On November 15, 2012, the German Federal Supreme Court (Bundesgerichtshof, "BGH") handed down an eagerly awaited landmark decision on the scope of parents' duty to monitor their children's internet activities and what measures parents have to take to prevent infringement of third parties' rights (Docket No. I ZR 74/12).

In this case, a physician's son—who was 13 years old when the conduct subject to the litigation occurred—had installed the file-sharing programs "Morpheus" and "Bearshare" on his computer without his parents' knowledge. File-sharing software enables a user to download files that are offered by third parties on the internet. At the same time, such software makes available the files stored on the user's computer, in particular music files, for other users to download and upload on their own computers. This activity constitutes an infringement of the copy and exploitation rights that exist with regard to the content of these files.

By examining the data stored with the relevant internet service provider, it is possible to trace back the computer from which an upload occurred. In the case at issue, the manufacturers of sound recording media EMI, Sony, Universal, and Warner took that route. Upon a report, the police searched the parents' home and seized the boy's computer, on which they found approximately 1,200 illegal music files created over a period of seven months in 2007. The plaintiffs then sent a warning letter to the parents, who provided the requested agreement to refrain from future infringements but rejected the plaintiffs' damage claims. The music companies subsequently filed a complaint with the Regional Court of Cologne and claimed damages in the amount of €200 for each of 15 selected songs. Together with the costs for the warning letter in an amount of €2,380.80, the compensation sought added up to approximately €5,400.

The complaint was successful before the Regional Court, as well as before the Court of Appeals in Cologne. In its reasoning, the Court of Appeals stated that the parents had violated their duty to supervise their son by monitoring the boy's activities on the internet. The parents did not share this position. The father argued that he had established sufficiently effective password protection and that, in addition, he had checked the contents of the computer on a monthly basis. The senate of the Court of Appeals in Cologne did not view this as sufficient. It determined that the software should have been discovered by the father because the computer desktop clearly showed the logo of the "Bearshare" program. The plaintiffs' attorneys even asserted that the parents had "clearly failed" and had violated their responsibility to educate their child.

The First Senate of the BGH ultimately dismissed the complaint and significantly reduced the standards applicable to the parents' duty of supervision that were used in the previous instances. The court held that the Court of Appeals had based its assessment on an ideal parental couple—one that is not only familiar with the technology but also has profound expertise in copyright laws. In the eyes of Germany's highest civil court, it is enough if parents instruct their children adequately not to participate in file-sharing communities. Stricter parental supervision is required only in the case of obvious misconduct. Here, the court also rejected technically challenging requests such as the mandatory installation of protective software as suggested by the Court of Appeals in Cologne.

Generally, parents are responsible for infringement of third parties' copyrights committed by their children using the parents' internet connection, unless the parents complied with their supervisory obligation. The specific steps to take depend upon the individual circumstances of the case, such as the child's age, his individual maturity, the likelihood of damage, the potential amount of damages, and numerous additional factors. One of the issues existing in association with infringement over the internet is the absence of fixed standards of conduct. The traditional exigencies of the parental monitoring duties apply to situations that cannot be compared to the use of the internet. Sockets, pharmaceutical products, and knives are different from cyberspace.

The BGH's judgment contributes to a more precise determination of the standard applicable to parental behavior in the future. It will also have an effect on a variety of comparable cases in Germany. A good portion of internet-based copyright infringement is committed by children and teenagers through their home computers. Enforcing claims against their parents has been an obvious approach in the past, given that children are generally without financial resources of their own. Also, it has induced parents to shift responsibility for their children's actions to those children. Arguably, the scope of parental duties differs in each individual case. However, the judgment of the BGH will significantly hamper this method of enforcement in the future.