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Thursday, 24 November 2011

A study in Scarlet: today's Court of Justice ruling

The decision of the Court of Justice of the European Union in Case C‑70/10Scarlet Extended SA v Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM); Belgian Entertainment Association Video ASBL (BEA Video), Belgian Entertainment Association Music ASBL (BEA Music) and Internet Service Provider Association ASBL (ISPA) intervening came out at the same time as the two rulings on supplementary protection certificates for patents, which the IPKat was busily flapping over (here and here). But now it's time to leave patents and attend to copyright.

Today's media release from Curia gives a handy summary:
"EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing theillegal downloading of files
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 Scarlet Extended SA, an internet service provider, and SABAM, a 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 (a transparent method of file sharing which is independent, decentralised and features advanced search and download functions).

Upon application by SABAM, the President of the Tribunal de première instance de Bruxelles (Brussels Court of First Instance, Belgium) ordered Scarlet, in its capacity as an internet service provider, 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. In that context, the Cour d'appel asks the Court of Justice whether EU law permits Member States to authorise a national court to order an internet service provider 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.

In its judgment delivered today, the Court points out, first of all, that holders of intellectual-property rights may apply for an injunction against intermediaries, such as internet service providers, 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 European Union 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 In this regard, the Court finds 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 the Court's 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 internet service provider 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 internet service provider 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".
In this Kat's post on this case in the 1709 Blog (here), he observed that the careful way in which the Court of Justice phrased its ruling rather suggests that the door remains open for the making of less drastic and more balanced orders. He also invites readers to contrast the treatment of the issue of relief in this case with that of the High Court, England and Wales, on which this blog recently commented in Newzbin 2.

2 comments:

Anonymous said...

I think that the key difference between the SABAM case and the Newzbin2 case is that the scope of the block ordered in the former was significantly more wide-ranging and imprecise than that ordered in the latter, and that was explicitly acknowledged by Arnold J at paragraph 177:

"Even if it is assumed that the Court of Justice will entirely endorse the Opinion of the Advocate General in Scarlet v SABAM, I consider that the present case is clearly distinguishable from that case. Quite simply, the Studios are not seeking an order that BT "introduce, 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 sharing 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". On the contrary, the order sought by the Studios is clear and precise; it merely requires BT to implement an existing technical solution which BT already employs for a different purpose; implementing that solution is accepted by BT to be technically feasible; the cost is not suggested by BT to be excessive; and provision has been made to enable the order to be varied or discharged in the event of a future change in circumstances. In my view, the order falls well within the range of orders which was foreseeable by ISPs on the basis of section 97A, and still more Article 8(3) of the Information Society Directive."
(http://www.bailii.org/ew/cases/EWHC/Ch/2011/1981.html)

The block of the Newzbin2 website was much more sensible in its scope and didn't interfere with fundamental rights to the same significant extent as the filtering request in SABAM.

Anonymous said...

I would just like to draw to your attention an overlooked judgment of the IPR judgments handed down yesterday (24.11.11)by the European Court of which three were reviewed on IP KAT.
It's Case C‑283/10 and concerns the right of communication to the public under Article 3 of Directive 200129. This particular judgment merits attention as it means that live performance or any other direct representation of a work, by any means, is not harmonised and therefore not subject to Article 3 of Directive 2001/29 and the exceptions in Article 5. These will, if need be, be governed by national law.
(Approximation of laws – Copyright and related rights – Directive 2001/29/EC – Article 3 – Concept of ‘communication of a work to a public present at the place where the communication originates’– Dissemination of musical works in the presence of an audience without paying the collective management organisation the appropriate copyright fee – Entry into contracts, with the authors of the works, for copyright waiver – Scope of Directive 2001/29
"39 It follows that the harmonisation sought by Directive 2001/29, to which the first sentence of recital 23 thereto makes reference, is not intended to cover ‘conventional’ forms of communication to the public, such as the live presentation or performance of a work.
40 This is borne out, moreover, by the third and fourth sentences of recital 23 to Directive 2001/29, according to which the right of communication to the public should cover any transmission or retransmission of a work to the public by wire or wireless means, including broadcasting, and should not cover any other acts. Accordingly, that right does not cover any activity which does not involve a ‘transmission’ or a ‘retransmission’ of a work, such as live presentations or performances of a work.
41 In the light of the foregoing, the answer to Questions 1 and 2 is that Directive 2001/29 and, more specifically, Article 3(1) thereof, must be interpreted as referring only to communication to a public which is not present at the place where the communication originates, to the exclusion of any communication of a work which is carried out directly in a place open to the public using any means of public performance or direct presentation of the work.
Question 3
42 In the light of the reply given to Questions 1 and 2, it is not necessary to answer Question 3.
Costs
43 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society and, more specifically, Article 3(1) thereof, must be interpreted as referring only to communication to a public which is not present at the place where the communication originates, to the exclusion of any communication of a work which is carried out directly in a place open to the public using any means of public performance or direct presentation of the work.

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