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ISPs cannot be legally obliged to monitor their customers’ electronic communications and block the unauthorised transmission of copyrighted content, the European Court of Justice (ECJ) has ruled, in a landmark decision that will come as a blow to rights holders.

The ruling came in the Scarlet Extended case, which began life in the Belgian courts in 2004 and was escalated to the ECJ.

Belgian rights holders group SABAM was looking to impose content filtering requirements on ISP Scarlet to prevent illegal downloading and distribution in the country.

“EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files,” the court ruled on Thursday.

Jérémie Zimmermann, co-founder of rights group La Quadrature du Net, welcomed the news, arguing that it is a blow for a European Commission that has until now “implicitly supported the broad filtering schemes” promoted by the creative industries.

“As the war on culture sharing is fiercer than ever, this ECJ ruling comes at a timely moment. The ruling stresses once again that instead of keeping on pushing for more repression, EU policy makers should work towards a much-needed reform of copyright that would protect citizens’ freedoms,” he added.

“Rejecting ACTA and other extremist measures imposed in the name of copyright would be a first step.”

Robin Fry, copyright expert at law firm DAC Beachcroft LLP, also welcomed the news.

“For too long, ISPs, search engines and online marketplaces have been
shunted down the track of having to be responsible for everything that’s
seen or done using their systems,” he told V3.

“A freedom to conduct business argument will certainly be deployed in many cases from now on where intellectual property rights owners choose to
bring claims against the messenger rather than the infringer.”

Fry added that the ruling could affect the UK’s controversial Digital Economy Act.
“This judgement may well jeopardise the DEA,” he said.

“The ISPs could show that the substantial costs of running the monitoring and access-blocking provisions will be an unfair burden on their business and subverts their existing financial model.”

However, Eversheds associate Simon Cloke explained that even the DEA stops short of requiring ISPs to monitor customer information to prevent illegal downloads as per SABAM’s request.

“It instead places the onus on the copyright owner to identify potential infringements and to notify these to the ISP,” he told V3.

“Under UK law, monitoring of communications transmissions would amount to a violation of the Regulation of Investigatory Powers Act (RIPA) except in certain limited circumstances. The Digital Economy Act does not require ISPs to monitor communications in a manner that would contradict the provisions of RIPA.”

In response to the ruling, rights holders remained confident that in the UK injunctions could still be sought to force ISPs to crack down on illegal content.

“The European Court found that the injunction against Scarlet was too broad and imposed a general obligation to monitor all information. The measures being adopted in the UK to reduce online piracy are entirely different,” argued BPI general counsel, Kiaron Whitehead.

“The Court reconfirmed today that, under European law, injunctions can be ordered against ISPs in relation to both existing and future copyright infringements.”

Rights holders have already been able to circumvent the Digital Economy Act, however, by turning to the Copyright, Design and Patents Act in order to force ISPs such as BT to block file-sharing site Newzbin, and pay for any technical measures needed to do this.

IPCom has threatened further legal action if HTC refuses to comply, stating that it could pursue its case under a German law called Zwangsgeldverfahren. This is a penalty system that allows a series of fines to be charged until an infringer agrees to comply with the court order.

“HTC’s claim that it is ‘business as usual’ in Germany is utterly misleading,” said Bernhard Frohwitter, managing director of IPCom.

“Fact is: the patent in question [patent #100; EP 1 186 189] is valid, and the Mannheim ruling of February 2009 covers all HTC 3G devices, since the patent covers a mandatory 3G standard, valid for all devices and networks.”

IPCom maintains that HTC will have to redesign products as it will not be able to use an “unspecified work-around” to avoid infringement. However, HTC shows no signs of backing down and claims that the patent is invalid.

“On Friday, HTC withdrew its appeal in the German IPCom EP1186189 case. HTC considers that the appeal had become redundant as the German Federal Patents Court had previously held the relevant claim of the patent to be invalid,” the firm said in a statement to V3.

The dispute looks set to drag on as HTC will want to avoid a potentially expensive licensing deal with IPCom.

Meanwhile, fellow Android device maker Samsung has had to redesign its products for the German market, but could be handed a reprieve in the Australian courts in its high-profile patent dispute with Apple across the globe.

Justice Lindsay Foster, an Australian appeals court judge, suggested that the Samsung tablet ban in the region could be overturned in time for the Christmas season.

“The result looks terribly fair to Apple and not terribly fair to Samsung,” Bloomberg reported the judge as saying during the appeal hearing.