Thursday, 16 February 2012

No general obligation to monitor information stored by online social networking platforms - CJEU in Sabam (C-360/10)

16 February 2012: CJEU's judgement in case Sabam (C-360/10)

The CJEU published today a judgement that is important for consumers' use of the online social networking sites. The potential limitation for consumers using such platforms could come due to lowered protection of their personal data, as well as censorship of information that they are allowed to share with their communities. This censorship could, e.g., happen due to the need to protect copyrights. Namely, parties who hold intellectual property rights to musical, cinematographic etc. works may ask national courts for an injunction that would require hosting service providers to install systems that would identify electronic files containing protected artistic works, with a view to prevent them from being made available to the public at large, in breach of copyright.

Pursuant to the judgement the national courts of Member States may not issue an injunction against a hosting service provider that would oblige it to install a certain system for filtering information. This contested system would require the hosting service provider to filter information which is stored on its servers by its service users as a preventative measure. It would be applicable indiscriminately to all users, for an unlimited period and it would have to be installed at the own expense of the hosting service provider. This specific contested filtering system is seen as being able to prevent future infringements of copyrights.

In the case SABAM - a Belgian management company representing authors, composers and publishers of musical works - asked for such an injunction against Netlog. Netlog runs an online social networking platform where every person who registers acquires a personal space ('profile') which the users fill themselves. Among other data users may also publish musical and audio-visual works in Sabam's repertoire, making them available to the public at large. Netlog itself doesn't pay any fee to Sabam for allowing its users to share Sabam's repertoire, which led Sabam to demand from Netlog ceasing unlawfully making available musical or audio-visual works from Sabam's repertoire. Netlog claimed that in order to comply with such an injunction it would have to install a specific filtering information system.

The CJEU reminded that holders of intellectual property rights may apply for an injunction against operators of online social networking platforms, given that their services may be exploited by users of those platforms to infringe intellectual property rights. (Par. 28) However, the rules adopted by national courts in order to protect intellectual property rights may not require a hosting service provider to carry out general monitoring of the information that it stores. (Par. 33-34) In the case at hand, the injunction would require installation of a filtering system that would require:

"–        first, that the hosting service provider identify, within all of the files stored on its servers by all its service users, the files which are likely to contain works in respect of which holders of intellectual-property rights claim to hold rights;
–        next, that it determine which of those files are being stored and made available to the public unlawfully; and
–        lastly, that it prevent files that it considers to be unlawful from being made available." (Par. 36)

All in all, hosting service provider would have to actively observe files stored by users, and would have to examine almost all of the information thus stored by all of the service users in order to prevent any future infringement of intellectual-property rights. Such general monitoring is prohibited by Article 15(1) of Directive 2000/31 on e-commerce. (Par. 38) 

The CJEU recognizes that the right to intellectual property is enshrined in Article 17(2) of the Charter of Fundamental Rights of the EU. However, it contests that it is not an inviolable right, that would have to be absolutely protected. (Par. 41) Protection of the fundamental right to property has to be balanced against the protection of other fundamental rights. (Par. 42) In the given case a fair balance must be reached between:

"the protection of the intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business enjoyed by operators such as hosting service providers pursuant to Article 16 of the Charter" (Par. 44)

As long as the injunction requires a hosting service provider to install a costly, complicated, permanent computer system at its own expense it has to be seen as seriously infringing the freedom of the hosting service provider to conduct its business. (Par. 46) Moreover, the contested filtering system could infringe also the fundamental rights of service users, namely their right to protection of their personal data and their freedom to receive or impart information (safeguarded by Art. 8 and 11 of the Charter). (Par. 48) Additionally, freedom of information could potentially be infringed, as well, since that filtering system may not distinguish adequately between unlawful and lawful content. As a result, introduction of such a filtering system could lead to the blocking of lawful communication. (Par. 50)

Summing up, it is good news for online social networking sites like MySpace or Facebook, on which consumers may post audio or video files that could potentially infringe someone's copyrights. This judgement confirms that they are not obliged to install general monitoring systems that would filter all information stored by consumers on such platforms.

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