In the crucial 7-year legal battle between a music rights group and an Internet service provider, the European Court of Justice has now delivered an important ruling. Music rights group SABAM wanted ISP Scarlet to spy on its customers and block their communications to stop file-sharing, but the Court decided that would breach privacy and violate the fundamental rights of both the ISP and its subscribers.

Belgian music rights group SABAM and Internet service provider Scarlet have been engaged in legal battle since 2004, with the former demanding that the latter install monitoring devices on its network and block subscriber communications if they involve copyright infringement.

In 2007 SABAM enjoyed a brief victory when a decision went their way, but when the mandated Audible Magic fingerprinting system did not perform to expectations, Scarlet was unable to comply with the court order. That order was subsequently reversed and the case went to the Brussels Court of Appeal and then to the European Court Of Justice for a definitive decision.

That ruling is now in and it’s bad news for SABAM but great news for Scarlet, its customers, and privacy advocates everywhere.

The Court ruled that issuing an order mandating the use of a filtering system where all subscriber communications are routinely monitored for infringements, not only on currently protected works but also those in the future, would be disproportionate and fraught with difficulty.

Scarlet would be required to install an expensive and complex computer system, which would run contrary to an EU Directive stating that measures to protect copyright may not be unnecessarily complicated or costly, the Court notes.

The implementation of such a filter would also be contrary to the requirement that an appropriate balance be found between the protection of intellectual property rights and the entrepreneurial freedom Scarlet is entitled to enjoy.

For privacy advocates the rights of Scarlet’s subscribers are of paramount importance in the case, and the Court did not disappoint in protecting them. The ruling clearly states that a proactive filter would violate their fundamental rights, “….namely their right to protection of personal information and their freedom to receive and impart information.”

Perhaps most fundamentally, though, the censoring system proposed by SABAM simply would not work.

The Court states that the filter would restrict freedom of information since it would be incapable of adequately distinguishing between legal and illegal content. The filter would be ineffective when trying to deal with geographic variations on exceptions to copyright, fair use, works residing in the public domain or indeed their creators simply authorizing distribution.

The unacceptable end result: blocking perfectly legal communications in error.

The ruling from the European Court of Justice arrives at many of the same conclusions first drawn by Advocate General Cruz Villalón, and then Prof. Cedric Manara in his paper investigating the potential negative consequences of proactive filtering.