Germany's Supreme Court has just handed down a landmark ruling on the liability of Internet subscribers in copyright disputes. Overturning an earlier decision by a lower court the Federal Court of Justice said that an account holder could not be held liable for piracy carried out by an adult family member if he had no reason to believe any was being carried out.

Copyright holders – especially those conducting troll-like operations – would like to create the impression that everything that happens on an Internet connection is the bill payer’s responsibility.

This notion, if it were true, would make their lives very simple. By holding the Internet subscriber responsible, infringement ‘fines’ could be sent to households safe in the knowledge that the person’s name they have on file could not escape liability.

Fortunately this is not the case in most Western legal systems which generally require the actual infringer to be held responsible, unless the bill payer was complicit in some way. While the system in Germany is tougher than most, with bill payers often being held responsible for everyone in their household (both children and adults), a new legal ruling published yesterday changes the playing field.

The ruling was published by the Federal Court of Justice (Bundesgerichtshof / BGH), the supreme court in all matters of civil and criminal law. It concludes a matter dating back to 2006 brought by several leading recording labels against an account holder said to have shared a total of 3,749 songs online.

The labels sent a letter to the man, a serving police officer who shared a home with his spouse and stepson, alleging infringement and talking about an amount of 400,000 euros in damages but offering a settlement value of around 3,400 euros.

The account holder and target of the settlement demand refused to pay on the basis he had not carried out any infringements. However, speaking with the police, his 20-year-old stepson admitting he had downloaded the music.

The case proceeded to the district court which ruled in the labels’ favor. It held that the account holder was responsible for the infringements carried out by the 20-year-old on the basis that when he gave his stepson Internet access he should have “educated” him on the issue of illegal file-sharing and forbidden him from engaging in it, even though he had no reason to believe any was being carried out. The court ordered the defendant to pay the labels 2,841 euros.

After traversing the legal system the Federal Court of Justice has now quashed the ‘guilty’ verdict and totally dismissed the action. The judgment published yesterday held that when an account holder allows adult family members to use his or her Internet connection, those adults are responsible for their own actions when online and do not have to be ‘educated’ by the person paying the bill.

If, however, the account holder is made aware that infringements may have been carried out (after receiving a warning letter for example), he or she is then obliged to take measures to ensure that further infringements are prevented.

“Since the Court of Appeal found no evidence that the account holder knew that his adult stepson had abused the Internet for illegal participation in file-sharing networks, he is not liable [for his stepson’s actions],” the judgment reads.

Lawyer Christian Solmecke of the Wilde Beuger Solmecke lawfirm describes the Court’s decision as an important landmark ruling, but feels opportunities were missed and questions remain.

“This is without doubt a very important decision in file sharing. However, there remains a large uncertainty that affects industry and business owners,” Solmecke says.

“The decision of the Supreme Court is good and right. Too bad, however, that the Supreme Court [has not covered the] complicated issues of evidence in the file sharing process. These are highly controversial and required a clear case,” he concludes.