Co-written by Laura Trapnell (Head of Intellectual Property) and Henry Barker (Trainee solicitor)

A growing number of businesses are following a trend of providing free, unsecured Wi-Fi services to customers in an attempt to increase footfall. Where those customers abuse such a service to commit a copyright infringement, is the provider indirectly liable for the copyright infringement?

This very question is being considered in Europe right now and could have drastic consequences for millions of copyright holders and Wi-Fi providers.

The Facts

Tobias McFadden runs a business in Munich selling and renting sound systems. A free and public Wi-Fi service is offered on the premises intended for use by those using the store.

In 2010 an unknown source took advantage of the public Wi-Fi network to offer illegal music for download to the public at large. Sony Music Entertainment Germany GmbH brought a claim for breach of copyright and a German court held that Mr McFadden was “indirectly liable” for breach of copyright material for the reason that he had not made his internet connection secure.

The Law

The Directive on Electronic Commerce  was implemented in the UK in a set of 2002 Regulations.  The Directive limits the liability of “Service Providers” where the following conditions are met:

1. The provider must not have initiated the transmission.
2. They must not have selected the recipient of the transmission.
3. They must not have selected or modified the information contained in the transmission.

The German court accepted that each of the conditions above was satisfied in Mr McFadden’s case. The question, however, was whether a shop owner who provides a free, unsecured Wi-Fi service could fall inside the definition of “Service Provider” and thereby rely upon this defence. The Regulations provides that a “Service Provider” is an entity providing “…any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service”.  The difficulty here is that the Wi-Fi is offered for free, albeit with the intention of enticing paying customers into the store (or as a related benefit of using the store where remuneration for services takes place).

Advocate General Finding

The national courts of Member States can submit a case to the European Court of Justice (ECJ) for clarification on a point of EU law. The interpretation of the ECJ is binding on national courts of all Member States (although the national courts are left to decide the dispute for themselves by applying the ECJ’s interpretation to the case at hand). An Advocate General is appointed to aid the judges in making their decision, but his or her opinion isn’t binding.

Advocate General Maciej Szpunar was appointed in this case and has recently published his opinion for the ECJ’s consideration.  He has determined that the limitation of liability contained in the Directive also applies to a person such as Mr McFadden who operates a Wi-Fi network that is accessible to the public free of charge in addition to their principal economic activity. The Advocate General does not consider it necessary for the person in question to present himself to the public as a service provider or that he should expressly promote his activity to potential customers to fall within the definition.

This limitation means that it’s not possible to order the payment of costs or damages against a Service Provider whose connection has been used to commit a copyright breach, although an injunction can still be awarded to end that breach (non compliance with which will have cost consequences). The Advocate General suggested the ECJ give guidance to national courts when making such an injunction that they should only be awarded to prevent a specific infringement (i.e. any injunction should not require the termination or password protection of the internet connection or the examination of all communications transmitted through it).

Conclusions

It will come as a great relief to millions of businesses if the Advocate General’s finding is upheld by the European Court of Justice. The ability to apply for an injunction in specific cases helps balance the interests of copyright holders with those of businesses who would be left with an unmanageable burden of monitoring all of their internet traffic or removing the service altogether; both of which would limit the right to freedom of expression and to conduct business as protected under European and national laws.

The case is to be determined by the ECJ at a later date and is certainly one to watch out for.