European Court of Justice rules on ISP injunction

This article was included in the winter 2011/12 issue of snIPpets - the intellectual property newsletter.

The Court of Justice of the European Union ("CJEU") has issued a landmark ruling clarifying the scope of an injunction that can be granted against an ISP whose service is being used by third parties to infringe copyright.  

Impact of the ruling

The ruling makes clear that such injunctions must be proportionate and not unduly costly.  As such, it will be welcomed by internet intermediaries.  Rights-holders will glean from the CJEU's ruling and the UK High Court decision earlier this year in Twentieth Century Fox v BT.  (reported here) that the chances of success in obtaining an injunction against an ISP hinge on the order sought being:

• Targeted.  The courts are unlikely to grant an order that might result in the disruption of a significant amount of lawful internet traffic
• Specific.  The courts will not order an ISP to actively monitor all data of all of its customers carried over the ISP's service
• Limited in time, or with an option for the parties to return to court if there is a change of circumstances
• Simple and not costly to implement

Facts

Belgian collecting society SABAM sought and won an injunction against internet service provider, Scarlet Extended.  Scarlet's service was being used by internet users for illegal P2P file sharing of copyright works administered by SABAM.  The injunction required Scarlet to install and implement a system to filter all communications carried over its service in order to indentify files containing works in SABAM's catalogue.  Scarlet would then have to identify files that were being shared unlawfully and block them.  The injunction was to run indefinitely and Scarlet was to bear all the implementation costs.  Scarlet appealed, arguing that the injunction was contrary to European law; and in its ruling, the CJEU agrees. 

The issues

Cost and complexity

Member States have to ensure that rights-holders can apply for an injunction against an internet intermediary if that intermediary's service is being used by a third party to infringe another's intellectual property rights (Article 3 Information Society Directive and Article 11 IP Enforcement Directive).  However, any measures imposed on must not be unnecessarily complicated or costly (Article 3, IP Enforcement Directive).  In this case, the filtering and blocking system failed to meet this requirement.  .

No requirement to undertake "general" monitoring

The Court also ruled that the injunction fell foul of a provision in the Ecommerce Directive that prohibits Member States from imposing a “general” obligation on internet intermediaries to monitor the information transmitted over their networks (Article 15 Ecommerce Directive).  An obligation to monitor traffic will be "general" if it requires active monitoring of all data of all customers of the service provider (L'Oreal v eBay (C-324-09)).  The disputed injunction fell squarely into this category.

Fundamental rights

Ordering an ISP to filter and block internet traffic inevitably brings the fundamental rights of different parties into conflict.  The CJEU has recognised that copyright is a property right protected under the European Convention of Human Rights ("European Convention") and under the Charter of Fundamental Rights of the European Union (the "Charter").  However, the courts must weigh up competing fundamental rights and strike a fair balance, for example,  between property rights, users' rights to freedom of expression (which include the right to send and receive information), and privacy rights.  The CJEU held that the disputed injunction failed to strike a fair balance.  Implementing the filtering and blocking system could lead to legitimate content being blocked, particularly since copyright exceptions and other provisions for lawful use of copyright material vary from one Member State to another.  The filtering system would also have impinged on users' privacy since IP addresses (which are personal data) would be identified and associated with the distribution of certain content. 

The CJEU also ruled that the disputed injunction restricted Scarlet's freedom to conduct a business.  That right is contained in Article 16 of the European Charter.  However, the status of the European Charter in the UK is uncertain.  Until the CJEU rules on its application (an Advocate Generale Opinion was issued on 22 September this year, and a preliminary ruling is expected sometime in 2012), it is unclear whether a UK-based ISP would be able to rely on this right, particularly since there is no equivalent right in the European Convention.

Comment: 

The ruling sets out clearly the factors that national courts must take into account when deciding whether to grant an injunction against an ISP.  The contrast with the outcome in the Newzbin2 decision is stark and serves to highlight the unique circumstances in that case.  In Newzbin2, BT was already using the very same site-blocking technology that formed part of the court order, so extending its application was not complicated or costly.  The system was automated and user communications were not subject to detailed inspection.  Newzbin.com was dedicated to infringing activity, so there was little chance that blocking access would prevent users from accessing legitimate content.  In these circumstances, the court had little difficulty finding that the property rights of the film studios outweighed the freedom of expression and privacy rights of Newzbin.com's users.  Tackling online infringement through the courts is clearly more challenging when the infringing activity is widely distributed and mixed-in with legitimate use.

Emily Parris, Senior Associate (PSL), IP and Technology, Technology and Outsourcing at Fieldfisher.