The EU's E-commerce Directive of 2000, from which the UK Regulations are derived, limits the liability of intermediaries where they host or cache information or act as 'mere conduits' in its transmission. The Directive's protection for an ISP is fairly clear; its protection for a search engine is not.
Some EU Member States sought to resolve that ambiguity in their implementing laws. The Spanish authorities reasoned that search engines are analogous to hosting services because the service provider has a lack of control over the content and included explicit protection for search engines in Spain's national law. It applied the same reasoning and protection to providers of hyperlinks and also content aggregation services. Austria and Liechtenstein also extended their national protections, though their reasoning was that search engines were more analogous to 'mere conduits' than hosts. Hungary and Portugal also added extensions for such intermediaries to their national laws.
The Directive required the European Commission to monitor the Directive's application in periodic reports. Its first report, delivered in 2003, recommended that all member states extend the protections afforded to intermediaries.
With no explicit protection in UK law for search engines or providers of links or content aggregation services, the UK's Department of Trade and Industry (DTI) sought views on whether it should make changes. It published a consultation paper in June 2005.
Perhaps predictably, providers of search and content aggregation services said they want the limitation of liability to be extended. They fear a court ruling that holds them responsible for failing to filter, assess or censor the content that they pass on to users. They claim that the automated processes which are essential to their operation would not be feasible if they were made responsible for third party content and they feel vulnerable to actions for copyright infringement, defamation and even contempt.
Just as predictably, owners of content such as music and films who are fighting unauthorised uses of their works argue that the limitation should not be extended any further because it would further aid those who use and distribute works without permission. They pointed out that search engines have developed very successfully over recent years notwithstanding the absence of liability exemptions.
In its conclusions, published in December, the DTI wrote: "Although there have been good arguments made both for and against the granting of an extension of the limitations on liability to providers of hyperlinks, location tool services and content aggregation services, the DTI, mindful of its obligation for evidence based-regulations, has reached the conclusion that there is currently insufficient evidence to justify any extension to these limitations."
"In particular," noted the DTI, "there has been no significant legal action in the UK since the Directive's implementation in July 2002." It added that it had seen little evidence of out-of-court settlements or notices received by search engines that showed significant legal uncertainty among providers.
"The second review of the Electronic Commerce Directive by the European Commission is due in 2007 and the DTI will encourage the Commission to take on board the important issues raised during this consultation," it said.
One of the main points raised in its own consultation, the DTI said, was that in countries that have extended the rights there has been no significant difference to the legal position of aggregators and hyperlink providers.
"There appears to be very little evidence to suggest that where Member States have limited the liability limitation to providers of hyperlinks and location tool providers it has made any significant difference," said the DTI's response. "There appears to be very little case law in these Member States to ascertain their effect."
Yahoo! is listed among the respondents in the DTI report. Its main rivals – Google and Microsoft – are not.