On 24 November 2011, the Court of Justice of the European Union gave its judgement in a case brought by the Belgian collecting society SABAM (Société Belge des Auteurs, Compositeurs et éditeurs) against the Belgian ISP Scarlet Extended (formerly Tiscali SA).
Such judgement highlights that the decisions of a national court related to the imposition of technical measures to ISP in order to deal with copyright infringement by the ISP’s customers, shall strike a balance between the protection of intellectual property rights on the one hand, and the protection of personal data, the freedom of information and the freedom to conduct a business on the other hand.
In 2004 SABAM, which is the collecting society representing the interests of copyright owners in musical compositions brought an interlocutory proceeding against Scarlet – an ISP providing its customers with access to the internet without offering other services such as downloading or file sharing – before the President of the Tribunal de première instance to address the problem of P2P file sharing of digital musical files by Scarlet’s customers.
SABAM realized that a number of subscribers of Scarlet were using the ISP’s services to illegally download, through P2P networks (“which constitute a transparent method of file sharing which is independent, decentralised and features advanced search and download functions”), works within its protected repertoire, without authorisation and without paying royalties.
On this basis SABAM requested that the President of the Tribunal de première instance issue an injunction against Scarlet forcing it to implement all necessary measures to identify on the provider’s network all the electronic files containing a work in respect of which the applicant claims to hold intellectual property rights and to block any such downloading or uploading of illegal files via P2P networks without specific authorization.
The President of the Tribunal recognized the copyright infringement of works within SABAM’s repertoire but prior to ruling on the application for the cessation, appointed an expert to estimate the feasibility of certain technical measures which could be implemented by Scarlet.
In his report, the expert concluded that, despite numerous technical obstacles, the feasibility of filtering and blocking the unlawful sharing of electronic files could not be excluded.
Following the report of the expert, the President of the Tribunal ordered on 29 June 2007 that Scarlet should bring an end to the infringements by making it impossible for its customers to send or receive files containing a musical work in SABAM’s repertoire by means of peer-to-peer software. The judge issued an injunction requiring Scarlet to install specific filtering technology , fixing a term of six months to implement them and imposing a daily penalty of £ 2.500.
Such technical measures would have been preventive, relating to all electronic communications on Scarlet’s network, at Scarlet’s exclusive cost and without limitation of time.
Scarlet appealed against the decision before the Brussels Cour d’Appel, claiming that it was not proved the effectiveness and the permanence of filtering systems and that there were several technical obstacles concerning the installation of possible equipment.
Scarlet also argued that the decision was contrary:
– to Article 15  of Directive 2000/31/EC of 8 June 2000 (“E-Commerce Directive”) as it would impose a general obligation to monitor and to keep surveillance of the communications on its network;
– to the provisions of European Union law on the protection of personal data and the secrecy of communications, since such filtering involves the processing of IP addresses, which are personal data.
Consequently, the Brussels Cour d-Appel proceeded to ask  the Court of Justice of the European Union whether an injunction imposing such a filtering system was compliant with the provisions of the directives listed below as construed in particular in the light of Articles 8 (‘Right to respect for private and family life’) and 10 (‘Freedom of expression’) of the European Convention on the Protection of Human Rights and Fundamental Freedoms:
– E-Commerce Directive (2000/31/EC) on certain legal aspects of information society services, in particular electronic commerce in the Internal Market,
– Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society,
– Directive 2004/48 of 29 April 2004 on the enforcement of intellectual property rights,
– Directive 95/46/EC of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data,
– Directive 2002/58/EC of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector.
The Court of Justice of the European Union found that the adoption of the filtering system would require an active observation of the entirety of the data traffic on its network and that a ruling imposing such an obligation would constitute – inter alia – a serious breach of above mentioned article 15 of the 2000 E-Commerce Directive, which prohibits national authorities from adopting measures which would require an ISP to carry out general monitoring of the information that it transmits on its network.
Such a general monitoring obligation would be incompatible with Article 3 of Directive 2004/48, which states that the measures must be fair and proportionate and must not be excessively costly .
Moreover, the implementation of a filtering system requested by SABAM and imposed by the court of first instance would constitute a violation of the freedom of the intermediary (ISP) to conduct its business due to the complexity and costs associated with the implementation of a permanent system which would require to identify, within all of the electronic communications of all the customers and without limitation in time, the files relating to peer-to-peer traffic, the files containing protected works and among them the files shared unlawfully and finally to block file sharing that it considers to be unlawful.
