Your PA then comes into your office with a letter that’s just been delivered. It’s from a firm of lawyers. As soon
as you get it you get your lawyer to come to your office and you read it to him:

“Dear Sirs

“We act for Excellent Publishers Limited and for its CEO, Snr. Juan Excellente. Your site has the following
features:

Your site and its RSS feeds contain a substantial amount of data about local business services which have
been copied, by technical means or otherwise, from our client’s website. This infringes our client’s database
right.

Your site displays quotations from the news service on our client’s site and these are available as RSS feeds.

There is a mash up application on your client’s site which includes data which must have been obtained from
our client site.

Our client also found a defamatory post about him in one of your user forums and when he used the search
feature on your site to search against his name, the results displayed included a link to a site which
contained defamatory material about Snr. Excellente.

Unless you shut down your website within 48 hours, our clients have instructed us to take legal proceedings
against you.”

“Surely this is all ridiculous?” You tell your lawyer. “All we do is to provide the technical tools and facilities to
enable our customers to get what we want and to give them the possibility to contribute to the site by providing
UGC. I thought all of that was covered by legal exemptions because we are just acting as an intermediary
between other sites and our customer. So can I just tear up the letter?”

Your lawyer is silent for a few minutes. “Is there a problem here? you ask.
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“Well, it’s not that simple”, says your lawyer.

Well, no-one promised simplicity! So let me give you some views. But let me begin with a couple of ‘big caveats’.
These are complex issues and Court decisions in Europe, US and elsewhere are often thin on the ground and
contradictory. So please don’t take my views as formal legal advice. In other words, “please don’t sue me!” Also,
I am going to base my remarks only on European law.

But before we can do the analysis, I need to provide a very brief background on two key legal issues which
directly relate to Barcelonaconference.com. The first one is about intellectual property in websites and other
online data repositories. The second is about the exemptions from legal liability for illegal content which the law
gives to intermediaries.

The first point is that a website is full of intellectual property. It is “IPR rich”. Of course, that intellectual property
does not guarantee revenue but it’s important to recognise that it exists.

Each page may be a copyright work and the collection of HTML pages is treated as a copyright as a “database”.
In addition, databases sitting behind the website (e.g. directory data) are potentially protected too. In addition,
the site may contain separate copyright works such as videos and sound recordings software applications on and
even applications hosted on the site which are run via users’ browsers.

So in Europe, there are at least 3 levels of intellectual property protection which can apply if the tests for
protection are met:

1. Copyright in the collection of HTML pages or equivalent.

2. Copyright in the various databases (e.g. holding directory data) and other copyright works (e.g. videos).
3. Database right (also known as the ‘sui generis’ right) in the investment made by the directory publisher as
database producer in each of the databases

These can be represented in the following form:

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1st Proposition: Rights in Website Content

Content and Database Right

STRUCTURE CONTENT
•
COPYRIGHT SUI GENERIS COPYRIGHT CONTENT
(Investment in content)

"whole or substantial part" "substantial part" "whole or substantial part"

"Restricted Acts" No "extraction" or "re-utlilization" "Restricted Acts"

Exceptions Exceptions

June 7 2005 DPA Conference 2005

As I just mentioned, the second key issue concerns the legal immunities enjoyed by “intermediaries”. These
were introduced into EU member states’ laws by the so-called ‘E-Commerce Directive’ of 8 June 2000. That
Directive refers to intermediaries as “information society service providers” and these immunities were really
designed to give Internet Service Providers immunity from being sued for carrying illegal content on their
networks, caching illegal content in their servers and providing hosting space for content uploaded by their users.

There are three immunities:-

1. The ‘mere conduit’ exemption which protects ISPs against claims for damages for content carried on their
networks provided the ISP has no control over and does not interfere with the message.

2. The exemption from liability in damages in respect of illegal content which it may ‘cache’ on a local server to
more efficiently handle users’ browser requests.

3. A similar exemption but this time for a service which consists of providing storage of information provided by
the recipient of the service. But here, the immunity from liability is subject to two conditions:-

The service provider does not have knowledge of the illegal content nor is he aware of circumstances
from which the illegal activity is apparent.

As soon as the service provider knows that the hosted content is illegal, the acts quickly to remove it or
to disable access to it. However, there is no duty on the service provider to monitor his site for illegal
content.
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Even if the service provider is immune from damages, it can still be required under a Court order to take steps to
terminate or prevent an infringement.

