EU court ruling on file-sharers is not what it seems

Out-Law Analysis | 30 Jan 2008 | 4:40 pm | 2 min. read

OPINION: Any record industry exec would have been weeping into his cornflakes today as he perused the newspapers. The European Court of Justice was reported everywhere as having handed victory in a battle to privacy activists and file-sharers by ruling that ISPs do not have to hand over subscriber details in file sharing or any other civil cases.

The problem is that these reports have missed the point. What the ECJ actually said was that national governments can, effectively, do what they like on the issue.

Therefore, if Spain wants to rule that file-sharer details can only be revealed in criminal cases, it can. However, if UK courts want to hold, as they do, that file-sharer details can be revealed in all cases, then that's fine too.

It all boils down to the slightly complicated question that the ECJ was asked. Telecoms firm Telefónica argued that Spanish law prevented it revealing user details except in criminal cases. Music rights-holders' group Promusicae, though, said that that law was inconsistent with the EU Directive protecting copyright.

The Spanish court asked the ECJ whether Spain was allowed to have a rule preventing disclosure in civil cases. The ECJ said that such a rule was okay. The ECJ did not say that all Member States had to prevent disclosure in civil cases to protect privacy rights as has been reported.

The Court, very even-handedly, said that the issue put two crucial rights in fundamental opposition: an internet user's right to privacy and a music producer's right to protect its copyright.

Each side in the argument had an entire EU Directive on its side, and the ECJ was asked to choose between them. It didn't, instead telling EU nations that they could create their own laws provided they balanced the two rights properly.

Spain, then, was allowed to keep a law that said that names can only be revealed in civil cases, as long as its law overall kept a proportional balance between the right to privacy and protection for copyright holders. And here's the nub of the issue, it is a criminal offence to host copyright-infringing material in Spain for profit or on a commercial scale, even if not for profit.

The music industry executive should be marginally happier now, but the one industry it could unsettle is the telecoms business. What practical effect will the ruling have in the hard world of commerce?

One potential effect is forum shopping.

British music fans generally can't subscribe to ISPs in Spain, because Spanish ISPs don't lay cables along the streets of Britain or install kit in British telephone exchanges (and satellite broadband is an expensive solution for free downloads). But they might use a Spanish web host to store copyright-infringing files. Entire companies could relocate to countries that would not order names to be revealed in civil cases, to pick up this business, and countries that do reveal names, such as the UK, might find their ISP businesses suffering.

So what might be relief for the record industry exec might well become a headache for his counterpart in a telecoms firm. But probably only a minor headache.

By Iain Connor

Iain Connor is a partner specialising in intellectual property law with Pinsent Masons, the law firm behind OUT-LAW.COM.