ICCE Position Paper on the European Commission’s proposal on the Digital Services Act
The Imaging Consumables Coalition of Europe, Middle East and Africa (ICCE)¹ welcomes the European Commission’s (EC) proposal for a Digital Services Act (DSA) and commends the Commission for this effort to ensure that what is illegal offline is illegal online.
The DSA is of particular importance to ICCE members and the many consumers that they serve. It provides the opportunity to support a more transparent and accountable online environment where e-commerce can flourish, and to promote a fairer balance of responsibilities between Internet Service Providers (ISPs) and rights holders.
ICCE reiterates its call for any future law to encourage ISPs to take more responsibility in policing their customers’ use of their services and remove listings of counterfeit and illicit goods more promptly. This is not about restricting freedom of expression, but ensuring that consumers are not confronted by counterfeit and illicit products in the online environment which inherently doesn’t provide the chance for inspection of the products before purchase. Manufacture, distribution and sale of counterfeit products is a criminal offence.
The Commission’s proposal is a positive step forward, but it would benefit from further clarifications. We call on the European Parliament, and the Member States, to improve various provisions of the proposal including clarifying the scope of the safe harbour provided to ISPs, ensuring rights holders can become trusted flaggers of counterfeit products and providing a consumer notification means whereby ISPs must notify consumers who buy counterfeit products through their platforms. ICCE would like to offer its recommendations as to how the DSA proposal could be further clarified and improved.
Executive summary of ICCE key recommendations
In order to ensure European consumers and businesses are equally protected on- and offline against rogue traders and illegal, unfair competition, ICCE encourages the co-legislators to:
• Very clearly define the scope of the provision on ISPs voluntary own-initiative investigations and limit the protection offered by Article 6 specifically to 1) Voluntary measures undertaken by ISPs to carry out their annual risk assessment process and mitigation adopted; and, to 2) The development (software coding) of an algorithm intended to identify a specifically defined illegality;
• Clarify that “trusted corporates” could directly qualify as trusted flaggers. This would make the Trusted Flaggers regime more efficient for both rights holders and online intermediaries;
• Extend the KYBC obligations to include Domain Name System (DNS) services and website hosts;
• Include a “best effort” requirement for all hosting service providers to prevent the reappearance of listings of counterfeit and other illicit products (stay-down measures);
• Consider the specific circumstances in which consumers may benefit from a requirement for all consumer facing platforms to carry out a risk assessment and mitigation process as enshrined in Article 26 and 27;
• Oblige ISPs to notify consumers if they purchased counterfeit products through their platforms; and,
• Address the issue of profit generated by the ISPs from the criminal activities of the rogue traders.
General provisions
Illegal content (Article 2g)
According to Article 2g, illegal content is any content that is not in compliance with European Union law or the law of a Member State. It is essential to maintain the principle of what is illegal, regardless of whether it is online or offline.
Liability of providers of intermediary services
Defence to liability (Articles 3-5)
ICCE recognises the value of the conditional defence to liability originally enshrined in the e-Commerce Directive (ECD), and now recast in Article 3-5 of the proposed DSA, that is provided to ISPs in that it allows them to provide hosting services to businesses and individuals while avoiding the liability for illegalities of particular users for which they have no knowledge. Accordingly, in respect to the hosting defence (Article 5), the defence is conditional (Article 1.1.a), until the ISP has actual knowledge of illegalities when then it is required to act. We welcome that the EC has maintained the defence in its current form and has clarified that it is conditional.
ICCE welcomes the specific clarification in Article 5.3 that the defence to liability does not apply to online intermediaries when acting as a retailer as opposed to a marketplace.
Lastly, ICCE recognises that this was a lengthy drafting process and that some provisions will need further clarifications. For example, “illegal activity” as referred to in Article 5 is not defined in the proposal. Hence, it may be easier to consolidate the text around “illegal content” only.
Voluntary own-initiative investigations (Article 6)
ICCE members continue to see neither evidence (via existing court rulings), nor sound legal basis that could substantiate the position by some stakeholders that the current framework deters ISPs from implementing proactive measures to find and remove illegal content. If a voluntary measures provision is deemed necessary, the pre-requisite is that it is clear, unambiguous and does provide an incentive for ISPs to implement voluntary measures. Regrettably, the current wording provides neither clarity nor an incentive for ISPs to establish voluntary measures, but rather provides the ultimately broad safe harbour for wilful blindness and delayed response by ISPs.
