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Draft Act of the Federal Government
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Draft Third Act amending the Telemedia Act
Third Act amending the Telemedia Act*

A. Problem and objective

The second act amending the Telemedia Act, which became law on 27 July 2016, already aimed to provide operators of wireless local networks (WLAN) with the necessary legal certainty for them to offer their WLANs to third parties without fear of being issued with injunctions or held liable for infringements committed by such third parties.

On 15 September 2016, the Court of Justice of the European Union (ECJ) issued its ruling in the case C-484/14 (Mc Fadden v Sony Music). The ruling is based on preliminary ruling proceedings initiated by the Munich I District Court [Landgericht], and addresses the question whether WLAN operators could be subject to injunctions under pecuniary penalty, and the extent of the liability exemption under E-Commerce Directive 2000/31/EC, which in Germany was implemented in the Telemedia Act. The ECJ denies liability for damages with respect to offences committed by third parties; on the other hand it does find that a court or national authority could issue WLAN operators with an order to prevent infringements from being repeated. This could be achieved e.g. by implementing password-protected access, which would require users to disclose their identity. The coalition parties in Parliament had agreed to refrain from imposing any verification or encryption obligations on WLAN hotspot operators. Their intention of abolishing causative liability and generally exempting WLAN operators from the cost of injunctions was laid down in the explanatory notes to the amendment of Article 8 TMG. The ruling has once again created legal uncertainty as WLAN operators now fear having to encrypt their WLAN hotspots and being issued injunctions. This would not only complicate the penetration of public WLAN but constrain a large number of business ideas and obstruct innovation.

The objective of the present Act is to provide WLAN operators with the maximum possible legal certainty so that the increased demand for public internet access can be met with WLAN as well.

B. Solution

The present draft Act provides for a clear set of rules in the Telemedia Act with regard to the scope of liability exemptions granted to internet access providers. In addition, they are exempted from a large part of the current liability for costs, specifically with regard to injunctions. Finally, it is expressly provided that authorities cannot require WLAN operators to register users, cease offering their WLAN, or require passwords to be entered – although all of these remain possible on a voluntary basis. Clear rules are also defined for the conditions upon which blocking is allowed in specific cases to stop specific infringements from being repeated.

C. Alternatives

None.

D. Budgetary expenditure without compliance costs

No budget expenditure without compliance costs is expected to occur.

E. Compliance costs

E.1 Compliance costs for private citizens

There will be no additional due care or information obligations for citizens. Compliance costs for citizens are therefore not expected to occur. Public WLAN will be offered more frequently as a result of the legal certainty which is provided. The cost to internet users of mobile internet access would be expected to be reduced due to the increase in supply of public WLAN.

E.2 Compliance costs for business

No compliance costs for businesses are expected to occur. The act expressly exempts WLAN operators from the prejudicial and extrajudicial costs of court orders. The number of injunctions issued against WLAN operators is also expected to drop. This should also lead to a drop in the cost to WLAN operators of legal advice in case of injunctions.

Of those, administrative expenses due to information obligations

No information obligations are created. There are therefore no corresponding administrative expenses.

E.3 Compliance cost for the administration

There is no compliance cost for administration, specifically no financial consequences for the Federal Government or the States.

F. Other costs

Other costs to the economy or social security systems, and effects on individual prices and price levels, particularly the consumer price level, are not anticipated.

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Draft Act of the Federal Government

Draft Third Act amending the Telemedia Act*

dated ...
of 28 September 2017

The Federal Parliament has adopted the following Act:

Article 1
Amendment of the Telemedia Act

Amendment to the Telemedia Act
The Telemedia Act of 26 February 2007 (Federal Law Gazette I p. 179, No 251), last amended by Article 2 of the Act of 1 September 2017 (Federal Law Gazette I p. 3352), is amended as follows:

The Telemedia Act of 26 February 2007 (Federal Law Gazette I p. 179, No 251), last amended by Article 1 of the Act of 21 September 2016 (Federal Law Gazette I p. 1766), shall be amended as follows:
§ 7 is amended as follows:

Article 7(2) shall be amended as follows:
Paragraph 2(2) and (3) are deleted.

Paragraph 2 ends after sentence 1.
The following paragraphs 3 and 4 are added:

The following paragraphs 3 and 4 are attached:
“(3) Obligations to remove information or to block the use of information under general laws based on judicial or official orders shall not be affected even in case of non-responsibility of the service provider pursuant to Articles 8 to 10. Telecommunications secrecy pursuant to Article 88 of the Telecommunications Act shall be respected.

