Legal Liability of Internet Service Providers for Copyright Infringement

I. Definition of Internet Service Provider

Internet Service Provider (ISP for short) refers to an enterprise which furnishes access to enable users to connect to the Internet. In practice, Internet service is usually divided into three forms: first, use of a telephone line to connect to the Internet via a modem; second, connecting to the Internet though special lines such as network cables; third, the websites of small-sized clients connecting to the ISP server, with the ISP collecting fees from its clients, and providing part of its server's and providing part of its server's memory space to them for hosting their websites.

Another kind of Internet service which is easily confused with ISP service is the on-line Service Provider (OSP for short). OSPs really provide such services as network databasing, searches and forums like www browsers \E-mail\FTP, etc., after an Internet connection has been established. The WESTLAW Legal Database frequently used by American law schools is a well-know OSP. Many relatively large-sized on-line Service Providers also provide Internet service separate from on-line services, such as America On-line and others.

At present, Internet services and on-line Internet incremental services are developing repidly. Apart from providing rapidly. Apart from providing basic and virtual host computer services, their business has extended to include Internet incremental services separate from such Internet functions as on-line consulting websites, audio-video services, web design, e-commerce and homepage design. Therefore, service providers can be classified into three categories: those purely providing network databasing and those concurrently providing both.

In the realm of civil and commercial tort law, when the content transferred is suspected of being unlawful, there is always a world of difference between on-line services involving transfer of content and services themselves providing the contents transferred. For example, in the case of persons who defame and slander others over the telephone, the telephone company is immune from joint tort-feasor liability with the unlawful actor; in contrast, media that provide content, because they have the capacity and opportunity of supervising and examining the content published and disseminated, are likely to bear liability as joint tort-feasors with the unlawful actor if an infringement is committed. Therefore, how to define the status of an ISP involves the problem of whether and what kind of liability they should bear when an infraction is committed over the Net.

II. Copyright Infringement Involving ISPs

Article 45 and 46 of the Copyright Law of the People's Republic of China and Article 30 of the Regulations on Protection of Computer Software of the People's Republic of China have specific provisions relating to copyright infringement. Although the provisions do not define infringement in Internet transfer, their animating spirit and legal principles have equally guiding significance in determining whether a copyright infringement occurs in cyberspace. In judicial practice, the act of transfer is generally regarded as a means of using a protected work(note2), and except for reasonable use, this means of use should only occur after the permission therefor is forthcoming from the owner or licensee, and remuneration, if an, is paid. That is to say, transfer over the Internet is an exclusive right belonging to the copyright owner. The adjustment made by the Intellectual Property Law of the People's Republic of China is an inevitable reflection of science and technology and the change and development of social relationships spurred by them.

Judging from the situations that have arisen in practice both at home and abroad, the copyright infringement common on the Internet usually manifests itself as follows:

1. Internet users or servers illegally reproduce, disseminate and post other person's works in homepages, bulletin boards, etc., which are designed by themselves (i.e., the infringers).

2. Downloading other's works and duplicating them on compact disks; for example, downloading papers published by others from the bulletin boards of academic websites, and recording them onto compact disks sold together with a book or a magazine.

3. Linking frames. This action results in others' homepages not appearing in their original form, so that the integrity of the work is compromised and the copyright thereby infringed.

4. FTP (File Transfer Protocol), the actor uploads or downloads the copyrighted file, thus using it illegally; this also encompasses the use of shareware in violation of limits imposed thereon, and continuing use after the trial period has expired without registration.

5. Providing, without permission, the original or the duplicated works for public trading or transmission, or disseminating the duplicated copy on the Internet, and input uploading with the intention to distribute with full awareness of the infringement of the owner or licensee's copyright.

6. Infringing the personal rights of the authors of works placed on the web, including infringement of such authors' rights of publication, rights of authorship and right to protect the integrity of the works. An example here is posting E-mails to news forum or BBS; deleting the author's signature file while collating and compiling web information; or linking part of the works in a frame while collating and compiling.

