A Positive Signal - No Liability for Providers of Free WiFi, Says AG Szpunar

As discussed on this very blog over 6 months ago, free public WiFi is something we all take for granted, even if just a little. Having access to the worldwide web at most restaurants, coffee shops and even the Underground in London is nearly ubiquitous in the developed world, and one that presents both opportunity for its users and liability for those who provide it, especially when it comes to the infringement of intellectual property rights. The CJEU has been slated to answer the question of third-party liability for those who provide free WiFi in the case of copyright infringement, and awaiting that the opinion of Advocate General Szpunar has given their answer as to this highly important question.

The case of Tobias McFadden v Sony Music Entertainment Germany GmbH deals with Tobias McFadden, who owned a business selling and renting lighting and sound systems for various events, and offered free WiFi access at his store for any visiting patrons. The Internet connection offered had no password protection, nor did Mr. McFadden monitor the users taking advantage of the free WiFi. In early September 2010 such a user downloaded a song illegally using his WiFi connection, and Sony Music subsequently took him to court for copyright infringement as a liable third party.

The Regional Court of Munich referred the matter to the CJEU, who had to answer several questions relating to Article 12(1) of the E-Commerce Directive, pertaining to whether the provision of the WiFi would amount to the provider as being a mere conduit, or whether they would be liable for the infringement indirectly.

The Advocate General grouped the questions into two more specific references: "...whether a professional person... who, in the course of business, operates a free, public Wi-Fi network, falls within the scope of application of Article 12 [as a mere conduit]", and therefore is not liable for the infringement of any other parties using that WiFi (questions 1-3); and, if Article 12 does apply, the he needs to interpret the limitation of liability of intermediary service providers in that Article (questions 4-9).

The Scope of Article 12

The scope of Article 12 hinges largely on the potential economic nature of the provision of the service, as defined in Article 2(a) of the same Directive, and the meaning of 'providing' access to a network under Article 12.

A lack of WiFi would cause some issues

The Advocate General addressed the first point by concluding that the provision of free WiFi would indeed be an economic activity, as "...where, in the course of his business, an economic operator offers Internet access to the public, even if not against payment, he is providing a service of an economic nature, even if it is merely ancillary to his principal activity". The Advocate General added onto his point, setting out that the provision of the Internet access necessarily takes place in an economic context, that "[a]ccess to the Internet may constitute a form of marketing designed to attract customers and gain their loyalty. In so far as it contributes to the carrying on of the principal activity, the fact that the service provider may not be directly remunerated by recipients of the service is not decisive.". What remains key here is the ancillary nature of the free WiFi, and this writer agrees, since even if they WiFi is not the focal point of the business, it drives foot traffic and adds value to the provision of the main service, creating a service of economic nature (which is important, since nature does not necessarily mean direct economic benefit)

He then turned to the matter of the meaning of 'providing' access to a network, determining that it means "...that the activity in question enables the public to have access to a network and takes place in an economic context". The intent of projected role of the provider is not relevant, but merely the provision of the service in the above economic context.

The Advocate General then concluded that: "...Articles 2(a) and (b) and 12(1) of [the] Directive... must be interpreted as applying to a person who, as an adjunct to his principal economic activity, operates a Wi-Fi network with an Internet connection that is accessible to the public free of charge".

Interpretation of Article 12

Questions 4-9 concerned the specific interpretation of Article 12, and will be dealt with in more brevity below, although discussed quite extensively by the Advocate General. The questions are, specifically, whether a national court could penalize an intermediary service provider, in the event of infringement through their service, awarding damages, costs or an injunction as the form of the penalty (questions 4-5). Additionally, if this would not be generally possible, whether it would be possible to limit the extent of Article 12 (question 6), or through other unwritten requirements (questions 7-8). Finally, the last question asks for the limits of any injunctions that may be awarded against an intermediary service provider (question 9).

In answering question 4 and 5 the Advocate General saw that the limitations of liability for intermediary service provides would extend to damages and pecuniary claims, such as for costs. In his view this is precluded by Article 12(1), and would have an impact on the development of the service provider's business, irrespective of it being damages or punitive costs. He did, however, accepted the possibility of injunctive relief, and any ancillary penalties thereto. In summary to questions 4 and 5, he stated that "Article 12... precludes the making of any order against a provider of mere conduit services that entails a finding of civil liability against that service provider... [it] therefore precludes the making of orders against intermediary service providers not only for the payment of damages, but also for the payment of the costs of giving formal notice or other costs relating to copyright infringements committed by third parties as a result of the information transmitted. It does not preclude the granting of an injunction, non-compliance with which is punishable by a fine".

In relation to questions 6,7 and 8 (seeking to clarify the possible exclusion of actions taken against intermediary service providers), the Advocate General sought to strike a balance per recital 41 of the Directive. In his opinion, the Advocate General saw that there should be no limitations imposed on actions that can be taken against providers, though taking into account their actions when the infringement is brought to their attention. He also observed that the conditions under Article 12(1) are non-exhaustive, and could be added to with additional unwritten requirements.

Finally, he turned to the final 9th question, which asks whether national courts could impose injunctions on service providers against future infringement on their network. He saw that this was indeed possible, but this injunction could not impose a future obligation of monitoring the network or breach any other EU or national legislation (including the basic human rights afforded in the European Convention on Human Rights). He summarized that the injunction can only issued if the provider cannot, or will not, address the infringement in one of three measures: the termination of the internet connection (of the infringer); password-protection of the connection; or the monitoring the connection, but only to ensure the future infringement of rights using the same connection (observing time limitations on said monitoring).

The ultimate decision of the CJEU is pending, and will potentially impact the provision of free WiFi in the EU should they not follow the AG's opinion in this matter. This writer expects them to follow the opinion, as it clearly shows a practical and functional approach to a complex, and sensitive question. Should they not do so, the provision of free WiFi could be severely hindered, or even ended by some providers, which would be a big problem for those who cannot necessarily afford their own connections. Either way, this writer is anticipating the CJEU's decision with great interest.

Source: IPKat