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Password protected: Copyright infringement and public wifi networks

The CJEU finds that operators of public wifi networks such as shops and cafes can take advantage of the mere conduit exemption, but can be ordered to impose passwords.

Earlier this year, we reported on Advocate General Szpunar’s Opinion in the matter of Tobias McFadden v Sony Music Entertainment Germany GmbH, Case C-484/14 (McFadden).

The referral to the Court of Justice of the European Union (Court) related to the operation of an unsecured, free public wifi network in a shop near Munich operated by Mr McFadden. Individuals could use the network anonymously and apparently did so to infringe copyright by offering music for download.

Sony brought a copyright claim against Mr McFadden, in which the Munich Regional Court was concerned with whether he could be held indirectly liable under German law for copyright infringement by users of the unsecured wifi network following application of the E-Commerce Directive (2000/31/EC).

Advocate General’s opinion

Advocate Generals provide advisory opinions in matters before the Court which are not binding, but are often followed by the subsequent judgments.  In McFadden, the Advocate General’s opinion stated, amongst other things:

  • The “mere conduit” exemption under Article 12 of the E-Commerce Directive 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.

Judgment

The Court’s judgment varied from that of the Advocate General.  The Court agreed that:

  • A public wifi provider could benefit from the mere conduit exemption (provided it met the conditions for that exemption, by engaging only in a technical, automatic and passive process).
  • Where the exemption applies, a copyright holder cannot claim damages or legal costs in respect of such a damages claim.
  • An injunction may be imposed, punishable by a fine.
  • Such injunction should not require the provider to terminate the internet connection or examine all communications passing through it, as these would not strike a fair balance between the rights concerned.

However, the Court also held that it is possible for an injunction to require the operator to secure the wifi network by means of a password, where users are required to reveal their identity to obtain the password and may not therefore act anonymously.  This may dissuade users from infringing copyright or related rights.

This strikes a balance between the right of the intellectual property holder to protection, the right of the operator to conduct their business and the rights of the users to freedom of information.  Costs may also be claimed in any such injunction proceedings.

WAB comment

As well as retail businesses like Mr McFadden’s, a huge range of businesses from train companies to hotels and cafes offer free wifi to their customers and potential customers.  If such businesses could easily be held liable for enabling the users of those networks to engage in peer-to-peer filesharing of copyright works, the actions of a few infringers could result in the widespread withdrawal of free wifi and the stifling of aspirations towards an information society.

Most wifi networks now operate some form of password protection or user registration, which would seem the most sensible course of action in light of the decision in McFadden.  Certainly if the operator receives a pre-action letter from a rightsholder such as Sony Music, it may be advisable to secure the network in such a manner to avoid the risk of an injunction and a costs award.

Read the full judgment in McFadden here and the press release here.

Disclaimer: This article is produced for and on behalf of White & Black Limited, which is a limited liability company registered in England and Wales with registered number 06436665. It is authorised and regulated by the Solicitors Regulation Authority. The contents of this article should be viewed as opinion and general guidance, and should not be treated as legal advice.

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