Case Summary and Outcome

In June 2004, Société belge des auteurs, compositeurs et éditeurs SCRL (‘SABAM’), a Belgian management company which represents authors, composers, and editors of musical works in authorising the use of their copyright-protected works by third parties brought interlocutory proceedings against Scarlet, an internet service provider, which offers Internet without offering file sharing and downloading services. SABAM alleged that Internet users of Scarlet’s services were downloading copyrighted works in SABAM’s catalogue without authorization by using peer-to-peer software. In addition to seeking a declaration that copyright was infringed by Internet users through the use of Scarlet’s services, the association sought an injunction, ordering Scarlet to block or make it impossible for its customers to send or receive files containing copyrighted musical works.

In June 2007, a court of first instance in Brussels found copyright infringement and ordered Scarlet to take all measures in order to block unlawful use of file sharing by its customers. On appeal, the Brussels Court of Appeals stayed the proceedings and referred the case to the European Court of Justice for a preliminary ruling on whether it is in compliance with EU laws for a national court to issue an injunction against Internet intermediaries whose services are used by third parties to infringe a copyright and to force the companies to install a filtering system in order to block unlawful use of file sharing. The Court held that such a measure would be incompatible with EU Directives, namely with Article 15(1) of Directive 2000/31, which prohibits imposition of an obligation on an Internet service provider to carry out general monitoring of the information that it transmits on its network, and would be against the fundamental rights of Internet users to the protection of their personal data and freedom of expression guaranteed under the EU Charter of Fundamental Rights.

Facts

Over an unspecified period of time, users of Internet provided by Scarlet company installed file sharing software in order to share and download copyrighted musical works. SABAM had the direct authority to permit the use of these copyrighted musical works by third parties. On June 24, 2004, SABAM brought interlocutory proceedings against Scarlet before the court of first instance in Brussels, claiming that Scarlet, as an Internet service provider, was in the best position to take measures against copyright infringements committed by its customers. It sought, first, a declaration that the copyright infringements were committed by Scarlet’s customers. It additionally asked the court to issue an order “requiring Scarlet to bring such infringements to an end by blocking, or making it impossible for its customers to send or receive in any way, files containing a musical work using peer-to-peer software without the permission of the right holders.” [para. 20]

On November 26, 2004, the Belgian Court found that copyright infringement to have been committed by the customers of Scarlet. But prior to ruling on SABAM’s application for cessation, the Court appointed an expert to investigate whether the proposed measures against Scarlet to block unlawful file sharing and to monitor the use of peer-to-peer software were technically feasible. The expert found that “despite numerous technical obstacles, the feasibility of filtering and blocking the unlawful sharing of electronic files could not be entirely ruled out.” [para. 22] Accordingly, the Belgian court ordered the company to cease copyright infringements by making it impossible for its customers to receive and send copyrighted files by means of peer-to-peer software.

Scarlet then appealed against the order before the Brussels Court of Appeals, claiming that it was impossible to implement the imposed measures because blocking and filtering would not be entirely effective mechanisms, and such measures would cause many unreasonable technical issues for the company. It also argued that the order would impose on the company a de facto obligation to monitor all Internet communications in order to filter out and block unlawful use of file sharing. Against this obligation, Scarlet cited the EU Directive 2000/31, according to which “[m]ember States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating unlawful activity.”

The Court of Appeals of Brussels stayed the proceedings and referred the case to the European Court of Justice for a preliminary ruling on inter alia whether it is in compliance with EU laws for a national court to “issue an injunction that will order an [Internet Service Provider (ISP)] to install, for all its customers, in abstract 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.” [para. 28]

Decision Overview

The main issue before the Court of Justice was whether under the EU Directives 2000/31, 2001/29, 2004/48, 95/46, 2002/58, and in light of the applicable fundamental human rights, it is proper to issue an injunction against an ISP to introduce a system for filtering all electronic communications for an unlimited period and at its expense in order to block unlawful use or transfer of copyrighted works.

The Court first noted that under Article 8(3) of Directive 2001/29 and Article 11 of Directive 2004/48, “holders of intellectual property rights may apply for an injunction against intermediaries, such as ISPs, whose services are being used by a third party to infringe their rights.” [para. 30] Relying on the it’s case-law, the Court further explained that those directives permit national courts to issue orders against “intermediaries to take measures aimed not only at bringing to an end infringements already committed against intellectual-property rights using their information-society services, but also at preventing further infringements.” [para. 31] The Court, however, emphasized that such orders should not violate Article 15(1) of Directive 2000/31 against adopting measures that “would require an ISP to carry out general monitoring of the information that it transmits on its network.” [para. 35] Furthermore, an injunctive order against an ISP should not be incompatible with Article 3 of Directive 2004/48, which prohibits unfair, disproportional or excessively costly measures imposed on Internet intermediaries.

Based on the foregoing standards, the Court found the obligation imposed on Scarlet to install a filtering system in order to identify and block unlawful use of file sharing would in effect demand the company to carry out a costly general monitoring function for an unspecified period, which is in contrary to Directive 2000/31. Furthermore, the Court noted that the fundamental right to property, which includes the protection of intellectual property rights “must be balanced against the protection of other fundamental rights.” [para. 44] Here, the order to install a filtering system only concerned the interests of copyrights holders in musical works. Yet the measure would not only limit Scarlet’s right to conduct business, it could also infringe the fundamental rights of the Internet users, namely the rights to the protection of personal data and freedom of expression respectively guaranteed under Articles 8 and 11 of the EU Charter of Fundamental Rights.

In view of the above mentioned reasons, the Court concluded that the injunction against Scarlet company was incompatible with the EU Directives 2000/31, 2001/29, 2004/48, 95/46 and 2002/58, construed in light of the fundamental rights to protection of personal data and freedom of expression.