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McFadden ruling vindicates mere conduit

Posted by Sam Frances on Friday, September 16th, 2016 at 13:31

The Court of Justice of the European Union has returned its ruling in the McFadden case, confirming that mere conduit protections do apply to the owners of shops, cafés or other businesses offering free, password-less wi-fi to the public.

[M]aking a Wi-Fi network available to the general public free of charge in order to draw the attention of potential customers to the goods and services of a shop constitutes an ‘information society service’ under the [E-Commerce] directive.
— CJEU press release

As a result, providers such as Tobias McFadden - the shop owner at the heart of this case, who in 2010 was sued by Sony for providing a free and open wi-fi connection which was used by an unknown customer to download copyright infringing files - cannot be held liable for copyright infringement by their users.

The Court confirms that, where the … three [mere conduit] conditions are satisfied, a service provider such as Mr Mc Fadden, who providers access to a communication network, may not be held liable. Consequently, the copyright holder is not entitled to claim compensation on the ground that the network was used by third parties to infringe its rights.
— CJEU press release

The CJEU’s ruling is a vindication of the mere conduit protections enshrined in the E-Commerce Directive. However, this decision is not an unequivocal victory for network operators. The Court also ruled that rightsholders can apply to national courts for an injunction to force an open w-fi provider to password protect their network.

[T]he directive does not preclude the copyright holder from seeking before a national authority or court to have such a service provider ordered to end, or prevent, any infringement of copyright committed by its customers.

[A]n injunction ordering the internet connection to be secured by means of a password is capable of ensuring a balance between, on the one hand, the intellectual property rights of rightholders and, on the other hand, the freedom to conduct a business of access providers and the freedom of information of the network users.

— CJEU press release

Although the Court held that such an injunction could represent a fair balance of rights, “the directive expressly rules out the adoption of a measure to monitor information transmitted via a given network”.

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