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For a small nation with a population of just over 4.5 million people, Ireland has produced more than its fair share of creative people: James Joyce, Bram Stoker, Van Morrison, Bono and more. It is now also the European home of a number of leaders in the technology industry, including Google, Facebook and Twitter. The ease with which unauthorised copies of protected works can be shared via the Internet, particularly following the advent of person-to-person file sharing, has led to tension between these two groups. In Ireland, attempts by content creators to force intermediaries such as Internet service providers (ISPs) to take active steps to prevent copyright infringement, culminated in a series of cases between record companies and ISPs.

Shift towards the music industry?

In January 2009, following eight days in the Irish High Court, a settlement was reached between four major record companies and Eircom, a principal ISP in Ireland. Eircom agreed to implement a ‘three strikes’ solution to stop illegal downloading of copyright works over its network; infringing Eircom customers would be given two warnings and disconnected on their third offence.

Subsequently, similar agreements were sought with other ISPs, including UPC. UPC refused to implement the three strikes policy and the record companies sought an injunction directing the ISP to take certain steps to stop customers illegally downloading music over its network. The record companies complained that their entire business was being decimated by Internet piracy and that UPC, as an ISP, was best placed to stop this.
The Irish High Court refused to grant the injunction (EMI Records (Ireland) Limited & Ors v UPC Communications Ireland Limited (2010) IEHC 377). While the court was sympathetic towards the record company's position, stating that ISPs “have an economic and moral obligation to address the problem”, it found that the Irish Copyright and Related Rights Act 2000 (CRRA) granted the courts only the power to require ISPs to remove infringing material and not to block, divert or interrupt Internet access.

Bridging the gap

The court indicated that Ireland had failed to comply with its obligations under European law by not fully transposing the InfoSoc Directive (Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society).
Article 8.3 of this directive places a clear and unambiguous obligation on member states to ensure that right holders can apply for an injunction against intermediaries, such as ISPs, whose services are used to infringe copyright.

While the legislators may have intended that Section 40(4) of the CRRA (which provides that ISPs may be liable if they fail to remove infringing material when requested to do so) would make such injunctions available to right holders, the court felt that this was not the case. Cutting off the customer’s Internet access would go further than simply removing infringing material which, the court noted, is simply not possible in the context of transient communication.

Following a public consultation, the EU (Copyright and Related Rights) Regulations 2012 were signed into Irish law earlier this year. The regulations amend the CRRA by permitting copyright owners to seek to injunct intermediaries and directs the court to have due regard to the rights of persons likely to be affected by the grant of such injunctions.

Concerns have been raised regarding the regulations, ranging from claims that they do not go far enough, to claims that they mirror the US Stop Online Piracy Act and that they put fundamental rights at risk. Nevertheless, the Irish Minister for Research and Innovation has emphasised that the regulations are necessary to restate the position that was considered to exist prior to the UPC decision and to ensure compliance with European law.

Restoring balance

While record companies and ISPs battled it out in Ireland, in Belgium, SABAM (a collecting society) sought an order against Netlog (an online social networking platform) which would effectively require Netlog to install a filtering system at its own expense to actively monitor its users’ data and prevent them sharing certain electronic copyright files. The Court of Justice of the European Union (CJEU) was asked to decide whether this was compatible with EU law.

The CJEU followed its approach in Scarlet v SABAM (C-70/10, 24 November 2011) and ruled that an intermediary cannot be forced to filter content stored on its servers by users of its social networking platform (C-360/10, 16 February 2012). It reiterated that national authorities and courts must strike a fair balance between IP rights and the fundamental rights of individuals affected by such measures. It held that to grant the order:-

• Would infringe freedom to conduct business: Netlog would have had to install a complicated, costly computer system at its own expense. The CJEU stressed that measures to ensure the respect of IP rights should not be unnecessarily complicated or costly;
• Would infringe ‘fundamental rights’ of service users: Netlog users’ files (including files not even created yet) would be monitored and analysed, which would infringe the users’ data protection rights; and
• Could potentially undermine free flow of information: the system might not be able to distinguish between lawful and unlawful content and this could result in lawful communications being blocked.

The CJEU not only balanced IP rights with data protection rights, as it has done before, but went further and gave weight to the right of the intermediary to conduct its business and to the freedom of the service user to use the service. The Irish government welcomed the decision stating that it “will provide further clarity to the Irish courts in adjudicating such matters”.

The debate surrounding online copyright infringement is far from over. While the CJEU has set out broad governing principles in this area, the specific nature of injunctions which can be sought against ISPs remains unclear. The recent enactment, in Ireland, of the hotly debated regulations opens up the possibility of further ground-breaking litigation in the Irish courts and a further shift of the scales. Watch this space.

The above article by Richard Woulfe and Peter Bolger first appeared in the World IP Review Annual.

Recent Developments

Since the article above, the CJEU decision in Bonnar Audio & Others v Perfect Communication Sweden AB (Case C-461/10) was handed down on 19 April 2012. The applicants in this case were publishing companies which hold certain exclusive rights to 27 audio books which they alleged were being unlawfully distributed by means of an FTP (file transfer protocol) server. The ISP through which this alleged illegal file sharing took place is ePhone.

The legal issues in this case concern the interactions between the Data Retention Directive (Directive 2006/24/EC), the IP Enforcement Directive (Directive 2004/48/EC), the Data Protection Directive (Directive 95/46/EC), the Directive on Privacy and Electronic Communications (Directive 2002/58/EC) and national law.

The applicants had taken successive cases in Sweden for the disclosure of the name and address of the person using an IP address associated with the distribution of the audio books. The legal basis for these cases were provisions of Swedish law which are based on Article 8 of the IP Enforcement Directive which allows such disclosure orders in certain circumstances. Eventually, the matter came before the Swedish Supreme Court which referred a number of questions to the CJEU including whether the Data Retention Directive prevented an order for disclosure of data of this nature.

The CJEU held that the Data Retention Directive, which applies only to specific data and data processors and relates to the investigation, detection and prosecution of serious crime, does not preclude the application of national law based on Article 8 of the IP Enforcement Directive in a case such as this, which related to alleged civil IP infringements.

The CJEU then went a little further and held that Swedish law in this case was likely, in principle, to ensure a fair balance between the protection of intellectual property rights enjoyed by copyright holders and the protection of personal data enjoyed by internet subscribers. This is because the Swedish legislation enables the national court hearing such a disclosure application to weigh the conflicting interests involved on the basis of the facts of each case and apply proportionality. Therefore, the Directive on Privacy and Electronic Communications and the IP Enforcement Directive do not preclude national legislation of this type.

Richard Woulfe is a partner in the commercial litigation group and heads Mason Hayes & Curran’s dedicated, cross-departmental IP unit. Richard carries out an extensive litigation practice encompassing many aspects of contentious IP law, including brand and trademark protection, copyright issues, patent infringement and revocation, software, media and entertainment issues.

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