Scarlet Extended SA (Scarlet) v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM), Case C-70/10 (24 November 2011)
An ISP cannot be ordered by a court to install a general filtering system to prevent illegal file-sharing. According to the Court of Justice of the European Union (CJEU), such an order would contravene the fundamental rights of both the internet service provider and its customers.
SABAM is a Belgian collecting society representing authors, composers and publishers of musical works, and authorises the use of their copyright works by third parties. Internet users using Scarlet, a Belgian ISP, were downloading works in SABAM’s catalogue using peer-2-peer (P2P) file-sharing software, without authorisation and without paying royalties.
On 24 June 2004, SABAM brought proceedings against Scarlet before the Tribunal of First Instance in Brussels, claiming that Scarlet, as ISP, was best placed to take measures to bring an end to the copyright infringements. SABAM sought a declaration that the copyright in musical works in its repertoire had been infringed through the use of Scarlet’s services. SABAM also sought an order requiring Scarlet to prevent such infringements by blocking or filtering P2P file-sharing sites. Finally, SABAM asked for details of the measures that Scarlet would be taking in applying the order and periodic penalties if Scarlet failed to provide information or to implement its policies.
In a judgment on 26 November 2004, the Tribunal found that copyright had been infringed, but appointed an expert before ruling on the application for an order for cessation. The expert was asked to investigate whether technical filtering solutions were feasible, the costs of those measures and whether there were other ways of monitoring the use of P2P file-sharing. The expert concluded that, despite many technical obstacles, the feasibility of filtering the file-sharing sites could not be ruled out.
In a later judgment on 29 June 2007, the Tribunal ordered Scarlet to install filtering technologies within six months, so as to make it impossible for users to send or receive files containing musical works included in SABAM’s catalogues. Scarlet would be liable for penalties of around €2,500 for each day that it failed to do so.
Scarlet appealed to the Belgian Court of Appeal in 2008, claiming that it was impossible to comply with the injunction. Scarlet pointed out that the effectiveness of the filtering system had not been proven, and that the installation of the equipment faced numerous practical obstacles. Any attempt to block files would fail because there were several P2P software products available that made it impossible for third parties to check their content.
Scarlet also argued that the injunction was contrary to the E-commerce Directive,[i] because it would impose a general de facto obligation to monitor communications on its network, and that installing a filtering system would be in breach of EU law on the protection of personal data and privacy of communications.
In light of these arguments, the Belgian Court of Appeal stayed the case and referred two questions to the CJEU for a preliminary ruling:
1 Is a requirement on an ISP to implement traffic filtering consistent with EU legislation?
2 If so, does a court need to impose such filtering obligations in accordance with a proportionality test?
The CJEU noted that, under the Copyright Directive and IP Enforcement Directive,[ii] rights-holders may apply for an injunction against intermediaries, such as ISPs, whose services are being used by a third party to infringe their rights. The CJEU found that, under case law, national courts have jurisdiction to allow rights-holders take preventative measures against further infringements, and the conditions to be met and procedures to be followed are matters for national law.[iii]
The CJEU stressed, however, that the application of these national laws by the national courts must also observe the limitations arising from those Directives and must not affect the requirements of the E-commerce Directive, nor fundamental rights under EU law.
Article 15(1) of the E-commerce Directive prohibits national authorities from adopting measures that would require an ISP to carry out general monitoring of the information that it transmits on its network. The CJEU found that the filtering system to be implemented under the injunction at issue would require that the ISP:
(a) identify, within all its customers’ electronic communications, the files relating to P2P traffic;(b) identify, within that traffic, the files containing works in which holders of intellectual property rights claim to hold rights;(c) determine which of those files are being shared unlawfully; and (d) block file-sharing that it considers to be unlawful.
The CJEU considered that such preventative monitoring would require active observation of all electronic communications on the network of the ISP concerned, and would encompass all information to be transmitted and all customers using that network. The injunction would therefore require the ISP to carry out general monitoring, which is prohibited under the E-commerce Directive.
Charter of Fundamental Rights
The injunction protected copyright, which is enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union. The CJEU noted, however, that there is nothing in the Charter (or in any case law) to suggest that copyright is inviolable. Following the Promusicae case,[iv] a fair balance must be struck between (a) the protection of copyright and (b) the fundamental rights of persons affected by such measures.
Here, copyright had to be balanced with the ISP’s freedom to conduct business under Article 16 of the Charter. The injunction at issue would result in a serious infringement of that freedom (as well as the requirements of the IP Enforcement Directive), as it would require the ISP to install a complicated computer system at its sole expense and for an unlimited period of time.
The CJEU also found that installing a filtering system would infringe the fundamental rights of the ISP’s customers. First, the filtering system would identify users’ IP addresses (i.e. involving processing of protected personal data), contrary to the customers’ right to protection of their personal data.[v] Secondly, the system might fail to distinguish adequately between lawful and unlawful content, and so could lead to the blocking of lawful communications of information, contrary to the customers’ freedom to receive or impart information.[vi]
The CJEU did not comment on the Advocate General’s earlier observation that Charter rights can be restricted where allowed under national laws that are “accessible, clear and predictable” – presumably because, on the facts of the case, the Belgian laws in question did not provide for any clear derogation from the Charter rights.
The CJEU concluded that, when it read the relevant Directives and case law together and construed them in light of the Charter, they must be interpreted to preclude an injunction made against an ISP requiring it to install the contested filtering system.
On the face of it, the CJEU’s judgment goes against the grain of the various “three strikes” or “graduated response” laws being introduced in Europe – whether already implemented (as in France under the “HADOPI” law) or due to be (as in the UK under the Digital Economy Act 2010). As such, the decision is likely to give ISPs ammunition in their lobbying of the UK Parliament to amend the legislation.
It seems likely, at any rate, that a UK court would decline to grant a general filtering injunction of the type sought by SABAM. While the UK secured an opt-out from the enforceability of the Charter in 2007, UK laws also involve a balancing act between property rights, on the one hand, and the freedom of expression and communication and the right to respect for private life, on the other. Moreover, the e-commerce and e-privacy considerations apply equally in the UK.
That is not to say that the online copyright enforcement regime under the Digital Economy Act is necessarily susceptible to legal challenge. While the Act is currently subject to an appeal on a judicial review application by BT and TalkTalk, the High Court had previously found the regime (including the infringer lists and potential technical measures to be put in place by the major ISPs) to be compatible with e-commerce, e-privacy and human-rights laws.
Nor do these considerations prevent a UK ISP from being ordered to block a particular website, as seen in the recent Newzbin 2 decision,[vii] in which the High Court required BT to implement blocking measures in relation to a specific site �� even if those involved relatively modest cost to BT and were, in effect, restricted to re-routing traffic away from the site.
In the meantime, wholesale monitoring of internet traffic will continue to fall foul of EU legislation. This will reassure ISPs; but for rights-holders, an effective legislative solution to online piracy remains elusive. This is no different in other legislatures: a case in point is the recent US debate on the proposed Stop Internet Piracy Act (SOPA) and the Protect IP Act (PIPA). In protest at those proposals, eBay, Google and leading internet companies signed an open letter stating their belief that the bills as drafted would expose law-abiding US internet and technology companies to new and uncertain liabilities.
Fundamentally, it is the same debate about fundamental rights that are hard to reconcile – both in principle and in practice. One thing is apparent: for legislatures and courts alike, the balancing of copyright with networks’ commercial interests and customers’ freedoms will remain a hot topic for the foreseeable future.
Article written for Entertainment Law Review.