JUDGMENT OF THE COURT (Fourth Chamber)

27 March 2014 (*)

(Request for a preliminary ruling — Approximation of laws — Copyright and related rights — Information society — Directive 2001/29/EC — Website making cinematographic works available to the public without the consent of the holders of a right related to copyright — Article 8(3) — Concept of ‘intermediaries whose services are used by a third party to infringe a copyright or related right’ — Internet service provider — Order addressed to an internet service provider prohibiting it from giving its customers access to a website — Balancing of fundamental rights)

In Case C‰ЫФ314/12,

REQUEST for a preliminary ruling under Article 267 TFEU from the Oberster Gerichtshof (Austria), made by decision of 11 May 2012, received at the Court on 29 June 2012, in the proceedings

UPC Telekabel Wien GmbH

v

Constantin Film Verleih GmbH,

Wega Filmproduktionsgesellschaft mbH,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, K. Lenaerts, Vice-President of the Court, acting as a judge of the Fourth Chamber, M. Safjan, J. Malenovský (Rapporteur) and A. Prechal, Judges,

Advocate General: P. Cruz Villalón,

Registrar: A. Impellizzeri, Administrator,

having regard to the written procedure and further to the hearing on 20 June 2013,

after considering the observations submitted on behalf of:

–        UPC Telekabel Wien GmbH, by M. Bulgarini and T. Höhne, Rechtsanwälte,

–        Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbH, by A. Manak and N. Kraft, Rechtsanwälte,

–        the Austrian Government, by A. Posch, acting as Agent,

–        the Italian Government, by G. Palmieri, acting as Agent, assisted by W. Ferrante, avvocato dello Stato,

–        the Netherlands Government, by C. Schillemans and C. Wissels, acting as Agents,

–        the United Kingdom Government, by L. Christie, acting as Agent, assisted by S. Malynicz, barrister,

–        the European Commission, by J. Samnadda and F.W. Bulst, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 26 November 2013,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 5(1) and (2)(b) and Article 8(3) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10), and of certain fundamental rights enshrined in EU law.

2        The request has been made in proceedings between (i) UPC Telekabel Wien GmbH (‘UPC Telekabel’) and (ii) Constantin Film Verleih GmbH (‘Constantin Film’) and Wega Filmproduktionsgesellschaft mbH (‘Wega’) concerning an application for UPC Telekabel to be ordered to block the access of its customers to a website making available to the public some of the films of Constantin Film and of Wega without their consent.

 Legal context

 EU law

3        Recitals 9 and 59 in the preamble to Directive 2001/29 state:

‘(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. … Intellectual property has therefore been recognised as an integral part of property.

…

(59) In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice to any other sanctions and remedies available, rightholders should have the possibility of applying for an injunction against an intermediary who carries a third party’s infringement of a protected work or other subject-matter in a network. … The conditions and modalities relating to such injunctions should be left to the national law of the Member States.’

4        Article 1 of that directive, headed ‘Scope’, provides in paragraph 1:

‘This Directive concerns the legal protection of copyright and related rights in the framework of the internal market, with particular emphasis on the information society.’

5        Article 3 of the same directive, headed ‘Right of communication to the public of works and right of making available to the public other subject-matter’, provides in paragraph 2:

‘Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

…

(c)      for the producers of the first fixations of films, of the original and copies of their films;

…’

6        Article 8 of Directive 2001/29, headed ‘Sanctions and remedies’, states in paragraph 3:

‘Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.’

 Austrian law

7        Paragraph 18a(1) of the Law on copyright (Urheberrechtsgesetz) of 9 April 1936 (BGBl. 111/1936), as amended by the new law of 2003 on copyright (Urheberrechtsgesetz-Novelle 2003, BGBl. I, 32/2003, ‘the UrhG’), reads:

‘The author has the exclusive right to make the work available to the public, by wire or wireless means, in such a way which allows members of the public to access it from a place and at a time chosen by them.’

8        Paragraph 81(1) and (1a) of the UrhG state:

‘(1) A person who has suffered an infringement of any exclusive rights conferred by this Law, or who fears such an infringement, shall be entitled to bring proceedings for a restraining injunction. Legal proceedings may also be brought against the proprietor of a business if the infringement is committed in the course of the activities of his business by one of his employees or by a person acting under his control, or if there is a danger that such an infringement will be committed; Paragraph 81(1a) shall apply mutatis mutandis.

(1a)      If the person who has committed such an infringement, or by whom there is a danger of such an infringement being committed, uses the services of an intermediary for that purpose, the intermediary shall also be liable to an injunction under subparagraph (1). …’.

9        Paragraph 355(1) of the Code of Enforcement (Executionsordnung) states:

‘Enforcement against the person obligated to desist from an activity or to tolerate the carrying out of an activity shall take place, at the time of consent to enforcement, by the imposition by the enforcement court, upon application, of a fine for any non-compliance after the obligation became executory. In the event of further non-compliance, the enforcement court shall, upon application, impose a further fine or a period of imprisonment of up to one year in total. …’.

10      It is apparent from the explanations given by the referring court in its request for a preliminary ruling that, at the stage of the enforcement procedure, the addressee of the prohibition can argue, in order to avoid liability, that he has taken all of the measures that could be expected of him in order to prevent the result prohibited.

 The dispute in the main proceedings and the questions referred for a preliminary ruling

11      Having established that a website was offering, without their agreement, either a download or ‘streaming’ of some of the films which they had produced, Constantin Film and Wega, two film production companies, referred the matter to the court responsible for hearing applications for interim measures with a view to obtaining, on the basis of Article 81(1a) of the UrhG, an order enjoining UPC Telekabel, an internet service provider, to block the access of its customers to the website at issue, inasmuch as that site makes available to the public, without their consent, cinematographic works over which they hold a right related to copyright.

12      By order of 13 May 2011, the Handelsgericht Wien (Commercial Court, Vienna) (Austria) prohibited UPC Telekabel from providing its customers with access to the website at issue; that prohibition was to be carried out in particular by blocking that site’s domain name and current IP (‘Internet Protocol’) address and any other IP address of that site of which UPC Telekabel might be aware.

13      In June 2011, the website at issue ceased its activity following an action of the German police forces against its operators.

14      By order of 27 October 2011, the Oberlandesgericht Wien (Higher Regional Court, Vienna) (Austria), as an appeal court, partially reversed the order of the court of first instance in so far as it had wrongly specified the means that UPC Telekabel had to introduce in order to block the website at issue and thus execute the injunction. In order to reach that conclusion, the Oberlandesgericht Wien first of all held that Article 81(1a) of the UrhG must be interpreted in the light of Article 8(3) of Directive 2001/29. It then held that, by giving its customers access to content illegally placed online, UPC Telekabel had to be regarded as an intermediary whose services were used to infringe a right related to copyright, with the result that Constantin Film and Wega were entitled to request that an injunction be issued against UPC Telekabel. However, as regards the protection of copyright, the Oberlandesgericht Wien held that UPC Telekabel could only be required, in the form of an obligation to achieve a particular result, to forbid its customers access to the website at issue, but that it had to remain free to decide the means to be used.