It’s important to remember that the E-Commerce Directive was negotiated between about 1997 and 2000. This
was really before Google had achieved prominence and well before social network sites and ‘Web 2.0’ had sprung
to prominence. At most, when some member states implemented the Directive into their national laws, they may
have thought about browser-based hyper linking and perhaps the very early days of search.

So with that background, let’s return to the lawyer’s letter and take an initial look at the various claims that he is
making on behalf of his client Excellent Publishing and Snr. Juan Excellente.

Although there are a number of different issues raised, the key issue is whether Barcelonaconference.com is
acting as publisher, with the responsibilities and liabilities that go with that role, or whether it’s really just an
intermediary, providing tools for its users to connect with the network, so enabling it to claim legal immunities
which are available for “information service providers”. As we will see, the reality is that it is a mix of both!

So let’s look at the first claim:

“Your site and its RSS feeds contain data about local business services which have been copied, by technical
means or otherwise, from our client’s website.”

In deciding whether Barcelonaconference.com has a problem, we will need to look carefully at whether the data
on its site has been displayed ‘on the fly’ to the user as a result of a search initiated by user or whether the data
is stored on a Barcelona database, after being obtained by Barcelonaconference.com, either under licence or by
the use of web scraping or other technologies.

If Barcelonaconference.com has obtained and published the data, by whatever technical means, it may have a
problem. There was a recent case – Directmedia Publishing GmbH v. Albert-Ludwigs Universitat Freiburg – which
gave a wide interpretation to the meaning of ‘extraction’ from a database which is prohibited without permission
of the database owner.

The first thing Barcelona will argue that the database right only applies if a substantial amount of data is taken
and it will argue that this is not the case here.

Barcelonaconference.com will also want to argue that by making its data available on its website it has impliedly
licensed the world, including Excellente Publishing, to extract its data, whether by screen scraping, web scraping
or similar means, Barcelona might argue – as Google does – that by not using technical measures to prevent web
bots from searching, scraping or extracting data, it has impliedly allowed its data to be taken.

Looking at the case law here and in Europe, it is certainly an argument to run. But in my view, applying an
‘effects based’ approached, this argument has risks for a directory publisher to run where the end result is that it
is republishing another party’s data in a commercial context. In my view – and this is just my personal view - the
legal trend will look more at the ‘what’ than the ‘how’. So if Barcelona has used technical tools to gather
particular kinds of data, as against just providing general search functionality, it increases its legal risk. In the
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recent German case of Ryanair v. Vtours, the Hamburg Court issued an injunction to stop Vtours from scraping
Ryanair’s website. Ryanair also claimed that Vtours breached Ryanair’s terms and condition of use on its website.

That’s an interesting point. Let’s imagine that a website scraped by Barcelonaconference.com’s search engine
had machine readable permissions expressed in XML embedded in the site. In my opinion, that would make it
much harder for Barcelonaconference.com to rely on an argument that the site in question had impliedly licensed
the use of its content to the world.

Now let’s the position if the local business services data were extracted from the Excellent Publishing site and
generated ‘on the fly’ on the Barcelonaconference.com site as a result of a search made a
Barcelonaconference.com user. In this situation, I am assuming that the data is not stored on the
Barcelonaconference.com servers but is displayed on the Barcelona site as a result of a site user using the search
box to generate a web search which retrieves and returns that data.

In that scenario, I think that the legal position is different. Barcelonaconference.com is much closer to the
position of the intermediary. Whilst there is very little case law on this point, Barcelonaconference.com would
argue that is acting as a host and so entitled to the exemption for hosts in the E-Commerce Directive. But it is
important to remember that, having received notice, it will nee to remove the data promptly to qualify for the
exemption.

Interestingly, a Paris Court decided about two weeks ago that EBay qualifies for the ‘hosting’ exemption and so
cannot be sued by L’Oreal for counterfeit goods offered by sellers on EBay. I will talk a little more in a moment
about what a site needs to do to take advantage of the exemption.

There is a mash up application on your client’s site which includes data which must have been obtained from our
client site.

With apologies to all you ‘tech savvy’ people in the audience, a mash up’ is defined in ‘Wikipedia’ as “a Web
application that combines data or functionality from two or more sources into a single integrated application….
An example of a smashup is the use of cartographic data from Google Maps to add location information to real
estate data, thereby creating a new and distinct Web service that was not originally provided by either source.”

We need to look at the substance more than the technology. If the data ‘mashed together’ is made publicly
available without express or implied restrictions, then the ‘implied right to use’ is a strong argument. But if there
are permissions attached, then, in my view, the legal analysis may be different.

