Insights

On 25 November 2021, the Court of Justice of the European Union (the “CJEU”) delivered a preliminary ruling in StWL Städtische Werke Lauf a.d. Pegnitz GmbH (“StWL”) v. eprimo GmbH (“eprimo”) (C-102/20) on certain aspects of: Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Directive 2005/29/EC, known as the ‘Unfair Commercial Practices Directive.’ The CJEU ruled that the display of advertising messages in an electronic inbox in a form similar to that of private emails placed in the same position as those emails: (1) constitutes ‘the use of electronic mail for the purposes of direct marketing’; and (2) may fall within the concept of ‘persistent and unwanted solicitations’ of users of email services within the meaning of the Unfair Commercial Practices Directive, in both cases, subject to certain conditions being met, as explained below.

Facts

StWL and eprimo are two competing electricity suppliers. At the request of eprimo, an advertising agency inserted advertisements into the email inboxes of users of the T-Online free email service, which service is funded by advertising paid for by advertisers and provided free to users. The mentioned advertisements appeared in the private email inboxes of those users, specifically in the section in which incoming emails are listed and were inserted between the emails received. The date was simply replaced by the word ‘Advertisement’, no sender was mentioned, the text appeared against a grey background and the ‘subject’ line contained text intended to promote advantageous prices for electricity and gas services. It is important to note that from a technical point of view, whenever a user opens the internet page to access the free email service, a request is sent to the advertising server to randomly select an advertising banner from a basket constituted by advertisers and transmit it. The relevant advertising email may be deleted from the list but may not be archived, altered, or forwarded, it is not possible to reply to it and the message is not counted amongst the total number of emails in the inbox and does not take up storage space.

StWL considered the advertising practice described above to be contrary to the rules of unfair competition in that it constituted an ‘unacceptable nuisance’ and was misleading. On this basis, StWL instituted a cease-and-desist action against eprimo before the German Regional Court in Nuremberg Fürth. The court upheld StWL’s claims and ordered eprimo to cease disseminating to customers. Following an appeal brought by eprimo before a Higher German Regional Court in Nuremberg, the court overturned the judgement of the first court and ruled in favour of eprimo as it did not consider the advertisements to be an unacceptable nuisance involving the use of ‘electronic mail’ and it did not consider the advertisements to be unfair on the ground that they were misleading, as the advertising agency did not conceal the advertising nature of the messages sent. The court also placed particular emphasis on the fact that the email service was provided to the users free of charge.

StWL raised a further appeal on a point of law. The German Federal Court declared that the success of the appeal depends on the interpretation of Article 2(d) and (h) and Article 13(1) of Directive 2002/58 and of Annex I, point 26 to Directive 2005/29.  It is due to this reason that the German Federal Court sought to seek clarification from the CJEU regarding the criteria governing the concepts of ‘electronic mail’ and ‘use’ of the latter for the purposes of direct marketing within the meaning of Directive 2002/58. It also asked the CJEU to specify the criteria for ‘solicitation’ within the meaning of Directive 2005/29.

Considerations and Rulings

The examination of the questions referred by the CJEU may be split into two, with the first part dealing with the analysis and interpretation of certain provisions of Directive 2002/58/EC and the second part dealing with certain aspects of the Unfair Commercial Practices Directive: Directive 2005/29/EC.

(1) Directive 2002/58/EC

The CJEU noted that Directive 2002/58 intends to safeguard subscribers against the intrusion of their privacy by unsolicited communications for direct marketing purposes, in particular by means of automated calling machines, telefaxes and emails, including SMS messages. Article 13(1) of Directive 2002/58 allows the use of various types of communication for the purpose of direct marketing, on condition that they target subscribers or users who have given their prior consent. In order to apply Article 13(1), the CJEU held that three key points need to be assessed, in the following order:

1. whether the type of communication used is amongst those covered by the Directive;
2. whether the communication has the purpose of direct marketing; and

• whether the requirement to obtain prior consent from the user has been complied with.

The advertising message, which was displayed in the user’s inbox, in the space normally reserved for private emails was said to be distributed using a means of communication expressly referred to in Article 13(1) of Directive 2002/58, namely electronic mail. The CJEU emphasized that the user was only able to free that space to obtain a view of all his/her exclusively private emails after having checked the content of that advertising message, and only after having deleted it. It also compared the advertising message to advertising banners or pop-up windows saying that the latter are usually displayed at the edges of or separately from, the list of private messages, usually in a designated ‘spam’ folder used for unsolicited emails. It was established that because of the advertising message’s similarity to a private email, there is a likelihood of confusion between those two categories of messages.

The CJEU held that eprimo and the advertising agency were using the existence of the list of private emails, considering the particular interest and trust of the subscriber regarding that list, to place their direct advertising, giving it the appearance of a real email. The very nature of the advertising messages at issue, promoting services, distributed via email, allowed the messages to be classified as communications for the purposes of direct marketing. According to the CJEU, the fact that the recipient is chosen at random cannot call that conclusion into question as it is not one of the conditions for the application of Article 13(1) of Directive 2002/58.

Furthermore, the CJEU also stated that a communication falling within the field of application of Article 13(1) is allowed on condition that its recipient has given prior consent. Consent must be indicated, at least, in a manifestation of a free, specific, and informed wish on the part of the person concerned. The CJEU observed that the users who chose the free email service accepted that they will receive advertisements in order not to pay any consideration in exchange for the use of that email service. The CJEU, however, still concluded that the referring court should determine whether the user concerned, having opted for a free service, was duly informed of the precise means of distribution of such advertising and whether s/he did in fact consent to receiving the advertising messages.

(2) Directive 2005/29/EC

The German referring court also requested the CJEU to clarify the concept of ‘persistent and unwanted solicitations’ of users of email services within the meaning of Annex 1, point 26 of Directive 2005/29/EC.

The CJEU declared the advertising message to be similar in effect to that of individual direct marketing and hence constituting a ‘solicitation’ of email service users. No weight was given by the CJEU
to the fact that the advertiser singles out a recipient during the technical preparation of the message and the message is processed differently from emails in terms of storage space and functionalities.

Solicitations are ‘persistent and unwanted’ if the display of those messages is, first, sufficiently frequent, and regular to be classified as ‘persistent’ and second, may be classified as ‘unwanted’ in the absence of consent having been given by that user prior to that display. ‘Persistent and unwanted solicitations’ of services are prohibited in all circumstances as they qualify as ‘misleading commercial practices’ under Directive 2005/29/EC. The CJEU ruled that the frequency of the solicitations, within a limited time, must be regarded as being ‘persistent.’ The messages were sent on three occasions, namely 12 December 2016, 13 January 2017, and 15 January 2017 respectively and were classified as ‘persistent’ by the CJEU. Whether the activity was ‘unwanted’ had to be determined by the referring court after it considers whether the user gave his/her prior consent to the receipt of the mentioned messages.

Observations

Several legal commentators expressed their dissatisfaction with the CJEU’s conclusions as they said that the CJEU only looked at how the user-perceived and treated the message and not at the underlying means used for presenting the advert. It is still not entirely clear when an advert prevents access to other messages and when it forms part of an inbox. Lastly, the CJEU did not clarify whether consent for direct marketing could be tied with the provision of a free email service. It is the author’s opinion that this CJEU’s ruling may constrain advertising agencies to reconsider existing business models and arrangements with free email providers.

This article was first published in the Malta Independent.