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Offering a wide range of services useful for the majority of websites, including many provided completely free of charge, Cloudflare continues on an upward trajectory.

While its popularity isn’t in question, Cloudflare’s stance on copyright issues has placed it at odds with copyright holders who believe that the company should do more to fight against piracy.

For its part, Cloudflare counters that its policies are in line or exceed legal requirements, including those established in the United States where, under appropriate circumstances, the company cannot be held liable for infringement carried out by its customers.

Complaint and Settlement (2018/2019)

Disappointed by Cloudflare’s stance in response to their allegations concerning several manga piracy sites, in 2018 major publishers Shueisha, Kodansha, Kadokawa, and Shogakukan filed a motion at the Tokyo District Court.

They argued that since Cloudflare was in a position to curtail infringement, the company should stop providing services to the pirate sites. Caching and replicating the sites’ content was described as especially problematic, with the publishers arguing that this amounted to Cloudflare delivering infringing content to the public.

A 2019 settlement with Cloudflare wasn’t revealed until 2020 but the premise was fairly straightforward. If the Tokyo District Court ruled that the sites in question were illegal, Cloudflare would “stop the replication of the sites to Cloudflare’s servers in Japan,” the publishers said.

Publishers File a Copyright Lawsuit in Tokyo

Late January 2022, it was reported that the same publishers were again preparing to sue Cloudflare in Japan over its provision of services to known pirate sites.

The publishers said that they requested Cloudflare to bring the infringements to a halt and Cloudflare advised that they had “taken the necessary measures.” When technical analysis revealed that the pirate sites were still using Cloudflare’s services and cache, legal action was inevitable.

Within days the publishers revealed a “partial claim” against Cloudflare, concerning just four copyrighted works, one for each of the manga publishers. Their claim for damages was a relatively modest US$4m but arguably more important was the request for an injunction. That would not only restrain the company in the current action, it would also establish ground rules for similar disputes moving forward.

“With regard to the infringing content illegally stored on the sites, we asked Cloudflare to stop the temporary reproduction (cache) on the company’s servers in Japan [and] terminate their contracts with pirate sites that are clearly illegal,” the companies said.

Cloudflare said that it had gone “above and beyond its obligations” to assist rightsholders in Japan, including by adopting an abuse process to connect rightsholders with hosting providers “actually able to remove infringing content from the Internet.”

Tokyo Court Declares Cloudflare Liable

After a wait of more than three and a half years, the Tokyo District Court rendered its decision this morning. In a statement provided to TorrentFreak by the publishers, they declare “Victory Against Cloudflare” after the Court determined that Cloudflare is indeed liable for the pirate sites’ activities.

In a statement provided to TorrentFreak, the publishers explain that they alerted Cloudflare to the massive scale of the infringement, involving over 4,000 works and 300 million monthly visits, but their requests to stop distribution were ignored.

“We requested that the company take measures such as stopping the distribution of pirated content from servers under its management. However, Cloudflare continued to provide services to the manga piracy sites even after receiving notices from the plaintiffs,” the group says.

The publishers add that Cloudflare continued to provide services even after receiving information disclosure orders from U.S. courts, leaving them with “no choice but to file this lawsuit.”

Factors Considered in Determining Liability

Decisions in favor of Cloudflare in the United States have proven valuable over the past several years. Yet while the Tokyo District Court considered many of the same key issues, various factors led to a finding of liability instead, the publishers note.

“The judgment recognized that Cloudflare’s failure to take timely and appropriate action despite receiving infringement notices from the plaintiffs, and its negligent continuation of pirated content distribution, constituted aiding and abetting copyright infringement, and that Cloudflare bears liability for damages to the plaintiffs,” they write.

“The judgment, in that regard, attached importance to the fact that Cloudflare, without conducting any identity verification procedures, had enabled a massive manga piracy site to operate ‘under circumstances where strong anonymity was secured,’ as a basis for recognizing the company’s liability.”

The publishers confirm that the litigation involved one protected work per company and that the overall damages recognized in the judgment total approximately 3.6 billion yen (US$24 million). However, since their claim sought to recover less than the damages suffered, the judgment against Cloudflare of 500 million yen, around US$3.2 million, isn’t as punishing as it could’ve been.

Moving Forward

The publishers believe that the judgment clarifies the conditions under which a company such as Cloudflare incurs liability for copyright infringement. Failure to carry out identity verification appears at the top of the publishers’ list, followed by a lack of timely and appropriate action in response to infringement notices sent by rightsholders.

“We believe this is an important decision given the current situation where piracy site operators often hide their identities and repeatedly conduct large-scale distribution using CDN services from overseas. We hope that this judgment will be a step toward ensuring proper use of CDN services. We will continue our efforts to protect the rights of works, creators, and related parties, while aiming for further expansion of legitimate content,” the publishers conclude.

Cloudflare May Have Already Signaled its Response

According to Japanese media, Cloudflare plans to appeal the verdict, which was expected. In comments to the USTR last month, Cloudflare referred to a long-running dispute in Japan with the potential to negatively affect future business.

“One particular dispute reflects years of effort by Japan’s government and its publishing industry to impose additional obligations on intermediaries like CDNs,” the company’s submission reads (pdf).

“A fully adjudicated ruling that finds CDNs liable for monetary damages for infringing material would set a dangerous global precedent and necessitate U.S. CDN providers to limit the provision of global services to avoid liability, severely restricting market growth and expansion into Asian Pacific markets.”

Whether that heralds Cloudflare’s exit from the region is unclear. The statement to the USTR seems to suggest that the company knew that a decision was coming and probably wouldn’t reflect the protections available to it in the United States.

From: TF, for the latest news on copyright battles, piracy and more.

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