In the long awaited judgment in the case of Scarlet Extended SA v SABAM, the Court of Justice of the European Union delivered a landmark decision preventing an onerous obligation being imposed by injunction on an Internet Service Provider (ISP) requiring it to prevent copyright infringements online. It ruled that the proposed injunction, which would require an ISP to install an expensive system for filtering, applied indiscriminately to all users as a preventative measure, and capable of identifying files which infringe copyright, was illegal and contrary to applicable fundamental rights, notably proportionality.
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The case of Sabam v Tiscali in the Belgian courts in 2007 addressed whether the court should grant injunctive relief to SABAM (the Belgian Society of Authors, Composers, and Publishers) against the Internet Service Provider ("ISP"), Tiscali, imposing an obligation on the ISP to stop infringements of SABAM's intellectual property by making it impossible for Tiscali's users to use "peer-to-peer" ("P2P") software to transmit infringing files containing musical compositions. After hearing expert evidence in support of the application of such a filter, the Belgian Court granted an injunction ordering Tiscali to install filtering software to prevent the ISP's customers from sending electronic files containing musical works that were part of the SABAM repertoire.
Tiscali subsequently appealed the decision and, prior to
delivering a judgment, in January 2010 the Belgian Court of Appeal
referred two questions to the Court of Justice at the European
Union ("CJEU") to ascertain whether a national court
was entitled to impose an obligation on an ISP to filter its
internet traffic, and, if so, to what extent the national court had
to consider the proportionality of the measure.
The questions referred were:
'(1) Do Directives 2001/29 and 2004/48, in conjunction with
Directives 95/46, 2000/31 and 2002/58, construed in particular in
the light of Articles 8 and 10 of the European Convention on the
Protection of Human Rights and Fundamental Freedoms, permit Member
States to authorise a national court, before which substantive
proceedings have been brought and on the basis merely of a
statutory provision stating that: 'They [the national courts]
may also issue an injunction against intermediaries whose services
are used by a third party to infringe a copyright or related
right', to order an [ISP] to install, for all its customers, in
abstracto and as a preventive measure, exclusively at the cost of
that ISP and for an unlimited period, a system for filtering all
electronic communications, both incoming and outgoing, passing via
its services, in particular those involving the use of peer-to-peer
software, in order to identify on its network the movement of
electronic files containing a musical, cinematographic or
audiovisual work in respect of which the applicant claims to hold
rights, and subsequently to block the transfer of such files,
either at the point at which they are requested or at which they
are sent?
(2) If the answer to the [first] question ... is in the
affirmative, do those directives require a national court, called
upon to give a ruling on an application for an injunction against
an intermediary whose services are used by a third party to
infringe a copyright, to apply the principle of proportionality
when deciding on the effectiveness and dissuasive effect of the
measure sought?'
Relevant Directives
Directive 2000/31 EC (The E-commerce Directive)
seeks to establish the free movement of information society
services in the internal market and sets out certain "safe
harbour" provisions for ISPs. However it also recognises that
Member States can grant injunctions to prevent certain
infringements, including requiring the removal of illegal
information or the disabling of access to it.
In particular, Article 12 of the E-commerce Directive provides that
Member States shall ensure service providers are not liable for
information transmitted on their networks provided that the
provider does not initiate the transmission, does not select the
receiver of the transmission and does not select or modify the
information contained on the transmission.
Article 15 of the same Directive states that Member States shall
not impose a general obligation on providers to monitor the
information which they transmit or store nor a general obligation
actively to seek facts or circumstances indicating unlawful
activity.
Article 8 of Directive 2001/29 (The Copyright
Directive) states that Member States must provide
appropriate sanctions and remedies in respect of copyright
infringements. The sanctions must be effective, proportionate and
dissuasive. It also states that Member States shall ensure that
rights holders are in a position to apply for an injunction against
intermediaries whose services are used by a third party to infringe
a copyright or related right.
Directive 2004/48 (The IP Enforcement Directive)
is directed to the provision of adequate enforcement mechanisms for
the prevention of intellectual property rights. In particular,
Article 3 provides that Member States shall provide for measures,
procedures and remedies necessary to ensure the enforcement of
intellectual property rights which must be fair and equitable, not
unnecessarily complicated or costly, and not entail unreasonable
time-limits or unwarranted delays.
