The European Court of Justice has issued a ruling today in the case SABAM v Netlog NV where it confirms its prior decision in the Scarlet case. The facts of both cases are similar. In Scarlet, the Court had to know about the conformity with the European legal framework of the request made by a Belgian copyright society, SABAM, to an ISP, Scarlet, to implement a general filtering system to prevent the unlawful use of musical and audio-visual work by the users of its network. In the Netlog case, the Court had to rule about the same request made this time to an online social network provider, Netlog. In both cases, the implementation of a general filtering system would have implied Scarlet and Netlog to perform an active observation of the files stored or exchanged by their users on their networks in view of identifying where protected works contained in SABAM’s catalogue were shared and to determine where this sharing was presumably done unlawfully, with the ultimate goal of taking down or blocking such files.
The Court first ruled that the implementation of general filtering systems collides with the prohibition contained in the E-Commerce Directive to Member States to impose a general obligation to monitor on service providers conducting activities of mere conduit, caching and hosting. In Scarlet, the Court had already ruled that that prohibition applied in particular to national measures which would require an intermediary provider, such as a hosting service provider, to actively monitor all the data of each of its customers in order to prevent any future infringement of intellectual-property rights.
In addition, general filtering systems intended to protect copyright challenge several fundamental rights protected under the Charter of Fundamental Rights of the European Union. The Court acknowledges that, first, it would affect Netlog’s freedom to conduct its business as it would require Netlog to install a complicated, costly, permanent computer system at its own expense. Second, it would affect users’ right to the protection of their personal data as it would involve the identification, systematic analysis and processing of information connected with the profiles created on the social network. Finally, such a system would put at risk the freedom of information, i.e. the freedom to receive or impart information, as the system might not have been always able to distinguish between unlawful content and lawful content, eventually blocking lawful communications. The Court recalls in that sense that it is not sufficient for a file exchange to be declared unlawful because it is protected under copyright. Whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. In addition, in some Member States certain works fall within the public domain or may be posted online free of charge by the authors concerned.
Finding a fair balance
Following the decision in the Promusicae case, the Court recalls that, in the context of measures adopted to protect copyright holders, national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures. In Scarlet, the Court ruled that the intended general filtering system was disproportionate, i.e. it did not respect the requirement that a fair balance be struck between the different interests at stake, as this system 1) would filter all electronic communications passing via its services, in particular those involving the use of peer-to-peer software 2) it would apply indiscriminately to all its customers, 3) as a preventive measure, 4) for an unlimited period, and 5) the costs would have been exclusively beard by the service provider.
In Netlog, the Court follows a similar reasoning and declares that the filtering system at stake does not meet the requirement of proportionality because such a system
- would involve monitoring all or most of the information stored on its server by its service users,
- it would apply indiscriminately to all its users;
- as preventative measure (it would be directed to all future infringements as it would be intended to protect not only existing works but also works that have not been yet created at the time when the system is introduced)
- for an unlimited period and
- exclusively at the expanses of Netlog.
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