Victory! We have victory!

For more than a year, those of us interested in intermediary liability have been waiting for an important Belgian case, Saban v Tiscali (now Sabam v Scarlet). This has been a long-running battle between Sabam, the Belgian rights management agency representing authors, composers and editors of musical works, and Tiscali, later Scarlet, a large internet service provider in that country. In 2004, Sabam sued Tiscali to try to put in place a large-scale filtering system that would try to catch copyright infringers using peer-to-peer technologies. The case made its way through the Belgian court system until it reached the Appeals Court of Brussels, who decided last year to forward the case to the European Court of Justice posing the following questions:

“(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?”

In other words, the Belgian court sought guidance on whether it would be possible for a national court to order putting in place by injunction a widespread and indiscriminate filtering system which would require constant monitoring at the expense of the ISP, as it might violate fundamental rights and freedoms enshrined in various directives and conventions, and if so, if such relief would have to respect principles of proportionality. The Belgian court was clearly troubled by the implications of enacting such a system without a substantive ruling, and that copyright owners would be able to impose great costs to ISPs simply by asking it via injunctive relief.

The ECJ has issued its ruling answering the first question in the negative, which is a great victory for the principle of limitation of intermediary liability. From the ruling, it was clear from the start that the ECJ was not amenable to rule in favour of indiscriminate monitoring as it would go against Art. 15 of the Electronic Commerce Directive 2000/31, which states unequivocally that Member States shall not require intermediaries “to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating unlawful activity”. Any filtering system would be in violation of this rule, as it would require the following acts from the ISP:

“– first, that the ISP identify, within all of the electronic communications of all its customers, the files relating to peer-to-peer traffic;
– secondly, that it identify, within that traffic, the files containing works in respect of which holders of intellectual-property rights claim to hold rights;
– thirdly, that it determine which of those files are being shared unlawfully; and
– fourthly, that it block file sharing that it considers to be unlawful.”

Moreover, the court stated that rights protected under intellectual property legislation are indeed enshrined in the Charter of Fundamental Rights of the European Union, but that these rights are not absolute, and must be read in conjunction with other legislation. Specifically citing the Promusicae case, the court commented that the protection of IP rights “must be balanced against the protection of other fundamental rights”, and that “in the context of measures adopted to protect copyright holders, national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.” I know, incendiary stuff, is it not?

The ECJ then considered that there are fundamental rights that would be affected by the filtering system proposed by Sabam, namely the freedom to conduct business by the ISPs because the system would be costly, and that cost would be footed just by them. To support this view they stated that Art. 3 of the Enforcement of IP Directive 2004/48 requires that IP remedies “shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays”.  For users, the filtering system would affect their “right to protection of their personal data and their freedom to receive or impart information”, protected by Arts. 8 and 11 of the Charter of Fundamental Rights.

Finally, the ECJ opined that there were some serious procedural problems with a system that would be enacted by injunction for works that were not even created at the time that the injunction was issued.

Nonetheless, specific injunctions are still allowed, what the ECJ has ruled against is a blanket filtering system suggested.The court then decided the following:

“[The cited Directives] 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 internet service provider which requires it to install a system for filtering

–        all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;
–        which applies indiscriminately to all its customers;
–        as a preventive measure;
–        exclusively at its expense; and
–        for an unlimited period,

which is capable of identifying on that provider’s network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold intellectual-property rights, with a view to blocking the transfer of files the sharing of which infringes copyright.”

Excellent ruling! It is measured and respects the balance in IP enforcement. It is solidly supported by existing legislation. It is sensible. Why do I feel like there’s a monster lurking around the corner? Oh yes, that must be SOPA.


TJ · November 24, 2011 at 12:26 am

Great post. Some supplemental thoughts:

* The references to privacy and freedom of expression are important – recent ECJ caselaw has increasingly recognised the significance of these principles in the online environment and by declining to rule on the narrower E-Commerce Directive ground the ECJ is sending a signal regarding future legislation also.

* The judgment relies heavily on the fact that what was required was "active" filtering, requiring "active observation of all electronic communications conducted on the network of the ISP concerned", and would require the ISP to "install a complicated, costly, permanent computer system at its own expense".

This portion of the judgment appears to rule out court orders requiring invasive filtering, such as DPI, but may leave the door open for "passive" filtering, particularly the use of simple DNS poisoning, which wouldn't necessarily present the same issues. However, it does raise interesting questions about the Newzbin2 decision – should the Cleanfeed system (or other hybrid be regarded as equivalent to the "complicated and costly" active monitoring system sought by SABAM?

* Para 52 is particularly interesting as it arguably undermines even the use of passive filtering where the effect is to cause substantial collateral damage to non-infringing material:

Secondly, that 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. Indeed, it is not contested that the reply to the question whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. Moreover, in some Member States certain works fall within the public domain or can be posted online free of charge by the authors concerned.

In light of this, one must wonder whether a court order to block e.g. all access to would still be acceptable.

    Andres · November 24, 2011 at 4:04 am

    Hi TJ,

    You're right, the ruling doesn't preclude specific injunctions of any manner. To me the importance is that it clearly sets out a principle that no injunction can be used in widespread indiscriminate filtering. Similarly, the great thing about this decision is that it sets a threshold of enforcement as well, so future specific injunctions, say against PirateBay, must fulfil certain requirements of balance and proportionality.

☆ Thanks, ECJ! « Wild Webmink · November 24, 2011 at 11:34 am

[…] LQdN has a good summary of the meaning of this decision, as does TechnoLlama. […]

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