15      UPC Telekabel appealed on a point of law to the Oberster Gerichtshof (Supreme Court) (Austria).

16      In support of its appeal, UPC Telekabel submits inter alia that its services could not be considered to be used to infringe a copyright or related right within the meaning of Article 8(3) of Directive 2001/29 because it did not have any business relationship with the operators of the website at issue and it was not established that its own customers acted unlawfully. In any event, UPC Telekabel claims that the various blocking measures which may be introduced can all be technically circumvented and that some of them are excessively costly.

17      In those circumstances, the Oberster Gerichtshof decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1.      Is Article 8(3) of Directive 2001/29 … to be interpreted as meaning that a person who makes protected subject-matter available on the internet without the rightholder’s consent [for the purpose of Article 3(2) of Directive 2001/29] is using the services of the [internet] access providers of persons seeking access to that protected subject-matter?

      If the answer to the first question is in the negative:

2.      Are reproduction for private use [within the meaning of Article 5(2)(b) of Directive 2001/29] and transient and incidental reproduction [within the meaning of Article 5(1) of Directive 2001/29] permissible only if the original of the reproduction was lawfully reproduced, distributed or made available to the public?

If the answer to the first question or the second question is in the affirmative and an injunction is therefore to be issued against the user’s [internet] access provider in accordance with Article 8(3) of [Directive 2001/29]:

3.      Is it compatible with Union law, in particular with the necessary balance between the parties’ fundamental rights, to prohibit in general terms an [internet] access provider from allowing its customers access to a certain website (thus without ordering specific measures) as long as the material available on that website is provided exclusively or predominantly without the rightholder’s consent, if the access provider can avoid incurring coercive penalties for breach of the prohibition by showing that it had nevertheless taken all reasonable measures?

If the answer to the third question is in the negative:

4.      Is it compatible with Union law, in particular with the necessary balance between the parties’ fundamental rights, to require an [internet] access provider to take specific measures to make it more difficult for its customers to access a website containing material that is made available unlawfully if those measures require not inconsiderable costs and can easily be circumvented without any special technical knowledge?’

 Consideration of the questions referred

 Admissibility of the questions referred

18      As a preliminary point, it should be noted that the fact that the website at issue in the main proceedings has ceased its activity does not make the questions referred inadmissible.

19      In accordance with settled case-law, in proceedings under Article 267 TFEU, which are based on a clear separation of functions between the national courts and the Court of Justice, it is solely for the national court, before which the dispute has been brought and which must assume responsibility for the judicial decision to be made, to determine, in the light of the particular circumstances of the case, both the need for and the relevance of the questions that it submits to the Court (see, to that effect, Case C‰ЫФ415/11 Aziz [2013] ECR, paragraph 34).

20      Thus, the Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (Aziz, paragraph 35).

21      However, that is not the case in the dispute in the main proceedings because it is apparent from the request for a preliminary ruling that, under Austrian law, the referring court must make its decision on the basis of the facts as set out in the decision at first instance, that is to say at a time when the website at issue in the main proceedings was still accessible.

22      It follows from the above that the request for a preliminary ruling is admissible.

 The first question

23      By its first question, the referring court asks, essentially, whether Article 8(3) of Directive 2001/29 must be interpreted as meaning that a person who makes protected subject-matter available to the public on a website without the agreement of the rightholder, for the purpose of Article 3(2) of that directive, is using the services of the internet service provider of the persons accessing that subject-matter, which is to be regarded as an intermediary within the meaning of Article 8(3) of Directive 2001/29.

24      As a preliminary point, it should be noted that, in the case in the main proceedings, it is common ground that the protected subject-matter was made available to users of a website without the consent of the rightholders mentioned in Article 3(2) of Directive 2001/29.

25      Given that, according to that provision, rightholders have the exclusive right to authorise or prohibit any act of making available to the public, it must be stated that an act of making protected subject-matter available to the public on a website without the rightholders’ consent infringes copyright and related rights.

26      In order to remedy such a situation of infringement of the rights at issue, Article 8(3) of Directive 2001/29 provides for the possibility for rightholders to apply for an injunction against intermediaries whose services are used by a third party to infringe one of their rights.

27      As Recital 59 in the preamble to Directive 2001/29 states, since the services of intermediaries are increasingly used for infringing copyright or related rights, such intermediaries are, in many cases, best placed to bring such infringing activities to an end.

28      In the present case, the Handelsgericht Wien and then the Oberlandesgericht Wien ordered UPC Telekabel, the internet service provider addressed by the injunction at issue in the main proceedings, to bring the infringement of the rights of Constantin Film and of Wega to an end.

29      However, UPC Telekabel disputes that it may be considered, for the purposes of Article 8(3) of Directive 2001/29, to be an intermediary whose services are used to infringe a copyright or related right.

30      In this respect, it follows from Recital 59 in the preamble to Directive 2001/29 that the term ‘intermediary’ used in Article 8(3) of that directive covers any person who carries a third party’s infringement of a protected work or other subject-matter in a network.

31      Having regard to the objective pursued by Directive 2001/29, as shown in particular by Recital 9 thereof, which is to guarantee rightholders a high level of protection, the concept of infringement thus used must be understood as including the case of protected subject-matter placed on the internet and made available to the public without the agreement of the rightholders at issue.

32      Accordingly, given that the internet service provider is an inevitable actor in any transmission of an infringement over the internet between one of its customers and a third party, since, in granting access to the network, it makes that transmission possible (see, to that effect, the order in Case C‑557/07 LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten [2009] ECR I‑1227, paragraph 44), it must be held that an internet service provider, such as that at issue in the main proceedings, which allows its customers to access protected subject-matter made available to the public on the internet by a third party is an intermediary whose services are used to infringe a copyright or related right within the meaning of Article 8(3) of Directive 2001/29.

33      Such a conclusion is borne out by the objective pursued by Directive 2001/29. To exclude internet service providers from the scope of Article 8(3) of Directive 2001/29 would substantially diminish the protection of rightholders sought by that directive (see, to that effect, order in LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten, paragraph 45).

34      That conclusion cannot be called into question by the argument that, for Article 8(3) of Directive 2001/29 to be applicable, there has to be a contractual link between the internet service provider and the person who infringed a copyright or related right.

