The Court Of Cassation Rules On The Active & Passive Hosting Providers Debate In The RTI v. Yahoo! Case

On March 19, 2019 the Italian Supreme Court of Cassation issued a landmark decision in the field of internet service provider (ISP) liability, reversing the Milan Court of Appeals judgment in the RTI (Reti Televisive Italiane S.p.A., one of the main Italian broadcasters) v. Yahoo! case. The Supreme Court recognized a distinction between active hosting providers, which are subject to the ordinary rules of civil liability, and passive hosting providers, which can benefit from the "safe harbor" defense covered by Article 16 of the E-commerce decree (Italian Legislative Decree no. 70 of 2003) and Article 14 of the E-commerce directive (2000/31/EC). Previously, this distinction was denied by the Milan Court of Appeals, which had instead ruled that all hosting providers can benefit from the "safe harbor" defense if they are just intermediaries and are not aware of the user's uploaded content. The Milan Court of Appeals held that this was valid despite the fact that some providers could be considered "advanced" hosting providers due to their technical capabilities, which were unforeseen when the directive was issued.

This is the first time that the highest Italian court has made a final decision on this debate. Previously, the lower courts were divided. On one side, the Court of Rome denied the safe harbor protection for all hosting providers that benefit financially from the uploading of content, even if uploaded by a third party (see the Break Media, Kewego, Megavideo and Vimeo cases). On the other hand, the Court of Turin (see the DeltaTV/YouTube case) and the Milan Court of appeals focused their attention on the specific activity of the hosting provider, which would become "active" only if it performs any operation on the hosted content, insomuch as it cannot be later deemed unaware of it.

Factual Background

The case arose in 2009 when RTI sued Yahoo! Italia S.r.l. and Yahoo! Inc. (collectively, "Yahoo!"), as providers of the Yahoo! Video service in Italy, requesting that the Court of Milan condemn Yahoo! for copyright infringement for hosting several of RTI's videos that had been uploaded by users onto the Yahoo! Video platform without RTI's consent.

In the first instance, the judge upheld RTI's demands, declaring Yahoo! liable for copyright infringement for hosting RTI's content. However, in 2015, the Milan Court of Appeals reversed the ruling, stating that Yahoo! was merely an intermediary and, as such, could benefit from the safe harbor...