BREIN Yearbook 2010

600 sites, 100,000 advertisements, 100 traders and 1 criminal organization!
Executive Summary.
Making illegal supply inaccessible
 
BREIN aims at the protection of creative content against illegal supply in particular on the internet. The content is film, TV series, music, games, interactive software and –since the first quarter of 2010- digital books. BREIN’s activities concern for 85% digital files on internet, 15% concerns optical discs and circumvention devices, of which two thirds takes place via internet.
 
The approach of BREIN is directed at websites and services that facilitate supply of or access to unauthorized content. They function as it were as shops that internet users visit to get access to illegally supplied files. In order to make this illegal supply inaccessible BREIN first approaches the website, then the hosting provider and ultimately the access provider.
 
Notices and preventive supervision
 
The principle with making illegal supply inaccessible is that Notice & Take Down of specific referrals, links of content only is effective in case of incidental illegal supply. In case the illegal supply is structural than preventive supervision by the website or service is required, that has been decided in the Mininova verdict. In the event that is refused than the sites or service must be made inaccessible. Agreements with sites or services can be made only if the operator is known because an anonymous cannot be held responsible. Therefore registration of the true name and address details at hosting providers is a necessity as well as immediate suspension of hosting when incorrect name and address details have been registered. This is not yet happening.

Illegal facilitators and prohibition of downloading from illegal source
 
BREIN is working on the anchoring of effective civil law enforcement through case law against facilitators that structurally facilitate access to illegal content. BREIN remarks that a prohibition of downloading from an evident illegal source is necessary for the effective enforcement against websites and services that facilitate such downloading. Now that the Appeal Court of The Hague has ruled that downloading of illegal source is allowed under Dutch law it appears essential to adapt this legislation. The aim is the enforcement against illegal facilitators.
 
Consumer awareness and seduction
 
The approach of the demand side on internet, the consumers, is a matter of development by right holders and internet providers of a balanced system of education and seduction, of rejection of illegal sources and referral to legal platforms. This should happen under the auspices of the government. The introduction of a threat of proportional sanction against persistently infringing users could be considered in case the enforcement against the illegal facilitators does not provide the desired result.
 
Framework of case law
 
BREIN steadily continues to work on a framework of civil case law against illegal supply and the structural facilitation thereof irrespective of the technical protocol used. The aim is that civil law enforcement becomes so effective that new illegal sites and services will only be short lived before they are made inaccessible. To this goal in 2010 more than 600 illegal sites and services were made inaccessible and legal proceedings took place amongst others against the usenet indexer FTD for the systematic referral to illegal files on usenet; again against bittorrent site The Pirate Bay for a general injunction; against an access provider for blocking access to The Pirate Bay now that this site has not made itself inaccessible in compliance with previous verdicts of Dutch courts, and; against a commercial usenet provider News-service Europe (NSE) that supplies paid access to illegal content stored on its servers to customers of (re)sellers of usenet subscriptions. The Mininova case, in which the District Court had ordered the site to refuse preventively torrentlinks to unauthorized content, came to an end this year because Mininova paid BREIN an undisclosed settlement amount and withdrew its appeal. The injunction against the site Shareconnector that ‘as a hobby’ indexed referrals to files available via the eDonkey network was upheld on appeal.
 
600 sites, 100,000 advertisements, 100 traders and 1 criminal organization
 
In 2010 more than 600 illegal sites and services were made inaccessible. This concerned mainly p2p (bittorrent) site but also usenet sites as well as streaming and link sites that made use of cyberlockers. At Dutch cyberlockers more than 45,000 unauthorized files were removed on notice from BREIN.
 
At auction sites around 100,000 ads for illegal copies of books, films, TV series, games and music were removed. In addition about 100 actions were undertaken against persistent illegal traders.
 
The fiscal and economic police (FIOD-ECD) rolled up a criminal organization that sold a monthly compilation box under the name Masterbox. Each month the illegal box contained 12 discs with the latest popular movies, music, TV series and concerts. The action was initiated on complaint by BREIN that estimates the organization turned over more than 16.5 million euro in sales since it started the box early 2006. Previously raids were conducted in pressing facilities in Poland, Italy, Czech Republic and Bulgaria.
 
