Case C-70/10 Scarlet Extended SA v SABAM—Société belge des auteurs, compositeurs et éditeurs SCRL, Court of Justice of the European Union (ECJ), 24 November 2011
Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps004, first published online: March 2, 2012
In Scarlet Extended SA v SABAM, the ECJ held that EU law precludes the imposition of an injunction by a national court which imposes on internet service providers (ISPs) the adoption, at their expense and for an unlimited period, of a general and preventive filtering system with a view to preventing the illegal sharing of electronic files containing musical, cinematographic, or audiovisual works. In reaching its decision, the court stressed the need to strike a fair balance between copyright protection and the right of ISPs to conduct business freely as well as the right of their customers to protect personal data and receive or impart information.
In this reference for a preliminary ruling, the ECJ was asked to assess the lawfulness under EU law of injunctions against ISPs requiring them to apply filtering tools aimed at detecting and blocking the transfer of files which allegedly infringe copyright. In particular, the ECJ had been asked to interpret certain provisions of, inter alia, the following directives.
(i) Directive 2000/31 on certain legal aspects of information society services (‘E-Commerce Directive’);Facts
(ii) Directive 2001/29 on the harmonization of certain aspects of copyright and related rights in the information society (‘Info-Society Directive’);
(iii) Directive 2004/48 on the enforcement of IP rights (‘Enforcement Directive’).
The ECJ was asked to verify whether under EU law ISPs can be subject to an injunction imposing the adoption of a preventative monitoring system requiring them to apply filtering tools with a view to detecting and blocking copyright infringement. In principle, Article 8(3) of the Info-Society Directive allows ‘injunctions against intermediaries whose services are used by a third party to infringe a copyright or related right’. The monitoring system in this case, however, was (i) referred to all electronic communications passing via the ISP's services, in particular those involving the use of peer-to-peer software; (ii) applied indiscriminately to all its customers; (iii) a preventive measure; (iv) exclusively at the ISP's expense; and (v) for an unlimited period.
The court first noted that the lawfulness of such a system should be assessed taking into consideration the principle laid down in Article 15 of the E-Commerce Directive. The latter provision states that ISPs which offer internet-related services are not required to monitor the information which they store or transmit, nor are they under a general obligation actively to seek facts or circumstances indicating unlawful activities. The court considered that the monitoring system in question infringed this provision of the E-Commerce Directive, as it would require the ISP to (i) identify the peer-to-peer files within all the electronic communications of all its customers; (ii) identify the allegedly infringing files; and (iii) determine which files are illegally transferred and block them. Such preventative monitoring, the court emphasized, would require ISPs proactively to check all electronic communications transmitted on their network, adding that this mechanism was not compliant with Article 3(1) of the Enforcement Directive, according to which the measures, procedures, and remedies necessary to ensure the enforcement of IP rights (IPRs) should be fair and equitable.
The court then took pains to stress the need to strike a fair balance between copyright protection and other fundamental rights protected under EU law. In this regard, the court explicitly referred to its finding in Promusicae (Case C-275/06), where it held that ‘the protection of the fundamental right to property, which includes the rights linked to intellectual property, must be balanced against the protection of other fundamental rights’. Indeed, as the court said, IPRs are protected under Article 17(2) of the Charter of Fundamental Rights, but such protection is not absolute and should be subject to limitations under certain circumstances.
In particular, the court noted that the order to install the contested filtering system would limit the freedom of ISPs to conduct their business, which is protected at EU level by Article 16 of the Charter of Fundamental Rights. As a matter of fact, such injunction would require ISPs to install a complicated, costly, and permanent computer system, which would have a negative impact on ISPs' overall economic activity. This would also be contrary to Article 3(1) of the Enforcement Directive, according to which the required measures should not be unnecessarily complicated or costly.
The court also considered the principle of proportionality and the need to strike a fair balance between copyright protection and the right of ISPs' customers to have their confidential data protected as well as to receive or impart information (the right to privacy of communication and the right to protection of personal data are protected by Articles 7 and 8 of the EU Charter of Fundamental Rights, and the free speech right by Article 11). The court thus stated that an injunction requiring ISPs to install the described filtering system would break this balance. Indeed, that system would involve a systematic analysis of all contents and the collection and identification of users' IP addresses used to exchange the files. Those addresses, the court recalled, are protected personal data as they allow those users to be precisely identified. Moreover, the ISPs' customers' freedom to receive and impart information could also be potentially jeopardized as the filter mechanism in question might not adequately distinguish between unlawful content and lawful content, with the result that its implementation could lead to the block of lawful communications.
This decision stresses the need to strike a fair balance between several rights and interests, ruling that copyright does not have a superior rank vis-à-vis the right of ISPs to freely conduct business as well as the right of their customers to protect personal data and receive or impart information.
The court's findings constitute a victory for ISPs, which cannot be forced by copyright owners to install cumbersome and costly filtering mechanisms aimed at detecting and stopping copyright infringements committed by their users (though ISPs are not prevented from voluntarily introducing a filtering system as a consequence of an agreement struck with right holders). The decision has also been welcomed by digital freedom organizations and hailed as being capable of boosting free speech online: in their eyes, this decision confirms that invasive and general monitoring of internet users' activities is unfeasible and unacceptable. The court's ruling stresses instead the need and relevance of a neutral and open internet environment which respects fundamental rights.
This decision seems to be in line with the criticisms expressed on the other side of the Atlantic by several commentators vis-à-vis the recently proposed Stopping Online Piracy Act (SOPA), which was introduced in the US House of Representatives on 26 October 2011 (also known as Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation Act). This bill would compel ISPs to adopt filters to prevent their customers reaching pirate websites easily. It is believed by several commentators that the bill's vague wording might leave open the door to intrusive forms of filtering, which would multiply costs and performance problems for ISPs and expose their users to a violation of their privacy (see The Economist, 26 November 2011).
It should, however, be borne in mind that in Sabam v Scarlet, the ECJ did not prohibit per se the adoption of other (and future) blocking and filtering measures which respect the fundamental rights at issue. This echoes the reasoning adopted by the AG in his opinion, in which he had stressed that any law interfering with the exercise of the fundamental rights in question would be allowed if it is adopted on a national legal basis and is ‘accessible, clear and predictable’ as to the nature and scope of the measures applicable.
This ruling also reflects the general view shared by the ECJ in previous case law, ie that the duty to detect and stop IP infringements in the online world is exclusively placed upon IPRs owners, as it occurs in the offline environment.