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Posted in International/EU Privacy

An injunction too far: The Court of Justice of the European Union (ECJ) rules out injunctions against ISPs that allow general filtering to prevent illegal downloading

By David Taylor, Partner, Paris

In what is both a highly anticipated and expected ruling issued on 24 November 2011, the Court of Justice of the European Union (the "ECJ") has held that under EU law, a national court cannot impose an injunction requiring an ISP to install a wide ranging filtering system in order to tackle illegal downloading since such an injunction is incompatible with EU law and the associated limitations on intermediary liability.

The ECJ judged that European directives on E-Commerce, Copyright Harmonisation, Enforcement of Intellectual Property Rights and Data Protection can prevent National Courts from imposing general filtering measures on internet service providers ("ISPs") to block illegal downloading using peer to peer ("P2P") networks.

The ECJ ruling follows a request from the Brussels Appeal Court which had before it a case brought by the Belgian collecting society SABAM (Société Belge des Auteurs, Compositeurs et éditeurs) against Belgian ISP Scarlet Extended ("Scarlet").

The original case goes back a number of years now. In 2004, SABAM discovered that subscribers of Scarlet were using the ISP’s services to illegally download, through P2P networks, protected works from its catalogue, without authorisation and without paying royalties.  SABAM thus requested that a Belgian Court issue an injunction against Scarlet forcing it to implement all necessary measures to block any such downloading or uploading of illegal files via P2P networks without authorisation.

On 29 June 2007, the Brussels Tribunal of First Instance agreed with SABAM and granted this injunction. Scarlet immediately lodged an appeal on the basis that the Court was in fact imposing an obligation to monitor on them and that as such it was incompatible with the E-Commerce directive and fundamental rights.

The Brussels Appeal Court  proceeded to ask the ECJ whether an injunction imposing such a filtering system was compliant with the provisions of various directives, namely the 2000 E-Commerce Directive[1], the 2001 Directive for Copyright harmonisation[2], the 2004 Directive on the Enforcement of Intellectual Property Rights[3], the 1995 Directive on Data Protection[4] and the 2002 Directive on Data Protection in the field of Electronic Communications[5].

In essence the Brussels Appeal Court sought guidance as to whether these directives could be interpreted as allowing a national court to order an ISP to implement a general filtering system as a preventive measure, at its own cost and for an indefinite period, thereby monitoring all electronic communications across its network between all its subscribers.

The ECJ found that the system as described would require the ISP in question to engage in an active observation of the entirety of the data traffic on its network and that a ruling imposing such an obligation would constitute a breach of article 15 of the 2000 E-Commerce directive which prohibits European Union Member States from imposing general monitoring obligations on ISPs.

In addition to this analysis, the ECJ underlined that whilst intellectual property rights had to be protected as part of the property right established by the Charter of Fundamental Rights of the European Union, a balance had to be struck between this and the preservation of other fundamental rights.

In this respect, the Court found that the implementation of a filtering system similar to the one requested by SABAM would restrict the freedom of the ISP concerned to conduct its business, and that the immense complexity and costs associated with the implementation of the system contradicted the provisions of the Directive on the Enforcement of Intellectual Property Rights.  In addition the ECJ also held that the effect would not be limited to the ISP but could also affect the fundamental rights of internet users’ rights namely their right to the protection of their personal data and right to receive or impart information and communicate freely since the system would, in all likelihood, not allow for the necessary level of granularity sufficient to distinguish between files exchanged legally and illegally, catching in its net both categories of files, regardless of their status. The Court emphasized that users’ freedom of expression rights were affected only insofar as the system might block lawful communications, such as exchanges of copyright-protected works that are legal under a statutory exception to copyright.  Right holders will applaud this decision for indirectly confirming that illegal file transfers are in no way protected by the fundamental right to freedom of expression.  While this principle seems obvious, it is often overlooked in the net neutrality debate.

Privacy law observers will be disappointed by how little attention the court pays to privacy law. The court simply states that users’ privacy rights will be affected, and then moves on to discuss freedom of expression.  One of the most complex issues in the fight against illegal content is how to balance potential infringements of data protection and privacy rights against other fundamental rights such as the protection of property or the protection of human dignity.  A balance is possible, as the Court previously said in the Promusicae case.  But the Court here provides no guidance on how the balance should be struck.

Observers will also be disappointed that the Court did not address the fundamental defect raised by the Advocate General, ie. the absence in Belgium of a specific law targeting this kind of filtering.  According to the Advocate General, the absence of a specific law constitutes a fatal flaw in the Belgium system, and made it unnecessary to move on to the balancing test.

The decision is an important one as it clearly sets the principles applicable to the implementation of filtering measures in accordance with European legislation. In this respect, it underlines the impossibility for national legislators and jurisdictions to impose general rules or injunctions on ISPs to monitor the electronic communications traffic which they convey.  As such rights owners cannot necessarily look towards ISPs to provide a blanket against piracy – and indeed many would say this was clearly the intention of the E-Commerce Directive back in 2000.  Many experts recognize the limitations of ISP filtering[6], and policy makers[7] increasingly want to involve a variety of Internet intermediaries, including ISPs, payment service providers, Internet advertising networks, Internet addressing firms and search engines in the fight against illegal content online.

While the SABAM decision can be interpreted as a step forward in favour of "net neutrality", it should still be noted that the ECJ does not rule out all types of filtering systems in principle. Thus it is not the end of the story for rights owners and indeed, it appears that certain filtering systems, if clearly defined and limited in time and in scope, could well be regarded as compliant with European legislation.  Thus rights owners can and will continue to apply for and be granted injunctions under national law against intermediaries, such as ISPs, where their services are being misused by third parties to infringe.  However, any such injunctions clearly must comply with and respect the limitations arising under EU law.  Thus we can expect to see further litigation until we have clarity on the acceptability, scope and extent of filtering and monitoring in the EU.

The full judgment is available here