 
The most important events of 2010 in a row
 
Preventive filtering required for Myp2p too
 
The year began with the ruling of the Appeal Court of Den Bosch that Notice & Take Down –i.e. the removal of illegal content on notice- is not adequate for live transmissions and issued a preventive filtering obligation for the website Myp2p that referred to live sportscasts. This concurs with the Mininova verdict in which the court ordered that site to refuse preventively referrals to commercially produced entertainment content unless it determined that it is authorized for publication. Previously the Mininova verdict also had been applied in the preliminary injunction against The Pirate Bay.
 
Mininova site adapted and settled
 
In December the operators of Mininova paid an undisclosed amount to settle a damage claim that BREIN prepared on behalf of its adherents. They withdrew their appeal against the verdict of the District Court that became irrevocable. The website had been adapted late 2009 after the verdict and only allows links to files for which an agreement has been made with the right holders.
 
Must access to The Pirate Bay be blocked?
 
In the procedure on the merits against The Pirate Bay the District Court of Amsterdam ruled in June that the operators must make the site inaccessible for the Netherlands. Previously the preliminary ruling was that the site had to remove and refuse illegal links. In August BREIN handed the verdict to one of the operators personally when he surfaced to appear in a panel debate in Vienna, Austria. The verdict as well as the claim for forfeited penalty sums was served also when the operators appeared in Stockholm, Sweden for the appeal in the criminal case against them. In November the Appeal Court there sentenced them once more to imprisonment and fines.
 
In the Netherlands BREIN has legal proceedings against access providers Ziggo and Xs4all to make the site inaccessible for their subscribers. In Denmark and Italy the highest courts of the countries already ruled in favor of blocking access to The Pirate Bay. The preliminary judge in the Netherlands concluded in July that BREIN should first hold subscribers of Ziggo liable for specific infringements. BREIN filed appeal in addition to its procedure on the merits. In the meantime Ziggo’s claim to ask prejudicial questions and fist wait for the decision of the European Union Court of Justice on filtering on network level has been dismissed.
 
It is BREIN’s aim that all Dutch access providers block access to the -by verdict of D
utch courts- already prohibited The Pirate Bay.
 
P2p indexer Shareconnector illegal
 
In February the Appeal Court of Amsterdam ruled that the website Shareconnector is illegal. The site structurally published referrals –so called ed2k links- to specific files that were available illegally via the eDonkey network. The site was prohibited on the demand of BREIN. The criminal equivalent of that ruling –i.e. no direct infringement but unlawfulness by structural referral to illegal content, comparable to indirect infringement under Anglo-American law- is aiding an abetting a criminal act. That also is the ruling of the Swedish criminal court about the operation of The Pirate Bay. Unfortunately the Dutch prosecution service has been dismissed in de criminal case against amongst others Shareconnector. The criminal authorities should, as usual, have conducted further investigations themselves on the basis of the information from BREIN. This omission put an end to the only Dutch criminal case against illegal websites since 2004. In the meantime however there is ample civil case law that rules that this sort of site must stop or filter preventively. Amongst which also Shareconnector: the site remains prohibited on pain of a penalty sum that can run up to a maximum of 100,000 euro.
 
Referrals usenet indexer FTD illegal
 
The English District Court ruled in April that the usenet indexer Newzbin infringed copyright by publishing so called NZB links that refer to specific files that are made available illegally in newsgroups on usenet. Dutch usenet indexers ceased after summons from BREIN but some switched to the copy-paste method of referrals used by FTD. That usenet indexer previously removed it ‘NZB button’ and talks about its referrals as ‘spots’ in order to disguise that its users upload many of its most popular titles.
 
In the court case that Dutch film producer Eyeworks filed about one of its movies, the Appeal Court of The Hague ruled these ‘spots’ on FTD illegal. It was end November by then. Previously the preliminary judge ruled that FTD was infringing directly by publishing the referrals. The Appeal Court instead followed previous verdicts in Mininova, Shareconnector and The Pirate Bay and ruled that FTD is not infringing directly but nevertheless is illegal. About the argument that FTD facilitated downloading and that downloading from an illegal source is allowed under Dutch law, the Appeal Court says that FTD with its ‘spots’ to the film is systematically stimulating illegal supply and thus is illegal.
 
