In recent years, the extent to which internet service providers (ISPs), search engines and content aggregators should be liable for any acts of copyright infringement committed by their users has been topical in courts around the world. Inevitably, this matter has also found its way to the Europe’s highest court – the Court of Justice of the European Union (CJEU) which, in a recent decision, highlighted the importance and the difficulty of balancing the rights and interests at play.
The court’s ruling marks a massive win for privacy evangelists- Josette Grech
This case has its origin in a dispute between ISP Scarlet Extended SA (Scarlet) and SABAM, a Belgian management company responsible for authorising the use by third parties of the musical works of authors, composers and editors. In 2004, SABAM brought interlocutory proceedings against Scarlet before the Belgian court after having established that users of Scarlet’s services were downloading musical works by means of peer-to-peer (p2p) file-sharing networks.
It sought a declaration that copyright in musical works managed by it had been infringed by users on Scarlet’s network and, consequently, sought an order requiring that Scarlet prevents its customers from sharing files containing musical works without permission from the copyright owners.
Belgium’s Court of First Instance ordered Scarlet, on pain of a periodic penalty, to bring those copyright infringements to an end by implementing a filtering and blocking system to make it impossible for its customers to send or receive in any way such electronic files.
Peeved by the decision Scarlet appealed, claiming the ruling was incompatible with EU law as well as the e-Commerce Directive. It protested against the ruling arguing that aside from being technically unfeasible, it violated the privacy of its customers by requiring it to monitor communications on its network. The Belgian Court of Appeal stayed proceedings and made a preliminary reference to the CJEU.
The CJEU found completely in favour of Scarlet, thus overturning the Belgian Court’s decision that would have forced Scarlet to pre-emptively filter internet traffic to prevent the unauthorised sharing of music files.
In its ruling, the court recognised the rights of intellectual property owners to apply for injunctions against intermediaries whose services are used by third parties to infringe their rights. But it struck down the requirement of a filtering system, ruling that ISPs cannot be ordered to implement, at their own cost, a filtering system to monitor possible breaches of intellectual property rights on their networks, since they do not have the right in the first place to filter out copyright-infringed content from the web passing through their networks.
In coming to this decision, the court was swayed by the need to strike a fair balance between the rights of intellectual property owners on the one hand, and the protection of freedom of business, freedom of information and rights of individuals to data protection on the other. The court in fact acknowledged that the implementation of a filtering system to monitor all communications over the ISP’s networks on an ongoing basis would be costly and complex and would seriously impact on Scarlet’s freedom to conduct business, a violation of the directive on electronic commerce.
It also held that rights to protection of personal data could be jeopardised by the implementation of a filtering system since the latter would necessarily involve a systematic analysis of all content and the collection and identification of protected users’ IP addresses from which unlawful content is shared. In addition, the court indicated that a filtering and blocking system could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications.
The court’s ruling marks a massive win for privacy evangelists. The European Digital Rights Organisation welcomed the judgement as hugely important in the protection of the openness of the Internet, fundamental rights and online economy in Europe. Consumers’ organisations have also hailed the decision as significant. Although the ruling appears to offer a setback to rights’ holders, the music industry has shrugged off the implications of the decision, stressing that other means to curb illegal file sharing such as the blocking of websites that enable piracy and the cut off of persistent file-sharers’ internet connections will not be affected and will remain in place.
jgrech@demarcoassociates.com
Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.