Germany: A Case Study On How To Strangulate Innovation

One of the most important fields of current innovation is linked with the rise of the Internet. During 15 or so years starting about 1995 the Internet has transformed our way of living. Those who have followed the path are wondering how they ever have lived without Google or without e-mail.

But there is also a strong movement of traditionalism and luddism, at least here in Germany. If something goes wrong, the Internet is blamed. When some sort of horrible crime has happened, police and press start meticulously researching Internet usage of alleged criminals, sometimes even of victims. And if anything out of the usual is discovered, the Internet is blamed in a knee-jerk fashion to be the cause or at least one out of multiple causes. And, to take another example, copyright is in a deep crisis not because of the mere existence of the Internet but because of growing proportions of the population are not willing to sacrifice certain benefits of modern digital technology by accepting the first principles forming the foundations on which current copyright law rests.

I'm really sick of listening to full-bodied political speeches and announcements asserting that the EU in general and Germany in particular are or should be innovative. For example, the EU Commissioner for Enterprise and Industry writes on the Official website:

"The European Union possesses extraordinary potential for innovation. Europe has a longstanding tradition of producing breakthrough inventions; it has a wealth of creative people and can build on its cultural diversity. It has laid the foundations for one of the largest single markets in the world, where innovative products and services may be commercialised on a large scale. Historically it has a strong and responsible public sector, which should be capitalised on."

Bah. The readers of this paragraph are cheated by purposely omitting the necessary bridge or glue between the concept of invention at the beginning of the text and innovative products and services at the end.

This week here in Germany we had another vivid example of how not to bridge invention and innovation.

A man living somewhere in Germany had installed at his home a broadband Internet access infrastructure including a WLAN wireless router. He let the default password of the router as set in the factory untouched and, later on, left home to enjoy vacations abroad. Some time after his return he got a nasty letter from representatives of a music company, complaining that (as it turned out, just during the time of his absence) under an IP address allocated to his provider account somehow a certain music title had been offered for downloading by utilising a popular filesharing software. The only available technical explanation was that when the owner of the WLAN router was absent, an unknown person had approached the vicinity of the house where the router was installed, and committed the wrongdoing after linking to the WLAN under the factory standard password.

The music company accused the owner of the router of having created an unacceptable cause of risk by not taking care that the router is closed by a non-standard password so that nobody outside his household can gain access. German lawyers and courts love the concept of secondary liability ("Störerhaftung") which means that someone did not commit any primary wrongdoing (e.g. copyright infringement as in this case) but is responsible for willfully creating a cause of risk with regard to which it is appropriate to attribute to him the consequences. Surely the man willfully had bought and installed the WLAN router with a factory set default password. However, is it really appropriate to state that someone who effectively allows a third party to anonymously utilise a WLAN access point should be held liable under the doctrine of secondary liability for every wrongdoing of the third party because of he should have known that he creates an unacceptable cause of risk by helping others to commit copyright infringement? In this case, the owner of the WLAN router in question resused to subjugate, and the matter went to the courts.

A couple of days ago, the German Supreme Court (Bundesgerichtsof, BGH) dealt with that matter in the third instance and took a decision. In accordance with the usual tradition of that Court, they do not have available the full case law including the reasons when they announce a particular decision. However, they have published a press release (Case number I ZR 121/08, in German only, sorry).

What at the time being can be said for sure is that from now on German case law says that an injuctive relief is available in Germany with regard to private individuals operating an open WLAN, i.e. a WLAN without proper and non-default encryption scheme. And there are absolutely no indications that commercial companies might be exempted from this new rule.

I dont't know how the internal deliberations went when the judges of the First Civil Senate of the Bundesgerichtshof were discussing the case. The German tradition is that the secrecy of the internal consulations of the judges before publicly announcing the decision must be maintained under virtually all circumstances. With the remarkable exception of the German Constitutional Court (Bundesverfassungsgericht), no public minority votes of dissenting judges are allowed. Hence, all we can know is that everyone of the judges acting under the supervision of presiding judge Prof. Dr. Bornkamm are well-educated and most distinguished experts in their field of law.

What we do not know is whether or not anyone from the Senate ever took a computer notebook of his own, went into a café or restaurant, and checked some e-mail. Perhaps, maybe, court e-mails are considered too secret to be processed outside the Court premises on a privately owned computer. But don't they use the Internet for other, private purposes? Or, were they fully aware that their decision will make it very hard to offer free WLAN access in Germany? Were they, in a political sense, convinced that unfettered Internet access is much too dangerous for the society? Or, had they been locked in their legal doctrines in such a way that they felt to be coerced to take that decision to prevent damage to the entire system of Störerhaftung as developed by decades of German case law? We will most probably never know.

As a humble Patent Attorney I'll refrain for now from going deeper into the legal matter. However, there are voices from Attorneys like Mr Stadler who appear to make clear that the Senate of the Bundesgerichtshof might well have seen sufficient space for manoevering away from demanding a general injunctive relief concerning open WLANs - if so desired.

What we do know, however, is that this decision has the potential to harm the economic well-being of Germany. It is one building block out of many serving to fend off real innovation for the digital economy. It is like throwing a spanner in the works. Promoting free WLAN access wherever feasible surely is an innovative way of fostering transformation into a digital society. Hence, in its final end, the decision might not only terminate free WIFI access in cafés or restaurants. If the full reasoning thereof is out (probably in a few months from now), then all sort of experts will analyse and probably generalise every sentence in it. If we are not lucky, the general result of inference will be that it is standing case law in Germany that the Internet is a dangerous entity, and access thereto must under all circumstances be checked and documented. Next, will you be required to show your ID card or passport when visiting an Internet café? How long will such data be retained by the operator of the facility? Who will have access to that data? And, what about sharing Internet access e.g. in a student's flat-sharing community? Moreover, there have been plans to create free WLAN infrastructures by municipal administrations. All gone?

The real winners of the decision of the Bundesgerichtshof will be the Telcos which are already running huge identification/authentification infrastructures. In the first place, cellphone Internet access benefits from such case law, and expensive managed hotspots where you have to pay EUR 30,-- a month in order to have access. Hence, the future of sitting in a café like Starbucks etc., having a cup of coffe, and doing some work with your mobile computer, will probably involve replacing free local WLAN access by cellphone Internet or, worse, by expensive commercial hotspots. In the effect, costs of mobile Internet access will rise, lowering the chances for all innovative business models based on mobile Internet.

A good Government would recognise the challenge and consider correcting a wrong court decision by a proper bill. However, there are sitting way too many proponents of Old School in parliament and ministries, And, hence, short before turning out to be a cynic I shall terminate this posting right now.

[UPDATE] For those of my readers who have some command of the German language I recommend this article from FAZ broadsheet paper, written by Ms Constanze Kurz.

(Photo: (C) 2009 by Yodel Anecdotal via Flickr under CC License)