Can you be liable for third-party copyright infringements if you offer password-free free internet access? New case referred to CJEU!

Smart idea?

Via Katfriend and copyright aficionado Tom Ohta (Bristows) comes the news that a new depressingexciting case has just been referred to everybody's favourite court, ie the Court of Justice of the European Union (CJEU). 

It is Case C-484/14 McFadden, a reference for a preliminary ruling from CJEU-loving Member State Germany, seeking clarification as regards the liability of internet service providers (ISPs) for third-party copyright infringements.

While sadly no particular details are (yet) provided on the Curia website (with the sole exception that the application was lodged on 3 November last), more information is available via invariably helpful EU Law Radar, which explains what is at stake here:

"If a person offers [free] non-password-protected access to the Internet [this is what apparently Mr McFadden deliberately did, so that everybody could connect to his shop's WLAN], and an unknown user passes a piece of copyright-infringing music over that Internet connection [this is what happened four years ago], then can the person offering the Internet access be absolved of legal liability on the basis that he is but a ‘mere conduit’ under [Article 12 of] the EU’s ‘E-Commerce’ Directive 2000/31/EC [read in light of Recital 42 in the preamble to this very directive]?"

One the main issues is whether Mr McFadden (1) could be actually considered an ISP and, if so (2) could be protected by the Directive’s ‘safe harbors’ (just to borrow from the language of the US Digital Millennium Copyright Act). 

The main obstacle in this respect may be that the internet connection he provided was free, while Recital 17 in the preamble to the ECommerce Directive states that the notion of information society services "covers any service normally provided for remuneration". 

This Kat notes however that Recital 18 in the preamble to this very directive clarifies that “information society services … in so far as they represent an economic activity, extend to services which are not remunerated by those who receive them”. The CJEU has recently clarified the meaning of Recital 18 in its judgment in Case C-291/13 Papasavvas, a case concerning online defamation which the Court decided on 11 September last. There, the CJEU held that “information society services extend, in so far as they represent an economic activity, to services ‘which are not remunerated by those who receive them [but are for instance remunerated by income generated by advertisement, as it was the case there], such as those offering on-line information or commercial communications’. That interpretation corresponds to that of the concept of ‘services’ within the meaning of Article 57 TFEU, which also does not require the service to be paid for by those for whom it is performed.”

This Kat understands that one of the reasons why Mr McFadden provided password-free free internet access was indeed to drive traffic to his website. So, if ads were displayed there, this might be useful to argue that he got some remuneration from those, and therefore he could be considered an ISP ...  

Coming and going when you please?
Perhaps time to change the rules ...

Anyway, the unofficial translation of the questions referred by Landgericht München I has been also provided by EU Law Radar:

1. When read together with Article 2(a) of the E-Commerce Directive and Article 1(2) of Directive 98/34/EC as amended by Directive 98/48/EC, is the phrase ‘normally provided for remuneration’ in Article 12(1) of the E-Commerce Directive to be interpreted as meaning that the national court must determine whether the person who claims to be a service provider normally provides the service for remuneration; or does it mean that suppliers in the market normally provide this service or comparable ones for remuneration; or that the majority of this or comparable services are offered for a fee?

2. Is the phrase ‘the provision of access to a communication network’ in Article 12(1)(a) of the E-Commerce Directive to be interpreted as meaning that to conform with the Directive that it is significant that the connection is successful when access to a communications network (for example, the Internet) is provided?

3. When Article 2(b) of the E-Commerce Directive refers to ‘provider’, and is read together with Article 12(1)(a), then does the latter provision cover the situation where the information society service actually being provided is a publicly available WLAN, or is for example some other form of promotion or advertising also required?

4. When Article 12(1)(a) of the E-Commerce Directive states a ‘service provider is not liable for the information transmitted’, is this to be interpreted as excluding any claims for injunctive relief, damages, and the recovery of warning costs and court fees, incurred in relation to the copyright infringement concerned, against the access provider or in any event in respect of the initial copyright infringement?

5. Is Article 12(1)(a) of the E-Commerce Directive, when read together with Article 12(3) to be interpreted as meaning that Member States cannot allow a national court from issuing an injunction in proceedings brought against the access provider, whereby the access provider must desist from enabling third parties access via a specific Internet connection to a specific copyright-protected work made electronically available on demand on file-sharing sites?

Surely looking for some inspiration
for his new password

6. Is Article 12(1)(a) of the E-Commerce Directive to be interpreted as meaning that in the circumstances of present case, Article 14(1)(b) applies mutatis mutandis to an injunction?

7. Is Article 12(1)(a) of the E-Commerce Directive when read together with Article 2(b) to be interpreted as meaning that the claims against a service provider are exhausted where a service provider is any natural or legal person who provides an information society service?

8. If the answer to Question 7 is in the negative, then which additional criteria can be required of a service provider when interpreting Article 2(b) of the E-Commerce Directive?

9(a). Taking into account the protection of fundamental legal right of intellectual property, which derives from the right to property (Art 17(2) EU Charter) and the provisions in Directives 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society […], and Directive 2004/48/EC on the enforcement of intellectual property rights […], and taking into account freedom of expression and the freedom to conduct a business in Article 16 of the EU Charter; is Article 12(1)(a) of the E-Commerce Directive to be interpreted as meaning that this does not preclude a decision by the national court in the main proceedings, if that decision makes the access provider liable for costs, and prohibits him from allowing third parties access via a specific internet connection to a specific copyright-protected work or parts thereof, via internet file-sharing sites made electronically available on demand, leaves the access provider free to adopt whichever technical measures in order to comply with this order?

9(b). Does this also apply when the access provider can only really comply with the injunction if he shuts down the internet connection or uses password protection or checks every ongoing communication to see whether that particular copyright-protected work is illicitly exchanged once again, and that this is clear from the start, and does not become apparent only for the first time in the context of enforcement proceedings or sentencing proceedings?

A while ago in a very similar [if not the same altogether?] case a German court ruled that “Private users are obligated to check whether their wireless connection is adequately secured to the danger of unauthorized third parties abusing it to commit copyright violation”. 

This Kat is by no means an expert in German copyright law, but: even if someone like Mr McFadden did not qualify for safe harbor protection under the German equivalent of the ECommerce Directive because he could not be considered an ISP, wouldn't a conclusion of this kind result, to say the least, in transforming secondary infringement into some sort of strict liability regime?

We’ll see what the CJEU says. Certainly, if the CJEU ruled that someone who offers password-free free internet connection may be in principle liable for third-party copyright infringements, this would have far-reaching implications. The most immediate one might be having to forget your free, password-free Starbucks Wi-Fi connection ...