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Entertainment in the Cloud

These are exciting times for publishers, and their customers. The arrival of Cloud technology as a mainstream offering gives businesses an opportunity to distribute and store digital media on an international scale.

January 2011

These are exciting times for publishers, and their customers. The arrival of Cloud technology as a mainstream offering gives businesses an opportunity to distribute and store digital media on an international scale, reaching new audiences and enabling new models for monetising content. From the consumers’ perspective, with this technology comes a blurring of territories. They may be streaming music or video content via services like Rhapsody or Spotify, possibly through mobile devices, they may be uploading their family photos into a digital locker provided by Tesco or Virgin, or they may be downloading e-books from Amazon. Either way they are unlikely to care where their cloud provider is based, provided that they believe that they are receiving a good product at a competitive price.

On the other hand, businesses operating Cloud services will need to consider the laws of all of the countries in which their service is available (and as some services are targeted at specific countries but allow users to access the service on the move, this could potentially mean all territories). Different countries apply different laws, particularly in the media and entertainment sector. One size does not fit all.

Below is a checklist of some of the points to consider when operating a Cloud platform:

copyrightDifferent IP restrictions on content

The term of copyright is not fully harmonised throughout the world. For example, some works – such as an old song - might attract copyright protection in the EU but not in the US, and in such cases whilst a US based platform could sell such works in the US, it could not do so in the EU without an appropriate licence.

Equally, some IP systems allow for wider non-licensed use than others – for example while selling a certain work might be allowed in the US because the author can rely on the US "Fair Use" defence, the author might not be so lucky in the UK where the equivalent "Fair Dealing" defence is far narrower.

It is worth noting that terms and conditions cannot solve these challenges alone - while the governing laws of the contractual provisions may be those of your own country, these will not override the intellectual property laws of the jurisdictions in which you are operating.

Different defamation laws

The UK laws of defamation are far stricter than those of the US. While a publication may be acceptable in the US, it should not be assumed that this will be the case in the UK. Even within Europe, there are significant differences. For example, in France it is possible to defame the dead. As such, by way of example, an autobiography which includes negative comment about the relevant individual might be able to be made available in the US but not in the UK and possibly other EU territories.

Uploading by users

data chip

Many Cloud platforms allow users to upload their own content – such as their CD collection. Within Europe there is enormous disparity regarding private copying. For example, in the UK, where there is no private copying exemption, it remains illegal to copy music (which is protected by copyright) onto a PC. Conversely, this is permissible in other European jurisdictions such as Germany where a levy is imposed on blank media (including CDs). As such, even though uploading of copyright protected content is commonplace, in the UK a Cloud provider could find itself liable for copyright infringement if it actively encouraged or authorised customers to do so. This is where terms and conditions, and carefully worded promotional material, are so important.

Location of users

In order to ensure it does not supply content into territories in which it does not have the necessary rights, a Cloud provider needs to know where its users are when they try to download content. This presents challenges and commonly used mechanisms such as IP addresses is far from foolproof. For example, a user working for a major French bank in the UK might be accessing the platform via its employer’s network which may display a French IP address if that’s where the relevant servers are based.

Liability for users’ content

Typically the Cloud provider will be unaware of what customers are uploading and storing in their lockers, but remain open to the risk of being liable for any unlawful content (such as defamatory publications or infringing copies of film or music). Often, not monitoring such content is the safest business model. This is because, in the EU, generally, a Cloud provider will not be liable for users’ content provided it can show that it:

  • is unaware of the infringing or illegal content; and
  • has an effective "notice and take down" procedure in relation to such content.
personal music device

These are known as the "safe harbour" provisions1, and allow Cloud providers to avoid monitoring user content2. Where the Cloud provider starts to monitor its customers’ content it is not going to be unable to come within the safe harbour requirements.

However, the above position will be tested in 2011, when the European Court of Justice (ECJ) is expected to rule on whether social networking sites must monitor user generated content for copyright infringement3. The case is relevant to all those operating websites where users can post their own content, and could have significant ramifications for Cloud models.

If you have any questions on this article please contact us.

1 European Directive on Electronic Commerce (2001/31/EC)

2The relevant legal provision clearly states that Member States shall not impose an obligation on an information society service to monitor the information which it transmits or stores or to actively seek facts or circumstances indicating illegal activity – Article 15

3The reference has been made in the Belgian case of Netlog v SABAM (C-360/10) in which copyright collecting society SABAM (Société Belge des Auteurs, Compositeurs et Editeurs) seeks a ruling that social networking site Netlog (a "social portal for more than 69 million young people in Europe") must implement technical measures to monitor the content that its users upload, to ensure the removal of infringing content.

Entertainment in the Cloud
Graham Hann

Graham Hann

As consumers increasingly expect content any time and any place, and as businesses continue to look for flexibility and cost reduction, cloud based solutions will become part of the new normal.

"The UK laws of defamation are far stricter than those of the US"