35      Neither the wording of Article 8(3) nor any other provision of Directive 2001/29 indicates that a specific relationship between the person infringing copyright or a related right and the intermediary is required. Furthermore, that requirement cannot be inferred from the objectives pursued by that directive, given that to admit such a requirement would reduce the legal protection afforded to the rightholders at issue, whereas the objective of that directive, as is apparent inter alia from Recital 9 in its preamble, is precisely to guarantee them a high level of protection.

36      Nor is the conclusion reached by the Court in paragraph 30 of this judgment invalidated by the assertion that, in order to obtain the issue of an injunction against an internet service provider, the holders of a copyright or of a related right must show that some of the customers of that provider actually access, on the website at issue, the protected subject-matter made available to the public without the agreement of the rightholders.

37      Directive 2001/29 requires that the measures which the Member States must take in order to conform to that directive are aimed not only at bringing to an end infringements of copyright and of related rights, but also at preventing them (see, to that effect, Case C‑70/10Scarlet Extended [2011] ECR I‑11959, paragraph 31, and Case C‑360/10 SABAM [2012] ECR, paragraph 29).

38      Such a preventive effect presupposes that the holders of a copyright or of a related right may act without having to prove that the customers of an internet service provider actually access the protected subject-matter made available to the public without their agreement.

39      That is all the more so since the existence of an act of making a work available to the public presupposes only that the work was made available to the public; it is not decisive that persons who make up that public have actually had access to that work or not (see, to that effect, Case C‑306/05 SGAE [2006] ECR I‑11519, paragraph 43).

40      In view of the above, the answer to the first question is that Article 8(3) of Directive 2001/29 must be interpreted as meaning that a person who makes protected subject-matter available to the public on a website without the agreement of the rightholder, for the purpose of Article 3(2) of that directive, is using the services of the internet service provider of the persons accessing that subject-matter, which must be regarded as an intermediary within the meaning of Article 8(3) of Directive 2001/29.

 The second question

41      In the light of the reply to the first question, it is not necessary to reply to the second question.

 The third question

42      By its third question, the referring court asks, essentially, whether the fundamental rights recognised by EU law must be interpreted as precluding a court injunction prohibiting an internet service provider from allowing its customers access to a website placing protected subject-matter online without the agreement of the rightholders when that injunction does not specify the measures which that access provider must take and when that access provider can avoid incurring coercive penalties for breach of that injunction by showing that it has taken all reasonable measures.

43      In this respect, as is apparent from Recital 59 in the preamble to Directive 2001/29, the rules for the injunctions which the Member States must lay down pursuant to Article 8(3) of the directive, such as those relating to the conditions to be met and the procedure to be followed, are a matter for national law.

44      That said, those national rules, and likewise their application by the national courts, must observe the limitations arising from Directive 2001/29 and from the sources of law to which Recital 3 in its preamble refers (see, to that effect, Scarlet Extended, paragraph 33 and the case-law cited there).

45      In order to assess whether an injunction such as that at issue in the main proceedings, taken on the basis of Article 8(3) of Directive 2001/29, is consistent with EU law, it is therefore necessary to take account in particular of the requirements that stem from the protection of the applicable fundamental rights, and to do so in accordance with Article 51 of the Charter of Fundamental Rights of the European Union (‘the Charter’) (see, to that effect, Scarlet Extended, paragraph 41).

46      The Court has already ruled that, where several fundamental rights are at issue, the Member States must, when transposing a directive, ensure that they rely on an interpretation of the directive which allows a fair balance to be struck between the applicable fundamental rights protected by the European Union legal order. Then, when implementing the measures transposing that directive, the authorities and courts of the Member States must not only interpret their national law in a manner consistent with that directive but also ensure that they do not rely on an interpretation of it which would be in conflict with those fundamental rights or with the other general principles of EU law, such as the principle of proportionality (see, to that effect, Case C‑275/06 Promusicae [2008] ECR I‑271, paragraph 68).

47      In the present case, it must be observed that an injunction such as that at issue in the main proceedings, taken on the basis of Article 8(3) of Directive 2001/29, makes it necessary to strike a balance, primarily, between (i) copyrights and related rights, which are intellectual property and are therefore protected under Article 17(2) of the Charter, (ii) the freedom to conduct a business, which economic agents such as internet service providers enjoy under Article 16 of the Charter, and (iii) the freedom of information of internet users, whose protection is ensured by Article 11 of the Charter.

48      As regards the freedom to conduct a business, the adoption of an injunction such as that at issue in the main proceedings restricts that freedom.

49      The freedom to conduct a business includes, inter alia, the right for any business to be able to freely use, within the limits of its liability for its own acts, the economic, technical and financial resources available to it.

50      An injunction such as that at issue in the main proceedings constrains its addressee in a manner which restricts the free use of the resources at his disposal because it obliges him to take measures which may represent a significant cost for him, have a considerable impact on the organisation of his activities or require difficult and complex technical solutions.

51      However, such an injunction does not seem to infringe the very substance of the freedom of an internet service provider such as that at issue in the main proceedings to conduct a business.

52      First, an injunction such as that at issue in the main proceedings leaves its addressee to determine the specific measures to be taken in order to achieve the result sought, with the result that he can choose to put in place measures which are best adapted to the resources and abilities available to him and which are compatible with the other obligations and challenges which he will encounter in the exercise of his activity.

53      Secondly, such an injunction allows its addressee to avoid liability by proving that he has taken all reasonable measures. That possibility of exoneration clearly has the effect that the addressee of the injunction will not be required to make unbearable sacrifices, which seems justified in particular in the light of the fact that he is not the author of the infringement of the fundamental right of intellectual property which has led to the adoption of the injunction.

54      In that regard, in accordance with the principle of legal certainty, it must be possible for the addressee of an injunction such as that at issue in the main proceedings to maintain before the court, once the implementing measures which he has taken are known and before any decision imposing a penalty on him is adopted, that the measures taken were indeed those which could be expected of him in order to prevent the proscribed result.

55      None the less, when the addressee of an injunction such as that at issue in the main proceedings chooses the measures to be adopted in order to comply with that injunction, he must ensure compliance with the fundamental right of internet users to freedom of information.

56      In this respect, the measures adopted by the internet service provider must be strictly targeted, in the sense that they must serve to bring an end to a third party’s infringement of copyright or of a related right but without thereby affecting internet users who are using the provider’s services in order to lawfully access information. Failing that, the provider’s interference in the freedom of information of those users would be unjustified in the light of the objective pursued.

57      It must be possible for national courts to check that that is the case. In the case of an injunction such as that at issue in the main proceedings, the Court notes that, if the internet service provider adopts measures which enable it to achieve the required prohibition, the national courts will not be able to carry out such a review at the stage of the enforcement proceedings if there is no challenge in that regard. Accordingly, in order to prevent the fundamental rights recognised by EU law from precluding the adoption of an injunction such as that at issue in the main proceedings, the national procedural rules must provide a possibility for internet users to assert their rights before the court once the implementing measures taken by the internet service provider are known.

