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EU: Advocate General comments on Liability for Free Wi-Fi

31 March 2016
Free Wi-Fi is an achievement for the community, particularly if it is also password-free. However, in numerous European countries service providers are reluctant to offer free Wi-Fi as they fear the consequences of being made liable for infringements the Internet users might commit whilst being online. The Court of Justice of the European Union is currently sitting over a case that deals with this subject. On 16 March 2016, Advocate General Maciej Szpunar submitted his opinion in this matter known as the Mc Fadden case (Case Ref.: C-484/14)

According to the Advocate General, the operator of a free Wi-Fi enjoys freedom under the liability privilege for access providers and therefore is not liable to pay the rightholder any kind of compensation. Still, by means of injunctive relief, the operator may be obliged to stop actual infringement and to prevent new infringement of the same kind. However, according to Maciej Szpunar the operator’s obligations may not be extended to the termination of the Internet connection as such. Equally, he may not be required to secure the connection with a password or to examine all communications transmitted through the Wi-Fi .

The Case

On 18th September 2014, the Regional Court of Munich decided to submit in total nine questions to the CJEU, which all related to the liability of intermediary service providers. Background of the case is the dispute between Mr. Mc Fadden, an operator of a business selling and renting lighting and sound systems, and Sony Music. Mr. Mc Fadden offered a free Wi-Fi network for his customers. In September 2010, a copyright protected work was unlawfully offered for downloading via this Wi-Fi network. The German court took the position that Mr. Mc Fadden did not infringe third-party copyright himself. However, the court considered an indirect liability. In this context, it relied on a decision handed down by the German Federal Court of Justice only a couple of months before (Decision of 12th May 2010, Case Ref.: I ZR 121/08Sommer unseres Lebens).

Consequently, the German Court submitted the previously mentioned range of questions to the CJEU in order to receive clarity on several aspects of the privilege for access providers as set out in the E-Commerce Directive 2001/31.

The Opinion

In his Opinion, the Advocate General Maciej Szpunar sub-divides questions into basically three parts:

  1. The Scope of Art. 12 (1) of the E-Commerce Directive

Right at the beginning, he clarifies that Art. 12 (1) of the Directive 2001/31 requires a “service of an economic nature“. Due to a wide interpretation, the term also includes providing Internet access to the public by an economic operator – even if it is not against payment. Providing free Wi-Fi is also a form of marketing to attract customers and therefore is economic. According to Maciej Szpunar, there is no difference between the case of Mr. Mc Fadden and offering internet connection in hotels, bars and other facilities of that kind.

  1. The Extent of the Liability of the Access Providers

As a second step, Maciej Szpunar outlines that Art. 12 (1) of the Directive 2001/31 provides a privilege for access providers under criminal, administrative and civil law in the event that three conditions are fulfilled: (1) the provider of the mere conduit service must not have initiated the transmission, (2) must not have selected the recipient of the transmission, and (3) must not have selected or modified the information contained in the transmission. In the light of the express terms, additional requirements relating to the limitation of the liability are precluded.

According to Art. 12 (1) of the Directive 2001/31, not only claims for compensation, but also to any other pecuniary claim entailing a finding of liability for copyright infringement with respect to information transmitted – such as a claim for the reimbursement of pre-litigation cost or court costs – are deemed to be excluded. In contrary to this, an injunction including a penalty being attached to the injunction shall be permissible due to Art. 8 (3) of the Directive 2001/31.

  1. The Scope of injunctions

Finally, the Advocate General clarifies the limitations on injunctions. He emphasizes that in order to grant an injunction, it shall always be necessary to weigh the interests of the parties concerned. Thus, you have to consider the right to protection of intellectual property on the one side and the freedom of expression and information and in particular the freedom to conduct business on the other side. In his opinion, it is obvious that an injunction requiring the termination of an Internet connection or a general monitoring obligation are incompatible with EU law. The Advocate General goes into more detail as regards the obligation to make Wi-Fi networks secure. He presents several arguments that support his thesis that the obligation to secure the Wi-Fi is not consistent with the requirement of a fair balance. For example, the financial and administrative consequence would be clearly inappropriate. Additionally, any measure that could hinder the development of the great potential for innovation by free Wi-Fi should be carefully examined with reference to the potential benefits.

Comment

The Advocate General provides the CJEU with a broad range of arguments thereby laying solid ground for a balanced decision. This is of great importance indeed given the impact that this decision will surely have. The general public will perceive the consequences of the outcome of this case quite immediately. This is because the question of liability is crucial for the development of a broad offer of free Wi-Fi throughout the European Union. Service providers will only engage in such networks if the risks of being held liable are quantified and manageable. Thus, a whole industry will eagerly look to Luxembourg awaiting the handing down of the CJEU’s ruling.

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