In what is both a highly anticipated and expected ruling issued on 24 November 2011, the Court of Justice of the European Union (the "ECJ") has held that under EU law, a national court cannot impose an injunction requiring an ISP to install a wide ranging filtering system in order to tackle illegal downloading since such an injunction is incompatible with EU law and the associated limitations on intermediary liability.

The ECJ judged that European directives on E-Commerce, Copyright Harmonisation, Enforcement of Intellectual Property Rights and Data Protection can prevent National Courts from imposing general filtering measures on internet service providers ("ISPs") to block illegal downloading using peer to peer ("P2P") networks.

The ECJ ruling follows a request from the Brussels Appeal Court which had before it a case brought by the Belgian collecting society SABAM (Société Belge des Auteurs, Compositeurs et éditeurs) against Belgian ISP Scarlet Extended ("Scarlet").

The original case goes back a number of years now. In 2004, SABAM discovered that subscribers of Scarlet were using the ISP's services to illegally download, through P2P networks, protected works from its catalogue, without authorisation and without paying royalties.  SABAM thus requested that a Belgian Court issue an injunction against Scarlet forcing it to implement all necessary measures to block any such downloading or uploading of illegal files via P2P networks without authorisation.

On 29 June 2007, the Brussels Tribunal of First Instance agreed with SABAM and granted this injunction. Scarlet immediately lodged an appeal on the basis that the Court was in fact imposing an obligation to monitor on them and that as such it was incompatible with the E-Commerce directive and fundamental rights.

The Brussels Appeal Court  proceeded to ask the ECJ whether an injunction imposing such a filtering system was compliant with the provisions of various directives, namely the 2000 E-Commerce Directive[1], the 2001 Directive for Copyright harmonisation[2], the 2004 Directive on the Enforcement of Intellectual Property Rights[3], the 1995 Directive on Data Protection[4] and the 2002 Directive on Data Protection in the field of Electronic Communications[5].

In essence the Brussels Appeal Court sought guidance as to whether these directives could be interpreted as allowing a national court to order an ISP to implement a general filtering system as a preventive measure, at its own cost and for an indefinite period, thereby monitoring all electronic communications across its network between all its subscribers.

The ECJ found that the system as described would require the ISP in question to engage in an active observation of the entirety of the data traffic on its network and that a ruling imposing such an obligation would constitute a breach of article 15 of the 2000 E-Commerce directive which prohibits European Union Member States from imposing general monitoring obligations on ISPs.

In addition to this analysis, the ECJ underlined that whilst intellectual property rights had to be protected as part of the property right established by the Charter of Fundamental Rights of the European Union, a balance had to be struck between this and the preservation of fundamental rights.

In this respect, the Court found that the implementation of a filtering system similar to the one requested by SABAM would constitute a violation of the freedom of the ISP concerned to conduct its business due to the immense complexity and costs associated with the implementation of the system in contradiction with the provisions of the Directive on the Enforcement of Intellectual Property Rights.  In addition the ECJ also held that the effect would not be limited to the ISP but could also infringe the fundamental rights of internet users' rights namely their right to the protection of their personal data and right to receive or impart information and communicate freely since the system would, in all likelihood, not allow for the necessary level of granularity sufficient to distinguish between files exchanged legally and illegally, catching in its net both categories of files, regardless of their status.

The decision is an important one as it clearly sets the principles applicable to the implementation of filtering measures in accordance with European legislation. In this respect, it underlines the impossibility for national legislators and jurisdictions to impose general rules or injunctions on ISPs to monitor the electronic communications traffic which they convey.  As such rights owners cannot necessarily look towards ISPs to provide a blanket against piracy – and indeed many would say this was clearly the intention of the E-Commerce Directive back in 2000.

While this decision can be interpreted as a step forward in favour of  "net neutrality", it should still be noted that the ECJ does not rule out all types of filtering systems in principle. Thus it is not the end of the story for rights owners and indeed, it appears that certain filtering systems, if clearly defined and limited in time and in scope, could well be regarded as compliant with European legislation.  Thus rights owners can and will continue to apply for and be granted injunctions under national law against intermediaries, such as ISPs, where their services are being misused by third parties to infringe.  However, any such injunctions clearly must comply with and respect the limitations arising under EU law.  Thus we can expect to see further litigation until we have clarity on the acceptability, scope and extent of filtering and monitoring in the EU.

The full judgment is available here:

The question as referred was:

"(1) Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and 2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that: 'They [the National Courts] may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right', to order an [ISP] to install, for all its customers, in abstracto 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?

(2) If the answer to the [first] in the affirmative, do those directives require a national court, called upon to give a ruling on an application for an injunction against an intermediary whose services are used by a third party to infringe a copyright, to apply the principle of proportionality when deciding on the effectiveness and dissuasive effect of the measure sought?"

The ECJ answers were:

"in adopting the injunction requiring the ISP to install the contested filtering system, the national court concerned would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other.

...the answer to the questions submitted is that Directives 2000/31, 2001/29, 2004/48, 95/46 and 2002/58, read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an ISP which requires it to install the contested filtering system."