7. The act of illegally decrypting the technical means employed by the copyright owner to provide security against infringement.

8. The Web host infringing the copyright, for example, the act of the Internet server providing facilities, guiding and encouraging clients to upload game software to BBSs, and obtaining said game software; refusing to delete or take other lawful measures after being notified of the fact of infringement by the copyright owner; other joint, tortious acts displaying a common intent with the illegal actor (acts of inducing, aiding and abetting).

The costs of infringing copyrights via means of computer net works is extremely low, but the efficiency is extremely high, and the infringing articles or service quality are fine, while the injured owner's investigation and prevention of infringement are extremely difficult and the cost is very high. Therefore, public interest dictates that the ISP serve in the front line to guard against Internet infringement, and bear liability for the user's infringement under certain conditions. Among the acts listed above, the first through the seventh are likely to implicate the ISP, and the eighth specially refers to probable active conduct by the ISP.

III. Several Theories on ISP Liability for ISP Liability for Copyright Infringement

1. Direct Infringement

Among the many provisions of the Civil Law and the Intellectual Property Law of the People's Republic of China, there are none bearing on the concept of direct infringement. Generally speaking, Chinese theoretical tort jurisprudence does not recognize a distinction between "direct infringement and indirect infringement". Some scholars assert that all infringements are direct, and there is thus no reason for a concept of indirect infringement. In line with this view, therefore, there is no basis for an artificial dichotomy between direct and indirect infringement. In recent years, however, many intellectual property scholars, inspired by the American Patent Infringement Law, have advanced the argument that direct and indirect infringement should be incorporated into the Patent Law of China in order to render more perfectly the protection of patent rights. In fact, there are legal provisions and theories on direct and indirect infringement not only in the field of patent law in the U.S., but also in the classification of copyright infringements. The direct infringement of a copyright law is roughly in line with the strict (or "no-fault") tort liability, and whether tort liability should be imposed is not determined based on the actor's subjective awareness of fault, i.e., whether deliberate intent or negligence is subjectively present. If the ISP's legal liability for its user's infringement is analyzed with reference to this form of liability, then the ISP should bear liability in tort when information infringing a copyright appears on a homepage or the server of the ISP, even if the ISP is entirely unaware of the fact(note3).

2. Vicarious Infringement

The formulation of a concept of vicarious infringement does not precondition the presence of subjective fault on the part of the actor as one of its essential elements. The determination of whether vicarious infringement applies is made based on a two-pronged test: 1) the defendant has the power and the capacity to control the actions of the tort-feasor; and 2) the defendant obtains some property interest from the actor directly as a result of the infringing act(note4). Vicarious infringement is established only when these two requirements are met. The judge in the case of RTCv.Netcom, tried in U.S. Federal District Court, referenced the defendant's actions in that case by application of the constructive requirements of the doctrine of vicarious infringement. The defendant Netcom did not reap any profits from the infringing act, and the second requirement was similarly lacking; therefore, the judge determined that tort liability could not lie.

3. Contributory Infringement

Contributory infringement is similar to joint tort liability, as provided for in the Civil Law of the People's Republic of China. Article 130 of the General Principles of Civil Law provides that: "where a party's injury is caused by the joint tort of two or more persons, joint and several liability shall be imposed". Article 148 of Opinions on Several Problems of Implementation of General Principles of Civil Law by the Supreme People's Court further explains that: "Those who aid and abet others in committing infringing acts are joint tort-feasors, and should bear joint liability. Those who aid and abet persons without civil capacity in carrying out the infringing act are tort-feasors, and, consequently, they should bear civil liability. Those who aid and abet person with limited civil capacity in carrying out the infringing act are joint tort-feasors, and should bear primary civil liability." Judging from the above provisions, the joint liability for tort as provided for by the Civil Law and Tort Law of China requires that joint tort-feasors possess joint fault and the external manifestations of the subjective condition of involvement in the infringement. The contributory infringement 2 of American copyright law has two constructive requirements: first, the establishment of contributory infringement requires knowledge by the defendant about the infringing act; second, it requires that the defendant has encouraged, was involved in, or helped to commit the copyright infringement(note5). Comparing the above two requirements for contributory infringement in the U.S. with the joint liability for tort in China, it can be seen that when the conditions for contributory infringement are satisfied, joint liability for tort in China, it can be seen that when the conditions for contributory infringement are satisfied, joint liability for tort is established. This form of tort liability still espouses a mens rea element, that is, actual knowledge on the part of the defendant is required, yet there is a marked difference from direct infringement, strict liability or no-fault liability. American judges believe that applying direct infringement to ISPs would make every ISP an insurer bearing unreasonable legal liability. However, if they know and participate in the user's infringing act, then contributory infringement can apply(note6). This form of tort liability is relatively conducive to the development of provision of Internet service, and is therefore suported by most American OSPs.

