European Union: EU Court Says Public WiFi Providers May Be Required To Use Password Protection To Discourage Copyright Violations

The Court of Justice of the EU (CJEU) has ruled on the scope of the "mere conduit" exemption of the e-Commerce Directive, as applied to the liability of free WiFi providers for copyright infringements committed by the users of the free WiFi service. This decision refrained from exposing public WiFi providers to damages if their systems are used in a copyright violation, but would allow copyright holders to require WiFi providers to demand user identities and apply password protections, as a way of discouraging the use of their systems for copyright infringement.

The issue arose from a copyright infringement claim by Sony Music Entertainment Germany ("SME") against Tobias McFadden, a business selling and leasing sound and lighting systems in the German town of Gauting. McFadden operates a wireless local area network (WLAN) that is accessible free of charge and anonymously in his office's building and the immediate vicinity.

At one point this network was used to download a musical work to which SME owns the rights. SME sent a formal notice to McFadden demanding he respect SME's rights over the musical work. McFadden applied to the regional court in Munich ("Landgericht München I") for a "negative declaration," that is, a declaration that he had committed no infringement. SME counterclaimed for damages on the ground that McFadden was directly liable for the infringement, seeking an injunction to prevent any continued infringement.

On the basis of the facts of the case, the regional court was inclined to accept that the infringement of SME's rights had not been committed by McFadden personally, but by an unknown user of his WLAN, and therefore that McFadden could not be held directly liable ("Täterhaftung") for the infringement. However, the court considered holding McFadden indirectly liable ("Störerhaftung") for failing to have secured the network and thus allowing the rights to be infringed anonymously. Before ruling, the court asked the CJEU whether the "mere conduit" exemption laid down in Article 12(1) of the e-Commerce Directive (directive 2000/31), as transposed into German law, might preclude it from finding McFadden liable in any way.

According to the "mere conduit" provision, the provider of an information society service, providing access to a communication network, is not liable for information transmitted, if the provider (i) does not initiate the transmission, (ii) does not select the receiver of the transmission, and (iii) does not select or modify the information contained in the transmission.

The CJEU concluded that the exemption indeed applied to this. Therefore, McFadden could not be held indirectly liable for the infringement of SME's rights resulting from the downloading of a musical work by an unknown user of McFadden's free WLAN. The Court thus held that the "mere conduit" exemption precludes an owner of intellectual property rights from claiming compensation from a provider of access to a communication network on the grounds that that network was used by a third party to infringe these rights.

However, the CJEU also held that the exemption does not preclude a rights owner from claiming injunctive relief from the communication network access provider whose services were used in an infringement, in order to prevent continuing infringement.

As to the nature of the injunctive relief that might be granted in such a case, the Court only took into consideration the three options presented to it by the referring court, namely (i) examining all communications over the connection, (ii) password-protecting the connection, or (iii) terminating the connection. The Court considered that a fair balance had to be struck between the competing interests at stake: protection of the right to the protection of intellectual property, freedom to operate a business as a network access provider, and freedom of information of the service users. The Court concluded that, of the three alternatives, only a measure consisting in password-protecting the WLAN connection and requiring users to reveal their identities to obtain the required password would strike an appropriate balance. According to the Court, such a measure would be an effective deterrent for copyright infringements, while not overly restricting the freedom to conduct a business of the provider, or the ability of internet users to lawfully access information.

On this point, the Court went against the advice of Advocate-General Szpunar, who considered that it would not be appropriate to require password protection, at least for undertakings that offer Internet connections only as an adjunct to their other services, because such a measure by itself would not be effective, but would undermine those undertakings' business model and impose disproportionate administrative burdens.

The Court also seems to contradict the German Federal Court of Justice ("Bundesgerichtshof"), which in 2010 held that a private person operating a WLAN with internet access may be regarded as a "Störer" (indirectly liable) where he has failed to make his network secure by means of a password, thus enabling a third party to infringe a copyright or related right (Sommer unseres Lebens, I ZR 121/08). By contrast, the CJEU considers that a person may only incur liability for failing to heed an injunction to password protect a wireless network. The CJEU's judgment is unlikely to end the debate in German law about Störerhaftung in relation to internet services. A recently adopted amendment of the German Telemedia Act ("Telemediengesetz"), which entered into force on 27 July 2016, was widely expected to exempt WiFi providers from Störerhaftung by extending immunity enjoyed by internet service providers and hosting companies to operators of wireless networks, but critics say the amendment fails to provide legal certainty because it does not rule out certain civil actions, at least not explicitly.

The CJEU has tried to reach a compromise. As is often the case with compromises, it is likely to leave both sides unsatisfied. Intellectual property rights holders will be unhappy they cannot hold connectivity providers liable for infringements, but can only seek injunctions to prevent continuing infringement. This will undermine enforcement of intellectual property rights for content transmitted over the internet, since in most cases it will not be possible to identify the directly liable party (the illegal downloader) if the network is not protected, and having to request an injunction against each and every free WiFi provider is cumbersome and only provides a remedy against future infringements. On the other hand, open access advocates such as McFadden (a local councilor for the German "Pirate Party") and also free WiFi providers will be disappointed that the Court would require password protection, which places additional burdens on the providers and reduces the accessibility and convenience of free WiFi services. The possibility for intellectual property rights holders to seek injunctions against WLAN providers (which include businesses in hospitality, transport hubs, local governments, etc.) may even prompt the latter to preemptively apply password protection to avoid such injunctions, even if only to avoid the costs of formal notice and court costs related to those injunctions. This could also slow down the rollout of public WiFi access in Europe, which is part of the European Commission's objectives in its Digital Agenda.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions