Electronic copy available at: http://ssrn.com/abstract=2015318

Current Intelligence

Copyright

B ISPs cannot be ordered to adopt generaland preventive filtering systems

Case C-70/10 Scarlet Extended SA v SABAM—Societe belgedes auteurs, compositeurs et editeurs SCRL, Court of Justiceof the European Union (ECJ), 24 November 2011

In Scarlet Extended SA v SABAM, the ECJ held that EUlaw precludes the imposition of an injunction by a na-tional court which imposes on internet service provi-ders (ISPs) the adoption, at their expense and for anunlimited period, of a general and preventive filteringsystem with a view to preventing the illegal sharingof electronic files containing musical, cinematographic,or audiovisual works. In reaching its decision, thecourt stressed the need to strike a fair balancebetween copyright protection and the right of ISPs toconduct business freely as well as the right of their cus-tomers to protect personal data and receive or impartinformation.

Legal contextIn this reference for a preliminary ruling, the ECJ wasasked to assess the lawfulness under EU law of injunctionsagainst ISPs requiring them to apply filtering tools aimedat detecting and blocking the transfer of files which al-legedly infringe copyright. In particular, the ECJ had beenasked to interpret certain provisions of, inter alia, the fol-lowing directives.

(i) Directive 2000/31 on certain legal aspects of infor-mation society services (‘E-Commerce Directive’);

(ii) Directive 2001/29 on the harmonization of certainaspects of copyright and related rights in the infor-mation society (‘Info-Society Directive’);

(iii) Directive 2004/48 on the enforcement of IP rights(‘Enforcement Directive’).

FactsThe proceedings were brought before the Court of Brus-sels (Tribunal de premiere instance) in 2004 by the col-lecting society SABAM against the ISP Scarlet, whichprovided its customers with access to the internet(without offering other services such as downloading orfile-sharing-related services). SABAM claimed that Scar-let’s customers infringed copyright by engaging in peer-to-peer file sharing and asked the national court to order

Scarlet to bring such infringements to an end by blockingor making it impossible for its customers to send orreceive in any way such files using peer-to-peer software.SABAM also asked that Scarlet inform it about the detailsof the measures it would apply in order to comply withthe order. In June 2007, the Court of Brussels orderedScarlet to terminate the infringements, imposing certainfilters to prevent users from sharing and downloadingfiles. Scarlet appealed to the Court of Appeal of Brussels,arguing that the requested measure was technicallyimpossible and would also impose a general obligation tomonitor communications on its network, which wasat odds with the E-Commerce Directive and severalfundamental rights. The Court of Appeal referred the caseto the ECJ.

AnalysisThe ECJ was asked to verify whether under EU law ISPs canbe subject to an injunction imposing the adoption of a pre-ventative monitoring system requiring them to apply filter-ing tools with a view to detecting and blocking copyrightinfringement. In principle, Article 8(3) of the Info-SocietyDirective allows ‘injunctions against intermediaries whoseservices are used by a third party to infringe a copyright orrelated right’. The monitoring system in this case, however,was (i) referred to all electronic communications passing viathe ISP’s services, in particular those involving the use ofpeer-to-peer software; (ii) applied indiscriminately to all itscustomers; (iii) a preventive measure; (iv) exclusively at theISP’s expense; and (v) for an unlimited period.

The court first noted that the lawfulness of such asystem should be assessed taking into consideration theprinciple laid down in Article 15 of the E-Commerce Dir-ective. The latter provision states that ISPs which offerinternet-related services are not required to monitor theinformation which they store or transmit, nor are theyunder a general obligation actively to seek facts or cir-cumstances indicating unlawful activities. The court con-sidered that the monitoring system in question infringedthis provision of the E-Commerce Directive, as it wouldrequire the ISP to (i) identify the peer-to-peer files withinall the electronic communications of all its customers; (ii)identify the allegedly infringing files; and (iii) determinewhich files are illegally transferred and block them. Suchpreventative monitoring, the court emphasized, wouldrequire ISPs proactively to check all electronic communi-cations transmitted on their network, adding that thismechanism was not compliant with Article 3(1) of theEnforcement Directive, according to which the measures,

Journal of Intellectual Property Law & Practice, 2012 1 of 2

# The Author (2012). Published by Oxford University Press. All rights reserved.

Jnl. Intellectual Property Law and Practice Advance Access published March 2, 2012 by guest on M

arch 3, 2012http://jiplp.oxfordjournals.org/

Dow

nloaded from

Electronic copy available at: http://ssrn.com/abstract=2015318

procedures, and remedies necessary to ensure the enforce-ment of IP rights (IPRs) should be fair and equitable.

