A European court has found that content holders cannot require Internet service providers to filter out pirated material.

Copyright holders can ask ISPs to block specific Web sites that include links to illegal content, but those ISPs cannot be required to troll the Web and sniff out pirated files themselves, according to a Thursday ruling from the Court of Justice of the European Union.

At issue is a case that dates back to 2004, when SABAMa Belgian trade group for authors, composers, and publishersfound that subscribers of ISP Scarlet Extended were trading illegal files on peer-to-peer networks.

SABAM sued and the Brussels Court of First Instance ordered Scarlet to filter its network and prevent its users from sending or receiving any files that contained copyrighted material from SABAM's repertoire. Scarlet appealed, claiming that would essentially require it to monitor activity on its network in violation of European law. The appeals court then asked the Court of Justice if EU member state courts had the right to order an ISP to filter its network in order to identify illegal file downloads. Yesterday, the Court of Justice found that they did not.

In its ruling, the Court of Justice pointed out that the EU's E-Commerce Directive bans court orders that would require ISPs to monitor the information transmitted on their networks.

"The Court finds that the injunction in question would require Scarlet to actively monitor all the data relating to each of its customers in order to prevent any infringement of intellectual-property rights," the court said in a statement. "Such an injunction would thus result in a serious infringement of Scarlet's freedom to conduct its business as it would require Scarlet to install a complicated, costly, permanent computer system at its own expense."

It would also violate the customers' rights "to protection of their personal data and their right to receive or impart information," the court said.

Ultimately, Internet filtering could "potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications," according to the court.

In the U.S., the Digital Millennium Copyright Act (DMCA) essentially gives service providers the benefit of the doubt as long as they take steps to remove pirated content when alerted to its existence. If someone posts a pirated TV show on YouTube, for example, the person or entity that owns that TV show can issue a takedown notice. YouTube must pull it down immediately and examine its content; if it's found to infringe, it remains down, but if not, YouTube will place it back online.

That works for legitimate companies like the Google-owned YouTube, but for years, regulators have tried to come up with an effective way to shut down "rogue" Web sites that contain pirated content. However, the anonymity of the Web, as well as the fact that many offending sites are located overseas, have complicated the matter. Congress has pushed several legislative solutions, including the and the , but the latest, and possibly most controversial, bill is the Stop Online Piracy Act, or SOPA.

Among the more controversial provisions of SOPA is a section that would allow rights holders to contact the financial institutions that do business with a particular Web site and ask them to shut down access because of infringing content. If you ran a Web site that used PayPal or accepted payment via MasterCard, for example, and someone thought your site contained pirated content, they could contact PayPal or MasterCard and have those companies cut off access to your site, effectively shutting down your business.

Major tech companies like Google, Facebook, and Twitter have and Google recently, arguing that the bill could affect Internet innovation.

Supporters, however, the outcry is hyperbolic.