Hard on the heels of the European Commission’s recent statement that access to free WiFi should be expanded across Europe, a recent case has delivered some mixed news for businesses that offer free unprotected WiFi networks for customers, the actions of whom they have little, if any, control over.
McFadden v Sony: the “mere conduit” Defence
The facts of the case, originating in the German courts, involved a lighting and sound retail business which offered its customers the usage of a free WiFi network whilst on its premises. A customer uploaded a piece of music over the network in respect of which Sony owned the copyright. Sony pursued the owner of the business, bringing a claim against it for damages for copyright infringement.
The court was asked to consider whether the defence offered under Article 12(1) of the E-Commerce Directive (2000/31/EC) could be applied to the business in the circumstances and, if so, what if any recourse Sony, the copyright owner, would have against a network operator where infringing content had been uploaded, accessed or created by a user.
The Directive provides that an “information service society” provider who transmits information on behalf of a third party will not be liable for that information where it can be shown that the provider did not initiate the transmission of such information, select the receiver or have any control over the information. Essentially, the network provider is deemed to be acting as a “mere conduit” and so has no liability for the actions of users of its network.
Earlier this year, the Advocate General made a recommendation that the network operator should not be liable for damages or costs, nor should the copyright owner have the ability to force it to implement the use of passwords across the unprotected network.
What did the court decide?
The court departed from the AG’s recommendation, in the sense that while the defence could be applied and network operator should not be ordered to pay damages to the copyright owner, the latter may be able to obtain an injunction (together with any related costs), including forcing the network operator to password-protect the network.
This case has the effect of aligning those businesses who operate these networks with the internet service providers (ISPs) themselves. By way of contrast, a business whose employee infringes copyright using his employer’s IT system, for example, would not have the benefit of the “mere conduit” defence and will therefore be liable for damages together with (potentially) the costs of the aggrieved party as well as any relevant injunction.
It appears that the court, in delivering the ruling, has tried to strike a balance between encouraging the spread of free WiFi networks and acting in the interests of those wishing to protect their copyright. It remains to be seen whether this is successful in this aim.
The “Brexit” Effect?
Given that this is a European decision, businesses in the UK are likely to ask how this will affect them and whether Brexit will directly influence the application of this decision. The background law applied in this case was implemented in English law by way of the Electronic Commerce (EC Directive) Regulations 2002. These Regulations apply to “any service normally provided for remuneration at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, at the individual request of a recipient of the service” and as such may apply to the majority of commercially available websites, platforms and networks.
The implementation of the Regulations made the Directive directly applicable to UK businesses, and this will not change with Brexit.
There has been extensive harmonisation of many IP-related laws across the EU. Given the fact that over time, English jurisprudence has in some areas become so heavily intertwined with that of the EU, it is unlikely that there would be a seismic shift in the law on the conclusion of the UK leaving the EU. It is more likely that there will be a gradual divergence from EU law over time, as UK legislation goes through an organic review and replacement process in light of the then current policy, and English courts reach their own decisions on the interpretation of the legislation.