Looking back on last year’s list, my number 2 (C-403/08 Football Association Premier League and Others and C-429/08 Murphy) and number 1 (C-70/10 Scarlet Extended) cases were decided with considerable repercussions in the blogosphere. However, my number 3 case (T-336/07 Telefónica v. Commission and T-398/07 Spain v. Commission) is still pending, now reaching its fifth year at the (first instance) General Court (and thus possibly also raising length of proceeding-issues) - so I will include this case again in this year’s list.

Already coming up on 16 February 2012 is the judgment in the SABAM case (C-360/10 Belgische Vereniging van Auteurs, Componisten en Uitgevers), addressing very similar issues to those of the Scarlet case (see this post) which was decided last year (court orders for “preventive filtering” by internet service providers to identify files containing musical, cinematographic or audio-visual work of rights holders, and subsequently to block the exchange of such files). There will be no opinion of the advocate general, and I do not expect any surprise compared to Scarlet, and so this case does not rank in my top 3 list. But there is another interesting copyright-related case which I am including in my list:

Number 3: C-461/10 Bonnier Audio AB a.o.: one of the questions raised in this case addresses the relationship between the data retention directive and the copyright-enforcement-directive 2004/48/EC and asks whether an internet service provider can - in civil proceedings - be ordered to give a copyright information on the subscriber to whom a specific IP address was issued. As the advocate general has pointed to the “novel and often delicate character” of the questions concerning the protection of personal data, but in the end it seemed quite clear cut: the data retention directive does not stand in the way of an obligation of the internet service provider to hand over information on the person to whom an IP-address was assigned at any given time; however, there have to be detailed national laws setting out these obligations. (update: judgment on 19 April 2012; see here at e-comm [in German])

Number 2: T-336/07 Telefónica v. Commission and T-398/07 Spain v. Commission: this is the case already mentioned above, in which Telefónica and Spain want the General Court to annul Commission Decision COMP/38.784 (Wanadoo España) which imposed a fine of EUR 151 875 000 on Telefónica for infringing Article 82 EC (Art 102 TFEU). The Commission found that Telefónica abused its dominant position by imposing unfair prices in the form of a margin squeeze in the Spanish broadband markets, for more than five years from September 2001 to December 2006. After the predatory pricing case C-202/07 P France Télécom v. Commission and the margin squeeze case C-280/08 P Deutsche Telekom AG this is the third and last of the major competition law cases from the earlier days of telecom liberalisation, also dealing with the relationship between sector specific regulation and general competition law. In the substance, I would not - in the light of the France Télécom and Deutsche Telekom cases - expect a reversal of the Commission decision, but one can never be too sure about the procedural issues and the calculation of the rather substantial fine. (update: judgment was handed down on 29 March 2012, Commission decision confirmed; see here at e-comm [in German])

Number 1: to be honest, I do not have a clear favorite for number 1, and I am not sure at all if any of the cases I would consider for number 1 will actually be decided this year, as they were only rather recently put to the Court. I was thinking about case C-375/11 Belgacom and others dealing with fees for the renewal of individual rights to use frequencies under Articles 3, 12 and 13 of the Authorisation directive 2002/20/EC, because this is an issue that might plague quite a few of the national regulators as they try to refarm/reallocate the spectrum for mobile services in the near future, taking in the digital dividend as well as frequencies that were used exlusively for 2G or 3G services and which will lose this exclusivity.

But then I decided to put the two (rather similar) cases C-468/11 Commission v. Spain and C-485/11 Commission v. France on the top of my list, as they not only provide a link between broadcasting and telecommunications law, but they also are of particular significance to other member states looking at telecom operators as a possible target for fiscal intervention (i.e.: special taxes), mostly to finance their public service broadcaster (as is the case in Spain, France and Hungary - for the latter, see this press release on the infringement procedures already started). The ECJ will have to decide whether such special taxes are compatible with the authorisation directive. The cases are still in a fairly early stage, but as there is some urgency to the issue I would not rule out completely that the Court might resolve the case by the end of the year (more likely though it will take until 2013).

PS: Another interesting case will not be decided by the Court, even though the Commission had - back in September 2010 - boldly announced to go to Court, yet - as is evidenced by this press release of 26 January 2012 - had never followed up on its promise. It should have been an infringement case against the UK for incorrect implementation of the e-Privacy directive (which seemed to allow targeted advertising based on prior analysis of users’ internet traffic), but after the UK made changes to the Regulation of Investigatory Powers Act (RIPA), the Commission was satisfied that the UK law is in line with the directive and closed the infringement procedure before it reached the Court.

