On 24 November 2011, the EU Court of Justice decided that ISPs cannot be forced to filter Internet traffic to fight intellectual property violations.  

In 2007, the Brussels Court of First Instance obliged the ISP Scarlet to filter all internet traffic and to block traffic involving violations of intellectual property rights, in particular in peer-to-peer applications.  An appeal was launched and the Brussels Court of Appeal filed two pre-judicial questions to the EU Court regarding the compatibility of such filtering obligation with European rules on e-commerce, intellectual property and data protection.

The Court has now rules that the E-Commerce Directive prohibits the imposition of general surveillance obligations on an ISP.  Moreover, the Court argues that while there is a right to property, protected by the EU Charter on Human Rights, this right is not absolute.  To the contrary, the right to property must be balanced against other rights, such as the freedom to undertake a business and the right to privacy.  The Court decides that the filtering obligation is disproportionate and in both cases fails to strike a fair balance.   

In respect of privacy, the Court explains that the filtering obligation would inevitably require a systematic analysis of the content of communications and the collection and “identification” of IP addresses of Internet users exchanging illegal materials.  These IP addresses are personal data because they allow the ISP to identify relevant individuals.  In addition, the Court is concerned that the filtering system affects the freedom of communication because the filtering system is not sufficiently precise and could block communications that do not contain any illegal materials.  The Court therefore holds that the filtering obligation does not strike a fair balance between intellectual property rights, the right to protection of one’s personal data and the right of free communications.

The Court’s qualification of IP addresses as personal data in this context is uncontested.   ISPs which allocate IP addresses to their subscribers, can indeed link these IP addresses back to the subscribers.  This in contrast to most information society services (such as websites, internet e-mail services, etc.), which do not allocate IP addresses.  Their ability to link IP addresses to individual users is much less clear.  Whether or not IP addresses are personal data in the latter context has given rise to diverging case law throughout the EU.