A CJEU case could ensure that providers of free wifi are not exposed to liability for their users’ actions. 

Consumers increasingly expect that cafes, hotels, pubs and even shops offer free wifi access on the premises as part of their service.  If the businesses could be liable in damages for what their customers do online, such access would be unworkable.

A case before the Court of Justice of the European Union (“CJEU”) should clarify whether businesses which offer such services are liable for offences such as copyright infringement and defamation by users of free wifi networks offered by businesses.

The “mere conduit” exemption

The E-Commerce Directive (Directive 2000/31/EC) at Article 12, as implemented into UK law by The Electronic Commerce (EC Directive) Regulations 2002 (Article 17), provides a defence to liability for damages, any pecuniary remedy or criminal sanctions on a provider as a result of any transmission where:

• the provider offers an information society service consisting 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; and
• the service provider did not: (i) initiate the transmission; (ii) select the receiver of the transmission; or (iii) select or modify the information contained in the transmission.

Article 12.3 of the E-Commerce Directive goes on to state that the above shall not shall not affect the ability of national courts to require the service provider to terminate or prevent an infringement.

The “mere conduit” defence, along with similar exemptions in the same directive for those acting as caches or hosts, represents an important protection allowing services to be provided for the transmission of communications without exposing providers to unworkable liabilities for IP infringement, defamation etc, as a result of the transmission’s contents.

Tobias McFadden v Sony Music Entertainment Germany GmbH

Mr McFadden ran a lighting and sound business and operated a free, non-password protected wifi network.  That wifi network was apparently used to offer a musical work for download in violation of copyright, which resulted in proceedings in the Munich Regional Court between Mr McFadden and Sony Music Entertainment Germany GmbH.

The Munich Court has stated that it is minded to find that Mr McFadden is indirectly liable for the infringement on the grounds that his wifi network was not secure, on the same basis as private individuals have been held liable for indirect infringement by operating unsecured networks in Germany.  However, such a finding could not be made if Mr McFadden has the protection of the mere conduit defence as it has been incorporated into German law.

In particular, as the definition of “information society service” is linked to services which normally involve remuneration, questions arise as to whether the provider must normally provide such service for remuneration or whether others do so.  Issues also arise in respect of the extent of sanctions that can be imposed when the exemption applies, e.g. to require such providers to take technical measures such as password-protecting the network.  Those issues were therefore referred to the CJEU (Case C‑484/14).

Advocate General’s Opinion

In the CJEU, one of eleven Advocate Generals offer impartial written opinions on issues referred to the Court.  The opinions are not binding on the Court’s judges in their subsequent judgment, but are followed in the majority of cases.

On 16 March 2016, Advocate General Maciej Szpunar issued his opinion in McFadden v Sony, advising amongst other things that:

• The mere conduit exemption must be interpreted as applying to a person who, as an adjunct to his principal economic activity, operates a local wireless network with Internet access that is accessible to the public free of charge.
• No order for damages or indeed for costs in respect of infringement of copyright can be brought against such a person to whom the exemption applies.
• However, an injunction can be imposed, non-compliance with which is punishable by a fine.
• The terms of such an injunction must not include a requirement to: (i) terminate the internet connection; (ii) password-protect the internet connection; or (iii) examine all communications passing through the network to determine whether the copyright-protected work is transmitted again.

WAB Comment

At the time of writing, the CJEU has not yet made its decision in the McFadden v Sony referral. However, the Advocate General’s opinion represents a sensible balancing of interests to ensure a workable interconnected information society and represents an attractive approach for the CJEU to follow, if it chose to do so.

If businesses were only able to safely offer wifi to customers if they could show a sufficiently close connection to their primary economic activity or otherwise prove remuneration, there is a risk that many free wifi networks would be withdrawn.  Similarly, injunctions should not be granted that prohibit the provision of information society services or impose conditions making their provision unduly difficult.

A requirement for such providers to pay the costs of proceedings brought where an injunction was granted could have just as punitive and chilling an effect on the provision of such services as if damages were also payable.  Nonetheless, the Advocate General’s view, if followed by the CJEU, would mean that those who have suffered copyright infringement, defamation etc, will have to bear more the legal costs of enforcement in cases where the defendant is a service provider that refuses to comply with a request to prevent the infringement, rather the infringer themselves.