Open Wi-Fi Provider Not Liable for Third Party Copyright Infringement

A recent decision of the Court of Justice of the European Union (CJEU) has clarified that businesses and organisations who offer customers and the general public access to their open Wi-Fi network cannot be liable if a user of their network used their connection to download copyright protected works.

The facts of the case (C-484/14, Tobias McFadden v. Sony Music Entertainment Germany GmbH) brought before the CJEU, is a long-standing legal dispute between an individual Tobias McFadden who owns a light and sound system retail store in Munich and Sony Music Entertainment Germany.

Tobias was sued by Sony after they claimed that an individual in his store used his open Wi-Fi connection to illegally download a music album belonging to a German music band to the internet. Sony owns the copyright to the album and they wanted to claim damages for the infringement of their copyright from Tobias. Sony believed that he was liable because the third party individual used his Wi-Fi connection to commit the infringing act and that Tobias was responsible for the provision and resulting use of the free internet connection.

At first instance, the court sided with Sony. However, Tobias appealed this decision on the basis that he should not be liable for third-party infringements. The Regional Court agreed and decided to stay the proceedings until it sought further guidance. It asked the Attorney General (AG) to provide its opinion, which he did in March 2016.

On 15 September 2016, the CJEU sided with Tobias rather than Sony, stating that a "copyright holder is not entitled to claim compensation on the ground that the network was used by third parties to infringe its rights." The CJEU also held that by merely offering a Wi-Fi connection to encourage customer trade constituted an "information society service", permitted under EU law.

The CJEU did however stipulate, in order to balance the rights and restrictions in question, that owners of free Wi-Fi connections can be ordered through the courts to protect their connection with a password. They said that this would ensure "a balance between, on the one hand, the intellectual property rights of right holders and, on the other hand, the freedom to conduct a business of access providers and the freedom of information of the network users."

This ruling will come as a relief to many businesses who freely offer access to their Wi-Fi networks to customers, like coffee shops and cafes.

If you have any questions on the above please do not hesitate to contact the team at McDaniel & Co. on 0191 281 4000 or legal@mcdanielslaw.com.