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Intellectual Property Law and Practice Advance Access published March 2, 2012
Journal of Intellectual Property Law & Practice, 2012

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Current Intelligence
Copyright
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ISPs cannot be ordered to adopt general and preventive ltering systems

Case C-70/10 Scarlet Extended SA v SABAMSociete belge des auteurs, compositeurs et diteurs SCRL, Court of Justice e of the European Union (ECJ), 24 November 2011 In Scarlet Extended SA v SABAM, the ECJ held that EU law precludes the imposition of an injunction by a national court which imposes on internet service providers (ISPs) the adoption, at their expense and for an unlimited period, of a general and preventive ltering system with a view to preventing the illegal sharing of electronic les containing musical, cinematographic, or audiovisual works. In reaching its decision, the court stressed the need to strike a fair balance between copyright protection and the right of ISPs to conduct business freely as well as the right of their customers to protect personal data and receive or impart information.

Scarlet to bring such infringements to an end by blocking or making it impossible for its customers to send or receive in any way such les using peer-to-peer software. SABAM also asked that Scarlet inform it about the details of the measures it would apply in order to comply with the order. In June 2007, the Court of Brussels ordered Scarlet to terminate the infringements, imposing certain lters to prevent users from sharing and downloading les. Scarlet appealed to the Court of Appeal of Brussels, arguing that the requested measure was technically impossible and would also impose a general obligation to monitor communications on its network, which was at odds with the E-Commerce Directive and several fundamental rights. The Court of Appeal referred the case to the ECJ.

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Analysis
The ECJ was asked to verify whether under EU law ISPs can be subject to an injunction imposing the adoption of a preventative monitoring system requiring them to apply ltering tools with a view to detecting and blocking copyright infringement. In principle, Article 8(3) of the Info-Society Directive allows injunctions against intermediaries whose services are used by a third party to infringe a copyright or related right. The monitoring system in this case, however, was (i) referred to all electronic communications passing via the ISPs services, in particular those involving the use of peer-to-peer software; (ii) applied indiscriminately to all its customers; (iii) a preventive measure; (iv) exclusively at the ISPs expense; and (v) for an unlimited period. The court rst noted that the lawfulness of such a system should be assessed taking into consideration the principle laid down in Article 15 of the E-Commerce Directive. The latter provision states that ISPs which offer internet-related services are not required to monitor the information which they store or transmit, nor are they under a general obligation actively to seek facts or circumstances indicating unlawful activities. The court considered that the monitoring system in question infringed this provision of the E-Commerce Directive, as it would require the ISP to (i) identify the peer-to-peer les within all the electronic communications of all its customers; (ii) identify the allegedly infringing les; and (iii) determine which les are illegally transferred and block them. Such preventative monitoring, the court emphasized, would require ISPs proactively to check all electronic communications transmitted on their network, adding that this mechanism was not compliant with Article 3(1) of the Enforcement Directive, according to which the measures,

Legal context
In this reference for a preliminary ruling, the ECJ was asked to assess the lawfulness under EU law of injunctions against ISPs requiring them to apply ltering tools aimed at detecting and blocking the transfer of les which allegedly infringe copyright. In particular, the ECJ had been asked to interpret certain provisions of, inter alia, the following directives. (i) Directive 2000/31 on certain legal aspects of information society services (E-Commerce Directive); (ii) Directive 2001/29 on the harmonization of certain aspects of copyright and related rights in the information society (Info-Society Directive); (iii) Directive 2004/48 on the enforcement of IP rights (Enforcement Directive).

Facts
The proceedings were brought before the Court of Brus` sels (Tribunal de premiere instance) in 2004 by the collecting society SABAM against the ISP Scarlet, which provided its customers with access to the internet (without offering other services such as downloading or le-sharing-related services). SABAM claimed that Scarlets customers infringed copyright by engaging in peerto-peer le sharing and asked the national court to order
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The Author (2012). Published by Oxford University Press. All rights reserved.