4. Exemption from Liability as Public Utilities

The scope of the provisions on exemption in China's General Principles of Civil Law is very narrow, and only Article 107 provides an exemption for force majeure(note7). In other intellectual property rights laws, there are provisions on exemption for those who do not know and should not reasonably be charged with knowing of the unlawful sale of patented products(note8). The provisions for exemption from legal liability may form the basis of the defendant's defense, or the basis for exemption. If the grounds on which such defense rests are validated, the party does not bear, or fully bear civil liability. The basis of the defense, therefore, is referred to as the basis or condition for exemption. Under what circumstances should exemption be applied to ISPs? Many scholars assert that, since law provides that telecommunication services which only provide telephone connections have no right to interfere with the content of subscribers' communications; thus, they accordingly bear no liability for their subscribers' infringements in the content of their communications. Likewise, ISPs solely providing Internet service should also be exempted from liability for the content transmitted on their lines even, if such are infringing. It is not suitable for them to bear too great a degree of liability, since they have no right to filter, compile, examine, or oversee contents of the communications users exchange on the Internet(note9).

IV. ISPs' Copyright Liability

The legal liability of ISPs, as discussed in this article, refers to the liability that ISPs should bear when an act of infringement of other person's copyrights occurs in Internet data transmissions. When the legal liability of ISPs is discussed, what is initially analyzed is the problem of whether an ISP should be regarded as a traditional telecommunications public utility providing lines, or as a media publisher providing content. The difference between the scopes of such business and the respective natures thereof will give rise to a series of issues, such as whether certain ISPs have the capacity for, and obligation to screen or filter the contents of the Web, i.e., whether they can or should delete infringing content when aware of it, and whether they should bear joint liability with the Internet user publishing, copying or disseminating infringing content.

In judicial practice in some countries and regions, for example in the U.S. and Taiwan, ISPs are usually joined as defendants. Judging from the considerations cited abroad, there are three reasons for making the ISP a co-defendant. First, when injurious acts occur on the Internet, more often than not the aggrieved party is unable to locate or identify the persons guilty of the infringement (who are usually Internet users); an ISP, however, has a fixed place of an ISP, however, has a fixed place of business, and trade symbols, so it is easy for the plaintiff to identify. Secondly, an ISP usually has abundant financial resources, and the aggrieved party believes that his injury will be more readily compensated if the ISP is joined as a defendant. Third, traditional law regimes provide that content media may bear liability for infringing content. Furthermore, because of the reach and potential reverberations of a Web-disseminated infringement, and because the public's feelings are becoming increasingly aroused as a consequence of the ubiquity of such factors on the Web as, for example, obscenity and eroticism, fraud, false advertising and invasions of privacy, the public clamor for the imposition of legal liability is reaching fever pitch. The question comes down to one of how to weigh advantages and disadvantages, and respectively, how to develop and overcome them; how to prevent unguided drift, escalation of risks, encumbering business operations with unreasonable difficulties and obstruction of Internet development and data dissemination. These are the important issues that should be considered and imported into any analysis of the methodology for standardizing norms for ISP conduct and investigating and apportioning legal liability when infringement of people's legitimate rights and interests occurs.

