EU Court of Justice Rules Out Private and Automatic Censorship (and Lessons for UofT)

The European Court of Justice rendered another decision today protecting users’ online freedoms.  The decision in SABAM v. Netlog arises out of a dispute between a Belgian copyright collective and an operator of a social network.  This is an important ruling when legislators around the world consider various initiative that would grant governments and private entities increasing powers to monitor and control content and online communications.  The circumstances of the case also bear some resemblance to the contested relationships between Access Copyright and Canadian universities.  Indeed, in defence of its disputed decision to sign an agreement with the publishers’ collective, which includes an agreement to develop a method for reporting and monitoring the use of copyrighted works by students, researchers, teachers, and staff, the UofT administration maintained that it prevented the imposition of much more intrusive measures by the Copyright Board. Today’s decision from Europe suggests, despite the possible differences between the EU and Canada, that in constitutional democracies, intrusive measures such as those sought by SABAM in Belgium or Access Copyright in the Proposed Tariff may not be granted.  This suggests that UofT’s quick decision to settle, may not have been the wisest, and that what it has settled for may violate some rights of the members of its community.

Here is a summary of the facts, as described by the court:

SABAM is a management company which represents authors, composers and publishers of musical works. On that basis, it is responsible for, inter alia, authorising the use by third parties of copyright-protected works of those authors, composers and publishers.  Netlog runs an online social networking platform where every person who registers acquires a personal space known as a ‘profile’ which the user can complete himself and which becomes available globally.  The platform, which is used by tens of millions of individuals on a daily basis, facilitates the creation of virtual communities through which those individuals can communicate with each other and thereby develop friendships. On their profile, users can, inter alia, keep a diary, indicate their hobbies and interests, show who their friends are, display personal photos or publish video clips.

SABAM claimed that Netlog’s social network also offers all users the opportunity to make use, by means of their profile, of the musical and audio-visual works in SABAM’s repertoire, making those works available to the public in such a way that other users of that network can have access to them without SABAM’s consent and without Netlog paying it any fee.  During February 2009, SABAM approached Netlog with a view to concluding an agreement regarding the payment of a fee by Netlog for the use of the SABAM repertoire.

The court doesn’t mention this explicitly, by apparently, Netlog did not accept SABAM’s offer and by letter of 2 June 2009, SABAM gave notice to Netlog that it should give an undertaking to cease and desist from making available to the public musical and audio-visual works from SABAM’s repertoire without the necessary authorisation.

Three weeks later, SABAM sought an injunction against Netlog, requesting inter alia that Netlog be ordered immediately to cease unlawfully making available musical or audio-visual works from SABAM’s repertoire and to pay a penalty of EUR 1000 for each day of delay in complying with that order.

Netlog submitted that granting SABAM’s injunction would be tantamount to imposing on Netlog a general obligation to monitor its users, contrary to applicable EU law. Netlog further claimed, without being contradicted by SABAM, that the granting of such an injunction could result in the imposition of an order that it introduce, for all its customers, in abstracto and as a preventative measure, at its own cost and for an unlimited period, a system for filtering most of the information which is stored on its servers in order to identify on its servers electronic files containing musical, cinematographic or audio-visual work in respect of which SABAM claims to hold rights, and subsequently that it block the exchange of such files.

It is quite evident that the injunction–and the associated costs of compliance if granted–were meant to push Netlog into signing a deal with SABAM on SABAM’s terms.

The question before the court was whether EU law allows the court to issue an injunction against a hosting service provider which requires it to install a system for filtering:

– information which is stored on its servers by its service users;

– which applies indiscriminately to all of those users;

– as a preventative measure;

– exclusively at its expense; and

– for an unlimited period,

which is capable of identifying electronic files containing musical, cinematographic or audio-visual work in respect of which the applicant for the injunction claims to hold intellectual property rights, with a view to preventing those works from being made available to the public in breach of copyright.

The court’s answer was No.

The court found that implementation of that filtering system would require:

– first, that the hosting service provider identify, within all of the files stored on its servers by all its service users, the files which are likely to contain works in respect of which holders of intellectual-property rights claim to hold rights;

– next, that it determine which of those files are being stored and made available to the public unlawfully; and

– lastly, that it prevent files that it considers to be unlawful from being made available.

The court noted that “preventive monitoring of this kind would thus require active observation of files stored by users with the hosting service provider and would involve almost all of the information thus stored and all of the service users of that provider.  The contemplated injunction would oblige Netlog to actively monitor almost all the data relating to all of its service users in order to prevent any future infringement of intellectual-property rights. It follows that that injunction would require the hosting service provider to carry out general monitoring, something which is prohibited under EU law.”

In those circumstances, the court held, “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 hosting service providers.  Moreover, the effects of that injunction would not be limited to the hosting service provider, as the contested filtering system may also infringe the fundamental rights of that hosting service provider’s service users, 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.

Indeed, the injunction requiring installation of the contested filtering system would involve the identification, systematic analysis and processing of information connected with the profiles created on the social network by its users. The information connected with those profiles is protected personal data because, in principle, it allows those users to be identified.  Moreover, 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. In addition, in some Member States certain works fall within the public domain or may be posted online free of charge by the authors concerned.”

Consequently, the court held, “in adopting the injunction requiring the hosting service provider 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.”

All of this is highly pertinent to the university context. Some aspects of Netlog’s platform are similar to the university as a learning community in general, and to the electronic platforms, such as Blackboard, that it offers.  But unlike Netlog, which is a commercial business, the university is a non-for-profit institution carrying important public mandate.  Moreover, given the fact that a significant part–if not the overwhelming majority–of the works copied on the university’s network are either already licensed or fall under fair dealing or other exceptions, the university’s case would be much easier to make.

Netlog decided to fight back,  likely because it would have to pay the cost of a SABAM license out of its own pocket.  UofT decided not to fight back and to settle with Access Copyright, likely because it believed it could shift the full cost to its students.



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