The Court of Justice of the European Union (CJEU) has deprived the audio recording and movie industries of one of their main instruments against the sharing of illegal internet content – the possibility to impose an injunction against an internet service provider (ISP) that requires it to install a system to filter electronic communications, especially those involving the use of peer-to-peer software. The CJEU balanced the protection of intellectual property rights against other fundamental rights of individuals, such as freedom to conduct business, freedom of information, and protection of personal data.
In a procedure for preliminary ruling under Article 267 TFEU, the main question referred to the CJEU was whether the relevant European legislation in the field of intellectual property rights in the information society, considering the protection provided by such legislation of the applicable fundamental rights, should be interpreted to preclude an injunction against an ISP to introduce a system for filtering electronic communications (especially involving peer-to-peer software) to prevent file sharing that infringes copyrights.
While the protection of the right to intellectual property is enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union (the Charter), it should not be interpreted as an absolute right protected at any cost. According to CJEU case law (Case C-275/06 Promusicae  ECR I-271),by imposing measures to protect intellectual property rights, the national authorities must observe a fair balance between protecting copyrights and protecting fundamental rights of individuals affected by such measures.
Three fundamental rights threatened
The Court ruled that imposing an obligation on an ISP to install a system for filtering electronic communications to prevent file sharing that infringes copyrights threatens three fundamental rights granted by the Charter.
Freedom of the ISP to conduct business
The Court ruled that the injunction imposing an obligation on the ISP to install and maintain at its expense a complicated and costly computer system to monitor all electronic communications made through the network for an unlimited period of time so to protect the rights of the copyright holders limits the ISP's freedom to conduct business under Article 16 of the Charter. It also contradicts the conditions in Article 3(1) of the Enforcement Directive that measures to ensure the respect of intellectual property rights should not be unnecessarily complicated or costly.
Considering the above, the Court concluded that the injunction to install a filtering system violates the fair balance between the protection of rights enjoyed by copyright holders and the right of freedom to conduct business enjoyed by ISPs.
Freedom of ISP customers to protection of personal data
The Court also held that the filtering system involves an analysis of all communication content and identification of users' IP addresses from which allegedly unlawful content is distributed through the network. IP addresses are protected personal data because they allow users to be easily identified. Hence, imposing the injunction may infringe users' fundamental right to protection of personal data, safeguarded by Article 8 of the Charter.
Freedom of ISP customers to receive or impart information
The Court held moreover that the injunction may endanger the freedom of information provided for by Article 11 of the Charter as the filtering system might not adequately distinguish between content infringing copyrights and lawful content. It thus might block lawful communications, such as content representing a statutory exception to copyright, works in the public domain, or works posted online free of charge by their authors.
Conclusion: Injunction precluded
The Court concluded that the relevant European legislation in the fields of enforcement of intellectual property rights, copyright and electronic services in the information society, and the processing of personal data and the free movement of such data:
read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an internet service provider which requires it to install a system for filtering all electronic communications passing via its services, in particular those involving the use of peer-to-peer software.
The judgment is highly significant both legally and practically.
First, it is an excellent example of how the Charter has the same legally binding force as the European Union treaties since the Lisbon Treaty entered into force. It is a proof that the fundamental rights enshrined in the Charter are not just declarations craving for recognition, but a legal standard and an absolute legal measure of judicature.
Secondly, the judgment prevents the "privatisation" of the enforcement of intellectual property rights by internet providers. The responsibility to enforce intellectual property rights would have, to a great extent, been delegated to internet companies if the Court had allowed national authorities to impose the injunction against an ISP. The model promised a brighter future for the music and movie industries – especially after the judgment of 29 June 2007 of the President of the Tribunal de premiere instance, Brussels, ordering the ISP Scarlet to end copyright infringements by making it impossible for customers to send or receive files containing copyrighted music via peer-to-peer software. This model was also accepted and proclaimed through the Anti-Counterfeiting Trade Agreement – a global anti-piracy treaty that aims to set up a global intellectual property framework with its own governing body.
The future will also answer the question of whether this model will work outside the EU. But after the recent judgment of the CJEU, this now seems less probable and could be easily challenged using the CJEU's arguments, which should be accordingly applicable to most developed internet societies.
The judgment also saves costs for ISPs, who would have had to spend significant amounts installing and maintaining the filtering systems.
The parties likely not happy with the judgment are copyright holders and organisations for the collective management of copyrights and related rights. They will have to reconsider their piracy in internet fighting strategies and choose the appropriate legal instruments for their implementation.
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