Any provision on voluntary own-initiative investigations should be very clearly defined as to its scope and limits. Under the proposed wording, the scope of the protection offered to online intermediaries by Article 6 remains unclear. Article 6 would benefit from further clarity by reference to acquiring “actual knowledge” under Article 5. Further, the catch-all provision under “requirements of Union law” is vague, unclear and unnecessarily broad in terms of protection benefiting ISPs. Lastly, the reference to good faith requirements in Recital 25, which does not appear in Article 6, further adds confusion: how would an ISP show it has acted in good faith in implementing a voluntary measure versus an ISP who has not?
To address the current inadequacies with Article 6 and lack of clarity inherent in the current provision, ICCE recommends the scope of the protection provided by Article 6 should be better defined to confirm that the Article 5 hosting defence would be available to ISPs to the extent they implement specific voluntary measures in response to, or to mitigate the effects of, 1) Illegality identified in accordance with Article 26-27; 2) The development (software coding) of an algorithm intended to identify a specifically defined illegality.
Such an approach would allow for clarity and precision on the application of the Article 5 defence aiding not only the Court of Justice of the European Union on the interpretation of Article 6, but also the national courts of the Member States, public authorities, ISPs and civil parties.
Due diligence obligations
Transparency reporting obligations for providers of intermediary services (Article 13)
ICCE welcomes the transparency obligations in the proposal. While recognising the valid concerns that ISPs wish to maintain their trade secrets, we congratulate the EC for developing requirements that can easily be implemented by the vast majority of ISPs to which this obligation applies. For example, the majority of notice and take down requests that ISPs receive will be through electronic means. Likewise, various voluntary measures implemented by the ISPs and complaints received will be through electronics means. Accordingly, the ease and simplicity by which an ISP can meet these obligations should mean that any ISP can meet the obligations without any significant undue cost or time.
In addition, we recommend that data on illegal goods is shared across platforms, to make fighting against repeat infringers more efficient as they are operating on several platforms at the same time, often with the same contact details. It is important that platforms are transparent with regards to the policy they adopt when it comes to repeat infringers.
Notice and action mechanisms (Article 14)
ICCE welcomes the formalisation at EU level of rules on notice and action mechanisms across online hosting services (including platforms) and the proposed elements that the notices must contain to be actionable, which will facilitate the expeditious removal of illegal content and goods. ICCE recognises the valid and legitimate arguments raised by interested organisations in relation to the concern that moderation of the internet could impact freedom of expression and freedom of speech. That said, the majority of notice and take down requests under this article will be in relation to counterfeit listings and/or intellectual property (IP) infringements. The proposal broadly implements what the vast majority of ISPs currently require from those using the notice and take down procedures, therefore ICCE welcomes the codification of the current common practice.
In relation to the elements that a notice must contain, ICCE notes that in the requirement to provide “a statement confirming the good faith belief of the individual or entities submitting the notice that the information and allegations contained therein are accurate and complete” (Article 14.2 d) the reference to “good faith belief” may be obscure. The language in this provision would be clearer if it linked the accuracy and completeness of the statement “to the best knowledge” of the individual or entities submitting the notice. Further, Article 14.6 seems to be defining what expeditious removal requires under Article 5, yet it does not expressly reference Article 5, and therefore by introducing a further definition may also cause confusion.
Some ISPs have raised concerns about misuse of the notice and take down procedures and such concerns are addressed in Article 20.2. ICCE acknowledges this genuinely held view by some ISPs, but it should not be used as an excuse for failure to act under the notice and take down procedures. In short, while misuse of the procedure may occur, it should not dictate how the vast majority of notice and take down requests are processed. Accordingly, to the extent that misuse falls under Article 20.2-3, it should be included as a sub provision under Article 14.
Lastly, the possibility to notify several illegal listings in one notice should improve the effectiveness of the mechanisms.
Trusted Flaggers (Article 19)
ICCE greatly welcomes the EC proposal for a trusted flaggers regime and specifically the recognition of intellectual property rights. To maximise the advantages that such a system would bring for both online intermediaries and rights holders, ICCE is of the view that this provision would benefit from further clarifications. This would allow the creation of a trusted flagger system that is better tailored to the needs of all actors involved and more easily adaptable to the type of illegality (e.g. child sexual abuse material vs counterfeiting), being therefore more practical and efficient across the online ecosystem.
The trusted flaggers regime for IP rights in its current formulation may cause confusion and implementation issues. ICCE concerns follow below:
1) We would welcome clarifications on what “organisations of industry” mean in a context where there are trade bodies on the one hand, and IPR service providers/ agencies (e.g. REACT) on the other.
2) As a trusted flagger defined in the proposal appears to act for multiple rights holders which may have a different tolerance on what constitutes an IPR infringement, this may expose the trusted flagger to the risk of losing its status because of one client with different tolerance.
