EU High Court Rejects Request for Blanket Monitoring for Illegal Downloads by Social Networks

The case arose in 2009, when Belgian copyright management society SABAM sought a court order requiring social network Netlog to stop making its copyright-protected music and audiovisual works available and to pay EUR 1000 ($1,300) for each day of delay in compliance, the ECJ said. Netlog countered that granting the injunction would amount to imposing a general monitoring obligation, which is barred by the “mere conduit” provisions of the e-commerce directive, it said. A Brussels court asked the high court whether, under EU law, hosting service providers can be mandated preventively to filter information stored on their servers by all of their users, exclusively at their expense and for an unlimited time.

The ECJ ruling relied in part on an earlier case in which SABAM sought to have ISP Tiscali ordered to monitor its network for illegal downloading. In a decision published in November, the court said such blanket filtering is unfair to ISPs and consumers (CD Nov 28 p6).

In Netlog, the high court noted that both sides agreed that the filtering system SABAM wants would require the social network to identify, within all the files stored on its servers by all users, those likely to contain works within SABAM’s repertory; determine which of those files are being stored and made available to the public illegally; and stop files it considers unlawful from being made available. That calls for active observation of all files and involves almost all of the information stored and nearly all of Netlog’s users, it said.

Such a regime amounts to the kind of general monitoring barred by the e-commerce directive, the court said. Moreover, national authorities and courts must strike a fair balance between intellectual property rights protection and the rights of businesses and users, it said. Making hosting providers filter all current and future information for an indefinite period would seriously infringe their right to conduct their businesses by requiring them to have a “complicated, costly, permanent computer system” at their own expense, it said. That level of filtering could also negatively affect users’ privacy and free speech rights, it said.

Given the similarities between this case and the earlier one, the court’s decision was foreseeable, SABAM said Thursday. On the other hand, the ECJ recognized that authors’ rights are fundamental, it said. SABAM will work on alternative measures for protecting its clients that take the ruling into account, it said.

The decision is key to the development of Europe’s single digital market because it gives Internet providers greater legal certainty and “ensures protection for the right to publish content without prior censorship,” said independent telecom and Internet regulation adviser Innocenzo Genna. It “strikes a blow for Internet freedom,” said the European Internet Service Providers Association. Hosting providers “cannot be required to go searching for questionable material so as to suppress content that nobody has ever complained about,” it said.

"It’s a new win for fundamental freedoms,” said European Digital Rights (EDRI). “Particularly now, in a political climate where the foundations of the current Internet are at stake, the European judges have re-emphasized the importance of not overburdening communications tools with restrictive technologies,” EDRI said on its website. Hosting providers will, however, remain liable for unlawful content if they have actual knowledge of it and don’t take it down quickly, it said.

Major hosting platforms already deploy technical tools to limit the amount of infringing material available on their sites, said Hogan Lovells attorney Winston Maxwell, who handles telecom and Internet regulatory issues. The practice started in 2007 as a result of “user-generated content principles” signed by the platforms and rights holders, he said. In addition, some European courts have imposed an obligation on hosting providers to ensure that once infringing content has been removed, it doesn’t reappear on the same platform -- the “take down and stay down” rule, he said. The decision shouldn’t affect existing tools, he said.

The decision “underlines the importance of the rule of law,” EDRI said. Acting within the rule of law ensures that important safeguards are respected, it said. Those protections would likely disappear or be inadequately implemented if enforcement is put in the hands of private companies through a “voluntary” cooperation mechanism, it said. Privatized enforcement is being pushed in ACTA and is likely to show up in the future revamp of the intellectual property enforcement directive, it said.

"This decision comes right on time,” said French citizens’ advocacy group La Quadrature du Net. It says clearly that pushing private parties to monitor and police their networks and services to halt potential copyright infringements “is not compatible with the democratic values of the European Union,” it said.

As in the first SABAM decision, the court signaled that some filtering may be too broad and could block access to content that may be legally accessed because of a statutory exception or the fact that it’s in the public domain in the relevant country, said Maxwell. That would harm individuals’ free speech, he said. But the “logical corollary” is that freedom of expression isn’t affected by blocking someone’s access to illegal content, he said. “This principle is sometimes forgotten by Internet libertarians, who give the impression that Internet users have a ‘right’ to access infringing material,” he said. “Of course there is no such right."

Meanwhile, the British Recorded Music Industry said digital music revenue rose by nearly 25 percent in 2011 and is now a third of record industry trade income. Digital album sales are up 43 percent, premium subscriptions nearly 48 percent, it said. There was a small (3.4 percent) drop in total recorded music trade revenue, while physical sales fell by 14 percent, it said.