The core of the decision is constituted by the analyses of the interests involved. In fact, the Court underlines the case requires to strike a balance between the intellectual property rights and the preservation of fundamental rights and that such balance should be also made by the national authorities and courts.
In particular it determines that “the protection of the right to intellectual property is indeed enshrined in Article 17(2)  of the Charter of Fundamental Rights of the European Union (‘the Charter’). There is, however, nothing whatsoever in the wording of that provision or in the Court’s case-law to suggest that that right is inviolable and must for that reason be absolutely protected”.
The Court considers the protection of the right to intellectual property should not imply the infringement of the freedom to conduct business, the removal of the right to protection of personal data or the constriction of the freedom to receive or impart information, which are considered inviolable rights by the Charter of Fundamental Rights of the European Union.
In particular, the injunction requiring the installation of the filtering system in discussion would infringe:
– The right to privacy, as this would involve a systematic analysis of all content and the collection and identification of users’ IP addresses (which are protected personal data as they allow those users to be precisely identified);
– The right to freedom of information, as the system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications;
– The right to conduct a business, as the adoption of the filtering system would result excessively costly and disproportionate.
In this respect, the Court confirms the approach of the decision Promusicae  which states the principle that “the Member States must, when transposing the directives mentioned above, take care to rely on an interpretation of the directives which allows a fair balance to be struck between the various fundamental rights protected by the Community legal order. Further, when implementing the measures transposing those directives, the authorities and courts of the Member States must not only interpret their national law in a manner consistent with those directives but also make sure that they do not rely on an interpretation of them which would be in conflict with those fundamental rights or with the other general principles of Community law, such as the principle of proportionality”.
The conclusion stresses the concept that it is precluded an injunction by a national court made against an internet service provider which requires it to install a system for filtering a) all electronic communications passing via its services, b) which applies indiscriminately to all the customers, c) as a preventive measure, d) exclusively at its expense, e) for an unlimited period.
The decision states two important principles: the first one is that the intellectual property rights are not inviolable and they must be always balanced with other fundamental rights of the person; the second one is that filtering systems are not considered precluded tout-court. If complying with the parameters and the limits expressly set by the Court they should be deemed applicable to intermediaries.
 Case C‑70/10: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010CJ0070:EN:HTML
 The court of first instance imposed to Scarlet the use of the network appliance Audible Magic’s CopySense in order to stop illegal file-sharing. In October 2008 Scarlet demonstrated to the judge that the technology suggested by SABAM did not work because of the incompatibility which made it technically impossible and unreasonably expensive for Scarlet to comply with the judgment of 29 June 2007. The President of the Tribunal allowed the suspension of the penalties for a period of six months. During this term, Scarlet was required to find an alternative measure in order to comply with the judgment of 29 June 2007.
 Article 15 of Directive 2000/31/EC provides: “Member States shall not impose a general obligation on providers to monitor the information that they transmit or store nor a general obligation actively to seek factors or circumstances indicating legal liability”
 The questions addressed by the Brussels Cour d’Appel were:
“(1) Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and 2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms, permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that: ‘They [the National Courts]may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’, to order an [ISP] to install, for all its customers, in abstracto and as a preventive measure, exclusively at the cost of that ISP and for an unlimited period, a system for filtering all electronic communications, both incoming and outgoing, passing via its services, in particular those involving the use of peer-to-peer software, in order to identify on its network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold rights, and subsequently to block the transfer of such files, either at the point at which they are requested or at which they are sent?
(2) If the answer to the [first]question…is in the affirmative, do those directives require a national court, called upon to give a ruling on an application for an injunction against an intermediary whose services are used by a third party to infringe a copyright, to apply the principle of proportionality when deciding on the effectiveness and dissuasive effect of the measure sought?”
 Article 3 of Directive 2004/48 provides:
‘1. Member States shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.
2. Those measures, procedures and remedies shall also be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.’
 Article 17 (Right to property) of Charter of Fundamental Rights of the European Union provides:
1. Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.
2. Intellectual property shall be protected.
 Case C-275/06 – Productores de Música de España (Promusicae) v Telefónica de España SAU