Compared to other countries, Germany lags behind when it comes to free Wi-Fi spots. A recent study conducted by the Association of the German Internet Industry has shown that of around one million public hotspots in Germany only 15,000 are freely accessible.[1] One of the main reasons for this gap might be the legal uncertainty that Wi-Fi providers face. Under German law, providers can be held liable for copyright infringement committed by a third party using free Wi-Fi.[2]

A request for a preliminary ruling from the Regional Court of Munich[3] was recently referred to the European Court of Justice[4], seeking clarification, among other things, as to whether the provider of a password-free Wi-Fi may be liable for copyright infringements committed by a third party using the Wi-Fi, or whether the provider may be exempt from the liability as a ‘'mere conduit’' provider pursuant to Article 12 (1) of Directive 2000/31/EC of the Parliament and of the Council of 8 June 2000 (the “"E-Commerce Directive”").

Underlying German Case

In the underlying case, a German shop owner who offers light and acoustic engineering services operates a password-free Wi-Fi connection from his shop and uses the network as a tool for advertising his business. An unknown user uploaded and shared a copyright-protected song on an online sharing platform via that Wi-Fi. Sony, the record label and owner of the copyrights of said song, holds the shop owner, as provider, liable for the copyright infringement and claims, inter alia, damages from the shop owner.

Pursuant to the decision of the Regional Court of Munich, the court generally tends to follow prior jurisdiction in this matter[5], in particular to follow the jurisdiction of the German Federal High Court of Justice ruling that private Wi-Fi operators can only prevent liability for third-party infringements by locking their Wi-Fi through password protection.[6] Such principle liability of the shop owner would, however, be excluded in the opinion of the Regional Court of Munich if the exemptions from liability pursuant to Article 12 (1) of the E-Commerce Directive, which were implemented in § 8 (1) of the German Telemediengesetz, would apply, which is why the Regional Court of Munich referred the case to the European Court of Justice.

Europe's Highest Court Has to Decide

One of the issues on which the European Court of Justice now has to decide within its preliminary ruling (case still pending) is the question of whether the German shop owner who provided the free Internet connection could be protected from liability as a ‘'mere conduit’' provider according to Article 12 (1) of the E-Commerce Directive. Pursuant to Article 12 (1) of the E-Commerce Directive, a service provider is, under certain circumstances, not liable for the information transmitted. The main obstacle in this respect may be that the Internet connection provided was free, while Article 12 (1) of the E-Commerce Directive refers to information society services which, pursuant to the definition contained in Article 2 (a) and Recital 17 in the preamble of the E-Commerce Directive, cover “"any services normally provided for remuneration”". The question is how to interpret “"any services normally provided for remuneration”". Does that mean that the national court must establish whether (a) the person specifically concerned, who claims the status of service provider, normally provides this specific service for remuneration, (b) there are, on the market, any providers at all who provide this service or similar services for remuneration or (c) the majority of these or similar services are provided for remuneration?[7] Being decisive on whether this rule and the exemption from liability applies, the Regional Court of Munich seeks clarification on how the E-Commerce Directive has to be interpreted from the European Court of Justice.

Prospect / Criticism

Dependent on the decision of the European Court of Justice as to whether the exemption from liability pursuant to Article 12 (1) of the E-Commerce Directive generally applies for free Wi-Fi providers, the Regional Court of Munich will assess whether the preconditions for an exemption from liability apply in the concrete case and either rule that the shop owner is exempt from any liability or follow the jurisdiction of the German Federal High Court of Justice[8] and rule that the shop owner is liable as it has not locked its free Wi-Fi. While the case is still pending, an open letter addressed to the European Court of Justice by the Electronic Frontier Foundation points out that a general requirement of password protection of open wireless would constitute an obstacle to legitimate trade (Article 3 (2) of the Enforcement Directive[9]) which should be outlawed. In the opinion of the Electronic Frontier Foundation, it is against European Law to hold wireless-network operators accountable for content that passes over their networks.[10]

The outstanding ruling of Europe’'s highest court will be of utmost relevance for the liability of free Wi-Fi providers. In order to expand free Wi-Fi spots in Germany and across the EU, it would be desirable that Article 12 (1) of the E-Commerce Directive be interpreted in a way that free Wi-Fi providers, who enable access to the Internet for third parties without remuneration, are covered by the exemptions from liability.