21/09/2012

By Oliver Smith, IP Specialist and Consultant Solicitor at Keystone Law

The European Court of Justice has recently ruled that ISPs cannot be forced to carry out broad filtering or monitoring of internet traffic in order to prevent file sharing. The case involved an appeal by Belgian ISP Scarlett against a Belgian court order obtained by local collecting society SABAM as long ago as 2007. This required the ISP to install complex filtering technology at its own expense to monitor all of its users' traffic and to block suspected unlawful file sharing of music, film and audio-visual content which appeared to be owned by members of the society. The court gave the ISP 6 months to come up with a suitable filtering system. The ECJ allowed the appeal, ruling that the order breached the IP Enforcement Directive by requiring the use of unnecessarily complicated and costly measures to prevent infringement. The court also stated that the right to protect property rights, including intellectual property, was not inviolable and had to be balanced against other fundamental rights such as free speech, privacy, protection of personal data and freedom to conduct business. The court held that the Belgian court had unfairly favoured the rights of society members to protect their IP over those of all the ISP customers. The court decided that users' rights to surf the internet without monitoring or blocking of potentially innocent communications and the ISPs right to conduct business without the imposition of onerous costs and duties unlimited in time or scope should have been given greater weight and won out in the balance.

This ruling can be contrasted with the earlier UK court judgment in the case of BT and the Newzbin website. Newzbin was a file sharing website comprised almost exclusively of copyright infringing material. Six major producers and distributors of films applied for an order against BT (as the largest ISP in the UK) requiring it to use its existing filtering technology (designed to protect the public against images of child abuse) to block all access for BT's users to the Newzbin website. BT argued that the order was unlawful because amongst other reasons, BT did not have actual knowledge of infringing use of Newzbin, the measures were too onerous involving a general monitoring obligation and was an unlawful restriction on free expression. Mr Justice Arnold decided that BT knew that many of their customers used the Newzbin site to obtain copyright infringing content, that the cost of using the existing technology was modest and that the order was proportionate and focussed and he therefore granted the blocking order. He declined to refer any questions to the ECJ before ruling, saying that the principles in this case were quite clear.

The recent Belgian and European Court case of SABAM in which filtering was refused has since been followed by a Rome court in the case of Italian media group RTI against Google. RTI sought an order that Google prevent future streaming of football television coverage via its Blogger.com platform. Google argued that this amounted to a costly obligation of general surveillance and the court agreed refusing the order, referring to the recent SABAM case for guidance. Google welcomed the judgment saying it further clarified the rules of online liability.

These recent cases have a number of important implications for ISPs and content owners.

- Actual knowledge of infringement - the UK court can grant an injunction against any third party used for infringement purposes if they have actual knowledge of infringement. The BT case made it clear that this can be general knowledge of the nature of the content and use of a website used by a significant proportion of the IPS's users rather than specific examples;

- Blocking rather than monitoring - the blocking of specific websites does not amount to unlawful general monitoring of ISP traffic and will generally be ordered where the ISP has actual knowledge that infringing content is being carried to a significant number of its users from that website.

- "Innocent" traffic - the general monitoring of all traffic (both innocent and infringing) through an ISP in order to block infringing communications will not usually be permitted but the blocking of all traffic to websites know to be engaged in infringing activities is permitted. This is considered sufficiently targeted to be acceptable.

- Time period - the ECJ expressed concern that the proposed SABAM order was to be unlimited in time and would also cover future copyright material not yet created. This would increase the administrative burden on the ISP in keeping the filter updated.

- Cost - the requirement to use new complex technology at an ISPs own expense and of its own design is not acceptable but it is likely that an ISP could be required to install a simple blocking filter targeting specific websites such as that already used by BT if the cost was minimal or was paid by the rights owners and there was no significant on-going monitoring or maintenance requirements

- Efficacy - the fact that website operators can shut down a blocked site and set up a new one does not make blocking orders pointless. The UK court said that this would be justified even if the effect was modest and that some users would not bother moving to the new site or would use legitimate sources of content as prices had since fallen. The efficacy may become questionable though where a determined "pirate" uses a large number of mirror sites. The fact that OFCOM has recently said that proposals to block websites under the Digital Economy Act are unworkable also calls into question the efficacy of site blocking on a wide scale.

- Technology - Audible Magic - in the SABAM case the court required the ISP to integrate existing software called Audible Magic into its system and adapting it to work with their own technology, effectively requiring them to design their own filtering system.

The UK Digital Economy Act, which promised a "3 strikes and you're out" blacklisting regime for serial file sharers has fallen by the wayside, with no sign of when or if the system will be implemented. This may explain the shift in focus of content enforcement efforts towards persuading the courts rather than legislators of the need to allow greater measures to curtail online copyright infringement. In the US there have been attempts to introduce laws to change the worldwide Domain Name System (DNS) infrastructure to enable US authorities to redirect traffic away from infringing foreign websites and stop the activities of file sharers with servers based outside the US. Another option in the US Bill is to filter out all traffic to infringing sites originating from US IP addresses and to give the government the power to get court orders requiring search engines to drop infringing sites from their results. The DNS redirect and US IP address filter have been rejected by the Obama administration as undermining united global efforts to address the broader problem of hacking but the position with the search engine censorship is currently unclear. These examples of new legislation and lobbying efforts show that content owners still believe that technical measures are worth pursuing and along with the recent European cases it is clear that the law in the EU and US needs to be adapted and clarified to accommodate these new approaches.

The UK and EU law relating to ISPs and infringing content continues to support the principle that ISP should be able to maintain a passive stance to policing of content where they are mere conduits. The BT case requiring modest use of existing technology does not depart from that approach. It remains to be seen whether the courts will require installation of new technology to prevent content infringement.