3) “Organisations of industry and of rights holders” would not necessarily have “particular expertise and competence for the purposes of detecting, identifying and notifying illegal content” as such expertise and competence belongs to the rights holders themselves.
While we welcome a trusted flaggers regime, in the case of IPR infringement the proposed system may be unnecessarily burdensome for both online intermediaries and rights holders. Since the vast majority of take down relates to IPR infringements, it would be more practical and efficient for both intermediaries and rightsholders if “trusted corporate” entities could directly qualify as trusted flaggers after demonstrating they are able to meet a list of criteria identified by each intermediary, building on trusted flaggers systems already implemented by several intermediaries. Trusted corporate entities could be determined by the number of notice and takedown requests that they file with a platform during a defined period of time versus the number of unfounded or incorrect notice and takedown requests.
If the definition of trusted flaggers is more appropriately clarified to represent trusted corporate entities as defined above, then online intermediaries should be free to select their own trusted flaggers. Therefore, the need for Digital Services Coordinators is somewhat redundant, except to the extent there is a dispute about the qualifying criteria for a party seeking to obtain trusted flagger status from an intermediary.
Measures and protection against misuse (Article 20)
We are grateful that Article 20.1 has been added. This provision should be further improved to introduce a permanent suspension of repeated offenders, not just suspension for a “reasonable period of time”, and a threshold for automatic suspension – and eventually ban – of their account. Most counterfeit sellers are repeated infringers, acting at commercial scale, often combining the sale of counterfeits with other criminal activities. Today, some online platforms already implement such policies, applying for example a “three-strikes” rule against repeat infringers. It is therefore easy for all intermediaries to apply this policy. Furthermore, a minimum set of information to be included in platforms’ terms and conditions, as set out in paragraph 4 of Article 20, should be clearly laid down in the DSA or subsequent guidelines, in particular to clarify which practices constitute a “misuse”.
For completeness, Article 20.3 has little relevance in respect to manifestly illegal content appearing online and therefore should not be linked to Article 20.1 take downs.
Lastly, ICCE would also welcome clarifications on the meaning in Article 20.3 a) of the wording “manifestly illegal content” and how it differs from “illegal content”.
Traceability of traders (Article 22)
ICCE strongly welcomes the introduction of a Know Your Business Customers (KYBC) principle.
However, in the current proposal, the obligations to trace traders applies only to online marketplaces or consumer-facing platforms. Such obligations should be widened to include Domain Name System (DNS) services and website hosts. ICCE members have repeatedly experienced situations in which DNS services and website hosts decline to take responsibility to remove websites operated by their customers which are intended to promote trade in counterfeit goods or to provide misleading or fraudulent services to unsuspecting users. This is detrimental to rights holders and greatly undermines consumers and users’ confidence in the online environment.
Furthermore, the definition of “trader” under Article 2e only includes any natural person, or any legal person, acting for purposes relating to his or her trade, business, craft or profession. The word “trader” should be replaced by “recipient of the service” so to include recipient of hosting services, including but not limited to a trader. This way both businesses and individuals setting up imposter accounts would be included.
ICCE welcomes Article 22.1f and 22.7 as they would help address issues with such traders selling online dubious or illegal consumable products, such as counterfeits and products that do not meet EU health and safety requirements. We recommend Article 22.1f to also include compliance to applicable Member States law.
ICCE would welcome clarification on whether “third parties” under Article 22.5 includes rights holders. The verified contact details and identity of the trader should also be provided to law enforcement agencies and rights holders to allow them to further investigate and eventually pursue legal action.
Finally, ICCE notes that the provisions listed under Section 3 of the proposal, including Trusted Flaggers and KYBC, do not apply to online platforms that qualify as micro or small enterprises within the meaning of the Annex to Recommendation 2003/361/EC. In our view such obligations should apply to all online platforms. They are part of the cost of doing business. Counterfeit and illicit products can be found on any type of platform, with equal risks for consumers health and safety. The same principle applies to offline business, where all size of businesses must abide by the same legal obligations.
Additional measures for a more effective DSA framework
Stay-down obligation
In addition to suspending illegal traders, the DSA should include a “best effort” requirement for all hosting service providers to prevent the reappearance of illegal listings. ICCE members report daily a large number of reappearing illegal goods, which often take the form of similar ads leading to the same website URL or to identical content and websites that keep reappearing on the same platform, including under different names (“back-up accounts”). These suggested stay-down measures should apply when a content has already been removed by the platform in absence of any appeal. Where appropriate and where there is a defined distribution channel, platforms should also target identical or equivalent content, as already outlined in case law Eva Glawischnig-Piesczek v. Facebook ². This is the most effective solution to manage and prevent the reappearance of illegal goods and related content (e.g. creative visuals), and a crucial step to ensure consumers do not perpetually face products that can endanger their health and safety.
