In Case C?484/14 Tobias McFadden v Sony Music Entertainment Germany GmbH the Court of Justice has been asked to consider a series of questions which Advocate General Szpunar summarises thus: Is a person who, in the course of business, operates a wireless local area network with Internet access that is accessible to the public free of charge providing an information society service within the meaning of the E-Commerce Directive (Directive 2000/31/EC)? To what extent may his liability be limited in respect of copyright infringements committed by third parties? May the operator of such a public Wi-Fi network be constrained by injunction to make access to the network secure by means of a password?
The case arises from a dispute between Tobias Mc Fadden and Sony Music Entertainment Germany GmbH concerning actions for damages and injunctive relief in connection with the making available for downloading of copyright-protected musical works via the public Wi-Fi network operated by Mr Mc Fadden.
Facts
Tobias Mc Fadden operates a business selling and renting lighting and sound systems near Munich, in which he offers a Wi-Fi network accessible to the public. In 2010, a musical work was unlawfully offered for downloading via that Internet connection. The Landgericht München I (Regional Court, Munich I, Germany), before which the proceedings between Sony and Mr Mc Fadden were brought, takes the view that he was not the actual party who infringed the copyright, but is minded to reach a finding of indirect liability on the ground that his Wi-Fi network had not been made secure. As it has some doubts as to whether the Directive on electronic commerce1 precludes such indirect liability, the Landgericht has referred a series of questions to the Court.
The Directive limits the liability of intermediate providers of mere conduit services for unlawful acts committed by a third party with respect to the information transmitted. That limitation of liability takes effect provided that three cumulative conditions are fulfilled: (i) the provider of the mere conduit service must not have initiated the transmission; (ii) he must not have selected the recipient of the transmission; and (iii) he must not have selected or modified the information contained in the transmission. The Landgericht München I believes these three exhaustive conditions are met in the case of Mr McFadden, but is uncertain as to whether Mr McFadden really is a provider for the purposes of the Directive.
The Opinion
Advocate General Szpunar first considered whether a ‘free Wi-Fi’ service fell within the scope of an ‘information society service’, for the purpose of Article 2(a) of the E-commerce Directive). This is particularly pertinent since the definition covers only services ‘normally provided for remuneration’: can a ‘free’ service be considered to be ‘for remuneration’.
The Advocate General has taken a pragmatic approach, opining that, where a service is offered in the course of a business, even if ‘merely ancillary’ to that business, it takes place in an ‘economic context’ (paras 41 and 42). This reasoning follows that of Papasavvas (C?291/13), which related to an online service which was funded through advertising revenue, rather than direct payments by users.
In the case at hand, the Wi-Fi service was operated to ‘draw the attention of customers of near-by shops and of passers-by to [the operator’s] business specialising in lighting and sound systems and to encourage them to visit his shop or his website’ (para 47). As such, even though offered without charge, McFadden’s open Wi-Fi service was an ‘information society service’ for the purposes of the E-commerce Directive.
Explicitly, the Advocate General opines that there ‘there is no need to consider whether the scope of Directive 2000/31 might also extend to the operation of such a network in circumstances where there is no other economic context.’ (para 50). Until there is an opinion or a ruling on this point, operators of free, open Wi-Fi might be well advised to link the provision of the service to an economic activity, although whether simply placing some advertising on a landing page, or using the SSID for advertising a service for remuneration would be sufficient, we’ll just have to wait and see.
Free Wi-Fi providers do not get off entirely, as the Advocate General opined that the protection of Article 12 does not prevent a rightsholder obtaining interim relief. However, the Advocate General did offer some useful comments on scope:
a.) costs: providers should not be liable for damages for copyright infringement (para 73), or ‘any other pecuniary claim that entails a finding of copyright infringement… such as a claim for the reimbursement of pre-litigation costs or court costs’ (para 74). Such an order could have ‘the same punitive effect’ as an order to pay damages, and could hinder the development of intermediary services. This is likely to be a very attractive position for those operators currently appealling the Cartier decision, in terms of where the cost burden should lie for implementing a blocking injunction.
b.) limits: an injunction imposed on a provider must be ‘aimed at bringing an infringement to an end or preventing a specific infringement’ (para 110). The CJEU was specifically asked about ‘the termination of the Internet connection, the password-protection of the Internet connection and the examination of all communications passing through that connection’. The latter option, of examination of all communications, would ‘clearly conflict’ with the prohibition on general monitoring (para 132). Password protection of the service and other similar approaches were also rejected for a number of reasons, including ‘potentially undermining the business model’ of companies offering free Wi-Fi as an additional service to customers (para 138).
Interestingly, at para 145, the Advocate General observed that a measure of imposing security ‘would not in itself be effective, and thus its appropriateness and proportionality remain open to question’: this might be a useful observation for those considering English rulings on blocking injunctions, and the extent to which efficacy of the block is, or is not, relevant to whether such a remedy should be awarded.
This is ‘only’ the opinion of the Advocate General, and we will need to see how the CJEU rules on this issue. However, at first blush, this seems to be a positive decision for Internet service providers and users, placing a greater emphasis on the rights of users and the rights of providers than English case law in this area.
With thanks to Neil Brown, Director, decoded:Legal, for the coverage of the Opinion.
