As clouds continue to gather around ACTA and other attempts to control online use of copyright works, today's ruling from the European Court provides a useful illustration of the practical challenges enforcement poses. In the case, a Belgian social network, Netlog, was challenging a Belgian Court Order that it should stop making certain musical works available. The claimant, a collecting society, sued because users of the Netlog service were sharing copyrighted musical works through their profiles.

The CJEU characterised the questions before it as whether EU law precludes a court from forcing a hosting service provider to install a system for:

• filtering information stored on its servers by its users,
• which can identify copyright works in the claimant's repertoire,
• which applies to all customers indiscriminately,
• as a preventative measure,
• and for an unlimited period?

The CJEU followed the approach it had taken in a previous case concerning the same rights-holder (SABAM v Scarlet, 2011). Recalling that the e-Commerce Directive prohibits any general requirement to monitor information and that the courts must strike a fair balance between the protection of copyright and the protection of other fundamental rights, the CJEU held that if Netlog installed technology to filter what its network was used for in this way, then this would be disproportionate, may block lawful communications and may infringe users' privacy rights. It would also be costly for Netlog and "result in a serious infringement of the freedom of [Netlog] to conduct its business".

This does not mean injunctions could not be granted against service providers (and indeed last year's English decision in the Newzbin2 case provides an example of the type of Order which EU law probably does permit), but the CJEU is saying that in granting such orders courts need to strike a balance between various fundamental rights protected by EU law. While these include intellectual property rights, they also include the rights of ISPs to conduct business and the rights of ISPs' customers to protect their personal data and to receive or impart information. Here, the Belgian Court had struck the wrong balance.

The outcome of this case was very much in line with recent CJEU pronouncements, in particular its decision in L'Oreal v eBay. As that case made clear, service providers remain at risk of liability for the way their services are used and need to constantly consider proportionate and balanced steps they can take in order to reduce the risk of their systems being used for IP infringement. There is no single test for how far they have to go and in fact this will constantly evolve, as technology and filtering techniques evolve. And as long as the injunction is drawn narrowly enough, it seems likely that rights-owners will be able to use the courts to pressurise service providers to take what steps they can.

16 February 2012