The Treaty on the Functioning of the European Union - once the Treaty of Rome - provides that the Court of Justice of the European Union "shall have jurisdiction to give preliminary rulings concerning... the interpretation of the Treaties" (Article 267). It is interesting to bear this definition of its jurisdiction in mind when considering the decision handed down today in Case C-70/10, SABAM v Scarlet Extended SA, referred from the Belgian court.
It was in 2004 that SABAM, a music collecting society, obtained a decision from the Brussels Tribunal de première instance entitling it in principle to an injunction against Scarlet, an ISP, requiring it to prevent the mass pirating of works of its repertoire through peer-to-peer file-sharing. In 2007, following a report by a court-appointed expert and some procedural wrangling, a further judgement was handed down which required the ISP to implement a filtering mechanism based on (highly accurate) fingerprinting technology (the method specifically considered was that of Audible Magic). The Belgian courts approached the whole case with a mixture of insouciance and common sense which was almost bound to lead to a reference, and so it did...
The defendant appealed to the Cour d'Appel de Bruxelles, which in January 2010 referred to the EU Court certain questions of interpretation under Article 267 of the Treaty, namely whether the relevant Directives and the European Convention on Human Rights permitted a Member State to authorise a court to issue an injunction requiring 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"; and if so, do the Directives require the national court "to apply the principle of proportionality"?
Today the EU Court handed down a brief judgment giving its answer. The implications of its lapidary remarks will reverberate through national courts in the coming years.
The EU Court confirmed that a national court may order an ISP to take action to terminate infringements and also to prevent future infringements (confirming that the principle expressed in the recent Case C‑324/09, L'Oréal and others, applies to copyright cases as it does to trade marks). However, the implementation of a filtering system would amount to the general monitoring of Internet traffic, contrary to Article 15 of the Electronic Commerce Directive. Also, as previously decided in Case C‑275/06, Promusicae, the protection of intellectual property under Article 17 of the European Charter of Fundamental Rights was not absolute, but had to be balanced against other fundamental rights, such as the freedom of Scarlet "to carry on a business" (Article 16, Charter). The injunction would require the ISP "to install a complicated, costly, permanent computer system at its own expense", was not subject to any limitation in time and applied to works not yet in existence.
Yet further, the operation of the system would involve a systematic analysis of all content and the collection and identification of users’ IP addresses. The addresses were protected personal data because they allowed those users to be precisely identified. The system might also block lawful communications, contrary to the freedom to receive and impart information (Article 11, Charter).
The Court concluded that "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 law must be interpreted as precluding "an injunction made against an ISP which requires it to install the contested filtering system".
The Court does not share with the reader its analysis of data protection law or the reasons why compliance with a court order would involve any infringement of the privacy rights of users (a matter of Belgian law). It also spares the national court the tiresome business of deciding on the facts whether the filtering system would unduly block non-infringing communications by the ISP's customers. It is hard to imagine the Belgian court's informing the EU Court that in reaching conclusions on these matters it had exceeded its jurisdiction; but perhaps there is somewhere a Bruxellois equivalent of the UK's late, lamented Mr Justice Laddie.
Given the fact-specific nature of the questions, right holders will not feel completely downcast by the outcome. The relief obtained by SABAM was always a bit too good to be true. However, the Court's comments on monitoring, data privacy and freedom of expression create obstacles for deploying against piracy the ISPs' traditional, if unpublicised, methods of controlling their subscribers' behaviour.