In an Opinion published last month on a reference currently before the Court of Justice of the European Union (“CJEU”) (McFadden v Sony Music Entertainment Germany GmbH (Case C-484/14)), Advocate General Szpunar addressed the issues of:
- Whether a password-free, free of charge WiFi service could be liable for infringement of content transmitted via that service, or whether the service is a “mere conduit” under the E-Commerce Directive, whereby it is not liable for information transmitted over the service; and
- Whether an injunction could be granted against a provider of that service to prevent or stop infringements.
The reference to the CJEU came from the Regional Court of Munich, in relation to a dispute between Tobias McFadden (who owned a business and store selling and renting event lighting and sound systems) and Sony Music Entertainment Germany GmbH. McFadden offered visitors free, password-free WiFi access. In 2010, using the WiFi connection, a user illegally downloaded a song and Sony Music subsequently sued McFadden for copyright infringement as a liable third party.
Password-free, free WiFi is a “mere conduit”
The E-Commerce Directive (Directive 2000/31/EC) regulates legal aspects of information society services, including the liability of intermediary service providers. Under article 12(1) of the Directive, an information society service may not liable for the information transmitted via that service (including the download of any infringing material) if they are a “mere conduit” (i.e. simply passive, automatic and technical in nature and have no knowledge or control over the content provided through their service). In order to be a mere conduit, the service provided must have an economic nature.
Advocate General Szpunar concluded that Article 12(1) applies to a person who, as an adjunct to his principal economic activity, operates a WiFi network with an Internet connection that is accessible to the public free of charge. WiFi services operated by businesses have an economic nature, even if they are free and are ancillary to the business’s principal economic activity. The economic nature may stem from the marketing value designed to increase footfall, attract customers and gain their loyalty, even if there is no direct economic benefit (such as remuneration from users).
The Advocate General’s Opinion suggests that free WiFi providers should be protected against liability for information (including infringing content and transmissions by a third party) transmitted via their service. The Advocate General also commented that such providers should be precluded from liability for damages, costs of giving formal notice and other costs (such as pre-litigation costs and court costs) related to infringements of copyright and related rights by such third parties.
But injunctions against free WiFi providers may still be granted…
Whilst free WiFi providers may not be liable for infringement, rightsholders may still be able to seek an injunction against such providers, non-compliance with which would be punishable by fine.
Advocate General Szpunar considered that it was for national courts to determine the extent of the measures in an injunction but provided the following guidelines:
- Measures must be effective, proportionate and dissuasive;
- Measures must be aimed at bringing to an end or preventing the specific infringement;
- Measures must not go as far as imposing any obligation to cease providing the service completely, imposing a password on use of the service, or imposing an obligation to monitor communications transmitted through it;
- Measures must be consistent with restrictions imposed by EU law and in particular must achieve a fair balance between the applicable fundamental rights – namely, freedom of expression, freedom of information and freedom to conduct business and the right to protect intellectual property.
What is the effect of the Opinion?
Advocate Generals’ Opinions are not binding, so this Opinion has no immediate impact. That said, in the majority of cases, the CJEU follows Advocate Generals’ Opinions. We will have to wait and see what the CJEU’s judgment says when it comes out.
Assuming that Advocate General Szpunar’s Opinion is followed, it follows that, whilst not liable for infringement, any business providing free WiFi, unprotected by a password, could face injunctions requiring them to take steps to prevent or stop the transmission of infringing content. How this could be achieved without monitoring the service remains to be seen, but if Advocate General Szpunar’s view is followed, it would at least be encouraging to such providers that they would not be liable for damages or the costs relating to third party infringements via their services. This differs from the English High Court’s decision in Cartier International AG and others v British Sky Broadcasting Ltd and others  EWHC 3354 (Ch) (which is currently under appeal) that ISPs should pay the costs for blocking access to websites providing infringing content.
Given the proliferation of free-to-access, password-free WiFi in cafés, shops and leisure outlets, not only as a service for the convenience of customers but also increasingly as an integral part of the customer experience, the CJEU decision will be one which businesses should keep an eye out for…
McFadden v Sony Music Entertainment Germany GmbH (Case C-484/14), Opinion of Advocate General Szpunar