Muddled Body Of Law Related To IP Hasn't Caught Up With Cloud Computing

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By Jabeen Bhatti

Sept. 18 --The biggest concerns over cloud computing in Germany continue to revolve around data protection, but a recent ruling that a cloud provider must monitor external websites for links to copyright infringing content has now complicated the situation even further, according to experts who spoke with Bloomberg BNA.

The problem, according to some experts, is that courts are only just beginning to rule on cloud computing in the context of the German Copyright Act, meaning there remains a gray area in which regulation has failed to catch up with technology.

“This problem, in our view, generally applies to commercial cloud services,” Bernd Becker, board spokesperson of German cloud computing industry association Eurocloud, told Bloomberg BNA. “This is less of an issue with our business customers but private services like DropBox, for example, are likely to suffer this issue.”

File sharing has long been a problem in Germany and subject to stringent laws, which have seen law firms spring up to represent copyright holders. Where the practice had focused around BitTorrent and specifically filesharing websites, it has become increasingly a part of cloud computing and an issue for providers.

“Once an operator of such a platform, such as RapidShare is made aware of an infringing file, it must delete it,” Marc Hilber of Oppenhoff & Partner, Cologne, told BNA. “Their responsibility is to take measures when alerted to this illegal content.”

However, he said, the lack of case law in Germany has made it difficult to determine the level of diligence that must be applied by cloud providers, as many courts decide in different ways.

Landmark Decision
On Aug. 16, Germany's highest court, the Bundesgerichtshof, ruled that cloud provider Rapidshare should be obliged to delete infringing material on its own servers, and also to monitor external website for links to infringing material .

The ruling was characterized by copyright holders as a landmark decision on the basis that it came from Germany's highest court and set an unofficial precedent--other courts are not required to abide by the decision but will likely do so anyway--in terms of applying copyright law to cloud computing services, which could also affect other cloud providers, say analysts.

“The RapidShare decision could be a problem for DropBox, too,” Christian Solmecke of Wilde Beuger Solmecke, Cologne, told BNA.

However, he said that given RapidShare's reputation in regard to filesharing, it also made the provider a special case and did not mean that other cloud services would feel they needed to rethink business in Germany.

“I think RapidShare is a special case because they were well known for copyright infringement and did not react quickly enough,” he said. “If you follow some rules and if you read the RapidShare decision well enough, it is still possible to offer a cloud service to the German market.”

'Private Purposes.’
Under German law, there are also some exceptions, which allows cloud users to reproduce copyright-protected content, provided it is for “private purposes,” Solmecke said.

“This means that in certain circumstances, an individual may download and upload copyright-protected files to the cloud without obtaining the copyright holder's consent,” he said.

“Private purposes” refers to use within a person's private environment including sharing a copyright-protected file with close friends and relatives. It does not include making a copyright-protected work publicly available, which requires the consent of the copyright owner.”

However, Solmecke said that the right to make private copies was excluded where the material was protected with technical measures, so-called Digital Rights Management technologies, which often cover DVDs, e-books and computer games.

“Under the circumvention prohibition contained in §95a of the German Copyright Act, a user is prohibited from attempting to circumvent the technical protection measures,” he said.

Rights of Use
Another issue within the sphere of copyright and cloud technology pertains to the rights over software offered by cloud providers to their clients.

“In the scenario that the software is running on the computer of the service providers, the copyright perspective is that the customer doesn't have to have any rights of use in terms of the software,” Hilber said.

“Only where software is running on the PC of the customer as a client, such as a web browser, does it become an issue and in the case that a customer does need a license,” he said. “The software provider must have sufficient right of use to be able to make it available via the cloud to his customers under German Copyright Law.”

Not a Passing Trend
Still, the lack of case law on important IP issues has left this sector with muddled standards as attorneys who specialize in this area continue to disagree about what type of compliance cloud providers need to pay attention to.

“This is certainly an important topic,” Becker said. “Cloud computing isn't a passing trend, we are going to see a nexus between new 'smart computer products' in the future and cloud storage systems. That's why we are pushing now for more cohesive standards.”

But despite the uncertainty, Becker said Germany is ready for cloud technology--although companies may not be.

“We're about five on a list of the world's most cloud-ready countries,” he said. “But medium-sized companies are still reluctant to use cloud services, mostly I'd say, because of things they have read in the media with the U.S.'s National Security Agency, etc., and so fear and lack of certainty is certainly affecting sales of cloud services. But we are trying at Eurocloud to make the case for cloud services through education and certification policies--from taxes to privacy.”


To contact the reporter on this story: Jabeen Bhatti in Berlin at

To contact the editor responsible for this story: Naresh Sritharan at

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