*) Shakespeare, Measure for Measure Act II, Scene 2

Neelie Kroes, Vice-President of the European Commission, appointed Karl-Theodor zu Guttenberg “to promote internet freedom globally”. According to her press release, this “appointment forms a key element of a new “No Disconnect Strategy” to uphold the EU’s commitment to ensure human rights and fundamental freedoms are respected both online and off-line, and that internet and other information and communication technology (ICT) can remain a driver of political freedom, democratic development and economic growth.”

But sadly, it is not a joke.

Guttenberg, who was briefly Germany’s minister for economics and technology (Feb 2009 until Oct 2009) and then minister of defense (until 1 March 2011), fell from grace when it was revealed that he had plagiarized large chunks of his doctoral thesis. Internet activists set up a wiki and within a few weeks managed to publicly document that 94.4 (!)  percent of the pages in Guttenberg’s thesis contained plagiarized text. Of course people made (and make) fun of Guttenberg, calling him “Googleberg” or “Doctor Copy & Paste”, or promoting a “Guttenberg”-keyboard (for maximum efficiency, just Ctrl+C+V).Guttenberg, who had denied all allegations when he was first confronted (“absurd allegation”), had to resign, the university stripped him of his degree, and the state prosecutor started investigations. In May 2011, the university’s investigation came to the conclusion that Guttenberg “had manifestly and gravely breached the standards of good scientific practice and had cheated with intent” (my translation, more information on the Guttenberg-case - in German - at the university’s website). Not even a month ago, the state prosecutor came to the conclusion that Guttenberg had, with intent, committed criminal breaches of copyright in 23 counts, but closed the case after Guttenberg payed 20.000 Euro to a charity (press release of the state prosecutor’s office, in German); this is a common way of dealing with petty crimes (misdemeanours) where there is no public interest in further prosecution (section 153a of the German Code of Criminal Procedure act).

Guttenberg is not repentant: just three weeks ago he published a book called “Vorerst gescheitert” (”failed for now“), consisting of a long interview with a German journalist. He again denied any intent to plagiarize; rather he argued that the copying was the “fatal result of a chaotic and unsystematic mode of work”, having copied from the internet and then mixed it up due to using at least 80 floppy disks (!) and four different computers (more here, in German). The respected conservative daily FAZ commented: “Guttenberg has not lost his ability to talk nonsense”.

Guttenberg has no relevant expertise in internet issues, at least no such expertise seems to be documented, and neither Kroes nor her spokesperson came up with any evidence that Guttenberg ever had any original ideas, did any research or even just was involved with specific internet-related issues. Many German commenters are heavily critical of Guttenberg’s support for a German law which should block access to the internet in case of (suspected) child pornography; the relevant act was introduced when Guttenberg was minister of economics (but not by him) under the title “Zugangserschwerungsgesetz”, which translates as “Act to make access [to the internet] more difficult”(!). The Act never came into force and is in the process of being formally repealed, after criticism not only by internet activists, but also by many law professors and constitutional scholars. Guttenberg defended the act and implicitely accused the critics of being against blocking of child pornography-websites (see a newspaper report here, in German).

Guttenberg’s wife was involved in a TV-series called “Tatort Internet” (“Crime Scene Internet”), which tried to lure potential pedophiles into meeting underage girls and then exposed them on TV. Although the faces of the suspected pedophiles were not shown (or blurred), some of them could be identifed rather easily by TV-viewers. The series came under heavy criticism, for instance by the Minister of Justice who said “There is danger that innocent people are put in the pillory and the rule of law would be in a precarious situation. This is a high risk”.

So, first of all, Guttenberg (just recently)

• has been stripped of his degree because of intellectual dishonesty,
• was found to have been a multiple copyright-infringer,
• and admitted only as much as that he was out of his depths when dealing with computers and the internet

In addition, Guttenberg has no relevant expertise or experience in internet issues.
Kroes, who was aware of all this, nevertheless thought it fit to appoint Guttenberg as her adviser. When she announced it, it still sounded like an impressive job (and remember: it is supposed to be a key element of the strategy). In the press release it said that “Karl-Theodor zu Guttenberg will liaise with Member States, third countries and NGOs which are committed to work in this area and advise on how to advance the strategy in a co-ordinated and effective manner.” Kroes is further quoted with: “I want Karl-Theodor zu Guttenberg to champion this cause with governments and NGOs and ensure it gets the attention, focus and support it deserves.”