Our client also found a defamatory post about him in one of your user forums and when he used the search
feature on your site to search against his name, the results displayed included a link to a site which contained
defamatory material about Snr. Excellente.

This situation is probably the easiest one to analyse. I referred a little earlier to the exemption for ‘hosts’ in the
E-Commerce Directive. As long as Barcelonaconference.com acts expeditiously to remove the defamatory post
about Snr Excellente in its user forum, that exemption will be available to it. The same will apply to any other
illegal content which may have been posted by its users, such as a video where the copyright belongs to
someone else.
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Although the E-Commerce Directive does not require Barcelonaconference.com to actively monitor its site for
illegal content. But, depending on the type of site, the host may need to take some steps here to qualify for the
hosting immunity. In a case in 2007 in Belgium, (May 2007) SABAM, a collecting society in the music industry,
sued the ISP Scarlet (formerly Tiscali) for handling peer to peer traffic containing musical files which breached
copyright.

The Judge noted that there was no obligation on the ISP to monitor, the Court decided in favour of SABAM.
Nevertheless, he decided that to be able to take advantage of the immunity, the ISP in this case had a duty to
use filtering technology. He was influenced by one of the introductory paragraphs in the E Commerce Directive
that said that the absence of a duty to monitor "should not preclude the development and effective operation of
technical systems of protection and identification and of technical surveillance instruments made possible by
digital technology.”

In considering the legal position of Barcelonaconference.com as a host of UGC, it is quite helpful to look at the
Paris Court’s approach in the recent ebay case. It decided that ebay could claim status as a host and had fulfilled
its responsibilities as a host and so cannot be held liable because the information stored at the request of the
recipient of service if it had no actual knowledge of unlawful circumstances from the moment they acted
promptly to remove such data or make access possible.

In reaching the decision, the Court focused on prevention. It acknowledged that prevention is difficult because
of the number of advertisements on ebay, the difficulty in reading them and the anonymity of sellers.

Significantly, it concluded that Ebay demonstrated sufficient prevention in the following ways:

by the use of contractual clauses in its Terms and Conditions;

in messages to sellers & buyers;

Its VeRo program – “working to develop and enforce policies & procedures for protecting IP”

After receiving a letter from L’Oreal, Ebay expressed readiness to cooperate and to improve situation.

So where does all this get us?

My five propositions
These are the five propositions which I would like to put to you which I think are important for the database
publishing industry at this present time.

1. Ownership of intellectual property in content remains as valid in the online world as it does in the offline
world. The challenge of ‘monetising content’ does not, of itself, invalidate this fact.

2. But ownership means nothing in the digital world without the right technical infrastructure in place to identify
ownership and to express permissions in machine readable form. In other words, copyright has to be
expressed through 21st century technology.

3. In deciding legal issues like data ownership and liability for illegal content the law should take an ‘effects-
based’, and not a ‘technology-based’, approach. By that I mean that in order to decide questions about
ownership and liability, we should focus on the commercial effects of using technology, not on how the
technology is used.
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4. We need a clear understanding and consensus about what an intermediary is in the online world. There is –
or should be – a clear distinction in the legal responsibilities of a provider of search and other location tools
to users on the one hand and, on the other, in being a data aggregator or publisher.

5. Fifth, and perhaps most important, is to recognise that solutions to all these challenges will not be found in
courts of law. Yes, of course, legal action will also have its place. Piracy and other illegal acts need a legal
response. But, above all, what are needed are creative business solutions between all players in the value
chain who benefit commercially from the use of other parties’ content. We need collaborative partnerships
and revenue sharing deals and a whole variety of commercial solutions, including paid for content,
advertising-supported content and ‘hybrid’ commercial models. After all, information may be freely available,
but in the commercial world it is never really free.

Laurence Kaye
Laurence Kaye Solicitors
© Laurence Kaye 2009
T: 01923 352 117
E: laurie@laurencekaye.com
www.laurencekaye.com
http://laurencekaye.typepad.com/
This presentation is not intended to be exhaustive and it does not constitute or substitute legal
advice, which should be sought on a case by case basis.
Please feel free to copy or make available this article without modification in print or electronic form for non-
commercial purposes. If you do so, please include this disclaimer and copyright wording with attribution. If you
want to re-publish or make the whole or part of this article available in a commercial service or publication,
please contact the author at laurie@laurencekaye.com.