In October also the hearing took place in the proceedings on the merits between BREIN and FTD before the District Court of Haarlem. FTD demands a declaratory judgment that is legitimate while BREIN demands an injunction and a declaratory judgment that FTD must pay damages. The verdict is scheduled for December 29th but may be postponed. In the meantime the Eyeworks verdict means that FTD shall have to comply with notices demanding it removes and refuses ‘spots’ to illegal content. BREIN however insists NTD is insufficient and it wants that the site stops its service or adopts preventive filtering like has been imposed on other illegal facilitators. The verdict is expected early 2011.
 
Preventive filtering obligation expanded to commercial usenet provider?
 
In May the District Court of Amsterdam admitted BREIN’s claim against the commercial usenet provider NSE to exclude illegal entertainment content from its servers. NSE keeps content available on its servers for subscribers of its contract partners, so called resellers that sell subscription for access to the servers. This regards so called binaries that are used to store films, TV series, music and games. In principle NSE refutes all responsibility but during the proceedings it adopted an NTD procedure that it improved at the eleventh hour. That is a step in the right direction but does not go far enough according to BREIN.
 
Also for this business model that structurally concerns unauthorized duplication and making available to the public of copyright protected entertainment content, BREIN is insisting on the principle of preventive supervision. An NTD that removes unauthorized content on notice by the right holder is insufficient because files can be replaced as quickly as they are removed. A preventive system under responsibility of the operator must close the wide-open tap. If it then still drips illegal content an NTD can be effective to sweep up the spill. That accommodates the objection that filtering never is 100% effective. The verdict in this procedure is expected in the course of next year.
 
 
e-Books at BREIN
 
From the first quarter BREIN is taking in hand the enforcement against online distribution of illegal digital copies of books on the request of the Dutch publishers alliance (NUV). One author reacts startled at the idea that her readers will be hassled. That is a misunderstanding; it is about illegal supply that is increasing head over heel after the introduction of the iPad. While publishers are increasing their digital supply, protection against illegal distribution is a must. Within weeks BREIN brings the sale of illegal digital copies on auction sites under control. BREIN also is addressing the facilitators that structurally provide access to illegal copies. In most cases this includes other copyrighted content in addition to books but some sites refer to free illegal digital copies of books exclusively.
 
Action against circumvention devices
 
In July the District Court of The Hague ruled in two joined proceedings by Nintendo against a number of web shops to prohibit their sale of circumvention devices and so called ‘chipping‘ of consoles. The court issues the injunction because such ‘modchips’ are almost exclusively used to enable the playing of illegal copies of games on Nintendo’s DS and Wii consoles. The verdict clears the road for more seizures of such circumvention devices and damage claims.
 
In October Sony started an offensive against amongst others the so called ‘PS3jailbreak’. That modchip circumvents for the first time in three years the security of the PlayStation PS3 game console against the play of illegal copies of games. BREIN assists with seizures of the chips.
 
Gallo report, ACTA and Kroes
 
In September the European Parliament accepted the Gallo report regarding the enforcement of Intellectual Property (IP). The report calls on the European Commission to develop legislative initiatives for the protection of the legal market for entertainment content in which a key role is played by internet providers in cooperation with right holders. The fundamental rights ensconced in treaties, including the fundamental freedom on internet, must be respected whereby it is noted that Intellectual Property also is a fundamental right worthy of protection.
 
In December the definitive version of ACTA was decided by the negotiating countries, amongst which the Netherlands. At the end of November the European Parliament accepted a resolution in which it calls the treaty ‘a step in the right direction’. As is usual for a trade treaty the content was kept confidential for a long time, which met much resistance because IP treaties usually are negotiated openly. The confidentiality led to speculation about the possible restriction of freedom on internet. The outcome of ACTA complies with existing treaties about minimum protection and in essence is not changing anything for the Netherlands. However the treaty also is calling for criminal enforcement measures. ACTA is about protection against counterfeiting of pharmaceutical and trademark goods as well as piracy of copyright protected content.
 
