A court has ruled that the Belgian ISP Scarlet Extended SA is responsible for blocking illegal file-sharing on its network, setting a precedent that could affect other ISPs in Europe, according to a recording industry group. One legal expert doubted that claim, however.

Belgium's Court of First Instance has given the Internet service provider six months to install technology to prevent its customers from sharing pirated music and video files, the International Federation of the Phonographic Industry said. If it fails to do so it will be fined €2,500 (US$3,400) per day, according to the ruling, published June 29.

The music industry has long sought to hold ISPs responsible for illegal file-sharing on their networks, although in the U.S. it has been largely unsuccessful. ISPs have argued that they provide a service like a post office or a telephone company, and shouldn't be required to police the traffic on their networks.

The Brussels ruling is based on Belgium's interpretation of the European Union's Information Society Directive, often called the E.U. copyright directive, and as such could set a precedent for other cases in Europe, the IFPI said.

"The court has confirmed that the ISPs have both a legal responsibility and the technical means to tackle piracy. This is a decision that we hope will set the mold for government policy and for courts in other countries in Europe and around the world," IFPI Chairman and CEO John Kennedy said in a statement.

The ruling surprised at least one legal expert, who said ISPs elsewhere in Europe would be "horrified" by it.

The copyright directive is not supposed to supersede the terms of an earlier E.U. directive, the E-Commerce Directive, which includes a "mere conduit" defense that shields ISPs from responsibility for what happens on their networks, said Struan Robertson, senior associate with Pinsent Masons and editor of the legal Web site Out-law.com.

"These laws were designed to complement each other, but there was always a risk of a collision like this," he said. "The copyright directive says copyright owners should be able to get a court order against intermediaries whose services are used for piracy, but it also says its provisions should not prejudice the E-Commerce Directive."

That law says ISPs generally are not responsible for the activity of their customers, and that E.U. countries must not impose general obligations on them to police their services for illegal activity.

Record companies normally deal with file-sharing by seeking a court order that requires an ISP to reveal the identity of customers suspected of breaking the law. ISPs are happy to work on that basis, according to Robertson. Record companies have also taken action against Web sites that offer downloads of P-to-P (peer-to-peer) applications, where those sites encourage piracy.

Again, that's legally sound, according to Robertson. "I haven't seen the judgment, but if this court really has ordered an ISP to monitor all traffic for any transfer of pirated music, that will surely send shockwaves through the industry," he said.

Anne Funch-Jensen, a legal advisor for the IFPI, acknowledged that each country can implement the E.U. directives slightly differently, taking national case law into account, for example. But she maintained that the Brussels ruling "creates an important precedent for similar cases against ISPs, because this ruling is based on European law."

The case stems from a lawsuit filed against the ISP Tiscali SA by the Belgian Society of Authors, Composers and Publishers, known as SABAM. Tiscali later sold its Belgian operation to Scarlet Belgie Holding NV, and the former Tiscali business became Scarlet Extended.

The ruling appears to apply only to the Belgian service and not to Tiscali. Neither company could immediately be reached for comment, and it was unclear if Scarlet planned to appeal the ruling.

SABAM said it won a preliminary judgment in the case 2004, and the Belgian court assigned an expert to study the technical options ISPs can use to prevent illegal file sharing. It came up with seven, including a system from Audible Magic that creates a "digital fingerprint" for each copyright work and blocks their delivery over networks.

IDG News Service

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