CJEU confirms indirect liability as Störer for open, anonymous Wi-Fi-networks

Press release of the law firm WALDORF FROMMER, September 15, 2016

Today the CJEU delivered its landmark decision in the McFadden Case (C-484/14). The highest European court took a firm stand against the Advocate Generals’ opinion and made some ground-breaking statements.

The decision is based on the following facts of the case: The proprietor of a shop for lighting and sound equipment intentionally provided an open Wi-Fi network on his business premises to the public. In 2010, a music album was made available to the public per filesharing via this Wi-Fi network. The shopkeeper pleaded that he did not personally commit this copyright infringement. Instead, he argued not to be liable for this infringement allegedly committed by an anonymous user of his Wi-Fi network and filed an action for a negative declaratory judgement (negative Feststellungsklage). In 2014, the regional court of Munich (Landgericht München I) stayed the proceedings and referred a comprehensive catalogue of 9 questions to the Court of Justice of the European Union in Luxembourg. The law firm WALDORF FROMMER represented the right holder in the main proceedings as well as in front of the Court of Justice of the European Union.

With respect to the verdict at hand, especially regarding some apparently premature and not adequately informed press reports, the following should be noted:

The CJEU explicitly clarifies that the provider of a commercial Wi-Fi network – irrespective of his knowledge of possible infringements – can be obligated to password – protect the internet connection and require the users to reveal their identity. In any case, he must not provide the network unrestricted to anonymous users in order to safeguard the protection of intellectual property. The liability as so called Störer that has been acknowledged in Germany for a long time is therefore not overturned. In fact the decision at hand has to be understood as confirmation of this legal concept that has been substantiated in Germany inter alia by the decision “Sommer unseres Lebens” of the German Federal Court of Justice (Bundesgerichtshof).

In our opinion, the decisive statements of the CJEU inter alia are:

The provider of a Wi-Fi network free of charge is to be considered as an “information society service” as defined by Article 12(1) of Directive 2000/31, if the network is provided in order to promote manufactured goods or provided services. Insofar as the provision of the network is not connected to the business in any way, it is already doubtful whether the provider can refer to the according liability exemption.

Furthermore, the CJEU explicitly declined to apply some premises for the liability exemption for host-providers to access-providers. Access-providers therefore do not need to be made aware of a certain infringement before they can be held liable.

Probably the most significant statement of the CJEU concerns the question, whether a Wi-Fi-network provider is liable to cease and desist (i.e. has to prevent illegal activities committed by users). Hardly surprising and in accordance with the obvious legal situation, the CJEU states that there is no liability for such service-provider regarding damages and out of court- as well as court costs related to damages. More significantly, the European law explicitly stipulates the obligation to prevent infringements. The reimbursement of respective costs of giving formal notice and court costs can be demanded from the Wi-Fi-network provider.

Truly ground breaking is the fact that the provider of a Wi-Fi-network can be obligated to prevent infringements, when the only eligible measure consists in “password-protecting the internet connection, provided that those users are required to reveal their identity in order to obtain the required password and may not therefore act anonymously”.

It remains to be seen which consequences this decision will have on the changes to the recently adopted changes to the German Law on Electronic Media (Telemediengesetz – TMG). The justification given by the German government mostly relied on the opinion of the Advocate General in the case at hand. His opinion, according to which the provider of a Wi-Fi-network cannot be expected to take preventive measures of any kind, has been clearly rejected be the CJEU.

 

Follow link for the German press release

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