The Establishment bytes back

Do the French eBay decision and the US Google decision mark a real turning point in the very long legal honey moon for internet businesses? The early years of the internet were often described as a Wild West where laws did not apply. Of course, only partly true. Often too many laws applied; but few were applied. And an environment thrived which has created not just large and successful businesses, but new business models which now underpin the modern economy.

However, while politicians and legislatures have recognised the value of such an economy, and provided harmonisation and light touch regulation, established businesses have seen their business models undermined, frustrated at the impotence of existing rights and enforcement regimes to provide meaningful protection. Now perhaps the tide is turning. Despite the electronic commerce directive (which is intended to provide freedom for ISPs from regulation) a French Court has fined eBay (in the handbag claims) for failing to take adequate action to remove counterfeit handbags from auction sale.

The Directive is intended (amongst other things) to ensure that ISP hosts do not have burdens placed on them to keep track of what is going on and prevent it. If a host is notified of an alleged infringement it should take suitable steps to remove it; but shouldn't that mean just to stop that (specific) act of alleged infringement, not any other ones which are like it? If a take-down notice can properly apply to a range of potential infringements other than the specific one identified then effectively the host has a monitoring requirement imposed on it, which is not permitted under the Directive; on the other hand, if it only applies to the individual identified act of infringement then a rights holder has a monumental task to police possible infringements.

There has always been a concern that if a host does more than just host - eg provides some monitoring - that it may find that it is no longer protected under the Directive. It is unclear whether eBay has ironically fallen foul of this in its attempt to provide rights holders, through its VeRo programme, with tools to assist them identifying potential infringement, or perhaps with its other restrictions such as control over who may auction trade mark goods, and the types of auction they may enter. Or is this, a French judge being persuaded to protect a French institution - the fashion industry - just evidence of the Establishment rallying its forces more effectively against e-Commerce? If not a change in sentiment within the French court system - one could be forgiven for not being very surprised that a French court has decided this way - perhaps an astute choice of forum to make the point.

Even so, there are strong signs that political pressure, even if not public sentiment, is everywhere shifting towards much more rigorous protection of intellectual property rights, and even perhaps a trace of an idea that the incumbent e-commerce service providers would not be too unhappy with some shift now that they are incumbent. Either way there are clearly some very interesting battles to be fought out here because the interests of a very free and open market which lowers the costs of intermediaries (the cost of "doing the deal") is very much in tension with the fact that making it easy to do the deal makes it easier to do the illegal deal. Some changes will undoubtedly be on the way, but let us hope that they are not ones which stifle innovative new businesses.