The reasons Kroes gave for this appointment are rather slim; pressed to justify her choice, she wrote:

“As he himself has acknowledged, if anyone understands the power of the internet, and its power to hold authorities to account, it is Karl-Theodor [Guttenberg]. Anyone who has worked with Karl-Theodor – and I myself have done so closely when he was German Economics Minister – would recognise his great political abilities. But what I also admire in him is his fresh and international outlook. […]

If you are wondering why Karl-Theodor and not someone else, I would say that I am looking for talent, not saints. I am asking him to do an important job; nothing more, nothing less. I live in the future, not the past.”

This indeed is rather troubling: Kroes is at once arguing that it is “an important job”, and that “talent” - plus a “fresh and international outlook” - is all that Guttenberg is bringing to this job. And she also thinks that Guttenberg gained relevant experience in internet-related issues by having been exposed on a Website as a multiple intentional copyright-infringer who cheated with intent in his thesis (which, by the way, she describes in an interesting euphemism as being “not a saint”).

I don’t think the regular Commission services would employ anyone just for having “talent” (at least I have not yet seen a single concours of EPSO just checking for talent), and I doubt that an academic cheater who was stripped of his degree could pass the vetting process for any senior position within the Commission services. While I don’t take offense with “forgiveness”, the logic that Kroes claims is behind Guttenberg’s appointment is severely flawed: I doubt that Vice-President of the Commission Reding would consider appointing a convicted criminal as an adviser on Justice affairs and then argue: “if anyone understands the power of law enforcement, it is XY, who served 10 years in jail”.

After the initial reactions (I recommend taking look at the comments to Kroes’ blog entry [and the German language version] and at the Kosmopolito-blog), the Commissioner retracted: in another blog entry she wrote: “There is no payment, no staff, no special treatment. He will be providing advice and assistance to me in a personal capacity. We will keep costs to a minimum, and I can assure you I’ll squeeze him for every good idea and every piece of feedback he has.” Her spokesperson commented that “People need to keep this choice in perspective; it is just one element of the wider no disconnect strategy“.

So we are left to wonder: is this an important job, including the task to liaise with governments and NGOs and thus to “champion a cause” - all of which would require a clear mandate, duties and responsibilities - or is it merely a rather vague invitation to a personal friend of the Commissioner to share a few ideas, just having the EU pay for a few trips? Kroes’ spokesperson explicitely stated that Guttenberg will not be a special adviser (who are under certain obligations under staff regulations, and who come in a paid and an unpaid variety), so we do not know what kind of relationship this should be, what (if any)  mandate Guttenberg has, which (if any) staff regulations apply, which confidentiality agreements, etc. etc.

Personally, I am also deeply sceptical about unpaid advisers, because they either have to be quite rich to be able to fulfill their tasks or they are in effect paid by someone else who is not necessarily disclosed or lacks transparency (Guttenberg is working for a US-based lobbying organisation/”think-tank”, which by the way is not registered in the EU transparency register). I don’t buy into conspiracy theories, which also abound in the comments on Kroes’s blog entries (ACTA, PNR, NATO, everything is mixed in, all forming part of a supposed greater story), to me all of this looks more like a new chapter to “The March of Folly“.

The appointment of Guttenberg as an adviser (or whatever his position/function might turn out to be) not only severely discredits the whole No Disconnect-Strategy, it also shows an incredible lack of judgment by the Commissioner and her staff. Kroes stressed that Guttenberg was her choice and her idea, and she is at least to be commended for not trying to blame her (other) advisers for this abysmal decision.

Kroes could have backed down: she could have apologized for not having thought this through, for having been distracted by more important issues and for not having paid enough attention to who should take this job. And then she could have cancelled the appointment of Guttenberg, to present a true expert as a new special adviser. I even waited a few days before writing this blog entry, because I thought Kroes might find a way out and get rid of Guttenberg. But instead of limiting the damage already done, Kroes chose to widen it and to defend Guttenbergs’s choice.

Obviously Kroes thinks that there are only some particularly concerned German internet activists who produce nothing more than a storm in a (German) teacup (at least that is what the comments of her spokesperson on the Kosmopolito-blog said, for instance here).
I do not share this view.