58      As regards intellectual property, it should be pointed out at the outset that it is possible that the enforcement of an injunction such as that in the main proceedings will not lead to a complete cessation of the infringements of the intellectual property right of the persons concerned.

59      First, as has been stated, the addressee of such an injunction has the possibility of avoiding liability, and thus of not adopting some measures that may be achievable, if those measures are not capable of being considered reasonable.

60      Secondly, it is possible that a means of putting a complete end to the infringements of the intellectual property right does not exist or is not in practice achievable, as a result of which some measures taken might be capable of being circumvented in one way or another.

61      The Court notes that there is nothing whatsoever in the wording of Article 17(2) of the Charter to suggest that the right to intellectual property is inviolable and must for that reason be absolutely protected (see, to that effect, Scarlet Extended, paragraph 43).

62      None the less, the measures which are taken by the addressee of an injunction, such as that at issue in the main proceedings, when implementing that injunction must be sufficiently effective to ensure genuine protection of the fundamental right at issue, that is to say that they must have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter made available to them in breach of that fundamental right.

63      Consequently, even though the measures taken when implementing an injunction such as that at issue in the main proceedings are not capable of leading, in some circumstances, to a complete cessation of the infringements of the intellectual property right, they cannot however be considered to be incompatible with the requirement that a fair balance be found, in accordance with Article 52(1), in fine, of the Charter, between all applicable fundamental rights, provided that (i) they do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and (ii) that they have the effect of preventing unauthorised access to protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter that has been made available to them in breach of the intellectual property right.

64      In the light of the foregoing considerations, the answer to the third question is that the fundamental rights recognised by EU law must be interpreted as not precluding a court injunction prohibiting an internet service provider from allowing its customers access to a website placing protected subject-matter online without the agreement of the rightholders when that injunction does not specify the measures which that access provider must take and when that access provider can avoid incurring coercive penalties for breach of that injunction by showing that it has taken all reasonable measures, provided that (i) the measures taken do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and (ii) that those measures have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter that has been made available to them in breach of the intellectual property right, that being a matter for the national authorities and courts to establish.

 The fourth question

65      In the light of the reply to the third question, it is not necessary to reply to the fourth question.

 Costs

66      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

1.      Article 8(3) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that a person who makes protected subject-matter available to the public on a website without the agreement of the rightholder, for the purpose of Article 3(2) of that directive, is using the services of the internet service provider of the persons accessing that subject-matter, which must be regarded as an intermediary within the meaning of Article 8(3) of Directive 2001/29.

2.      The fundamental rights recognised by EU law must be interpreted as not precluding a court injunction prohibiting an internet service provider from allowing its customers access to a website placing protected subject-matter online without the agreement of the rightholders when that injunction does not specify the measures which that access provider must take and when that access provider can avoid incurring coercive penalties for breach of that injunction by showing that it has taken all reasonable measures, provided that (i) the measures taken do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and (ii) that those measures have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter that has been made available to them in breach of the intellectual property right, that being a matter for the national authorities and courts to establish.

European Court of Justice, March 27, 2014, C-314/12, UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproducktionsgesell-schaft mbH

(Summary by Giancarlo F Frosio)

The European Court of Justice has published a long awaited decision dealing with the legitimacy of blocking orders in PC Telekabel Wien GmbH v Constantin FilmVerleih GmbH e Wega Filmsproduktionsgesellschaft mbH. The decision came a few weeks after the Advocate General delivered his opinion on the case. We refer to a previous blog post discussing that opinion for any factual background information to the case. Additional coverage of the case can be found also here. The core of the ECJ decision substantially departed from the Advocate General conclusions. In a quite surprising twist, the ECJ is loosening the stricter standard proposed by the Advocate General. Rather than requiring a court injunction to specify the measures that an access provider must take in order to prevent further copyright infringement online, the ECJ legitimates blanket injunctions.

Preliminary the ECJ has confirmed that an access provider whose services are used to place protected subject matter online without the agreement of the rightholders must be regarded as an intermediary within the meaning of Article 8(3) of Directive 2001/29. Article 8(3) provides for the possibility for rightholders to apply for an injunction against intermediaries whose services are used by a third party to infringe copyright. The ECJ, therefore, in its decision, turns to the legitimacy of these injunctions.

First, the ECJ stated that EU law must be interpreted as not precluding a court injunction that does not specify the measures which an access provider must take to block access to a website making available copyrighted material without the rightsholders’ permission. 

Second, the ECJ concludes that blocking orders can be imposed on access providers when they can avoid incurring coercive penalties for breach of that injunction by showing that they have taken all reasonable measures. According to the ECJ, measures are deemed “reasonable” provided that

(i) they do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and

(ii) they have the effect of preventing unauthorized access to copyrighted materials or, at least, of seriously discouraging internet users from accessing infringing materials.

The ECJ observed that this arrangement should serve best the balance between (i) copyrights and related rights, (ii) the freedom to conduct a business, and (iii) the freedom of information of internet users.

§ 501. Infringement of copyright

(a) Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A (a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be. For purposes of this chapter (other than section 506), any reference to copyright shall be deemed to include the rights conferred by section 106A (a). As used in this subsection, the term “anyone” includes any State, any instrumentality of a State, and any officer or employee of a State or instrumentality of a State acting in his or her official capacity. Any State, and any such instrumentality, officer, or employee, shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity.

(b) The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it. The court may require such owner to serve written notice of the action with a copy of the complaint upon any person shown, by the records of the Copyright Office or otherwise, to have or claim an interest in the copyright, and shall require that such notice be served upon any person whose interest is likely to be affected by a decision in the case. The court may require the joinder, and shall permit the intervention, of any person having or claiming an interest in the copyright.

(c) For any secondary transmission by a cable system that embodies a performance or a display of a work which is actionable as an act of infringement under subsection (c) of section 111, a television broadcast station holding a copyright or other license to transmit or perform the same version of that work shall, for purposes of subsection (b) of this section, be treated as a legal or beneficial owner if such secondary transmission occurs within the local service area of that television station.

(d) For any secondary transmission by a cable system that is actionable as an act of infringement pursuant to section 111 (c)(3), the following shall also have standing to sue:

(i) the primary transmitter whose transmission has been altered by the cable system; and

(ii) any broadcast station within whose local service area the secondary transmission occurs.

(f)

(1) With respect to any secondary transmission that is made by a satellite carrier of a performance or display of a work embodied in a primary transmission and is actionable as an act of infringement under section 122, a television broadcast station holding a copyright or other license to transmit or perform the same version of that work shall, for purposes of subsection (b) of this section, be treated as a legal or beneficial owner if such secondary transmission occurs within the local market of that station.