Generally speaking, instances of libel, threat, fraud, false advertising and copyright infringement on the Internet usually involve ISP liability. What needs to be noted here, however, is that there is some difference between the unlawful contents of Web-base obscenity and eroticism, sales of contraband, threats and fraud, gambling and false advertising on the one hand and copyright infringement on the other. The former, in the first place, narrowly relate to public security, public order and public morals and customs, and their content is obviously illegal. While the latter mainly involves the rights of specific person, and without a conclusive determination made as to whether the accused contents fall within fair use guidelines or constitute copyright infringement. Therefore, these factors should be taken into account when standardizing a litany of unlawful practices involving Internet infringement and instituting rules of the game in the virtual world of the Web.

1. Clearly providing that an ISP solely providing Internet service does not bear legal liability for user's transfer of information infringing the contents of a copyright via the Internet, the tort liability of the user should be borne by the user himself.

2. The ISP should bear civil liability for the act of infringement of other's copyright carried out by ISP itself over the Internet.

3. The ISP should bear civil liability as a joint tort-feasor for its complicity in the infringing act of other's copyright.

4. The ISP should bear civil liability as joint tort-feasor for infringement when aiding and abertting users in carrying out an infringement of copyright.

5. The ISP providing content service capable of controlling, supervising, adding and deleting and compiling the transferring contents should bear liability as a joint tort-feasor for a user's transfer of contents infringing other's copyrights, when it fails to take any measures to halt the transfer of infringing contents after being informed thereof by the copyright owner.

6. The ISP providing content service should bear tort liability if it is fully aware that users transfer the contents infringing others' copyrights over the Internet.

7. The ISP providing content service should, on the condition that it is technologically and economically feasible, take measures to remove infringing contents, and provide the address of the infringer if the copyright owner lodges a notice of infringement based on clear evidence. Corresponding tort liability should be borne if there is a refusal to remove the infringing content, and liability as a joint tort-seasor should be borne if advance knowledge of infringement is demonstrated.

8. The copyright owner should present the name, telephone number, E-mail address, and address of the owner or licensee, and the certificate of copyright, as well as the infringing content and evidence of finding the infringing content on the Internet and along with notice to the ISP of the infringement. Where the party claiming an infringement is unable to adduce the above materials and otherwise fails to provide evidence of justification, the ISP may refuse to remove the subject content. The copyright owner may apply to a court for a preliminary injunction to cease the infringing act upon submission of the materials mentioned above, if the ISP fails to take any measures.

9. The ISP shall be exempted from liability if the Internet user asserts a claim against the ISP for breach of contract on the grounds of the ISP removing the content per request by the copyright owner; any loss accruing to the user caused by the ISP's removal shall be apportioned as between the user and the copyright owner applying for removal.

The above are offered as suggestions for legislative and judicial principles, and some of them may also be used as use convenants between the ISP and its users so that the frequency and costs of lawsuits can be reduced.

(translated by Ma Jing)

note1: Deputy Director of the Intellectual Property Rights Trial Chamber of the Supreme People's Court, PRC
note2: Some hold that transferring acts should be classified, and they may be classified as "reproduction", or as "publication", otherwise it is not terribly convenient to determine their character and whether they constitute infringement. The author believes, based on judicial practice and with reference to experiences gleaned from abroad, that network transfer should be regarded as an independent right of the copyright owner, at the same time existing as a means of using the work. A more detailed discussion will be forthcoming in a subsequent article.
note3: See details from Analysis on Advisory Legal Affair, p.18, 1998-5, by Zhang Yawen
note4: Zhang Yawen, ibid. At P.18-19
note5: Gershwin Pub. Corp. V. Columbia Artists Management. Inc., 443 F.2d 1159 (2d Cir. 1971)
note6: 907 F. Supp. 1361, 1369
note7: See Article 107 of General Principles of Civil Law of the People's Republic of China
note8: See Section 2, Article 62 of General Principles of Civil Law of the People's Republic of China
note9: See Legal Liabilities of Internet Service Provider for Unlawful Contents on Internet by Zhang Yawen, Analysis on Advisory Legal Affairs, p.19, 1998-5