As evidenced - among others - by this blog post, there are people outside of Germany who do not believe in the wisdom of appointing a disgraced former politician to be an adviser in a field where he is not an expert and does not command the trust of the people he should “liaise” with. Critics include not only some hotheaded activists, but also many highly reputable academics, because appointing Guttenberg can only be seen as a deliberate provocation of the academic community and its values. This appointment will come back to haunt Kroes in any future decision she will take: as she showed such lack of judgment in appointing Guttenberg, how can she be trusted to show more judgment and take reasoned decisions in other matters?

To sum it up: The appointment of Guttenberg was wrong, and the decision to stick with him casts a serious doubt on Kroes’ overall power of judgment.

PS: Kroes asked that we should judge “Karl-Theodor [Guttenberg] ultimately on the quality of the advice he provides”, which calls for that advice to be published in full (because otherwise how could we judge it?). If published, I am sure that there will be a wiki devoted to scrutinising this advice.

The case concerned a special tax regime applied to (partly state-owned) France Télécom in the years from 1994 to 2002, which the Commission - in its decisiopn of 2 August 2004, C(2004) 3061 - had found to be state aid which had not been notified to the Commission and was incompatible with the common market. The benefit to France Télécom had been “between EUR 798 million and EUR 1 140 million”.

France Télécom argued that the Commission (and the Court) should have taken into account not only the tax regime between 1994 and 2002, but also a special tax that had been levied on Fracne Télécom in the years before. The ECJ found that the two tax regimes were based on different legal models and operating parameters and not inextricably linked; also, the special tax regime from 1994 on was intended to be of indefinite duration. and thus “necessarily entailed the conferring of an advantage on FT”.

The ECJ also stated that “neither the purported complexity of the tax regime at issue nor the periodic nature of the aid measure can release the Member State from its obligation to notify or give rise to any legitimate expectation on the part of the company receiving the aid.”

France Télécom then argued that the Commission and the Court of First Instance had disregarded the principle of limitation and the principle of legal certainty. The ECJ held that the decisive factor in determining the starting point of the limitation period referred to in Article 15 of Regulation No 659/1999 is when the aid was in fact granted, not when the aid scheme was adopted; as the advantages were granted on a periodic basis, the limitation period started to run each year on the date on which the business tax was due from FT.

As regards the principle of legal certainty, the ECJ confirmed the Court of First Instance’s decision, that no provision of European Union law requires the Commission, when ordering the recovery of aid declared incompatible with the common market, to fix the exact amount of the aid to be recovered. It is sufficient for the Commission’s decision to include information enabling the recipient to calculate the amount itself, without overmuch difficulty.

The ECJ’s judgment of course is the final decision, confirming that the special tax regime indeed was state aid and that France has the duty to recover the aid from the benficiary. Whether or not France Télécom will have to repay all of the aid granted, however, might still have to be decided by the national courts. In his opinion in this case (not yet available in English), advocate general Jääskinen had added some very interesting “complimentary observations” (starting an Nr 184) pointing out that even if though the Member State has the unconditional obligation to recover the aid, the beneficiary must have have all procedural guarantees as enshrinend in the Charter of Fundamental Rights and the European Convention on Human Rights. France Télécom cannot dispute that the special tax scheme was state aid, but it could still fight the opligation to (fully) repay the aid in the national courts.

*) Shakespeare, Measure for Measure, Act V, Scene 1

The Court held that the filtering system at issue was precluded by EU-law; it held that directives 2000/31/EC (e-commerce directive), 2001/29/EC (copyright harmonisation directive), 2004/48/EC (copyright enforcement directive), 95/46/EC (data protection directive) and 2002/58/EC (ePrivacy directive)

“read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against an internet service provider which requires it to install a system for filtering

• – all electronic communications passing via its services, in particular those involving the use of peer-to-peer software;
• – which applies indiscriminately to all its customers;
• – as a preventive measure;
• – exclusively at its expense; and
• – for an unlimited period,

which is capable of identifying on that provider’s network the movement of electronic files containing a musical, cinematographic or audio-visual work in respect of which the applicant claims to hold intellectual-property rights, with a view to blocking the transfer of files the sharing of which infringes copyright.”

The decision comes as no big surprise, as the system that should have been introduced by the ISP was indeed rather comprehensive and did not allow for any balancing exercise between the fundamental rights that were affected. In fact the ECJ came to its conclusion already based on Article 15(1) of the e-commerce directive, which states that “Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12 [”mere conduit”], 13 [”caching”] and 14 [hosting], to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity.” 