‘(3) Obligations to remove information or to block the use of information under general laws based on judicial or official orders shall not be affected even in case of non-responsibility of the service provider pursuant to Articles 8 to 10. Telecommunications secrecy pursuant to Article 88 of the Telecommunications Act shall be respected.
(4) If a user employs a telemedia service to infringe upon the intellectual property of another person, and the owner of the property has no alternative remedy against such infringement, then the owner may require the relevant service provider within the meaning of Article 8(3) to block the use of information in order to prevent the infringement from being repeated. The block must be reasonable and proportional. There shall be no right to claim reimbursement from service providers of the prejudicial and extrajudicial costs of the initiation and enforcement of a claim as referred to in sentence 1, except in the cases described in Article 8(1)(3).”

‘(4) If a user employs a telemedia service to infringe upon the intellectual property of another person, and the owner of the property has no alternative remedy against such infringement, then the owner may require the relevant service provider within the meaning of Article 8(3), who provides users with internet access via a wireless local network, to block the use of information in order to prevent the infringement from being repeated. The block must be reasonable and proportional. There shall be no right to claim reimbursement from service providers of the prejudicial and extrajudicial costs of the initiation and enforcement of a claim as referred to in sentence 1, except in the cases described in Article 8(1)(3).’
§ 8 is amended as follows:

Article 8 shall be amended as follows:
Paragraph 1 is amended as follows:

Paragraph 1 shall be amended as follows:
After sentence 1, the following sentence is inserted:

The following sentence 2 shall be inserted after sentence 1:

‘To the extent that the service provider is not responsible, he shall not be held liable for compensation for any unlawful act committed by a user or obliged to cease or desist from an infringement; the same applies in respect of all costs of submission and enforcement of such claims.’
“To the extent that the service provider is not responsible, he shall not be held liable for compensation for any unlawful act committed by a user or obliged to cease or desist from an infringement; the same applies in respect of all costs of submission and enforcement of such claims.”

In the new sentence 3, the words ‘Sentence 1 shall’ shall be replaced with the words ‘Sentences 1 and 2 shall’.

The following paragraph 4 is added:
The following paragraph 4 is added:

‘Service providers within the meaning of Article 8(3) cannot be required by authorities,
“(4) Service providers within the meaning of Article 8(3) cannot be required by authorities,

1. prior to granting access,
prior to granting access,

a) to collect and store the personal details of users (registration); or
to collect and store the personal details of users (registration); or

b) to require a password to be entered; or
to require a password to be entered; or

2. to permanently cease offering the service.
to permanently cease offering the service.

Measures taken on a voluntary basis shall not be affected.’
This shall not affect the case where a service provider voluntarily identifies users, requires a password or takes other voluntary measures.”

Article 2
Evaluation

Review

The Federal Government will assess, 2 years from entry into force, whether the objective of this Act has been achieved, specifically whether the newly created right to block the use of information pursuant to Article 7(4) TMG has proven to be an effective instrument to protect the interests of right owners. The outcome of this assessment will be reported to the Federal Parliament.

Article 3
The Federal Government will assess, two years from entry into force, whether the objective of this Act has been achieved, specifically whether the newly created right to block the use of information pursuant to Article 7(4) of the Telemedia Act has proven to be an effective instrument to protect the interests of right owners. The outcome of this assessment will be reported to the Federal Parliament.”

Entry into force

This Act shall enter into force on the day following its announcement.

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Explanatory Statement

A. General Part

Objective and necessity of the provisions

In the coalition agreement for the 18th legislative term, entitled ‘Shaping the future of Germany’, the parliamentary coalition groups of CDU, CSU and SPD agreed that the potential of local radio networks (WLAN) for providing internet access in the public space should be fully utilised. To that end, legal foundations should be created underpinning the use of open networks and their providers so that mobile internet over WLAN will be available to all. This was the purpose of the Second Act amending the Telemedia Act, which entered into force on 27 July 2016.

This was followed on 15 September 2016 by proceedings before the Court of Justice of the European Union (ECJ) in preliminary ruling proceedings initiated by the Munich I District Court [Landgericht], including on whether WLAN operators could be subject to injunctions under pecuniary penalty, and the extent of the liability exemption under E-Commerce Directive 2000/31/EC. In Germany, this Directive was implemented in the Telemedia Act [Telemediengesetz]. The ECJ denies liability for damages with respect to offences committed by third parties; on the other hand it does find that a court or national authority could issue WLAN operators with an order to prevent infringements from being repeated. This could be achieved e.g. by implementing password-protected access, which would require users to disclose their identity. The coalition parties in Parliament had agreed to refrain from imposing any verification or encryption obligations on WLAN hotspot operators. Their intention of restricting causative liability and generally exempting WLAN operators from the cost of injunctions was laid down in the explanatory notes to the amendment of Article 8 TMG. The ruling has once again created legal uncertainty as WLAN operators now fear having to encrypt their WLAN hotspots and being issued injunctions. This legal uncertainty will now be removed with a new amendment of the Telemedia Act. It will prevent the ECJ ruling from discouraging non-commercial providers, such as public establishments and private individuals, from offering WLAN to the public.

