Court of Justice of the European Union, Decision of 24 November 2011, C-70/10, Scarlet Extended SA v. SABAM
In what was both a highly anticipated and expected ruling, the Court of Justice of the European Union (CJEU) held that under EU law a national court cannot impose an injunction requiring an internet service provider (ISP) to install, at its own cost, a wide ranging filtering system in order to tackle illegal downloading using peer to peer (P2P) networks.
The CJEU ruling follows a request from the Brussels Appeal Court in a case brought by the Belgian collecting society SABAM (Société Belge des Auteurs, Compositeurs et Éditeurs) against the Belgian ISP Scarlet Extended (Scarlet).
In 2004, SABAM had discovered that subscribers of Scarlet were using the ISP's services to illegally download, through P2P networks, protected works from SABAM's catalogue, without authorization and without paying royalties. SABAM applied to the Brussels Tribunal of First Instance and was granted a mandatory injunction obliging Scarlet to implement all necessary measures to block any downloading or uploading of illegal files via P2P networks.
Scarlet immediately lodged an appeal arguing that the injunction effectively obliged the ISP to monitor all electronic communications across its network and was therefore incompatible with European law. The Brussels Appeal Court proceeded to ask the CJEU whether an injunction imposing a general filtering system as a preventive measure, at the ISP's own cost and for an indefinite period, was compliant with the provisions of various directives, namely the 2000 E-Commerce Directive, the 2001 Directive for Copyright Harmonization, the 2004 Directive on the Enforcement of Intellectual Property Rights, the 1995 Directive on Data Protection and the 2002 Directive on Data Protection in the Field of Electronic Communications.
The CJEU found that the system as described would require the ISP in question to actively observe the entirety of the data traffic on its network and that the Belgian tribunal's injunction therefore constituted a breach of Article 15 of the 2000 E-Commerce Directive which prohibits EU Member States from imposing general monitoring obligations on ISPs.
The CJEU also underlined that the protection of intellectual property rights under the Charter of Fundamental Rights of the European Union had to be balanced with the preservation of other fundamental rights. In this respect, the CJEU found that the cost and complexity involved in the implementation of a filtering system of the kind requested by SABAM would constitute a violation of the freedom of Scarlet to conduct its business. The CJEU also held that such a filtering system could infringe the fundamental rights of internet users, namely their right to the protection of their personal data, to receive or impart information and to communicate freely. This is because the system would, in all likelihood, not be able to adequately distinguish between legal and illegal file sharing.
The decision is important as it sets out the principles which apply to the implementation of filtering measures in accordance with European law. It confirms that national courts are not entitled to impose general obligations on ISPs to monitor the electronic communications traffic that they convey. As such, rights owners cannot necessarily look to ISPs to provide blanket protection against copyright infringement.
While this decision can be seen as a step forward in terms of "net neutrality", it should be noted that the CJEU did not rule out all types of filtering systems. It would appear that certain filtering systems, if clearly defined and limited in time and in scope, could be compliant with European law. Rights owners can and will therefore continue to apply for injunctions to be granted under national law against intermediaries whose services are being misused by third parties to infringe copyright. Such applications are likely to continue to arise at least until the exact scope and extent of filtering and monitoring permitted under EU law is clarified.