On 24 November 2011, the Court of Justice of the European Union (“ECJ”) decided in Scarlet Extended SA (“Scarlet”) vs. Société belge des auteurs, compositeurs et éditeurs SCRL (“SABAM”) that Internet Service Providers (“ISP”) cannot be compelled to install a filtering system that identifies and blocks all copyright infringing file sharing. The judgment is in line with the opinion of Advocate General Cruz Villalón in this case (See, Van Bael & Bellis on Belgian Business Law Newsletter, Volume 2011, No. 4, p. 8, available at www.vbb.com).
Scarlet, a Belgian ISP, had been summoned by SABAM, the Belgian Society of Authors, Composers and Publishers, before the Brussels Commercial Court on 24 June 2004. SABAM requested the Court to order Scarlet to block all peer-to-peer sharing of files infringing the copyright of works managed by SABAM. In a judgment of 29 June 2007, the Brussels Commercial Court granted this request and, accordingly, ordered Scarlet to end copyright infringements by installing filtering software which would make it impossible for Scarlet’s customers to send or receive files containing a protected musical work by means of peer-to-peer software without the permission of the copyright holders (See Van Bael & Bellis on Belgian Business Law Newsletter, Volume 2007, No. 7, p.8, available at www.vbb.com).
Scarlet appealed against this judgment to the Brussels Court of Appeal which referred a preliminary question to the ECJ. The Brussels Court of Appeal essentially asked whether an injunction ordering an ISP to filter, at its own expense and as a preventive measure, all electronic communications for all its customers for an unlimited period of time, would be compatible with EU law. In particular, the Brussels Court of Appeal wanted to learn whether such a measure is compatible with the fundamental rights guaranteed by the Charter of Fundamental Rights of the EU, considering that the ISP would be capable of identifying on that network the movement of all electronic files containing an audiovisual work.
The ECJ concluded that EU law precludes courts from imposing such a measure upon ISPs as the installation of a system for filtering and blocking electronic communications infringes the fundamental rights of the internet users. The ECJ considered that installing such a filtering system would run counter to the prohibition to impose a general monitoring obligation contained in Article 15 (1) of Directive 2000/31/CE of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market. In addition, the ECJ was of the opinion that such a measure would fall short of the requirement to be fair and equitable and not to be unnecessarily complicated or costly, as provided for by Article 3(1) of Directive 2004/48/CE of 29 April 2004 on the enforcement of intellectual property rights (the “IPRED Directive”).
The ECJ took the view that such an injunction would seriously infringe the freedom of the ISP to conduct its business, as it requires installation of a complicated, costly and permanent computer software. Moreover, such an injunction would also violate the rights of the ISP’s customers, notably (i) their right to the protection of their personal data; (ii) their right to privacy; and (iii) their right to receive or transmit information.
Consequently, the ECJ held that the protection of intellectual property rights does not prevail over the right of privacy in the case at hand. Therefore, the ECJ prohibited Belgian courts from adopting an injunction ordering Scarlet to install a general filter that monitors all electronic communications passing via its services for all its customers as a preventive measure against illegal downloads, and this at its own expense and for an unlimited period of time.
With its judgment, the ECJ has further clarified the balance between the enforcement of intellectual property rights, which permits actions against intermediaries that do not directly contribute to an infringement of intellectual property rights and the protection of the “mere conduit” status of ISPs. Actions against intermediaries under the IPRED Directive have proven to be an effective tool in the fight against counterfeiting and piracy. However, it is now clear that they do not provide a remedy for all forms of online piracy. The EU legislator will need to take this into account in the ongoing revision of the IPRED Directive and come up with a different tool to tackle the dissemination of pirated works through online file sharing.
