This is an informal case summary prepared for the purposes of facilitating exchange during the 2026 WIPO IP Judges Forum.
Session 7: Online Platforms and Intermediary Liability for IP Infringement
Supreme Court of the Czech Republic, [2021]: Hellspy, Case No. 23 Cdo 2793/2020
Date of judgment: August 31, 2021
Issuing authority: Supreme Court of the Czech Republic
Level of the issuing authority: Final Instance
Type of procedure: Judicial (Civil)
Subject matter: Copyright and Related Rights (Neighboring Rights)
Plaintiff/Appellant: Česká národní skupina Mezinárodní federace hudebního průmyslu, z. s. (Czech National Group of the International Federation of the Phonographic Industry)
Defendant/Respondent: I&Q GROUP, spol. s r.o.; Hellspy SE
Keywords: Unfair competition; Business model; Safe harbour; Liability of online platforms; Hosting service; Remuneration of uploaders; Search engine
Basic facts:
The plaintiff is a Czech branch of the International Federation of the Phonographic Industry (IFPI) which is an organization of producers of sound and audiovisual recordings established on a voluntary basis, defending their interests. Under Czech law, such legal person is entitled to defend (only) the interests of competitors or customers in unfair competition and to demand injunctions and corrective measures for that purpose. However, it is not, generally, empowered to enforce any intellectual property rights (IPR) of its members.
Defendants were providers of an internet hosting service operated mainly under the brand names ‘‘Hellshare’’ and ‘‘Hellspy’’ and accessible to the public on their websites, which allowed end users to upload, search and download virtually any file. Through this service, the uploaders were rewarded (financially or credit-wise) depending on the number of downloads of files uploaded by them. Furthermore, easy searching for the stored files was supported by incorporation of a search engine into the defendants’ service.
The plaintiff alleged unfair competition in such a business model of the defendants’ service based on profits derived from payments for downloading data rather than for storing it, which was provided free of charge. Thus, uploaders were incentivised to upload attractive files that were downloaded by as many paying users as possible. Ultimately, this business model involves to a substantial extent encouraging uploaders to offer copies of IPR-protected subject matter, specifically copyright-protected sound and audiovisual recordings, irrespective of whether they were made available to the public legally or not, and thus, usually below the regular market price, to the detriment of fair competitors in the intellectual property (IP) market, which was facilitated also by the implementation of a search engine.
The plaintiff sought an injunction ordering the defendants to refrain from such a system of remuneration of uploaders under the given conditions and from providing the search engine and demanded that appropriate corrective measures be taken.
The Court of Appeal concluded that the legal regulation on the limitation of liability of hosting service providers arising from Arts. 14 and 15 of the EU E-Commerce Directive must be applied to the defendants’ conduct in question, and the defendants did not exceed the conditions of the so-called ‘‘safe harbour’’ limiting their liability for illegal content available on their website.
Held:
The Supreme Court revoked the judgment of the Court of Appeal and remanded the case to the Court of Appeal for further proceedings.
The Supreme Court reiterated that the ‘‘safe harbour’’ limitation of the liability of hosting service providers within the meaning of Art. 14 of the E-Commerce Directive and no general obligation to monitor within the meaning of Art. 15 of the E-Commerce Directive refer to liability for the data which the provider stored at the request of a user of the service (i.e. liability for the stored content).
In that regard, the Supreme Court held that the plaintiff did not claim the defendants’ liability for the (illegally) stored data, but rather for an unfair incentive business model of their service encouraging the users of the service to upload the illegal content, which gives rise to a different ground (type) of liability that is not limited by the ‘‘safe harbour’’ provisions (i.e. liability for the business model).
Relevant holdings in relation to online platforms and intermediary liability for IP infringement:
In its reasoning the Supreme Court reiterated that the defendants were not suspected of violating the plaintiff’s (or any other rightsholder’s) IP rights. Accordingly, the plaintiff did not claim any liability of the defendants for such violation and did not enforce any measures or remedies therefor. Similarly, no rights arising from the content of ‘‘the data stored by the provider of hosting service’’, which would violate any of the plaintiff’s (or any other rightsholder’s) IP (or any other of their private subjective rights) within the meaning of Art. 14(1) of the E-Commerce Directive (recently Art. 6(1) of the Digital Services Act (DSA)) were enforced in the proceeding. Likewise, there was no claim of defendants’ infringement of any rights arising from the unauthorized existence of certain data stored on the service.
Consequently, the courts could not establish any such liability for the stored content on the part of the defendants. Indeed, this was because no particular content was being challenged in the proceedings. Apparently, it was not even possible to assess by courts whether the defendants complied with the ‘‘safe harbour” requirements in relation to such a particular content according to Art. 14(1) of the E-Commerce Directive (recently Art. 6(1) of the DSA). Therefore, it cannot even be considered that the ‘‘safe harbour’’ limitation of the liability might be applicable to the case.
In other words, even if the service provider had properly complied with the requirements according to Art. 14(1) of the E-Commerce Directive (Art. 6(1) DSA) in relation to every particular stored file, this could have no effect on the assessment of whether a particular way of paying remuneration to users or a way of implementing a search engine is prohibited for its incentive-based nature under national rules, including unfair competition rules.
It follows that the defendants were charged with a different type of liability than the liability for the stored content. It was the liability for a certain defective set-up in which they operated their hosting service based on an unfair business model, independently of the fact whether they comply, eventually, with all the requirements of the ‘‘safe harbour’’ limitation or not.
Thereafter, applying the provisions of the Civil Code governing unfair competition, the Supreme Court found that in a situation where the set-up of defendants’ hosting service potentially allows its users to make information (data files) infringing third parties’ IPRs (copyright protected sound and audiovisual recordings) available to the public to a considerable (competitively significant) extent, such a business model of that service may, depending on the specific circumstances, result in unfair competition practice, irrespective of whether the provider of that service is (at the same time) liable for the stored data or not.
Particularly, the Supreme Court found unfair competition practice in payment of remuneration to the users of defendants’ hosting service (uploaders), the amount of which was directly linked to the number or extent of downloads of files stored by these users, without the defendants’ adequate verification whether such remuneration is paid to these users as a result of infringement of the IPRs.
Regarding the implementation of the search engine into the defendants’ service, the Supreme Court found that such an implementation does not, in principle, constitute unfair competition practice as long as the file searching is performed by a neutral, purely technical and automatic means of processing information.
Relevant legislation: Civil Code (Act No. 89/2012 Coll. of February 3, 2012), Art. 2976(1) [CZ098]; Act on Certain Information Society Services (No. 480/2004 Coll. of 27 July, 2004), Art. 5(1); EU Directive 2000/31/EC, Arts. 14, 15 [EU107].