According to the press release by the Court, the Court held that WLAN account holders are not liable as an intermediary but can be required to undertake specific safety measures in order to safeguard that no copyright protected content can be uploaded through their hot spot. In its decision, the Court adopted the ruling of the Court of Justice of the European Union in the case “McFadden vs. Sony Music” (C-484/14) and made clear that the operators of public hotspots and those of private WLAN networks are generally not liable as intermediaries for any copyright infringing actions by their users, provided the hotspot operators undertake certain safety precautions for their networks, e.g. password protection. Rights holders can therefore not claim any damages or costs for any copyright infringement directly against the operator.
New TMG in effect since 2017 after the McFadden decision of the Court of Justice
The new regulations of the TMG had been necessary to adopt since the Court of Justice of the European Union held in the decision “McFadden/Sony Music” that to be in line with the prerequisites of Art. 12 EU directive 2000/31 it would be necessary for the operator of a private WLAN network to protect access to his hotspot for example by demanding the entering of a password. This way he can ensure that there will be no violation of the copyright via his WLAN network. The decision however was only applicable for public WLAN hotspots.
After the much disputed McFadden decision, the German legislator changed the law in such a way that the operator of a WLAN network cannot be held accountable as an intermediary if he is not responsible for the violations and if his account has only be used to upload, but not to store the relevant data (section 8 of the TMG). However, to prevent future uploads, the operator of WLAN hotspots might be required to undertake reasonable safety precautions in order to safeguard that no further copyright infringements may take place (section 7 of the TMG).
According to the Federal Court of Justice, the new TMG is not in violation of EU directive 2001/29/EG and 2004/48/EG and therefore compliant with EU Law.
As clear as this decision might look in the first place, it is difficult to apply. It has to be appreciated that private WLAN network operators do not face the risk that they might be liable as intermediaries if a third party uses their network connection to upload copyright infringing material. Such a liability could have been the end of open WLAN networks as we know them.
However, the operators might be required to undertake reasonable precautions in order to avoid future right infringements. How these safety precautions will look is still very unclear. According to section 7(4) of the TMG, operators might be required to block the access to specific data. It remains however, unclear what this means and how this requirement will be applied. Even the reasoning of the TMG gives little guidance on this topic.
According to the press release of the German Federal Court of Justice, blocking measures might also include the requirement for the registration of users, password protection or even the blocking of the whole hotspot. We will have to await the reasoning of the Court (which has not yet been made available at the time of writing this article) to further evaluate this requirement.
Even if the operator of an open WLAN network cannot be held accountable as an intermediary whereby he can demonstrate that the copyright infringing material was not uploaded by him or that he gave any incentive to do so, it is therefore still recommended to block access to the network by password-protection or similar means.
For rights holders it will be very difficult to claim any damages or costs as long as any copyright infringing material is uploaded to a third platform over a WLAN network. Any rights holder will need to very carefully evaluate whether to initiate legal proceedings against the operator of a WLAN network.