Wifi-provider liable for illegal up- and downloads on a public wifi-network?

Tobias McFadden runs a business in lighting and sound systems. As an extra service McFadden offers a wifi-network free of charge and without password protection. Sony Music discovered that someone used this wifi-connection to upload a musical work without their permission and sends a letter. Mc Fadden assures that he did not upload this musical work, but cannot rule out the possibility that the infringement was committed by one of his customers. Sony holds McFadden liable for copyright infringement and seeks damages.  
 
McFadden defends himself by relying on article 12 of the E-Commerce Directive, which exempts internet service providers that merely pass on information -mere conduit- from liability. But according to standard case law in Germany a wifi-provider can still indirectly be held liable when a wifi-provider does not secure its network. The German judge decides to refer this case to the European Court of Justice ("CJEU").
 
Liability?
The CJEU comes to the conclusion that McFadden cannot be held liable for the copyright infringement on his public wifi-network and therefore is not liable for damages. At first the Court determines that because McFadden offers wifi as an extra service, even though it is available at no charge, the E-Commerce Directive is applicable. The E-Commerce Directive prevents liability now that McFadden meets the threefold condition: he does not initiate the transmission, select the receiver of the transmission or select or modify the information in the transmission.
 
Suitable measure?
The E-Commerce Directive however does not preclude an injunction to prevent further infringements. In its judgment the CJEU clarifies what possible measures can be taken to prevent future infringements:
Not suitable: monitoring the network or completely blocking internet access.
Suitable: securing the wifi-network with a password, provided that users obtaining the password are required to reveal their identity.
 
So in the end there are both positive as negative aspects to this judgment for providers of public wifi. As a provider you are generally not responsible for copyright infringement by third parties, however you can be granted an injunction by a judge and be obliged to secure your network.

Stephanie Reinders Folmer