Record labels and film studios cannot demand that telecommunications companies hand over the names and addresses of people who are suspected of sharing copyright-protected music and movies online, the EU's top court ruled Tuesday.
But European Union nations could — if they want — introduce rules to oblige companies to hand over personal data in civil cases, the European Court of Justice said.
The court upheld the Spanish telecom company Telefonica SA's right to refuse to hand over information that would identify who had used the file-sharing program Kazaa to distribute copyright material owned by members of Promusicae, a Spanish trade group for film and music producers.
EU law does not require governments to protect copyright by forcing companies to disclose personal data in civil legal actions, the Luxembourg-based court ruled.
They could draft national rules to change this, but they will then have to balance the right to privacy against property rights, a court statement said.
Both are fundamental rights, the court said, and governments will need to find ways to reconcile them and allow copyright holders seek some kind of compensation.
A Spanish court had asked the European court to give guidance on the case after Promusicae complained of Telefonica's refusal to hand over details identifying the people who used the computer addresses linked to the illegal downloads.
Telefonica claimed Spanish law only allows it to share personal data for criminal prosecutions or matters of public security and national defense.
The EU ruling is important because courts across Europe have been moving in different directions.
A Belgian court last July said a local Internet provider should install blocking software to stop illegal downloads within six months — while a German court in August refused to order Internet providers to give record labels information identifying file sharers.
A music industry group, the International Federation of the Phonographic Industry, said record labels would push on with their campaign against Internet piracy and the court had confirmed the need to have effective tools to tackle illegal copying.
"Copyright theft on the internet is the single biggest obstacle to the growth of the music business today," said IFPI head John Kennedy.
"The judgment means that music rights owners can still take civil actions to enforce their rights, and it has sent out a clear signal that (EU) member states have to get the right balance between privacy and enforcement of intellectual property rights and that intellectual property rights can neither be ignored nor neglected."
The European branch of the Motion Picture Association — which represents American film studios such as Universal, Walt Disney, Paramount and others — welcomed the ruling as balanced because the court had held up copyright as a fundamental right alongside the right to privacy.
The MPAA claimed in a 2005 study that U.S. film industry lost $6.1 billion to piracy worldwide that year, most of it outside the United States.
Millions of people use file-sharing software to download both legal and illegal copies of albums, films, TV episodes, computer programs and even books.