The court then took pains to stress the need to strike afair balance between copyright protection and other fun-damental rights protected under EU law. In this regard,the court explicitly referred to its finding in Promusicae(Case C-275/06), where it held that ‘the protection of thefundamental right to property, which includes the rightslinked to intellectual property, must be balanced againstthe protection of other fundamental rights’. Indeed, as thecourt said, IPRs are protected under Article 17(2) of theCharter of Fundamental Rights, but such protection isnot absolute and should be subject to limitations undercertain circumstances.

In particular, the court noted that the order to installthe contested filtering system would limit the freedom ofISPs to conduct their business, which is protected at EUlevel by Article 16 of the Charter of Fundamental Rights.As a matter of fact, such injunction would require ISPs toinstall a complicated, costly, and permanent computersystem, which would have a negative impact on ISPs’overall economic activity. This would also be contrary toArticle 3(1) of the Enforcement Directive, according towhich the required measures should not be unnecessarilycomplicated or costly.

The court also considered the principle of proportional-ity and the need to strike a fair balance between copyrightprotection and the right of ISPs’ customers to have theirconfidential data protected as well as to receive or impartinformation (the right to privacy of communication andthe right to protection of personal data are protected byArticles 7 and 8 of the EU Charter of FundamentalRights, and the free speech right by Article 11). The courtthus stated that an injunction requiring ISPs to install thedescribed filtering system would break this balance.Indeed, that system would involve a systematic analysis ofall contents and the collection and identification of users’IP addresses used to exchange the files. Those addresses,the court recalled, are protected personal data as theyallow those users to be precisely identified. Moreover, theISPs’ customers’ freedom to receive and impart informa-tion could also be potentially jeopardized as the filtermechanism in question might not adequately distinguishbetween unlawful content and lawful content, with theresult that its implementation could lead to the block oflawful communications.

Practical significanceThis decision stresses the need to strike a fair balancebetween several rights and interests, ruling that copyrightdoes not have a superior rank vis-a-vis the right of ISPsto freely conduct business as well as the right of their cus-

tomers to protect personal data and receive or impart in-formation.

The court’s findings constitute a victory for ISPs, whichcannot be forced by copyright owners to install cumber-some and costly filtering mechanisms aimed at detectingand stopping copyright infringements committed by theirusers (though ISPs are not prevented from voluntarilyintroducing a filtering system as a consequence of anagreement struck with right holders). The decision hasalso been welcomed by digital freedom organizations andhailed as being capable of boosting free speech online: intheir eyes, this decision confirms that invasive and generalmonitoring of internet users’ activities is unfeasible andunacceptable. The court’s ruling stresses instead the needand relevance of a neutral and open internet environmentwhich respects fundamental rights.

This decision seems to be in line with the criticismsexpressed on the other side of the Atlantic by several com-mentators vis-a-vis the recently proposed Stopping OnlinePiracy Act (SOPA), which was introduced in the USHouse of Representatives on 26 October 2011 (alsoknown as Enforcing and Protecting American RightsAgainst Sites Intent on Theft and Exploitation Act). Thisbill would compel ISPs to adopt filters to prevent theircustomers reaching pirate websites easily. It is believed byseveral commentators that the bill’s vague wording mightleave open the door to intrusive forms of filtering, whichwould multiply costs and performance problems for ISPsand expose their users to a violation of their privacy (seeThe Economist, 26 November 2011).

It should, however, be borne in mind that in Sabam vScarlet, the ECJ did not prohibit per se the adoption ofother (and future) blocking and filtering measures whichrespect the fundamental rights at issue. This echoes thereasoning adopted by the AG in his opinion, in which hehad stressed that any law interfering with the exercise ofthe fundamental rights in question would be allowed if itis adopted on a national legal basis and is ‘accessible, clearand predictable’ as to the nature and scope of the mea-sures applicable.

This ruling also reflects the general view shared by theECJ in previous case law, ie that the duty to detect and stopIP infringements in the online world is exclusively placedupon IPRs owners, as it occurs in the offline environment.

Enrico BonadioCity University LondonEmail: enrico.bonadio.1@city.ac.ukMauro SantoAssociate, M&R Europe, MilanEmail: mauro.santo@mrelaw.com

doi:10.1093/jiplp/jps004

Journal of Intellectual Property Law & Practice, 20122 of 2 CURRENT INTELLIGENCE

by guest on March 3, 2012

http://jiplp.oxfordjournals.org/D

ownloaded from