(2) A television broadcast station may file a civil action against any satellite carrier that has refused to carry television broadcast signals, as required under section 122 (a)(2), to enforce that television broadcast station’s rights under section 338(a) of the Communications Act of 1934.

(Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2584; Pub. L. 100–568, § 10(a), Oct. 31, 1988, 102 Stat. 2860; Pub. L. 100–667, title II, § 202(3), Nov. 16, 1988, 102 Stat. 3957; Pub. L. 101–553, § 2(a)(1), Nov. 15, 1990, 104 Stat. 2749; Pub. L. 101–650, title VI, § 606(a), Dec. 1, 1990, 104 Stat. 5131; Pub. L. 106–44, § 1(g)(5), Aug. 5, 1999, 113 Stat. 222; Pub. L. 106–113, div. B, § 1000(a)(9) [title I, §§ 1002(b), 1011 (b)(3)], Nov. 29, 1999, 113 Stat. 1536, 1501A–527, 1501A–544; Pub. L. 107–273, div. C, title III, § 13210(4)(B), Nov. 2, 2002, 116 Stat. 1909.)

§ 502. Remedies for infringement: Injunctions

(a) Any court having jurisdiction of a civil action arising under this title may, subject to the provisions of section 1498 of title 28, grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.

(b) Any such injunction may be served anywhere in the United States on the person enjoined; it shall be operative throughout the United States and shall be enforceable, by proceedings in contempt or otherwise, by any United States court having jurisdiction of that person. The clerk of the court granting the injunction shall, when requested by any other court in which enforcement of the injunction is sought, transmit promptly to the other court a certified copy of all the papers in the case on file in such clerk’s office.

(Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2584.)

§ 503. Remedies for infringement: Impounding and disposition of infringing articles

(a)

(1) At any time while an action under this title is pending, the court may order the impounding, on such terms as it may deem reasonable—

(A) of all copies or phonorecords claimed to have been made or used in violation of the exclusive right of the copyright owner;

(B) of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced; and

(C) of records documenting the manufacture, sale, or receipt of things involved in any such violation, provided that any records seized under this subparagraph shall be taken into the custody of the court.

(2) For impoundments of records ordered under paragraph (1)(C), the court shall enter an appropriate protective order with respect to discovery and use of any records or information that has been impounded. The protective order shall provide for appropriate procedures to ensure that confidential, private, proprietary, or privileged information contained in such records is not improperly disclosed or used.

(3) The relevant provisions of paragraphs (2) through (11) of section 34(d) of the Trademark Act (15 U.S.C. 1116 (d)(2) through (11)) shall extend to any impoundment of records ordered under paragraph (1)(C) that is based upon an ex parte application, notwithstanding the provisions of rule 65 of the Federal Rules of Civil Procedure. Any references in paragraphs (2) through (11) of section 34(d) of the Trademark Act to section 32 of such Act shall be read as references to section 501 of this title, and references to use of a counterfeit mark in connection with the sale, offering for sale, or distribution of goods or services shall be read as references to infringement of a copyright.

(b) As part of a final judgment or decree, the court may order the destruction or other reasonable disposition of all copies or phonorecords found to have been made or used in violation of the copyright owner’s exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.

(Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2585; Pub. L. 110–403, title I, § 102(a), Oct. 13, 2008, 122 Stat. 4258; Pub. L. 111–295, § 6(d), Dec. 9, 2010, 124 Stat. 3181.)

§ 504. Remedies for infringement: Damages and profits

(a) In General.— Except as otherwise provided by this title, an infringer of copyright is liable for either—

(1) the copyright owner’s actual damages and any additional profits of the infringer, as provided by subsection (b); or

(2) statutory damages, as provided by subsection (c).

(b) Actual Damages and Profits.— The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

(c) Statutory Damages.—

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107, if the infringer was:

(i) an employee or agent of a nonprofit educational institution, library, or archives acting within the scope of his or her employment who, or such institution, library, or archives itself, which infringed by reproducing the work in copies or phonorecords; or

(ii) a public broadcasting entity which or a person who, as a regular part of the nonprofit activities of a public broadcasting entity (as defined in section 118 (f)) infringed by performing a published nondramatic literary work or by reproducing a transmission program embodying a performance of such a work.

(3)

(A) In a case of infringement, it shall be a rebuttable presumption that the infringement was committed willfully for purposes of determining relief if the violator, or a person acting in concert with the violator, knowingly provided or knowingly caused to be provided materially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a domain name used in connection with the infringement.

(B) Nothing in this paragraph limits what may be considered willful infringement under this subsection.

(C) For purposes of this paragraph, the term “domain name” has the meaning given that term in section 45 of the Act entitled “An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes” approved July 5, 1946 (commonly referred to as the “Trademark Act of 1946”; 15 U.S.C. 1127).

(d) Additional Damages in Certain Cases.— In any case in which the court finds that a defendant proprietor of an establishment who claims as a defense that its activities were exempt under section 110 (5) did not have reasonable grounds to believe that its use of a copyrighted work was exempt under such section, the plaintiff shall be entitled to, in addition to any award of damages under this section, an additional award of two times the amount of the license fee that the proprietor of the establishment concerned should have paid the plaintiff for such use during the preceding period of up to 3 years.

(Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2585; Pub. L. 100–568, § 10(b), Oct. 31, 1988, 102 Stat. 2860; Pub. L. 105–80, § 12(a)(13), Nov. 13, 1997, 111 Stat. 1535; Pub. L. 105–298, title II, § 204, Oct. 27, 1998, 112 Stat. 2833; Pub. L. 106–160, § 2, Dec. 9, 1999, 113 Stat. 1774; Pub. L. 108–482, title II, § 203, Dec. 23, 2004, 118 Stat. 3916; Pub. L. 111–295, § 6(f)(2), Dec. 9, 2010, 124 Stat. 3181.)

§ 505. Remedies for infringement: Costs and attorney’s fees

In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.

(Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2586.)

§ 506. Criminal offenses

(a) Criminal Infringement.— 

(1) In general.— Any person who willfully infringes a copyright shall be punished as provided  under section 2319 of title 18, if the infringement was committed— 

(A) for purposes of commercial advantage or private financial gain; 

(B) by the reproduction or distribution, including by electronic means, during any 180–day  period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a  total retail value of more than $1,000; or 

(C) by the distribution of a work being prepared for commercial distribution, by making it  available on a computer network accessible to members of the public, if such person knew or  should have known that the work was intended for commercial distribution. 

(2) Evidence.— For purposes of this subsection, evidence of reproduction or distribution of a  copyrighted work, by itself, shall not be sufficient to establish willful infringement of a copyright. 

