Shooting the carrier

The high-profile fight by the creative industries against online copyright infringement continues with no end in sight. Methods of online infringement are becoming ever more sophisticated. The creative industries, and the law, are often slow to catch up with the activities of infringers.

Background

Twentieth Century Fox (“TCF”) and five other studios have recently brought action to force BT to block its subscribers’ access to the Newzbin 2 website: Twentieth Century Fox Film Corporation v British Telecommunications plc [2011] EWHC 1981 (Ch). This is not TCF’s first skirmish involving Newzbin. In Twentieth Century Fox Film Corporation v Newzbin Ltd [2010] EWHC 608 (Ch) (“Newzbin 1”), TCF successfully established that Newzbin were infringing their copyright in a number of films.

In that case, the court held that Newzbin had infringed copyright by communicating copyright works to the public, by authorising its premium members to make infringing copies of the films, and by participating in a common design with them. TCF obtained an injunction against Newzbin to prevent further infringement of films in TCF’s own repertoire.

However, TCF experienced difficulties in enforcing this judgment. Newzbin failed to pay costs. The original Newzbin site was shut down, but then re-appeared as “Newzbin2”. The website was moved to servers in Sweden. The domain name was owned by a company in the Seychelles.

Copyright in the films on Newzbin2 was owned by TCF, as well as many other major film studios. The website was directed at UK users. The price for membership was quoted in sterling, the site was in English, and its terms and conditions referred to UK legislation.

The new application

Given the likely difficulties in enforcing any further judgment against Newzbin2, the studios decided instead to apply for an injunction against BT, to force BT to block or impede its customers’ access to the Newzbin2 website. The studios stated that this was a test case, and if successful they would apply for similar injunctions against other UK ISPs.
The basis for the studios’ application against BT was s 97A of the Copyright, Designs and Patents Act 1988, which provides:

“(1) The High Court (in Scotland, the Court of Session) shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.

“(2) In determining whether a service provider has actual knowledge for the purpose of this section, a court shall take into account all matters which appear to it in the particular circumstances to be relevant and, amongst other things, shall have regard to– (a) whether a service provider has received a notice through a means of contact made available in accordance with regulation 6(1)(c) of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2001/2013); and (b) the extent to which any notice includes– (i) the full name and address of the sender of the notice; (ii) details of the infringement in question.”

Section 97A came into force on 31 October 2003, to implement article 8(3) of the Information Society Directive (2001/29/EC), which provides that: “Member States shall ensure that rights-holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right.”

Perhaps surprisingly, given that s 97A has been on the statute book for eight years, the studios’ application was the first such case against an ISP.

The judgment

The court granted the application. The judge’s comments on the scope of the various requirements of s 97A are noteworthy.

What knowledge must the service provider have?

The judge took the view that the studios had to show that BT had knowledge of use of its service for copyright infringement purposes. They did not have to show that BT knew of precise instances of infringement , although the more information the service provider had about infringing activity, the more likely it would be to have actual knowledge.

In what manner may “actual knowledge” be given?

The parties agreed that a service provider may be given actual knowledge of infringement “by receipt of a sufficiently detailed notice and a reasonable opportunity to investigate the position” (judgment, para 149).

What is the scope of the injunction that may be granted?

BT argued that the injunction should be limited to the particular infringements of which the service provider had actual knowledge. The studios argued that once actual knowledge had been established, a broad injunction could be granted. The judge found helpful guidance in the ECJ case of L'Oreal v eBay (Case C-324/09), which considered article 11 of the Enforcement Directive 2004/48/EC. This is similarly worded to article 8(3) of the Information Society Directive, but extends to all intellectual property rights rather than just copyright.

Basing his decision on that judgment, he concluded that the scope of the injunction could be extended beyond preventing the continuation of existing infringements, to require the service provider to take measures aimed at preventing further infringements.

On this basis the judge took the view that he could grant a broad injunction, requiring BT to block or impede access to the Newzbin2 website using automated means. BT accepted that the technical solution envisaged by the injunction was feasible, and was not excessively costly. 

Other factors in favour of granting injunction

BT also argued that the studios, between them, owned copyright in a significant number, but not all, of the works on the site. Other rights holders would thus be affected by the injunction.

