In what some consider to be a landmark decision, the European Court of Justice ruled Thursday that forcing Internet service providers (ISPs) to monitor consumer traffic in order to block copyright infringement is incompatible with European Union laws.
The decision comes as a result of a complaint filed in 2004 by SABAM, the Belgian association of authors, composers and publishers, against Scarlet, a telecommunication company and Internet service provider operating in Belgium and the Netherlands.
SABAM alleged that Scarlet's customers were downloading copyrighted works without authorization from peer-to-peer networks and sought an injunction that would force the ISP to prevent the infringement.
The Brussels Court of First Instance granted the injunction and ordered Scarlet to make it impossible for its customers to send or receive files from SABAM's portfolio, which would have forced the ISP to monitor the Internet traffic of all of its customers and build a complex filtering system from its own resources.
The company appealed the verdict and the Brussels Court of Appeals asked the European Court of Justice (ECJ) to clarify if such an injunction would be in violation of E.U. laws.
The ECJ ruled Thursday that imposing an obligation on an ISP to perform general monitoring of consumer traffic in order to protect the right of intellectual property is incompatible with the E-Commerce Directive and other individual rights safeguarded by the E.U. Charter of Fundamental Rights.
First of all, such a system would require the collection and analysis of content and identification of IP addresses, which is protected personal data under E.U. law, the court said. Secondly, such a system could be prone to errors that could result in the blocking of lawful communications in violation of freedom of information principles, it added.
"E.U. law precludes an injunction made against an internet service provider requiring it to install a system for filtering all electronic communications passing via its services which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period," the ECJ said in a public statement.
"We regret the ruling," said the CEO of SABAM, Christophe Depreter, in a phone interview. "We consider that an important door has been closed for authors and composers in their fight against piracy."
However, Depreter said that there are other methods of combating online piracy and the organization will consider other actions to enforce the rights of its members.
SABAM has not taken a decision regarding its legal action against Scarlet yet and Depreter said that the organization will consult with lawyers and technicians over its possibilities. Scarlet could not be reached for comment in time for publication.
The European Commission welcomed the court's clarification that the E-Commerce Directive prohibits the imposing of a general obligation on ISPs and other intermediaries to monitor traffic.
The ruling shows the case for promoting legal content alongside enforcement, said Neelie Kroes, the European Commissioner for Digital Agenda and Vice-President of the European Commission.