The Czech Supreme Court has issued a decision concerning the liability of an information society service provider (ISP) for its business practices and their assessment in the light of unfair competition legislation. The Court stated that ISPs may commit unfair competition if they choose an inappropriate business model of providing their services, regardless of whether or not the ISPs are also liable for the content of the information they store.
The Czech Supreme Court, in its decision of 31 August 2021, Case No. 23 Cdo 2793/2020-409, concluded that an information society service provider may commit unfair competition despite the existence of the doctrine of limited liability of ISPs for illegal content stored on their websites ("safe harbour") pursuant to Sections 5(1) and 6 of Act No. 480/2004 Coll., on certain information society services. The latter applies only if the service operated is a neutral, purely technical and automatic means of processing information.
However, the particular manner in which those services are operated may also objectively constitute conduct in the course of trade that is contrary to the good morals of competition and is capable of causing harm to other competitors or customers.
Where the conditions of operation of an information storage service and, in particular, its technical set-up allow its users to make publicly available information infringing third parties' intellectual property rights to a competitively significant extent, the business model of operating the service may depend on the particular circumstances, fulfil the characteristics of unfair competition, irrespective of whether or not the provider of that service is also liable for the content of the stored information.
A business model for the operation of an information storage service may be considered to be contrary to the principles of fair competition and objectively capable of causing harm to other competitors or customers, if a significant part of that business model is the negotiation and payment of remuneration to users. It is also a precondition that the service provider does not reasonably verify when paying revenue thatit is not paid to the user in connection with the user's infringement of intellectual property rights.
A competitor who infringes the unfair competition rules this way may be ordered to remedy the infringing situation and, where appropriate, to pay damages, but it is not possible to impose conditions on how it should conduct its economic activity.
The chosen business model of economic activity is the main feature that distinguishes a simple information storage service from the possibility of unfair competition in the market for access to intellectual property based on the infringement of the rights of others. The mere operation of an information storage service using an electronic search engine for stored information does not constitute an act of unfair competition just because the search results may include a data file whose content threatens or infringes an intellectual property rights. However, the service provider must not actively influence the search results beyond the automated process itself or otherwise deal with them in a competitively significant way, thereby entering the market for making intellectual property subject matter available.
Therefore, if your company or your client provides hosting services, you should also think about the matter of compliance with competition rules. Are you not sure if everything is done right? Do not hesitate to contact us; we will be happy to help you.