Filesharing - Responsibility and Calculation of Damages

How damages are calculated in filesharing cases has proved to be very difficult and controversial.  Some guidance on this has been given recently by the Bundesgerichtshof, the German Federal Court of Justice (BGH).

Background

Three DSL subscribers were successfully sued by major music labels EMI, Sony, Warner and Universal for filesharing.

The three cases date from 2007, when the IP addresses of the defendants were found to be the sources of hundreds and thousands of MP3s made available for download via P2P-filesharing, using the now obsolete "Gnutella"-Network.  This network is technically similar to BitTorrent, whereby users who download files to the network are also uploading them at the same time so that others are able to access and download the files.

As it is technically impossible to know who is operating a PC using a certain IP-address, lawyers acting for the music labels approached the DSL subscribers with cease-and-desist letters and an offer for out-of-court settlement. When no agreement was found, the cases went to the district court of Cologne. The labels asked for damages of 3000 EUR (for 15 tracks, or 200 EUR per track) and for their out-of-court lawyer's fees.

BGH Appeal

The BGH dismissed the appeals of the three offenders.

The BGH had previously decided on filesharing cases one in 2010 (I ZR 121/08 "Sommer unseres Lebens"), 2012 (I ZR 74/12 "Morpheus") and second in 2014 (I ZR 169/12 "BearShare"). In these cases, the BGH ruled that when an IP is found to be the source of filesharing, this is prima facie evidence that the DSL subscriber was using the P2P client.

However, since the decision of the BGH, lower German courts have been very diverse when it came to the question of what evidence a subscriber could use to counter such prima facie evidence. Positions ranged from "it is sufficient to claim that other persons had access (in general) to the subscribers internet" to "the subscriber needs to name the person who did it".

In addition, the BGH had never decided on the amount of damages.  The lower courts' decisions varied from 15 EUR per song to 300 EUR per song. Since there are thousands of similar cases pending in the lower courts, the three decisions were eagerly anticipated.

In short, the BGH confirmed that damages of EUR 200 per song are appropriate when music is communicated to the public via P2P-Filesharing.  The damages were estimated by the court using the licence analogy method. The higher regional court began its calculation at 50 cent per song, and further estimated that it was realistic to anticipate 400 downloads to be made from the plaintiffs PCs, thus totaling EUR 200 per song. This is in line with earlier judgments by the higher regional courts of Frankfurt and Hamburg.

DSL subscribers were found liable as perpetrators for damages and lawyers' fees when they were unable to present alternative facts that could explain why their IP was used for unlawful filesharing. They also had the burden of proof for such facts.

Where the filesharing was done by the subscriber's children, they needed to prove they did not neglect their parental supervisory duties. With regards to filesharing, this means the parents need to explain the dangers of filesharing to their children and take steps to prohibit the use of such platforms. Failure to do so results in full liability for damages and lawyers' fees.