On 15 September 2016 (C-484/14), the Court of Justice of the European Union (CJEU) ruled that the operator of a shop, hotel or bar that offers free Wi-Fi to the public is not liable for copyright infringements committed by the network’s users. However, the operator may be required to password-protect its network in order to prevent—or cease—these infringements.

The Facts of the Case

The case concerns a dispute between Tobias Mc Fadden, the owner of a lighting and sound system shop, and Sony Music Germany. Mc Fadden’s shop offered free Wi-Fi in order to bring in new customers. In 2010, someone used Mc Fadden’s Wi-Fi network to unlawfully offer a copyright-protected musical for downloading. The Regional Court of Munich, Germany, took the view that while Mc Fadden was not the actual infringer, he could be indirectly liable on the grounds that his Wi-Fi network had not been made secure. However, the court was not sure whether the E-Commerce Directive (2000/31/EC) precluded such indirect liability and referred a series of preliminary questions to the CJEU.

Opinion of the Advocate General

On 16 March 2016, Advocate General Maciej Szpunar recommended to the CJEU that the operators of free Wi-Fi networks should not be held liable for copyright infringements committed over their networks. The opinion confirmed the applicability of the E-Commerce Directive—and the “mere conduit” defense in Article 12 of that directive—to free Wi-Fi providers. While acknowledging that the scope of application of Article 12 largely depended on the potential economic nature of the provision of the service, the advocate general opined that the safe harbor provisions should also apply to operators who, as an adjunct to their principal economic activity, offer a Wi-Fi network that is accessible to the public free of charge.

He further commented that the safe harbor provisions prevent courts from making orders against these intermediary service providers for payment of damages and even for the costs of giving formal notices. However, the advocate general said this limitation of liability would not prevent the right holder from seeking an injunction against the Wi-Fi operator to end the infringement. But that injunction could not go so far as to require that the operator terminate or password-protect the internet connection or examine all communications transmitted through it.

Judgment of the CJEU

In its judgment, the CJEU largely followed the opinion of the advocate general while disagreeing on two crucial points. The Court ruled that the operator of a free Wi-Fi network provides an “information society service” within the meaning of Article 12(1) of the E-Commerce Directive if he provides access to the network for the purpose of advertising the goods sold or services supplied by him. This means that the operator can directly rely on the liability exemption laid down in Article 12(1).

However, in the eyes of the Court, the operator of the free Wi-Fi network could be required to protect the network with a password in order to deter users from infringing copyrights. The CJEU further ruled that the right holder can claim from the network operator the costs of giving formal notices and court costs when such claims are made to obtain injunctive relief to prevent the operator from allowing the infringement to continue.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.