Blanket Filtering to Prevent Illegal Downloading Unfair to ISPs and Consumers, EU High Court Says

The case pitted Belgian copyright management society SABAM against ISP Tiscali (since owned by Scarlet and now by Belgacom). A Brussels court found illegal downloading taking place on Scarlet’s network, but before imposing SABAM’s requested filtering system, asked an expert to determine if such a technical solution was possible, the ECJ said. The expert concluded that, despite many technical obstacles, the feasibility of filtering and blocking unlawful file-sharing couldn’t be entirely ruled out. In 2007, Scarlet was ordered to block customers from sending or receiving peer-to-peer files containing musical works in SABAM’s repertory, it said.

The ISP appealed on the ground that the effectiveness and permanence of filtering and blocking systems hadn’t been proved and that installing such equipment created network capacity and other problems, the ECJ said. Scarlet also said any attempt to block files was doomed to fail because there were P2P software products available that made it impossible for third parties to check their content. Scarlet also claimed the filtering order breached various EU laws such as the e-commerce directive. The Brussels appeals court asked the ECJ for a preliminary ruling on the order’s legality.

The requirement to monitor all e-communications made through Scarlet’s network related to the interests of rights owners, the ECJ said. The monitoring wasn’t time-limited, was directed at all future infringements, and was intended to protect not only existing works but also content not even in existence at the time the system was introduced, it said. Such an injunction would seriously hamper Scarlet’s ability to run its business because it would have to install complicated, costly and permanent computer systems at its own expense, in violation of EU law mandating that intellectual property rights enforcement measures not be unnecessarily complicated or pricey, it said.

The order failed to respect the balance between IP protection and ISPs’ right to conduct business, the ECJ said. Moreover, the effects of the monitoring and filtering would affect Scarlet subscribers’ personal data and other rights, it said. The order could also potentially undermine freedom of information since the filtering might end up blocking legal communications, it said. EU law and fundamental rights therefore bar orders against ISPs that require installation of contested filtering systems, it said.

The opinion will serve as “solid guidance” for a European Commission that will, in the next two years, have to shape a regime for development of digital content on the Internet, fight online piracy and come up with basic rules for e-commerce, Genna told us. The high court ruling will “frustrate all anti-piracy measures, of legislative or self-regulatory origin, which rely on filtering technologies,” such as those in Italy, Ireland and the U.K., he said. France’s “Hadopi” law allowing a graduated response to piracy may also be in jeopardy because it may let rights holders use filtering measures, he said.

The ECJ implicitly backed Digital Agenda Commissioner Neelie Kroes’ position that development of digital content calls for new business models and reform of the copyright system, not tougher, more repressive measures, Genna said.

The decision recognized copyright protection as a fundamental right and indicated that blocking illegal content doesn’t trigger any freedom of expression issues, said Hogan Lovells (Paris) telecom attorney Winston Maxwell. “In other words, no one has a fundamental right to make an illegal copy of a work."

One take-away from the judgment is that it’s possible to order ISPs to implement blocking systems, as has happened recently with British Telecom and Newzbin, Maxwell said. But requiring an ISP to examine all communications to detect and block illegal content “raises particularly sensitive issues, including the cost for the network operator,” he said. Although not impossible to put in place, any such measures would have to pass an “extremely rigorous balancing test,” including a practically zero risk that the filtering might erroneously block legal content, he said. Network operators’ costs, as well as privacy risks, would also have to be considered, he said.

The ruling will have serious implications for content-blocking systems imposed on ISPs in other EU countries, especially where they are maintained at the providers’ expense, said the European Internet Services Providers Association. The Internet industry “plays a crucial part in connecting European citizens and business to information, news, entertainment, social media, cultural content and other public interest content,” said President Malcolm Hutty. Considering the major contribution the sector can make to economic recovery, this isn’t the time to put Internet innovation at risk, he said.

The recording industry said the judgment will help efforts to protect creative content online. It confirms that ISPs and other intermediaries can be required to act against existing and future online infringement and restates the importance of protecting copyright, said International Federation for the Phonographic Industry Chief Executive Frances Moore. The fact that the ECJ rejected content filtering in this case doesn’t affect other forms of ISP cooperation IFPI advocates, including graduated response and blocking rogue websites, she said.

The ECJ sent a “crystal clear signal” that ISPs can’t be asked to police consumers’ use of the Web, said European Consumers’ Organization Director General Monique Goyens. Monitoring and harsher enforcement isn’t the answer; fairer and more easily accessible legal digital content is, she said.

Policymakers across Europe must now reject regimes such as the Anti-Counterfeiting Trade Agreement and engage in much-needed copyright reform, said French citizens’ advocacy group La Quadrature du Net. The ECJ opinion is a blow to the EC, which has implicitly supported such systems, it said.