Extend VLOPs measures
While ICCE regrets that the proposal does not include a new legal obligation on all intermediaries to deploy appropriate and proportionate measures to (i) prevent or substantially reduce the offering for sale and sale of counterfeit products online; and (ii) reduce fraudulent activities utilizing ISPs services, ICCE welcomes the introduction of stronger obligations, particularly those applying to Very Large Online Platforms (VLOPs).
We welcome the EC clarity on which platforms will quality as VLOPs based on size of user base, albeit there may be certain specific circumstances where a platform should qualify as a VLOP based on additional or alternative factors. For example, consumers may benefit from a requirement that all consumer facing platforms irrespective of size conduct a risk assessment periodically and have the option to implement measures to mitigate risks identified.
Consequently, ICCE recognises the clear purpose for Article 6 protection in a limited form pursuant to and in compliance with Article 26 and 27. In short, Article 6 should clearly define that the compliance with the obligations contained in Article 26-27 would benefit from the Article 6 safe harbour. Such amendment would incentivise ISPs to adopt their best voluntary measures to address the risks they have themselves identified. As said earlier, Article 6 as currently worded is unjustifiably broad.
Consumer notification regime
A key ambition of the EC in revising the ECD is to provide a safer online environment to all participants. Online counterfeiting continues to put European consumers’ safety at risk and undermine their trust. In 2019, counterfeit products represented 6,8% of all EU imports by value ³, growing by almost 40% compared to 2016 ⁴. It is in this context that ICCE regrets the Commission has not introduced provisions to protect consumers from using fake products by not requiring platforms to notify consumers that have bought counterfeit products once they become aware. Such an initiative would considerably benefit consumers in Europe and even, potentially, save lives. Consumer facing platforms have the contact information of buyers of a product subject to a removed listing. Accordingly, such a consumer notice could be prompted immediately upon removal of a listing at almost no cost or effort to the platform concerned.
Addressing the issue of profit generated by criminal activities
As ICCE highlighted in previous position papers on the DSA, ISPs continue to generate revenues from the placement of an advertisement, clicking on the ads by end users and/or the sale of the illegal products until and if they are notified by rights holders or other interested third parties. Further, ISPs generating profit from criminal activity on their platforms is a forgotten but crucial element of the current discussion. While the owner of a physical shop found to be allowing the trade in, and making profit from, criminal activity occurring in the shop would be subject to legal penalties, the owner of an online shop making profit off the back of criminal activity in exactly the same manner would be subject to no penalties. ICCE calls for the introduction of proceeds of crime provision permitting Member States or the EC to require disgorgement of the profit made on advertisements and/or links which are taken down because the products they are promoting are counterfeit. Where systemic problems are found with an ISP and the ISP may become liable to sanctions under the DSA, mitigation should be offered where ISPs can show early disgorgement of proceeds of crime.
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ICCE stands ready to engage constructively with the European Parliament and Member States and all relevant stakeholders to enhance the Commission’s ambition to improve the e-commerce landscape and better protect consumers.
For further information, please contact:
Isla Irvine, ICCE secretariat, at ICCE_Secretariat@outlook.com
About ICCE
The Imaging Consumables Coalition of Europe, Middle East and Africa (ICCE) was formed in 1997 as a direct response to the increase in counterfeit imaging consumables across the regions of Europe, Middle East and Africa. Imaging consumables include such products as toners, ink cartridges and ribbons. Initially created as an industry association with a focus on education, lobbying, information exchange and awareness, it has since developed to include coordinating the role of receiving and processing intelligence information on counterfeiters, initiating joint industry raids and enforcement activities and helping its members to target counterfeiters through the criminal and civil courts.
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¹ ICCE includes the following members: Brother, Canon, Epson, HP Inc, Kyocera, Lexmark, OKI, Printronix, Ricoh and Xerox. HP Inc also represents Samsung toner division.
² C-18/18, Eva Glawischnig-Piesczek v Facebook Ireland Limited: the jurisprudence lays down that “it is legitimate for the court to be able to require that host provider to block access to the information stored, the content of which is identical to the content previously declared to be illegal, or to remove that information”. It further indicates that stay-down obligations are not considered “excessive” and against the absence of a general monitoring obligation, “in so far as the monitoring of and search for information which it requires are limited to information containing the elements specified (…), and (…) does not require the host provider to carry out an independent assessment, since the latter has recourse to automated search tools and technologies.
³ OECD, EUIPO, Illicit Trade – Trends in Trade and in Counterfeit and Pirated Goods, 2019.
⁴ OECD, EUIPO, Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, 2016.
