Monday, October 13, 2014

Munich Court Asks CJEU About Injunctions Against Operators of Open WiFis

Regional Court in Munich (LG München) last month filed a preliminary reference to the CJEU (Case 7 O 14719/12 - reported by OffeneNetze) asking several questions related to applicability of mere conduit safe harbour to free and open WiFis and also to possibilities of national courts to impose certain obligations on (non-liable) providers of such hot spots. In Germany, German Federal Supreme Court (BGH) in 2010 judgement (Sommer unseres Lebens, I ZR 121/08) obliged most of the operators to password-protect their WiFis. Now this could either change or be extended to some other European countries.

Update 27/11/2014, the case is now listed as Mc Fadden C-484/14.

The case arose between an entrepreneur selling light and audio systems who is also a member of the German Pirate Party and a record label. The entrepreneur operates an open and free of charge WiFi in his store. He uses the WiFi sometimes as a tool for advertising of his store (preloaded home page points to his shop and name of the network bears its name) and sometimes to agitate for his political views (pointing to particular websites such as data protection campaigns, etc.). After receiving a letter informing him about a copyright infringement allegedly committed via his hot-spot, the entrepreneur unusually sued the right holder pursuing the negative declaratory action. The right holder as a defendant later counter-claimed asking for damages, injunctive relief and pre-trail costs as well as court fees under the above mentioned doctrine of BGH.

The referring court is hesitant whether mere conduit safe harbour of Article 12 allows especially for injunctive relief on which the German concept of Stoererhaftung is based. It points to similar cases before the Hamburg court (Case No. 25b C 431/13 and Case No. 25b C 924/13) that recently denied such claims arguing that mere conduit safe harbour prevents them. The court comes to conclusion that the plaintiff did not infringe the rights himself, and thus is considering what kind of measures can be imposed on a WiFi operator such as plaintiff. It is very symptomatic to German case-law on injunctive relief that the Munich court does not even mention applicability of Article 8(3) InfoSoc in this case. Despite the fact that its case is clearly about its local transposition and European limits.

Here is my very freely translated and heavily rephrased summary of questions with some commentary.

1. Question 

Q: Can a provider of a free open WiFi qualify for a mere conduit safe harbour? In particular, should the phrase of ‘normally provided for remuneration’ that defines the terms ‘information society services’ be interpreted as meaning that:
  • the particular service must be provided for remuneration,
  • the services on the market of this kind need to be provided for remuneration or
  • it is enough that majority of such or comparable services are provided for such remuneration.

This question was a ticking bomb. And it was not even a few weeks ago, when I criticized that if CJEU follows its approach from Papasavvas C-291/03, its case-law will soon bump into a trouble. So here it is. I understand that ‘normally provided for remuneration’ is limitation coming from the primary law and the very competence of the EU, but stretching the factor of required economic activity is a step that is necessary if we don't want to end up with a framework which punishes service providers for not making any money out of their services.

2. & 3. Question

Q: Does provision of an open WiFi hot spot constitute "the transmission in a communication network of information" as required by Article 12 of the E-Commerce Directive? And if so, is such a service also "provided" in the sense of the same Article when it is offered to the public by mere opening of connectivity without any advertising or offer to contract.

Personally, I don't see why this should not be resounding "YES". Munich court apparently thinks the same, but probably only wanted to make sure it is right.

4. & 5. Question

Q: Does the wording of Article 12(1), which requires Member States to "ensure that the service provider is not liable for the information transmitted" and Article 12(3), which permits some injunctions, when read together, mean that (a) injunctive relief, (b) damages, (c) pre-trail costs and (d) court fees are precluded before the first copyright infringement is established.

Q: Should Article 12 bar the national court from obliging an operator of WiFi to prevent third parties from using the Internet access for peer to peer file-sharing?

