Mass filtering does not strike a fair balance between protecting copyright holders and the freedom to conduct business, personal data protection and the freedom to exchange information, the Kirchberg-based court said on Thursday.

The ruling stems from a case brought in 2009 by SABEM--the national organisation that collects royalties on behalf of Belgian artists, authors and performers--against Netlog, a social networking site based in Gent, Belgium. SABEM claimed that Netlog users were posting music and video files to their profiles without SABEM’s authorisation and without paying licensing fees. The association had asked in a Belgian court for protective measures to be applied to all of the company’s user accounts.

However, the ECJ ruled that “such preventive monitoring would therefore require active observation of the files stored by users with the owner of the social network. Accordingly, the filtering system would require that owner to carry out general monitoring of the information stored on its servers, something which is prohibited by the E-Commerce Directive.”

The court also said such an interpretation “would require Netlog to install a complicated, costly, permanent computer system at its own expense. Moreover, the effects of that injunction would not be limited to Netlog, as the filtering system may also infringe the fundamental rights of its service users--namely their right to protection of their personal data and their freedom to receive or impart information--which are rights safeguarded by the Charter of Fundamental Rights of the European Union.”

The decision is the latest victory for internet firms like Netlog, as well as Facebook, Flickr, Twitter and YouTube, which is owned by Google. In November, the ECJ also ruled against SABEM in a similar case (number C-70/10), saying that internet service providers do not need to install such filtering systems under European law. In January, US lawmakers backtracked on a plan to pass tough, Hollywood-backed, anti-piracy legislation after being deluged by emails as part of a campaign led by Wikipedia. Earlier this month, thousands protested across Europe against an international anti-piracy agreement called ACTA, leading to several EU politicians to call for a revisit of the deal.

Last week’s case (number C-360/10) now goes back to the Court of First Instance of Brussels for a final decision.