(3) Definition.— In this subsection, the term “work being prepared for commercial distribution”  means— 

(A) a computer program, a musical work, a motion picture or other audiovisual work, or a  sound recording, if, at the time of unauthorized distribution— 

(i)the copyright owner has a reasonable expectation of commercial distribution; and 

(ii) the copies or phonorecords of the work have not been commercially distributed; or 

(B) a motion picture, if, at the time of unauthorized distribution, the motion picture— 

(i) has been made available for viewing in a motion picture exhibition facility; and 

(ii) has not been made available in copies for sale to the general public in the United  States in a format intended to permit viewing outside a motion picture exhibition facility. 

(b) Forfeiture, Destruction, and Restitution.— Forfeiture, destruction, and restitution relating to  this section shall be subject to section 2323 of title 18, to the extent provided in that section, in addition  to any other similar remedies provided by law. 

(c) Fraudulent Copyright Notice.— Any person who, with fraudulent intent, places on any article  a notice of copyright or words of the same purport that such person knows to be false, or who, with  fraudulent intent, publicly distributes or imports for public distribution any article bearing such notice  or words that such person knows to be false, shall be fined not more than $2,500. 

(d) Fraudulent Removal of Copyright Notice.— Any person who, with fraudulent intent, removes  or alters any notice of copyright appearing on a copy of a copyrighted work shall be fined not more  than $2,500. 

(e) False Representation.— Any person who knowingly makes a false representation of a material  fact in the application for copyright registration provided for by section 409, or in any written statement  filed in connection with the application, shall be fined not more than $2,500. 

(f) Rights of Attribution and Integrity.— Nothing in this section applies to infringement of the rights conferred by section 106A (a).

(Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2586; Pub. L. 97–180, § 5, May 24, 1982, 96 Stat.  93; Pub. L. 101–650, title VI, § 606(b), Dec. 1, 1990, 104 Stat. 5131; Pub. L. 105–147, § 2(b), Dec. 16,  1997, 111 Stat. 2678; Pub. L. 109–9, title I, § 103(a), Apr. 27, 2005, 119 Stat. 220; Pub. L. 110–403, title  II, § 201(a), Oct. 13, 2008, 122 Stat. 4260.)

JUDGMENT OF THE COURT (Third Chamber)

24 November 2011 (*)

(Information society – Copyright – Internet – ‘Peer-to-peer’ software – Internet service providers – Installation of a system for filtering electronic communications in order to prevent file sharing which infringes copyright – No general obligation to monitor information transmitted)

In Case C‰ЫФ70/10,

REFERENCE for a preliminary ruling under Article 267 TFEU from the cour d’appel de Bruxelles (Belgium), made by decision of 28 January 2010, received at the Court on 5 February 2010, in the proceedings

Scarlet Extended SA

v

Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM),

intervening parties:

Belgian Entertainment Association Video ASBL (BEA Video),

Belgian Entertainment Association Music ASBL (BEA Music),

Internet Service Provider Association ASBL (ISPA),

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, J. Malenovský (Rapporteur), R. Silva de Lapuerta, E. Juhász and G. Arestis, Judges,

Advocate General: P. Cruz Villalón,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 13 January 2011,

after considering the observations submitted on behalf of:

–        Scarlet Extended SA, by T. De Meese and B. Van Asbroeck, avocats,

–        Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM), Belgian Entertainment Association Video ASBL (BEA Video) and Belgian Entertainment Association Music ASBL (BEA Music), by F. de Visscher, B. Michaux and F. Brison, avocats,

–        Internet Service Provider Association ASBL (ISPA), by G. Somers, avocat,

–        the Belgian Government, by T. Materne, J.-C. Halleux and C. Pochet, acting as Agents,

–        the Czech Government, by M. Smolek and K. HavlíЂЌková, acting as Agents,

–        the Italian Government, by G. Palmieri, acting as Agent, assisted by S. Fiorentino, avvocato dello Stato,

–        the Netherlands Government, by C. Wissels and B. Koopman, acting as Agents,

–        the Polish Government, by M. Szpunar, M. DrwiЂЄcki and J. GoliЃгski, acting as Agents,

–        the Finnish Government, by M. Pere, acting as Agent,

–        the European Commission, by J. Samnadda and C. Vrignon, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 14 April 2011,

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of Directives:

–        2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) (OJ 2000 L 178, p. 1);

–        2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10);

–        2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ 2004 L 157, p. 45, and corrigendum OJ 2004 L 195, p. 16);

–        95/46/EC of the European Parliament and of the Council 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 (OJ 1995 L 281, p. 31); and

–        2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (OJ 2002 L 201, p. 37).

2        The reference has been made in proceedings between Scarlet Extended SA (‘Scarlet’) and the Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) (‘SABAM’) concerning Scarlet’s refusal to install a system for filtering electronic communications which use file-sharing software (‘peer-to-peer’), with a view to preventing file sharing which infringes copyright.

 Legal context

 European Union law

 Directive 2000/31

3        Recitals 45 and 47 in the preamble to Directive 2000/31 state:

‘(45)      The limitations of the liability of intermediary service providers established in this Directive do not affect the possibility of injunctions of different kinds; such injunctions can in particular consist of orders by courts or administrative authorities requiring the termination or prevention of any infringement, including the removal of illegal information or the disabling of access to it.

…

(47)      Member States are prevented from imposing a monitoring obligation on service providers only with respect to obligations of a general nature; this does not concern monitoring obligations in a specific case and, in particular, does not affect orders by national authorities in accordance with national legislation.’

4        Article 1 of Directive 2000/31 states:

‘1.      This Directive seeks to contribute to the proper functioning of the internal market by ensuring the free movement of information society services between the Member States.

2.      This Directive approximates, to the extent necessary for the achievement of the objective set out in paragraph 1, certain national provisions on information society services relating to the internal market, the establishment of service providers, commercial communications, electronic contracts, the liability of intermediaries, codes of conduct, out-of-court dispute settlements, court actions and cooperation between Member States.

…’

5        Article 12 of that directive, which features in Section 4, entitled ‘Liability of intermediary service providers’, of Chapter II thereof, provides:

‘1.      Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, Member States shall ensure that the service provider is not liable for the information transmitted, on condition that the provider:

(a)      does not initiate the transmission;

(b)      does not select the receiver of the transmission; and

(c)      does not select or modify the information contained in the transmission.

…

3.      This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement.’

6        Article 15 of Directive 2000/31, which also features in Section 4 of Chapter II, states:

‘1.      Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating unlawful activity.

2.      Member States may establish obligations for information society service providers promptly to inform the competent public authorities of alleged unlawful activities undertaken or information provided by recipients of their service or obligations to communicate to the competent authorities, at their request, information enabling the identification of recipients of their service with whom they have storage agreements.’