Electronic copy available at: http://ssrn.com/abstract=2015318

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CURRENT INTELLIGENCE

Journal of Intellectual Property Law & Practice, 2012

procedures, and remedies necessary to ensure the enforcement of IP rights (IPRs) should be fair and equitable. The court then took pains to stress the need to strike a fair balance between copyright protection and other fundamental rights protected under EU law. In this regard, the court explicitly referred to its nding in Promusicae (Case C-275/06), where it held that the protection of the fundamental right to property, which includes the rights linked to intellectual property, must be balanced against the protection of other fundamental rights. Indeed, as the court said, IPRs are protected under Article 17(2) of the Charter of Fundamental Rights, but such protection is not absolute and should be subject to limitations under certain circumstances. In particular, the court noted that the order to install the contested ltering system would limit the freedom of ISPs to conduct their business, which is protected at EU level by Article 16 of the Charter of Fundamental Rights. As a matter of fact, such injunction would require ISPs to install a complicated, costly, and permanent computer system, which would have a negative impact on ISPs overall economic activity. This would also be contrary to Article 3(1) of the Enforcement Directive, according to which the required measures should not be unnecessarily complicated or costly. The court also considered the principle of proportionality and the need to strike a fair balance between copyright protection and the right of ISPs customers to have their condential data protected as well as to receive or impart information (the right to privacy of communication and the right to protection of personal data are protected by Articles 7 and 8 of the EU Charter of Fundamental Rights, and the free speech right by Article 11). The court thus stated that an injunction requiring ISPs to install the described ltering system would break this balance. Indeed, that system would involve a systematic analysis of all contents and the collection and identication of users IP addresses used to exchange the les. Those addresses, the court recalled, are protected personal data as they allow those users to be precisely identied. Moreover, the ISPs customers freedom to receive and impart information could also be potentially jeopardized as the lter mechanism in question might not adequately distinguish between unlawful content and lawful content, with the result that its implementation could lead to the block of lawful communications.

tomers to protect personal data and receive or impart information. The courts ndings constitute a victory for ISPs, which cannot be forced by copyright owners to install cumbersome and costly ltering mechanisms aimed at detecting and stopping copyright infringements committed by their users (though ISPs are not prevented from voluntarily introducing a ltering system as a consequence of an agreement struck with right holders). The decision has also been welcomed by digital freedom organizations and hailed as being capable of boosting free speech online: in their eyes, this decision conrms that invasive and general monitoring of internet users activities is unfeasible and unacceptable. The courts ruling stresses instead the need and relevance of a neutral and open internet environment which respects fundamental rights. This decision seems to be in line with the criticisms expressed on the other side of the Atlantic by several com` mentators vis-a-vis the recently proposed Stopping Online Piracy Act (SOPA), which was introduced in the US House of Representatives on 26 October 2011 (also known as Enforcing and Protecting American Rights Against Sites Intent on Theft and Exploitation Act). This bill would compel ISPs to adopt lters to prevent their customers reaching pirate websites easily. It is believed by several commentators that the bills vague wording might leave open the door to intrusive forms of ltering, which would multiply costs and performance problems for ISPs and expose their users to a violation of their privacy (see The Economist, 26 November 2011). It should, however, be borne in mind that in Sabam v Scarlet, the ECJ did not prohibit per se the adoption of other (and future) blocking and ltering measures which respect the fundamental rights at issue. This echoes the reasoning adopted by the AG in his opinion, in which he had stressed that any law interfering with the exercise of the fundamental rights in question would be allowed if it is adopted on a national legal basis and is accessible, clear and predictable as to the nature and scope of the measures applicable. This ruling also reects the general view shared by the ECJ in previous case law, ie that the duty to detect and stop IP infringements in the online world is exclusively placed upon IPRs owners, as it occurs in the ofine environment. Enrico Bonadio City University London Email: enrico.bonadio.1@city.ac.uk Mauro Santo Associate, M&R Europe, Milan Email: mauro.santo@mrelaw.com
doi:10.1093/jiplp/jps004

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Practical signicance
This decision stresses the need to strike a fair balance between several rights and interests, ruling that copyright ` does not have a superior rank vis-a-vis the right of ISPs to freely conduct business as well as the right of their cus-

Electronic copy available at: http://ssrn.com/abstract=2015318