The interesting question was how the Court would tackle the issues of fundamental rights, as the Belgian court requesting the preliminiary ruling had explicitly asked about Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms.

The ECJ first points out, that the injunction at issue pursues the aim of ensuring the protection of copyright, which is an intellectual-property right, enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union (‘the Charter’). The Court weighs this fundamental right of the copyright owner against the freedom to conduct a business of the ISP, and comes to the conclusion that - as the ISP would be required to install a complicated, costly, permanent computer system at its own expense - that “the injunction to install the contested filtering system is to be regarded as not respecting the requirement that a fair balance be struck between, on the one hand, the protection of the intellectual-property right enjoyed by copyright holders, and, on the other hand, that of the freedom to conduct business enjoyed by operators such as ISPs.”

The issues of data protection and freedom of information only come in at the last stage. The ECJ notes that the effects of the filtering/blocking injunction “could not be limited to the ISP concerned, as the contested filtering system may also infringe the fundamental rights of that ISP’s customers, namely their right to protection of their personal data and their freedom to receive or impart information, which are rights safeguarded by Articles 8 and 11 of the Charter respectively.” The Court holds:

“51 It is common ground, first, that the injunction requiring installation of the contested filtering system would involve a systematic analysis of all content and the collection and identification of users’ IP addresses from which unlawful content on the network is sent. Those addresses are protected personal data because they allow those users to be precisely identified.
52 Secondly, that injunction could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications. Indeed, it is not contested that the reply to the question whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. Moreover, in some Member States certain works fall within the public domain or can be posted online free of charge by the authors concerned.
53 Consequently, it must be held that, in adopting the injunction requiring the ISP to install the contested filtering system, the national court concerned would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other.”

I would like to add just one caveat: all of the reasoning in this judgment rests on the facts of this particular case, where it was not contested that the ISP indeed was providing “mere conduit”, which gives it protection under Article 15(1) of the e-commerce directive. If a provider were to “select or modify the information contained in the transmission” (Art 12(1)c) e-commerce directive), for instance to filter “inappropriate” content of its own initiative, maybe following some appeal for “self regulation”, it would cease to be a provider of mere conduit - with all consequences!

*) Shakespeare, Coriolanus, Act V Scene 2

I will not try to catch up and write case notes on all the cases I didn’t write about here yet (in a moment, I will just make a short post on today’s Scarlet Extended-judgment). But just in case you want to read the judgments (and search on the web for the blog posts that exist on pretty much all of them), here is the list of interesting judgments from this year that I have not blogged about here:

• 3 March 2011, C-134/10 Commission v. Belgium (Art 31 universal service, directive; must carry-obligation in Brussels-Capital)
• 10 March 2011, C-85/10 Telefónica Móviles España (Art 11 (2) directive 97/13/EG, fee for allocation of public radio frequencies without earmark)
• 3 May 2011, C-375/09 UOKiK v. Tele2 Polska (competition policy; interpretation of article 5 of Regulation 1/2003)
• 5 May 2011, C-543/09 Deutsche Telekom (Art 25 of the Universal Service Directive and Art 12 of the ePrivacy-Directive)
• 12 May 2011, C-410/09 Polska Telefonia Cyfrowa Spółka z o.o. v. UKE (reliance on guidelines for market analysis, although not published in Polish language)
• 9 June 2011, C-52/10 Eleftheri Tileorasi A.E. ‘Alter Channel’ ao (TV without Frontiers-directive, ’surreptitious advertising’, payment or of consideration of another kind)
• 21 July 2011, C-284/10 Telefónica de España S.A. (article 6 of the [old] authorisation directive 97/13/EC, annual fee for holders of general authorisationscalculated on the basis of a percentage of gross operating income)
• 15 September 2011, C-544/09 P Germany v. Commission (dismissed appeal against judgment T-21/06, state aid for the introduction of digital terrestrial television in Berlin-Brandenburg)
• 22 September 2011, C-244/10 Mesopotamia Broadcast and C-245/10 Roj TV (secondary control under the AVMS-Directive)
• 13 October 2011, C-431/09 Airfield and Canal Digitaal and C-432/09 Airfield (satellite broadcasting and cable retransmission-directive)
• 24 November 2011, C-70/10 Scarlet Extended (mandatory filtering by ISP)
• 24 November 2011, C-281/09 Commission v. Spain (spot-advertising on TV); h

*) Shakespeare, As You Like It, Act V, Scene 4