Article 12 covers only monetary claims. I think this is a general consensus [not necessarily in Germany, I know]. In my opinion, there is clear string of case-law that shows that injunctive relief is not covered by Article 12 (see here). UPC Telekabel Wien being the most obvious one. I believe that the CJEU will just confirm this. What is, however, very interesting and potentially far-reaching are the questions related to shielding from pre-trail costs and court fees. Especially in countries like Germany where you can recover pre-trail expenses related to injunctive claims, this could be of a great significance. Also, if such expenses would be included in the safe harbours, in the future, even courts in the enforcement proceedings could have difficulty to impose fines on mere conduits when they do not comply with website blocking for instance. I am really thrilled to see how the court approaches this question. Though admittedly for different reasons that the referring court.

6. Question

Munich court, disturbed by the fact that if no obligations were to be imposed on open WiFi operators there could be no recourse for right holders, suggests that such a situation would be incompatible with the recital 41 that safeguards the balance "between the different interests at stake and establishes principles upon which industry agreements and standards can be based". To prevent such imbalance, the court suggests his solution in questions 6,7,8.

Q: Should the knowledge requirement of hosting safe harbour apply per analogy also to injunctive relief against mere conduits?

This question is "understandable" from the German perspective, where the problem is whether pre-trail costs attach to the first cease and desist letter exercising claim to injunctive relief (yes, in most of the continental countries injunctive relief is a material claim, similarly as damages, not a procedural tool of a court, so it existis also outside of the court). The Munich court is basically trying to curb these costs before the first notification by this question [at least that is my understanding]. Not sure if CJEU will get this message, and even if it does, whether it can/should at all do something about it, given that the court wrongly seems to assume that Article 14 knowledge requirement also applies to injunctions against hosts. It does not. I probably do not need to stress too much that this would be constitute rewriting of the existing safe harbour schemes.

7. & 8. Questions

But the court also has second suggestion.

Q: Are there any unwritten requirements for mere conduits?

Invoking wording of Article 2(a) [who qualifies as a service provider] and Article 12 it seeks to know if there is any backdoor for mere conduits. The Munich court explicitly suggests that a possible unwritten requirement could be whether operators can prove to have a link/need of such open WiFis to their business model. I personally think that the CJEU might take the L'Oreal v. eBay neutrality requirement out of pocket and apply it here. This would, however, create similar uncertainty as it created with hosting safe harbour today.
9. Question

Puzzled by what UPC Telekable Wien, especially with considerations of Article 15 of E-Commerce Directive, might mean for the case at hand, the Munich court also asks an additional question provided that injunctions are permitted.

Q: Does Article 12, considering the provisions of the EU Charter, the Enforcement Directive and the InfoSoc Directive, bar a national court from issuing an injunction against a WiFi operator obliging him to prevent third parties from using that access for peer to peer file-sharing, if such a provider is given option to chose what kind of technical means he will use to comply with this obligation? Does the fact that such a provider can comply with this obligation change if it is known already before the enforcement proceedings that the only way of complying with the order is refraining from using the WiFi, password-protecting it, or filtering all the content passing through it.


In a way, this is an indirect direct attack on BGH case-law obliging operators of open WIFIs to password-protect them in order to prevent infringing use. At the same time, some questions are scary. It is expected that the CJEU confirms that injunctive relief is not restricted by mere conduit safe harbour. And it is hoped that it will refuse the invitation to create new conditions for mere conduits out of the blue. The court could, however, seize the opportunity to examine whether such measures are compatible with fundamental rights and not only another socially wasteful enforcement practice. In order this to happen, somebody should explain the court the innovative potential and social use of open WiFis beyond mere household use, which most of the judges are [only] familiar with.


Anonymous said...

The key question is whether the Record Company has produced any hard evidence to the court of the claim it made in it's original letter and whether any such evidence stood up to court scrutiny. Until that is answered the record company is guilty as charged and should be treated as a vexatious litigant.

Anonymous said...

why open wifi is important : the Electronic Frontier Fondation has campaigned for it :