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Case law: Court clarifies when businesses providing free Wifi access may have to password-protect their network

Businesses providing free access to a Wifi network should make clear to users that the purpose of doing so is to advertise their goods or services, or password-protect the service so that users must provide their details before they can use it - or risk having to pay compensation if the network is used to breach third party intellectual property rights.

Legal Alert

This update was published in Legal Alert - November 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A business in Germany operated an unprotected wireless network which could be accessed freely and anonymously by customers and passers-by. It was provided to increase traffic to the business's website and to promote the business.

A user used the network to upload music to the internet in breach of copyright. The copyright owner notified the owner of the business that its copyright had been infringed. The business owner applied to the German courts for a declaration that he was not liable for the infringement, in defence of claims for compensation, an injunction and legal costs by the copyright owner.

The German courts asked the European Court of Justice (ECJ) whether it was entitled to find the business owner liable for the infringement. Under EU law, a person is not liable if they are a 'mere conduit' – ie they haven't initiated the transmission of the infringing data, do not select who is to receive the transmission, and do not modify the information in transmission.

The ECJ ruled that making an unprotected wireless network available to the general public fell within the scope of the mere conduit defence, but only if the service was provided for remuneration. In this case, the service was provided free to users. However, the ECJ said there was still remuneration for these purposes if the free access was for advertising the goods and services of the provider, and the business had factored the costs of the service into the price of those goods and services.

So in this case, access to an unprotected wireless network provided free of charge for the purpose of advertising the goods and services sold by the provider of the network was within the mere conduit defence - and there was no infringement by the business.

The ECJ said that if there was doubt whether the mere conduit defence applied, an alternative was to password-protect the service, so that users were required to register in order to use their password and so they were no longer anonymous.

Operative date

  • Now

Recommendation

  • Businesses providing free access to a Wifi network should make sure it is clear to users that its purpose is to advertise the provider's goods or services, or require users to register and provide their details to obtain a password - or risk having to pay compensation if a user breaches third party intellectual property rights

Case ref: Tobias McFadden -v- Sony Music Entertainment Germany GmBH Case C-484/14

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.