Article 11 of The IP Enforcement Directive states that Member
States shall ensure that rightholders are in a position to apply
for an injunction against intermediaries whose services are used by
a third party to infringe an intellectual property right.
Filtering Out
The CJEU stated that the particular injunction being considered
would have required that the ISP (i) identify, within all of the
electronic communications of all its customers, the files relating
to peer-to-peer traffic; (ii) identify, within that traffic, the
files containing works in respect of which holders of
intellectual-property rights claim to hold rights; (iii) determine
which of those files are being shared unlawfully; and (iv) block
file sharing that it considers to be unlawful.
The Court concluded that the requirement to monitor actively all
the data relating to each of its customers would require the ISP to
carry out general monitoring, which is prohibited by Article 15 of
the E-Commerce Directive.
Striking a Balance
Consideration of the injunction's lawfulness also required
consideration of the applicable fundamental rights. The protection
of intellectual property rights is enshrined in the Charter of
Fundamental Rights of the European Union ('the Charter')
but there was nothing to suggest that that right is wholly
inviolable and must for that reason be absolutely protected.
The CJEU held that national authorities and courts must strike a
fair balance between the right to the protection of intellectual
property enjoyed by copyright holders, and to the freedom to
conduct a business, enjoyed by operators such as ISPs pursuant to
Article 16 of the Charter.
The injunction would result in a serious infringement of the
freedom of the ISP concerned to conduct its business since it would
require that ISP to install a complicated, costly, permanent
computer system at its own expense. It would also be contrary to
Article 3 of the IP Enforcement Directive which requires measures
designed to protect intellectual property rights not to be
unnecessarily complicated or costly.
The judgment made reference to the principle of proportionality,
which, amongst other things, requires that any legislative
objective be sufficiently important to justify limiting a
fundamental right and that the means used to impair the right or
freedom are no more than is necessary to accomplish the specific
objective. The CJEU noted that the proposed monitoring injunction
had no limitation in time, was directed at all future infringements
and was intended to protect not only existing works, but also
future works that have not yet been created at the time the system
would be introduced.
The judgment also considered the fundamental rights of the
ISP's customers, namely their right to protection of their
personal data and their freedom to receive or impart information.
The injunction would involve a systematic analysis of all content
and the collection and identification of users' IP addresses
from which unlawful content on the network is sent. Those addresses
are protected personal data because they allow those users to be
precisely identified. The injunction 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.
Overall the CJEU ruled that the proposed injunction would not
respect the requirement that a fair balance be struck between the
right to intellectual property, on the one hand, and the freedom to
conduct business, the right to protection of personal data and the
freedom to receive or impart information, on the other.
Implications for the Future
The case is a useful exposition of the relevant Directives and
fundamental freedoms that must be balanced by the Courts in cases
where rights holders seek injunctions against intermediaries. The
CJEU has made it clear that such a costly and unlimited filtering
requirement imposed on an ISP would be contrary to the E-Commerce
Directive and the Copyright Directive and would not respect the
rights of ISPs or consumers.
The decision appears to close the door on generalised attempts to
require ISPs to filter all communications on their networks to
identify copyright infringing material and prevent its
transmission. It also implies that any injunctions against
intermediaries or other analogous obligations imposed on them,
(such as 'technical measures' proposed to be imposed on
ISPs under the Digital Economy Act), would need to be shown to be
materially better targeted, less onerous and less costly than the
filtering obligation proposed here.
The susceptibility of intermediaries to injunctions brought by
rights holders to prevent infringement of intellectual property
rights is a topical area of the law in the UK and in the EU at
large. A recent example is the case of 20th Century Fox v
BT where the High Court granted an injunction requiring BT to
block access to a website used for copyright infringement, on the
basis that there appeared to be no legitimate use on the site and
that the cost of the measures would be modest and proportionate.
While the Sabam v Scarlet case does not appear to contradict the
findings of fact in that particular case, it does emphasise that
the CJEU is willing to uphold the rights of ISPs to conduct their
business and the rights of consumers to freedom of information in
cases of copyright enforcement in the digital age.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 28/11/2011.