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Social networking sites such as Facebook cannot be compelled to install anti-piracy filtering systems because it would contravene users' rights to freedom of business and information, the European Court of Justice has ruled.

The ruling comes after Belgian music royalty-collecting firm SABAM asked a Belgian court to force social network Netlog to stop members sharing copyrighted content.

The ruling is a blow to content owners putting pressure on internet groups to take greater responsibility for policing copyright infringement on their networks. The move could have consequences for similar cases across the EU, where Netlog claims to have more than 95 million members, according to the BBC.

The case was referred to the European Court of Justice (ECJ) when Netlog argued that, to meet SABAM’s demands, the social network would have to monitor all its users, contrary to the EU's E-Commerce Directive.

In its judgement the ECJ ruled that such a system would be a serious infringement of Netlog's freedom to conduct its business, since it would require Netlog to install a complicated, costly, permanent computer system at its own expense.

The court said there was also a risk of infringing rights to the protection of personal data, as a filtering system would require the identification, systematic analysis and processing of information connected with the profiles created on the social network.

The court said a filtering system might also restrict freedoms to send and receive information, as the 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.

Michael Gardner, head of the intellectual property practice at London law firm Wedlake Bell, said the ECJ appears to have ruled out the idea that operators of social network sites and ISPs can be forced, at their own expense, to impose blanket monitoring and filtering aimed at stopping infringements.   

However, he said the ruling does not stop  rights owners seeking more limited injunctions against social networking sites or ISPs, but they will have to be more proportionate in scope and effect.

"Under EU law, there has to be a balance between the interests of copyright owners and the rights of privacy and freedom of expression. So far, the courts seem to have rejected the Draconian solutions urged on them by the rights owners,” said Gardner.

But the ruling does not make content hosting sites untouchable, said Adam Rendle, copyright lawyer from international law firm Taylor Wessing.

“If they have knowledge of the unlawful material they have to take steps to remove it and they could also be ordered to prevent specific infringements in future,” he said.

The ruling comes after several public protests against the anti-piracy measures contained in the Anti Counterfeiting Trade Agreement (Acta), which has been signed by 22 EU states, including the UK.

"As clouds continue to gather around Acta and other attempts to control online use of copyright works, the ruling from the ECJ provides a useful illustration of the practical challenges enforcement poses,” said Mark Owen, head of the intellectual property practice at London law firm Harbottle & Lewis

The Open Rights Group, an organisation which opposes Acta, said in a statement: "It's good to see courts promoting our rights by swatting away plans to snoop on people's use of social networks."

Advocacy group La Quadrature du Net said the ruling clearly states that pushing private companies to monitor and police their networks and services to prevent potential copyright infringements is not compatible with the democratic values of the European Union.

“This ruling should sound as a call for EU policy makers to stop pushing for privatised censorship schemes under the guise of cooperation between internet actors and the entertainment industry,” said Jérémie Zimmermann, spokesperson for La Quadrature du Net.

“We now need to break away from repression, which is bound to undermine our freedoms online and an open internet, and engage in a profound reform of our broken copyright regime. We must invent a copyright that, instead of censoring the net, will foster access to culture and sharing while fairly funding creation,” he said.

Acta is aimed at improving the enforcement of intellectual property rights (IPR) by setting international standards for dealing with copyright infringements. But critics believe it will lead to censorship of the internet.

Acta’s supporters insist the agreement will not alter existing laws and will instead provide protection for content creators in the face of increasing levels of online piracy.

Fierce debate over Acta is set to continue, as the treaty cannot be enacted before it is ratified by the European Parliament after a formal debate scheduled for June.

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European Court of Justice rules out automated internet censorship for social networking sites