3 Attachment(s)
Supreme Court: Bank Can Terminate Contract Over Lacking Anti-Piracy Measures
The French Supreme Court has confirmed that Société Générale rightfully terminated a payment processing agreement with file-hosting service 1fichier. The cyberlocker failed to monitor and prevent the storage of pirated material, which it had contractually agreed to do. When Mastercard raised red flags, the bank was therefore was within its right to take action.
1fichierFile-hosting platform 1fichier.com appeared around 2009 and since then has seen no shortage of copyright complaints.
Most recently, it was highlighted by the U.S. Trade Representative as a notorious piracy market. The site’s response to takedown notices is seen as insufficient by rightsholders, the USTR concluded.
These allegations are nothing new to 1Fichier and parent company Dstorage. However, where other services typically evade legal threats, 1fichier has defended itself in court, albeit with little success.
Nintendo previously sued the file hosting company and won, both in first instance and on appeal. 1fichier now owes the gaming giant hundreds of thousands of euros in damages, which has yet to be confirmed in a follow-up proceeding.
A Decade of Payment Troubles
Long before Nintendo appeared into view, 1fichier already had plenty of other worries. The shutdown of Megaupload in 2012 put a spotlight on the cyberlocker industry and, urged by rightsholders, major payment companies started to intervene.
PayPal notably increased its enforcement efforts, banning dozens of services, and in the background banks were cutting their ties too. Société Générale terminated its contract with 1fichier in 2015 due to concerns over piracy.
The French ban followed an alert by Mastercard and complaints from Zee Entertainment, which alleged that hundreds of links to copyrighted works were being shared on the site. The bank referred these complaints to 1fichier, asking it to take appropriate action.
While the file-hosting site claimed it responded to these takedowns, it couldn’t prevent similar files from being shared. That was a problem. After new ‘infringing’ links were reported, Société Générale decided to terminate its contact with 1fichier.
Anti-Piracy Provision in Bank Contract
The French bank didn’t just arbitrarily cut its ties. The company had previously updated its contracts with clients to include a section where they agreed to stay away from illegal activities, including “acts of counterfeiting and infringements of works protected by intellectual property rights.”
Most cyberlockers would have taken termination for granted, but not 1fichier. The French site went to court, arguing that it should not be held responsible for third-party copyright infringements without being notified about specific instances first.
In court, 1fichier argued that hosting services are only at fault when they fail to remove content after being specifically notified about concrete infringements. In addition, the service claimed to have taken steps to prevent pirated content from reappearing.
The French courts disagreed and ultimately ruled that the bank was within its right to terminate the contract based on the copyright infringement clause. This conclusion was confirmed by the court of appeal in 2023, which determined that 1fichier’s response to the reported infringements was insufficient.
Supreme Court Affirms
1fichier’s parent company Dstorage took the case to the French Supreme Court (Cour de Cassation), hoping for a reversal. However, in a decision handed down this week, the court affirmed the appeal court’s verdict.
The Supreme Court notes that the bank warned the hosting company of copyright infringements, including a link to content that was previously reported, concluding that 1fichier failed to demonstrate that it had implemented appropriate anti-piracy measures.
“Based on the findings and the statements, which indicated that Dstorage had failed to comply with its contractual undertaking not to publish or store any illicit content, the court of appeal was able to hold that Société Générale had rightly terminated the contract. The plea is therefore unfounded,” the Supreme Court’s decision reads.
The Supreme Court saw no need to refer any questions to the Court of Justice of the European Union. Instead, it dismissed the case and ordered Dstorage to pay the costs of the proceedings.
Monitoring Obligation?
1fichier is disappointed with the outcome. Speaking with TorrentFreak the hosting platform says that the court effectively ruled that it has an obligation to monitor its service for potential copyright infringements. The company views that as problematic and a violation of EU law.
This is reminiscent of the indirect ‘upload filter’ requirements referenced in Article 17 of the EU Copyright Directive. However, under Article 15 of the EU E-Commerce Directive, member states cannot impose a general monitoring obligation on service providers.
For 1fichier, this is sufficient ground to take the case to the EU authorities for clarification. But even if the EU takes the case on, it will likely take years before a decision is reached. Meanwhile, the site still accepts PayPal, Visa, and Mastercard payments through third parties.