The court decided this was no reason for refusing the application. There was evidence in this case that such third party rights were being infringed, and also evidence that other third party rights holders supported the application. Moreover, the studios were the single biggest group of rights holders interested in obtaining relief, and their rights were being infringed on a “massive scale” (para 185). Further, while the order would prevent BT subscribers from making non-infringing uses of Newzbin2, the evidence suggested that such use was de minimis.

Discussion and commentary

This judgment provides a helpful guide to s 97A applications. However, there are a number of formidable hurdles for applicants to cross in order to succeed.

First, a significant amount of detailed evidence must be provided. Here, there was detailed analysis of over 36,000 copyright works on the Newzbin2 website, and expert evidence relating to the blocking mechanisms available. A significant amount of evidence was needed, even though TCF had already obtained judgment against Newzbin. Such evidence gathering could prove costly and time consuming.

In addition, over 90% of the Newzbin2 website contents were potentially infringing. However, many cases will not be so clear cut. If only 60% of a website’s contents were infringing, would the courts be willing to grant interdicts/injunctions which also prevented access to the 40% of non-infringing content?

Also, to block access to all infringing content on a website it may prove necessary (as it did in Newzbin2) to have multiple pursuers/applicants. The need to obtain and coordinate instructions from a number of pursuers could greatly add to the complexity and costs. It could be beneficial if industry representative bodies such as the Motion Pictures Association of America were given the right to bring representative actions. There is precedent for this in recent legislation – for example, the Scotch Whisky Regulations 2009, reg 40 permit actions for interdict to be brought by the Scotch Whisky Association or other representative bodies.

Of course it is right to require significant evidence when the effect of an order is to block access to a website by millions of the ISP’s customers throughout the UK. However, because of the fast pace of technology and the ease of taking down and reconstituting websites in a different format, it is also essential that remedies for online infringement are quick to obtain and implement. In this case, although the judgment was issued in July, the blocking mechanisms will not take effect until mid-October. Meantime, Newzbin2 claim they have been working on software which will defeat the blocking system (www.bbc.co.uk/news/technology-14930394).

In theory, ISPs could choose to apply blocking mechanisms on receipt of complaints from rights-holders, rather than wait to be on the receiving end of a court order. However, BT have indicated that they will not implement such measures without a court order, particularly given the potential legal liability they could have if they wrongly blocked a website. It is likely that other ISPs would be similarly cautious.

DEA and website-blocking update

Meantime, the Government is making slow progress with implementation of the Digital Economy Act 2010 (“DEA”), which contains a regime for dealing with online copyright infringement. The DEA recently survived a judicial review challenge, but this has delayed its implementation. The first stage of the regime is now unlikely to come into force until late 2012 (Department for Culture, Media and Sport, Next steps for implementation of the Digital Economy Act, August 2011).

The Government has also dropped plans to implement additional website-blocking provisions in ss 17-18 of the DEA (similar to s 97A), primarily based on an Ofcom report (“Site Blocking” to reduce online copyright infringement: A review of sections 17 and 18 of the Digital Economy Act, 27 May 2011) which concluded that the slow court process would defeat the effectiveness of the provisions. Rights holders want blocking measures which can be put in place within hours of an application being made. Further, Ofcom noted that the cost of seeking an injunction under s 97A is prohibitive for “all but the largest copyright owners”. Also, over-broad blocking mechanisms could lead to reduced access to legitimate content, with implications for freedom of expression, as well as potential liability for over-zealous ISPs.

Recent reviews of UK IP law such as Gowers and Hargreaves have failed, as yet, to come up with quick and efficient solutions to the many problems caused by online copyright infringement. The failure to implement ss 17-18 of the DEA only perpetuates this lack of action. At least some of Ofcom’s concerns could have been addressed in the secondary legislation which would have been needed to implement ss 17-18. Can any Government grasp the nettle and deal with these challenges?

• Author's update as at 11 October 2011: It has been reported today that BT and TalkTalk have been granted permission to appeal the refusal of the judicial review challenge to the Digital Economy Act. However, apparently the Government are going to press ahead with their plans to implement it regardless.