 Directive 2001/29

7        Recitals 16 and 59 in the preamble to Directive 2001/29 state:

‘(16)      … This Directive should be implemented within a timescale similar to that for the implementation of [Directive 2000/31], since that Directive provides a harmonised framework of principles and provisions relevant, inter alia, to important parts of this Directive. This Directive is without prejudice to provisions relating to liability in that Directive.

...

(59)      In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice to any other sanctions and remedies available, rightholders should have the possibility of applying for an injunction against an intermediary who carries a third party’s infringement of a protected work or other subject-matter in a network. This possibility should be available even where the acts carried out by the intermediary are exempted under Article 5. The conditions and modalities relating to such injunctions should be left to the national law of the Member States.’

8        Article 8 of Directive 2001/29 states:

‘1.      Member States shall provide appropriate sanctions and remedies in respect of infringements of the rights and obligations set out in this Directive and shall take all the measures necessary to ensure that those sanctions and remedies are applied. The sanctions thus provided for shall be effective, proportionate and dissuasive.

…

3.      Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.’

 Directive 2004/48

9        Recital 23 in the preamble to Directive 2004/48 provides:

‘Without prejudice to any other measures, procedures and remedies available, rightholders should have the possibility of applying for an injunction against an intermediary whose services are being used by a third party to infringe the rightholder’s industrial property right. The conditions and procedures relating to such injunctions should be left to the national law of the Member States. As far as infringements of copyright and related rights are concerned, a comprehensive level of harmonisation is already provided for in Directive [2001/29]. Article 8(3) of Directive [2001/29] should therefore not be affected by this Directive.’

10      Article 2(3) of Directive 2004/48 provides as follows:

‘This Directive shall not affect:

(a)       the Community provisions governing the substantive law on intellectual property … or Directive [2000/31], in general, and Articles 12 to 15 of Directive [2000/31] in particular;

…’

11      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.’

12      Article 11 of Directive 2004/48 states:

‘Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Where provided for by national law, non-compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance. Member States shall also ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive [2001/29].’

 National law

13      Article 87(1), first and second subparagraphs, of the Law of 30 June 1994 on copyright and related rights (Moniteur belge of 27 July 1994, p. 19297) states:

‘The President of the Tribunal de première instance (Court of First Instance) … shall determine the existence of any infringement of a copyright or related right and shall order that it be brought to an end.

He may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.’

14      Articles 18 and 21 of the Law of 11 March 2003 on certain legal aspects of information society services (Moniteur belge of 17 March 2003, p. 12962) transpose Articles 12 and 15 of Directive 2000/31 into national law.

 The dispute in the main proceedings and the questions referred for a preliminary ruling

15      SABAM is a management company which represents authors, composers and editors of musical works in authorising the use of their copyright-protected works by third parties.

16      Scarlet is an internet service provider (‘ISP’) which provides its customers with access to the internet without offering other services such as downloading or file sharing.

17      In the course of 2004, SABAM concluded that internet users using Scarlet’s services were downloading works in SABAM’s catalogue from the internet, without authorisation and without paying royalties, by means of peer-to-peer networks, which constitute a transparent method of file sharing which is independent, decentralised and features advanced search and download functions.

18      On 24 June 2004, SABAM accordingly brought interlocutory proceedings against Scarlet before the President of the Tribunal de première instance, Brussels, claiming that that company was the best placed, as an ISP, to take measures to bring to an end copyright infringements committed by its customers.

19      SABAM sought, first, a declaration that the copyright in musical works contained in its repertoire had been infringed, in particular the right of reproduction and the right of communication to the public, because of the unauthorised sharing of electronic music files by means of peer-to-peer software, those infringements being committed through the use of Scarlet’s services.

20      SABAM also sought an order requiring Scarlet to bring such infringements to an end by blocking, or making it impossible for its customers to send or receive in any way, files containing a musical work using peer-to-peer software without the permission of the rightholders, on pain of a periodic penalty. Lastly, SABAM requested that Scarlet provide it with details of the measures that it would be applying in order to comply with the judgment to be given, on pain of a periodic penalty.

21      By judgment of 26 November 2004, the President of the Tribunal de première instance, Brussels, found that copyright had been infringed, as claimed by SABAM, but, prior to ruling on the application for cessation, appointed an expert to investigate whether the technical solutions proposed by SABAM were technically feasible, whether they would make it possible to filter out only unlawful file sharing, and whether there were other ways of monitoring the use of peer-to-peer software, and to determine the cost of the measures envisaged.

22      In his report, the appointed expert concluded that, despite numerous technical obstacles, the feasibility of filtering and blocking the unlawful sharing of electronic files could not be entirely ruled out.

23      By judgment of 29 June 2007, the President of the Tribunal de première instance, Brussels, accordingly ordered Scarlet to bring to an end the copyright infringements established in the judgment of 26 November 2004 by making it impossible for its customers to send or receive in any way files containing a musical work in SABAM’s repertoire by means of peer-to-peer software, on pain of a periodic penalty.

24      Scarlet appealed against that decision to the referring court, claiming, first, that it was impossible for it to comply with that injunction since the effectiveness and permanence of filtering and blocking systems had not been proved and that the installation of the equipment for so doing was faced with numerous practical obstacles, such as problems with the network capacity and the impact on the network. Moreover, any attempt to block the files concerned was, it argued, doomed to fail in the very short term because there were at that time several peer-to-peer software products which made it impossible for third parties to check their content.

25      Scarlet also claimed that that injunction was contrary to Article 21 of the Law of 11 March 2003 on certain legal aspects of information society services, which transposes Article 15 of Directive 2000/31 into national law, because it would impose on Scarlet, de facto, a general obligation to monitor communications on its network, inasmuch as any system for blocking or filtering peer-to-peer traffic would necessarily require general surveillance of all the communications passing through its network.

26      Lastly, Scarlet considered that the installation of a filtering system would be in breach of 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.

27      In that context, the referring court took the view that, before ascertaining whether a mechanism for filtering and blocking peer-to-peer files existed and could be effective, it had to be satisfied that the obligations liable to be imposed on Scarlet were in accordance with European Union law.

28      In those circumstances, the cour d’appel de Bruxelles decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(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?’

 Consideration of the questions referred

29      By its questions, the referring court asks, in essence, whether Directives 2000/31, 2001/29, 2004/48, 95/46 and 2002/58, read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction imposed on an ISP to introduce a system for filtering

–        all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;

–        which applies indiscriminately to all its customers;

–        as a preventive measure;

–        exclusively at its expense; and

–        for an unlimited period,

which is capable of identifying on that provider’s network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold intellectual property rights, with a view to blocking the transfer of files the sharing of which infringes copyright (‘the contested filtering system’).

