Infringement of copyright and other intellectual property rights on the Internet is universally recognised as a widespread problem that is proving difficult to solve. The long running dispute between SABAM (the Belgian Society of Authors, Composers, and Publishers) and the Internet Service Provider, Tiscali, has polarised opinion and crystallised the issues on the topic of whether or not ISPs should be liable for infringement of intellectual property rights committed by users of their services and whether national courts can require them to take technical measures, such as filtering, to prevent future infringement.
‘Mere conduits’ not Liable?
Before this case was heard in the Belgian court of first instance in 2007, it was widely believed that Article 12 of the E-Commerce Directive (2000/31/EC) protected ISPs from liability in relation to information transmitted on their networks, provided that their role was limited to that of a ‘mere conduit’. Furthermore Article 15 of the same Directive, which states that Member States must not impose a general obligation on service providers to monitor the information they transmit, was regarded as a key legislative safeguard, preventing ISPs from being required to police the Internet or their users.
Technical solutions to prevent infringement
Nevertheless in May 2007, the District Court of Brussels accepted SABAM’s request for an injunction against Tiscali, and ordered that Tiscali must implement software which would make it impossible for its subscribers to send or receive electronic files via peer-to-peer technology containing music licensed to SABAM.
The Court took advice from a technical expert and concluded that one of the filtering solutions offered could identify protected material and music files that were registered on a recognised database as protected by copyright and that it would not be disproportionately expensive to implement such a system.
The Court held that an effective technical measure existed that could prevent the copyright infringement complained of and, even though some legitimate use would be inadvertently blocked, such an effect was insufficient to prevent the grant of an injunction as it would not amount to an ‘abuse of the claimant’s rights’.
Application of E-Commerce Directive Safeguards
Surprisingly, the Court took the view that the provisions of the E-Commerce Directive did not prevent it from granting an injunction requiring the ISP to filter all communications on its network. The Court’s reasoning was as follows:
– the E-Commerce Directive does not actually affect the power of a judge granting injunctive relief in court proceedings;
– in any case, a requirement to use ‘technical instruments’ to block and filter certain information would not constitute an obligation on Tiscali to ‘monitor’ its network within the meaning of the E-Commerce Directive.
The Court was also moved by the fact that the technology would not involve the processing of personal information and that Tiscali’s terms and conditions reserved the right to impose sanctions on customers who use the service to infringe copyright.
ECJ Referral
On 28 January 2010 the Belgian Court of Appeal considered the appeal and referred two questions to the ECJ on the issues of whether a national court is entitled to impose an obligation on an ISP to filter its Internet traffic, and, if so, to what extent the national court has to consider the proportionality of the measure.
The full questions referred to the ECJ (translated from French) are as follows:
‘1. Do Directives 2001/29 [on copyright in the information society] and 2004/48 [on the enforcement of IP rights], read alongside Directives 95/46 [on the protection of individuals in relation to the processing of personal data], 2000/31[on electronic commerce] and 2002/58 [on processing of personal data and the protection of privacy in electronic communications] and interpreted in light of Articles 8 and 10 of the European Convention on Human Rights, allow Member States to authorise a national court, to a apply a national legal provisions which enables it “to grant an injunction against intermediaries whose services are used by a third party to infringe copyright or other similar right” to order an Internet Service Provider (ISP) to put in place for all its customers, at the ISP’s expense and on an ongoing basis, a filtering system for all electronic communications in particular P2P software, whether they are being received or being sent out, in order to identify the circulation of electronic files concerning a musical, cinematic or audio-visual work, across the ISP’s network, over which the claimant aims to preserve his rights, to prevent the transfer/dissemination of the work, whether it is at the request stage or at the point of sending/ dispatch?
2. Should the answer to the above question be affirmative, would these Directives mean that a domestic judge, who presides over an application for an injunction against an intermediary whose services are used by a third party to infringe copyright, should apply the principle of proportionality when he rules on how efficient a solution and how dissuasive the proposed measure would be?’
