In Case C-70/10 Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM), the ECJ has determined that an injunction by a national court which requires an ISP to install a filtering system preventing illegal downloads is not consistent with EU law and the limitations on intermediary liability in particular. Such an injunction does not comply with the prohibition on imposing a general monitoring obligation on such a provider, or with the requirement to strike a fair balance between, on the one hand, the right to intellectual property, and, on the other, the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information
This case has its origin in a dispute between the ISP Scarlet Extended SA and SABAM, the Belgian management company which is responsible for authorising the use by third parties of the musical works of authors, composers and editors.
In 2004, SABAM established that users of Scarlet’s services were downloading works in SABAM’s catalogue from the internet, without authorisation and without paying royalties, by means of peer-to-peer networks.
The President of the Tribunal de première instance de Bruxelles (Brussels Court of First Instance, Belgium) ordered Scarlet, on pain of a periodic penalty, to bring those copyright infringements to an end by making it impossible for its customers to send or receive in any way electronic files containing a musical work in SABAM’s repertoire by means of peer-to-peer software.
Scarlet appealed to the Cour d’appel de Bruxelles (Brussels Court of Appeal), claiming that the injunction failed to comply with EU law because it imposed on Scarlet, de facto, a general obligation to monitor communications on its network, something which was incompatible with the Directive on electronic commerce and with fundamental rights. The Cour d’appel then asked the ECJ whether EU law permits Member States to authorise a national court to order an ISP to install, on a general basis, as a preventive measure, exclusively at its expense and for an unlimited period, a system for filtering all electronic communications in order to identify illegal file downloads.
The ECJ points out, first of all, that holders of intellectual-property rights may apply for an injunction against intermediaries, such as ISPs, whose services are being used by a third party to infringe their rights. The rules for the operation of injunctions are a matter for national law. However, those national rules must respect the limitations arising from EU law, such as, in particular, the prohibition laid down in the E-Commerce Directive on electronic commerce under which national authorities must not adopt measures which would require an internet service provider to carry out general monitoring of the information that it transmits on its network. The ECJ ruled that the injunction in question would require Scarlet to actively monitor all the data relating to each of its customers in order to prevent any infringement of intellectual-property rights. It follows that the injunction would impose general monitoring, something which is incompatible with the E-Commerce Directive. Moreover, such an injunction would not respect the applicable fundamental rights.
It is true that the protection of the right to intellectual property is enshrined in the Charter of Fundamental Rights of the EU. There is, however, nothing whatsoever in the wording of the Charter or in ECJ case-law to suggest that that right is inviolable and must for that reason be absolutely protected.
In the present case, the injunction requiring the installation of a filtering system involves monitoring, in the interests of copyright holders, all electronic communications made through the network of the ISP concerned. That monitoring, moreover, is not limited in time. Such an injunction would thus result in a serious infringement of Scarlet’s freedom to conduct its business as it would require Scarlet to install a complicated, costly, permanent computer system at its own expense.
What is more, the effects of the injunction would not be limited to Scarlet, as the filtering system would also be liable to infringe the fundamental rights of its customers, namely their right to protection of their personal data and their right to receive or impart information, which are rights safeguarded by the Charter of Fundamental Rights of the EU. It is common ground, first, that the injunction would involve a systematic analysis of all content and the collection and identification of users’ IP addresses from which unlawful content on the network is sent. Those addresses are protected personal data. Secondly, the injunction could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications.
Consequently, the Court finds that, in adopting the injunction requiring Scarlet to install such a filtering system, the national court would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the right to receive or impart information, on the other.
Accordingly, the Court’s reply is that EU law precludes an injunction made against an ISP requiring it to install a system for filtering all electronic communications passing via its services which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period.
The full judgment is available here.
The question referred was as follows:
‘(1) Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and 2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that: ‘They [the national courts] may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’, to order an [ISP] to install, for all its customers, in abstracto and as a preventive measure, exclusively at the cost of that ISP and for an unlimited period, a system for filtering all electronic communications, both incoming and outgoing, passing via its services, in particular those involving the use of peer-to-peer software, in order to identify on its network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold rights, and subsequently to block the transfer of such files, either at the point at which they are requested or at which they are sent?
(2) If the answer to the [first] question … is in the affirmative, do those directives require a national court, called upon to give a ruling on an application for an injunction against an intermediary whose services are used by a third party to infringe a copyright, to apply the principle of proportionality when deciding on the effectiveness and dissuasive effect of the measure sought?’
The formal verbatim answers were:
it must be held that, in adopting the injunction requiring the ISP to install the contested filtering system, the national court concerned would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other.
…, the answer to the questions submitted is that Directives 2000/31, 2001/29, 2004/48, 95/46 and 2002/58, read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an ISP which requires it to install the contested filtering system.
