Case Summary and Outcome

SABAM, a company that represents musicians and protects copyrighted work, brought an action before a Belgian court against Netlog, a social network, in order to impose a filtering system that would prevent making available its clients work without permission. Before issuing a decision, the Belgian court referred a preliminary question to the ECJ- whether the proposed filtering mechanism was compatible with the EU acquis. The ECJ found the filtering mechanism would violate principles contained in Directives 2000/31, Directive 2001/29, and Directive 2004/48, as well as fundamental rights such as the freedom of information and the protection of personal data.

Facts

The plaintiff, SABAM, is a company that represents musicians and their copyright protected work in relation to third parties. The defendant, Netlog, is a social network that functions like Facebook and other similar networks. The case arose when SABAM asserted that Netlog users were sharing the copyright protected work of its clients and making the work publicly available without permission or compensation. For that reason, in 2009, SABAM asked that Netlog pay a fee for using copyright protected work, and demanded that Netlog thereafter, cease sharing the material.

In 2009, before the Court of First Instance in Brussels, SABAM prayed for an injunction against Netlog to prevent it from breaching SABAM’s IP rights through the free publication and disbursement of SABAM’s copyrighted material. In response, Netlog argued that such an injunction would require the imposition of a general filtering measure directed towards all users for an indefinite period of time at its own cost, and therefore, the injunction would violate the “no general obligation to monitor” principle codified in E-commerce Directive EC 2000/31, and in Articles 8 and 10 of the European Convention on Human Rights (“ECHR”).

Persuaded by Netlog’s reasoning, the Belgian court stopped the proceeding and referred the following question as a preliminary issue to the ECJ:

“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 [signed in Rome on 4 November 1950], 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 ‘[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 a hosting service provider to introduce, for all its customers, in abstracto and as a preventive measure, at its own cost and for an unlimited period, a system for filtering most of the information which is stored on its servers in order to identify on its servers electronic files containing musical, cinematographic or audio-visual work in respect of which SABAM claims to hold rights, and subsequently to block the exchange of such files?” [para. 25]

Decision Overview

The main issue before the Court was whether the hosting service provider could be obliged to impose a general filtering requirement for an indefinite period of time in order to prevent further IP infringements by its users (the contested filtering system).

Although Netlog is simply a service provider, holders of IP rights can ask for injunctions against social network service providers such as Netlog in order to cease past infringements and to prevent new infringements in the future. Even though the determination and operation of such injunctions is a matter of national law, service providers are nevertheless required to obey the limitations set out by the Directives.

The Court referred to it’s previous judgment where it found that contested filtering systems that require monitoring of all the data in order to prevent further IP infringements are incompatible with Article 15 of the E-commerce Directive 2000/31. Moreover, even though this requirement is aimed toward the protection of IP rights and the Charter of Fundamental Rights of the European Union recognizes as legitimate the right to intellectual property, these rights must nevertheless be balanced with other rights. Imposing a filtering system that would require the monitoring of all information for an indefinite period of time and to prevent future infringements would contradict the right to conduct a business, since such monitoring would be complicated and prohibitively expensive. Further, such a monitoring system would require an analysis of the data of Netlog users which would contradict the users’ right to protection of their data. Finally, monitoring system could violate the freedom of information by allowing Netlog to decide which information is protected and which is not.

Accordingly, the Court found that “the answer to the question referred is that Directives 2000/31, 2001/29 and 2004/48, 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 a hosting service provider which requires it to install the contested filtering system.” [para. 52]