ECJ Guidance Awaited
The answers to the questions posed to the ECJ will be of considerable interest and importance to ISPs, rights holders and the general public at large. There are a number of relevant Directives in this field, which seek to balance the conflicting priorities of protecting intellectual property rights from unlawful exploitation, enabling communications service providers to provide access to services without fear of liability and protecting the rights of consumers to access such services. How these conflicting interests can be reconciled and how the relevant Directives should be applied is likely to shape the manner of protection of intellectual property rights on the Internet for years to come. The SABAM v Tiscali case also raises the possibility that national courts may have greater power and scope to grant significant injunctions and require ISPs to apply technical measures to prevent infringement than was previously considered.
Proportionality
The second question referred to the ECJ is also telling. The principle of proportionality appears to be an enduring and pervasive one. In the case of Productores de Musica de Espana v Telefonica de Espana SAU (Case C-275/06) in January 2008, the European Court of Justice ruled that, in relation to the protection of intellectual property rights in the information society, ‘Member States must not only interpret their national law in a manner consistent with the directives but also make sure that they do not rely on an interpretation of them which could be in conflict with those fundamental rights or with other general principles of Community law, such as the principle of proportionality’. This new reference to the ECJ is a clear invitation to confirm whether or not national courts, in addition to Member States, must also apply this principle.
If the principle of proportionality is applicable to the decisions of national courts, it still remains to be seen how measures designed to protect rights holders, but seen by opponents as draconian, can be objectively justified as proportionate. In the UK, Parliament has been grappling with the issue of proportionality as it considers legislation in the form of the Digital Economy Bill, which, at the time of writing, includes proposals which would allow the Secretary of State to specify circumstances in which ISPs can impose technical measures on subscribers.
Centralised Enforcement Actions
The case also demonstrates an increasing trend in attempts to centralise enforcement of IP rights, with rights holders seeking to pursue intermediaries/enablers rather than innumerable individual infringers. Similar issues in respect of trade marks arose in the case of L’Oreal v eBay and others, which referred questions to the ECJ as to whether it was possible to obtain an injunction against eBay to prevent infringement of a particular trade mark in general on the site, rather than in respect of a specific act of infringement, with eBay seeking to rely on the ‘mere hosting’ defence to liability in the E-Commerce Directive.
The Debate Continues
The ECJ’s views are keenly anticipated. While the answers to these questions could herald a sea-change in the responsibilities of intermediary service providers for the actions of their users, an ECJ judgment in SABAM v Tiscali may also precipitate heated debates as to what measures ought rightly to be considered proportionate in any particular set of circumstances.
If the injunctions considered in this case are ruled to be permissible, then rights holders, and bodies such as SABAM, will hope that action through the courts will yield wide-ranging and effective technical measures, with the effect of greatly reducing P2P file-sharing, and we may see a torrent of actions in the courts seeking similar injunctions. Quite what those solutions are and how effective they may be is yet to be determined.
Such a scenario might entail ISPs being asked to invest a great deal of time and money in ensuring that filtering systems are sufficient, for the benefit of rights holders, but with negative consequences for their relations with customers, who may not appreciate having their activities controlled in such a manner and having to foot the bill as increased operating costs are passed on to them. Customers may further object when, inevitably, the software used blocks the legitimate transfer of non-rights protected material. As the software lauded in Sabam v Tiscali relies on a database of recorded material, opponents will argue that this heralds a covert creep towards the registration of copyright. Use of such databases will also be subject to their accuracy and the efforts taken by rights holders or collecting societies to ensure they are up to date; over a long period, a disconnect could develop between the information on such databases and the true legal position in respect of the works on them.
Whatever the outcome, one thing is certain: the battle between rights holders and infringers of their rights will rage on, with service providers and intermediaries uncomfortably wedged between them.
Chris Watson is a partner and head of the telecommunications practice at CMS Cameron McKenna LLP. Tom Scourfield is a senior associate in the intellectual property team. Scott Fairbairn is an associate in the intellectual property team.
