EU Ruling is Bad News for IP Companies

The European Court of Justice overruled a Belgian court's ruling that placed the burden of filtering illegal content on Internet service providers. The court ruled that while intellectual property owners were free to ask Internet service providers to block the websites of known copyright violators, they could not force ISPs to monitor and filter content being accessed by the ISPs' customers. The European Court of Justice, which is the European Union's highest court, said that the requirement to make an ISP filter the content shared between its users was in violation of the European Union's E-Commerce Directive. The court was also concerned that the filter would inevitably block some legal content and that it violated the rights of ISP customers. Consumers and Internet service providers alike applauded the court's verdict. The idea of an ISP filtering the information obtainable to its customers and reporting possible violators to the authorities isn't a popular one anywhere in the world. For their part, Internet service providers don't want to be tasked with policing their customers' use of the Internet. The ruling comes as a blow to music companies in particular and other businesses that see a large portion of their sales lost to illegal downloads. While the European Court of Justice did say that intellectual property owners like Warner Music Group and Universal Music Group do have a right to fight illegal downloading, they can't force Internet service providers to pay for expensive filtering systems that violate the rights of European consumers.

Traders who believe that the court's decision could hurt music, video and software sales in Europe might want to consider the following trades:

Traders who believe that the court's ruling could deal a significant blow to intellectual property owners may consider alternate positions: