The EU's top court on Tuesday said online platforms like YouTube can in some circumstances be held responsible for copyrighted material illegally uploaded by users.
The preliminary ruling will likely be welcomed by German music producer Frank Peterson who has been locked in a long-running legal battle with YouTube over unauthorised uploads featuring British artist Sarah Brightman.
The Court of Justice of the European Union found that generally speaking, YouTube and the likes are not responsible for users posting protected content without permission.
"Operators of online platforms do not, in principle, themselves make a communication to the public of copyright-protected content illegally posted online by users of those platforms," judges said.
But the situation changes once operators of such sites are made aware of copyright breaches and fail to act "expeditiously" to remove or block the content and ensure the infringements do not recur, they said.
Operators can also be liable for copyright violations if they refrain from putting in place technological tools to "credibly and effectively" fight against illegal uploads.
The EU judgement was triggered by two cases currently before Germany's Federal Court of Justice, whose judges in 2018 asked the Luxembourg-based court for guidance.
The first involves a lawsuit by Hamburg music producer Peterson against YouTube and its parent company Google for various songs and performances by soprano Sarah Brightman that were illegally posted in 2008.
YouTube removed some but not all of the content, to which Peterson holds the rights, and the case has been snaking its way through German courts for years.
Peterson is seeking damages from YouTube, arguing that the site is liable for the copyright infringements and has earned advertising revenue from hosting the videos.
The second case involves a claim by Dutch publisher Elsevier against file-hosting website Cyando, for copyrighted works uploaded by users without permission.
It is now up to the German court to decide how to interpret the EU judgement in these two cases.
The impact of the EU ruling beyond these two cases will be limited however because they cover events that took place before the European Union reformed its copyright laws in 2019.
The new regulations place a heavier burden on online content-sharing services to protect copyright.
In a response to Tuesday's ruling, YouTube said it "supports rights holders being paid their fair share".
"That's why we've invested in state of the art copyright tools which have created an entirely new revenue stream for the industry," it said in a statement.
"In the past 12 months alone we have paid $4 billion (3.4 billion euros) to the music industry, over 30 percent of which comes from monetised user-generated content."