Not only consumers have a considerable stake in having ubiquitous and, most of all, problem-free internet access. The supply side is also sizeable: Municipalities wish to equip their schools, libraries and municipal service centres with public WLAN. Retail businesses would like to offer their customers the option to pay with their mobile phones, railway stations, airports, public transport companies, hotels and hospitals all wish to offer their customers free WLAN. WLAN has become a major part of the digital infrastructure and forms the basis of many different business models and innovations. The Federal Government wishes to allow as many citizens as possible to share the opportunities offered by the digital society, and therefore wants to ensure that WLAN hotspots can be offered without a password requirement. Otherwise, the benefit of public WLAN hotspots might still be beyond the reach of precisely those citizens who have hitherto been relatively unreceptive to digital opportunities and challenges.

At the same time, the risk of an increase in copyright infringements caused by free WLAN has been reduced. On one hand, a set of specific legal business models have established themselves on the streaming market especially in recent years. On the other hand, there are other effective ways of dealing with copyright infringements.

Main content of the draft

In order to create legal certainty for WLAN operators, a clear set of rules is incorporated in the Telemedia Act as regards the scope of liability exemptions granted to internet access providers. In addition, they are exempted from a large part of the current liability for costs, specifically with regard to injunctions. Finally, it is expressly provided that WLAN operators cannot be required to register users in advance, to require passwords to be entered, or to cease offering their service, although all of these remain possible on a voluntary basis. It is also clearly laid down that obligations to remove information or to block the use of information under general laws will remain lawful only when based on judicial or official orders, even if the service provider is not responsible pursuant to Articles 8 to 10. For service providers pursuant to Article 8(3), there are also provisions on the conditions under which court orders may be issued against them to block the use of information in order to prevent infringements from being repeated.

Alternatives

None.

Legislative competence

The legislative competence of the Federal Government to enact the amendment is created – with respect to service providers operating commercially as well as other matters within the scope of the TMG – by Article 74(1)(11) of the Basic Law – Business Law (see also the relevant remarks in Bt-Drs. 16/3078, p. 19). The requirements of the TMG are directed in particular at services which are offered in connection with business activities. The new provisions applicable across borders as proposed in this Act in the field of providers’ responsibility have particular significance for Germany as a business centre. Therefore their promulgation is in the national interest.

With regard to private service providers, legislative competence results from Article 73(9) (intellectual property rights, copyright) and Article 74(1) (civil and criminal law).

Compatibility with European Union law and international treaties

The provisions of the E-Commerce Directive 2000/31/EC must be observed. The provisions merely give a more precise form to the current rules of the Telemedia Act; they are furthermore in accordance with the E-Commerce Directive as they do not restrict the existing liability exemptions granted to service providers. Directive 2004/48 on the enforcement of intellectual property rights as well as Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society have been observed.

The information procedure pursuant to Directive 2015/1535/EU of 9 September 2015 laying down a procedure for the provision of information in the field of technical standards and regulations and of rules on information society services has been followed.

Legal consequences

Legal and administrative simplification

The changes with respect to liability, costs and the unlawfulness of requiring WLAN operators to register users, to require passwords to be entered, or to cease offering their service, all serve to further specify the current rules and to create legal certainty. The newly created right to claim, in case of infringement of intellectual property rights, is no longer derived from case-law with respect to causative liability, which was mostly based on individual cases and therefore felt to be confusing and unpredictable, and thereby also contributes to legal clarity and certainty.

Budget expenditure without compliance costs

The Act has no impact on the budgets of the Federal Government, Federal States or municipalities.

Compliance costs

The Act creates legal certainty in the context of existing legislation. No new obligations are created; only existing obligations are specified more precisely. There is no compliance cost for citizens, businesses, the Federal Government, Federal States or municipalities.

No administrative expenses arise as a result of notification obligations.

Further costs

The new provisions are intended to create legal certainty specifically for WLAN operators. Additional financial burdens on the economy and public budgets and adverse effects on price levels, particularly the consumer price levels, are not expected.

Other legal consequences

Public WLAN will be offered more frequently as a result of the legal certainty which is provided. This enables consumers to share the opportunities offered by the digital society and reflects the increased interest that many citizens have in getting ubiquitous, problem-free internet access.