30      In that regard, it should first be recalled that, under Article 8(3) of Directive 2001/29 and the third sentence of Article 11 of Directive 2004/48, holders of intellectual property rights may apply for an injunction against intermediaries, such as ISPs, whose services are being used by a third party to infringe their rights.

31      Next, it follows from the Court’s case-law that the jurisdiction conferred on national courts, in accordance with those provisions, must allow them to order those intermediaries to take measures aimed not only at bringing to an end infringements already committed against intellectual-property rights using their information-society services, but also at preventing further infringements (see, to that effect, Case C‑324/09 L’Oréal and Others [2011] ECR I‑0000, paragraph 131).

32      Lastly, it follows from that same case-law that the rules for the operation of the injunctions for which the Member States must provide under Article 8(3) of Directive 2001/29 and the third sentence of Article 11 of Directive 2004/48, such as those relating to the conditions to be met and to the procedure to be followed, are a matter for national law (see, mutatis mutandis, L’Oréal and Others, paragraph 135).

33      That being so, those national rules, and likewise their application by the national courts, must observe the limitations arising from Directives 2001/29 and 2004/48 and from the sources of law to which those directives refer (see, to that effect, L’Oréal and Others, paragraph 138).

34      Thus, in accordance with recital 16 in the preamble to Directive 2001/29 and Article 2(3)(a) of Directive 2004/48, those rules laid down by the Member States may not affect the provisions of Directive 2000/31 and, more specifically, Articles 12 to 15 thereof.

35      Consequently, those rules must, in particular, respect Article 15(1) of Directive 2000/31, 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.

36      In that regard, the Court has already ruled that that prohibition applies in particular to national measures which would require an intermediary provider, such as an ISP, to actively monitor all the data of each of its customers in order to prevent any future infringement of intellectual-property rights. Furthermore, such a general monitoring obligation would be incompatible with Article 3 of Directive 2004/48, which states that the measures referred to by the directive must be fair and proportionate and must not be excessively costly (see L’Oréal and Others, paragraph 139).

37      In those circumstances, it is necessary to examine whether the injunction at issue in the main proceedings, which would require the ISP to install the contested filtering system, would oblige it, as part of that system, to actively monitor all the data of each of its customers in order to prevent any future infringement of intellectual-property rights.

38      In that regard, it is common ground that implementation of that filtering system would require

–        first, that the ISP identify, within all of the electronic communications of all its customers, the files relating to peer-to-peer traffic;

–        secondly, that it identify, within that traffic, the files containing works in respect of which holders of intellectual-property rights claim to hold rights;

–        thirdly, that it determine which of those files are being shared unlawfully; and

–        fourthly, that it block file sharing that it considers to be unlawful.

39      Preventive monitoring of this kind would thus require active observation of all electronic communications conducted on the network of the ISP concerned and, consequently, would encompass all information to be transmitted and all customers using that network.

40      In the light of the foregoing, it must be held that the injunction imposed on the ISP concerned requiring it to install the contested filtering system would oblige it to actively monitor all the data relating to each of its customers in order to prevent any future infringement of intellectual-property rights. It follows that that injunction would require the ISP to carry out general monitoring, something which is prohibited by Article 15(1) of Directive 2000/31.

41      In order to assess whether that injunction is consistent with European Union law, account must also be taken of the requirements that stem from the protection of the applicable fundamental rights, such as those mentioned by the referring court.

42      In that regard, it should be recalled that the injunction at issue in the main proceedings pursues the aim of ensuring the protection of copyright, which is an intellectual-property right, which may be infringed by the nature and content of certain electronic communications conducted through the network of the ISP concerned.

43      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.

44      As paragraphs 62 to 68 of the judgment in Case C‑275/06 Promusicae [2008] ECR I‑271 make clear, the protection of the fundamental right to property, which includes the rights linked to intellectual property, must be balanced against the protection of other fundamental rights.

45      More specifically, it follows from paragraph 68 of that judgment that, in the context of measures adopted to protect copyright holders, national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.

46      Accordingly, in circumstances such as those in the main proceedings, national authorities and courts must, in particular, strike a fair balance 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 ISPs pursuant to Article 16 of the Charter.

47      In the present case, the injunction requiring the installation of the contested filtering system involves monitoring all the electronic communications made through the network of the ISP concerned in the interests of those rightholders. Moreover, that monitoring has no limitation in time, is directed at all future infringements and is intended to protect not only existing works, but also future works that have not yet been created at the time when the system is introduced.

48      Accordingly, such an injunction would result in a serious infringement of the freedom of the ISP concerned to conduct its business since it would require that ISP to install a complicated, costly, permanent computer system at its own expense, which would also be contrary to the conditions laid down in Article 3(1) of Directive 2004/48, which requires that measures to ensure the respect of intellectual-property rights should not be unnecessarily complicated or costly.

49      In those circumstances, it must be held that the injunction to install the contested filtering system is to be regarded as not respecting the requirement that a fair balance be struck between, on the one hand, the protection of the intellectual-property right enjoyed by copyright holders, and, on the other hand, that of the freedom to conduct business enjoyed by operators such as ISPs.

50      Moreover, the effects of that injunction would not be limited to the ISP concerned, as the contested filtering system may also infringe the fundamental rights of that ISP’s customers, namely their right to protection of their personal data and their freedom to receive or impart information, which are rights safeguarded by Articles 8 and 11 of the Charter respectively.

51      It is common ground, first, that the injunction requiring installation of the contested filtering system would involve a systematic analysis of all content and the collection and identification of users’ IP addresses from which unlawful content on the network is sent. Those addresses are protected personal data because they allow those users to be precisely identified.

52      Secondly, that injunction could potentially undermine freedom of information since that 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. Indeed, it is not contested that the reply to the question whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. Moreover, in some Member States certain works fall within the public domain or can be posted online free of charge by the authors concerned.

53      Consequently, it must be held that, in adopting the injunction requiring the ISP to install the contested filtering system, the national court concerned would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other.

54      In the light of the foregoing, the answer to the questions submitted is that Directives 2000/31, 2001/29, 2004/48, 95/46 and 2002/58, read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an ISP which requires it to install the contested filtering system.

 Costs

55      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

Directives:

–        2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’);

–        2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society;

–        2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights ;

–        95/46/EC of the European Parliament and of the Council 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; and

–        2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications),

read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an internet service provider which requires it to install a system for filtering

–        all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;

–        which applies indiscriminately to all its customers;

–        as a preventive measure;

–        exclusively at its expense; and

–        for an unlimited period,

which is capable of identifying on that provider’s network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold intellectual-property rights, with a view to blocking the transfer of files the sharing of which infringes copyright.