For all these initiatives it is clear that the call for protection of Intellectual Property, the enforcement against illegal competition, must serve the development and growth of
legal supply. In November Euro commissioner Kroes spoke out passionately in favor of legal supply on internet. She wants that right holders, their business partners and collective management organizations give pan-European licenses. Also Dutch music authors society BumaStemra supports that. Kroes understands that enforcement against illegal competition is a necessity too. Via her cabinet she let it be known that she is not in favor of closing down BREIN like some internet media alleged.
 
Europol action against sources of internet piracy
 
In September a Europol coordinated action took place in 12 European countries amongst which the Netherlands. In these actions 49 servers of four so called release groups were seized and 16 suspects arrested. Such groups have the aim to make illegal digital copies of new entertainment content as soon possible and spread these on the internet. They are at the root of much of the unauthorized availability of files films, TV series, games, interactive software, music and books on the internet. In this case information from BAF the Belgian equivalent of BREIN, provided the lead for the international investigation.
 
Limewire ruled infringing, must filter
 
In October the Federal Court of New York condemned the file sharing service Limewire for copyright infringement, the willful incitement thereof and unfair competition. Limewire was in particular popular for the illegal up and downloading of music, also in the Netherlands. The court ruled that Limewire must do everything in its power to stop the infringements by its users, amongst others by installing a preventive filter. The verdict is comparable to the milestone Mininova verdict in the Netherlands.
 
Illegal traders and professional pirates arrested
 
Throughout the year various police action took place against illegal trade in copies of films, games and music. In April 24,000 illegal DVDs were seized from a copyright pirate in the village of Maarsenbroek. In the same month a music pirate from the city of Den Bosch settled by payment of 12,000 euro. In June police raided the residence of a repeat offender in the city of Tiel. In October police in Rotterdam seized 39,000 illegal copies of Bolly and Hollywood films. In December in the course of a raid for illegal fireworks police discovered an illegal duplication lab in a private residence in Rotterdam. In addition to equipment 13 suitcases with DVDs that served as masters for illegal copies were seized. By the year end more than 260,000 illegal copies are confiscated.
 
The biggest bang came in October when the fiscal and economic police (FIOD-ECD) roll up the so called Masterbox gang in an international action. Four suspects, three Dutchmen and one Belgian still are in custody. Days after the raids a Bulgarian truck was stopped trying to deliver 150,000 discs for the latest edition. The Masterbox was a monthly compilation box with 12 discs. Each month 7 motion pictures, 16 episodes of popular TV series, 60 music albums and 20 singles with a legal market value of around 1000 euro. The boxes were sold for an average price of 35 euro. The monthly turnover was around 400,000 euro.
 
A few of the suspects are old acquaintances from the nineties. Interesting is that then the monthly turnover was 1.2 million euro with discs sold for 12 euro with content with a legal market value of 150 euro. Ten years later the Masterbox gang had to supply six times as much legal market value to harvest one third of the illegal turnover of the late nineties.
 
The actions also provided evidence of other criminal offences that were committed in an organized and professional manner. The investigation was started as a result of information provided by BREIN. Previously raids took place at pressing plants in Poland, Italy, Czech Republic and Bulgaria in cooperation with IFPI, local equivalents of BREIN and police and prosecution in those countries.
 
Dutch sites down in the US
 
In cooperation with the Motion Picture Association of America 29 illegal websites were made inaccessible in December by their American hosting provider. The sires were directed at the Netherlands and did not comply with summons from BREIN.
 
Earlier in the year the American Justice Department seized seven domain names of illegal websites of which a number previously had been made inaccessible by their Dutch hosting provider in compliance with a summons from BREIN.
 
Google unfolds anti-piracy initiative
 
At the beginning of December Google announces an anti-piracy initiative that is hailed by MPAA, IFPI and RIAA as ‘a step in the right direction’. BREIN also is looking forward to further cooperation with Google to reduce the availability of illegally supplied files with entertainment content. The pushing back of illegal competition in cooperation with key parties on the internet enables quicker and better delivery to consumers by legal parties that reinvest in new creation.
 
That is a good resolution for a prosperous 2011 for all.