Forfeiting a Contractual Penalty by Continuously Storing a Photograph

On September 12th, 2012 the Higher Regional Court of Karlsruhe – 6 U 58/11 – decided on the question, which actions a debtor has to restrain from after he signed a declaration to cease and desist “using a photograph on the internet”.

The parties before the court argued about the transfer of rights and the continued existence of claims after the transfer of a company. However, the court mainly had to deal with three questions:

1.            How is a declaration to cease and desist to be interpreted:

a)            in general

b)           regarding the term “using a photograph on the internet”?

2.            Does the defendant’s behavior fulfill the so-defined conditions?

3.            Can fault be attributed to the defendant regarding the fulfillment of the conditions?

 What had happened?: The circumstances of the case

The defendant used a photograph as part of an article on his homepage without having been granted the necessary rights by the plaintiff. In reaction to the plaintiff’s written warning notice, the defendant declared in December 2011 to cease and desist “using the photograph on the internet without having been licensed to do so”. According to the declaration, the plaintiff was entitled to demand a contractual penalty for any culpable failure to observe the restrictions on use.

The photograph was deleted from his content-management system by the defendant. However, when entering the URL build of 44 letters and numbers it was still accessible and downloadable via the internet in January 2012.

The plaintiff called upon the defendant to pay the contractual penalty. When the defendant refused, the plaintiff initiated legal proceedings to pursue his demands. He claimed the defendant’s actions to be a “use of the photograph on the internet” without the necessary license. Therefore, as the defendant culpably failed to observe the restrictions on use, he had to pay the contractual penalty.

The defendant claimed that he did not culpably fail to observe the restrictions on use.

According to him, he did not use the photograph on the internet, as the term use on the internet was to be interpreted as “using the photograph as part of an article or editorial contribution to his homepage”. However, if the term had to be interpreted differently, it could not be interpreted as “making available” in terms of the German copyright law. The law – the defendant claimed – differentiates between “use” and “exploitation”. As the right to make available a creation covered by the German copyright law forms part of the creator’s right to exploit the creation, the wording of the declaration to cease and desist indicates that it had to interpreted differently. In any case, the defendant claimed, he had not made the photograph available, as no one was likely to enter a URL build of 44 letters and numbers so that in practice the photograph was not accessible via the internet.

Finally, he claimed, he had not acted culpably. He had deleted the photograph from his content-management-system. The system had reliably always deleted all the content from all his servers on previous occasions. He had checked the deletion manually and when entering the URL he had received a corresponding error message. Therefore, fault could not be attributed to him for the fact that the system had not worked properly and had not deleted the photograph from three of his servers.

What did the court hold?: The decision

In his decision, the Higher Regional Court of Karlsruhe held that in general the wording of a declaration to cease and desist was to be interpreted on the basis of the declaration, not on the basis of the German copyright law. In the case laid before him, the defendant’s declaration referred to the plaintiff’s written warning notice, the term “use of the photograph on the internet” had to be interpreted with regard to what the plaintiff had wanted the defendant to refrain from. That was not to make the photograph available via internet any longer. Therefore, the plaintiff forfeited the contractual penalty by making the photograph accessible and downloadable via the internet. A relation to an article or any other editorial contribution was found not to be necessary.

Furthermore, the court held, even if the term had to be interpreted on the basis of the German copyright law, the defendant would still have forfeited the contractual penalty as he would still have used the photograph on the internet. Although the German copyright law generally differentiates between “use” and “exploitation”, the wording of the declaration – the court held – could not be interpreted to mean anything other than that the defendant had to refrain from making the photograph accessible. That, however, is what the German copyright law describes as making a creation available. A further, special form of exploitation is not required.

The court went on stating that the photograph had been made available by the defendant. The fact that an URL build of 44 letters and figures had to be entered, did not prevent others from accessing and downloading the photograph at times and from places of their choice. The circumstances had to be abstractly analyzed. As the URL might still be saved on third parties computers or might be found by search engines, the photograph was being made available.

Finally, the court held, fault could be attributed to the defendant. While generally speaking defendants might be entitled to rely on software and a content-management-system, in this case the defendant negligently neglected the due care. After he had signed the declaration to cease and desist the use of the photograph, he was obliged to pay special attention to its deletion from all his servers. He had been obliged to manually check up to thirty servers and had failed to so. Thus, he had culpably failed to observe the restrictions of use and therefore had to pay the contractual penalty.

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