Copyright lasts a long time -- but are contracts forever?

From our friend across the border, Gill Grassie (Brodies LLP, Edinburgh), comes news of an extremely recent Scottish decision on an attempt to enforce an undertaking not to infringe copyright even beyond the point at which the copyright could have been enforced.  The case in question is Scottish Professional Football League Ltd v Lisini Pub Management Co Ltd [2013] CSIH 97, a decision of the Extra Division of the Inner House, Court of Session. This is what Gill says:

"Can a contractual undertaking not to infringe copyright continue forever -- even if the legal basis for it has disappeared?

The definitive answer given by the Scottish Court of Session appeal court (Inner House) to this question last Friday was a resounding ‘No’. This case was part of the fall-out of the FAPL case -- Football Association Premier League Ltd and others v QC Leisure and others (no 2) and the ruling of the Court of Justice of the European Union (CJEU), for which, click here.  In that case, as readers will know, the CJEU decided that clauses prohibiting the use of foreign decoders and smart cards were void as a restriction on competition under European law - the free competition provisions of European law prevailed over the UK's Copyright, Designs and Patents Act 1988.

In the Scottish version of this case the defenders, as the owners of three pubs on the west coast of Scotland, had screened live Scottish Premier League football matches in a pub using a decoder device to access the signal broadcast by a Polish company (Polsat). This was at the time an infringement of copyright under section 298 of the 1988 Act because Polsat was not licensed to broadcast within the UK. When the defenders effectively ignored the pursuer's requests to cease such activity, they raised an action for copyright infringement and applied for an interim interdict (injunction) in the local Sheriff Court. In response, the defenders offered an undertaking effectively to stop use of the decoders and smart cards to screen matches at its premises, in return for which the proceedings were dismissed. Despite this undertaking the defenders screened yet another live match via the Polsat signal in response to which the pursuers applied for interim interdict again -- but this time to the Court of Session.  And this time an order was granted.

Meantime the FAPL action in England and Wales had been referred to the CJEU, so the pursuers’ action was stayed to await the outcome of that. On 4 October 2011 the Grand Chamber of the CJEU issued its decision in FAPL to the effect that contracts which prevented use of foreign decoders and smart cards were void as a restriction on competition and that EU law in this respect took precedence over the 1988 Act. The defenders applied to have the interim interdict cancelled/recalled, to which the pursuers consented. The defenders also counterclaimed for damages for wrongful interim interdict. The pursuers amended their case to delete the copyright claim and relied instead on the defenders' undertaking as a basis to seek a continuing and perpetual interdict. One of the key questions therefore to be decided was whether the contractual undertaking was still enforceable. 

At first instance the court decided that the undertaking ceased to have effect as from the date of the recall of the interim interdict which was later than the CJEU's decision.  On appeal there were some quite ingenious arguments run by the pursuers about the meaning and scope of the undertaking. For example it was argued that the undertaking contained no limit in time, had not been withdrawn and contained nothing to suggest it envisaged that it would fall if the unlawfulness that it sought to address were to change. Nor was it envisaged at the time or known by the parties that the interim interdict would be recalled or that FAPL would be referred to the CJEU. The enforceability of an undertaking should not depend upon the recall of an interim interdict which was not foreseen by the parties since, if it did, so this would amount to the court making the parties’ bargain as opposed to just applying it and its terms. The CJEU decision declared the law ‘as it had always been’ i.e. was retrospective. Accordingly if the defenders were correct the result would be that the undertaking had never taken effect at all which was contrary to the parties' contention.

The defenders were able to counter these points and relied on BCCI v Ali [2001] UKHL 8 on construction of a commercial contract which made it clear that a court should be most reluctant to infer that a party intended to give up rights and claims of which it was unaware and could not have been aware. Thus the opposite point to that of the pursuers was being made to the effect that there was no need for the undertaking to have specific wording in it to deal with a situation which was unforeseen. The undertaking had been given not to do something which both sides had assumed was illegal at the time. Once that changed, it was logical that the undertaking should fall.

The appeal court agreed with the defenders and essentially upheld the first instance decision, but considered that the date upon which the undertaking ceased to have effect was as from the date of the CJEU decision on 4 October 2011 and not when the interim interdict was recalled on 12 July 2012. In interpreting the undertaking the appeal court took account of the circumstances in which it had been given, ie in the context of an application for interim interdict to prevent the defenders from carrying out what were at the time illegal acts. The logic was therefore that, if those acts ceased to be illegal, the undertaking ceased to be effective or enforceable.

On a subsidiary point the appeal court also decided that there were enough details in the pleadings on whether there had been breach of Article 101 of the Treaty on the Functioning of the European Union to allow the case to proceed. The case will therefore continue with the defender’s counterclaim for damages for wrongful interim interdict.

This seems to have been the only sensible outcome here as to hold a party to an undertaking when its whole legal basis has been undermined could not be correct. Here such an outcome would have allowed a back door route to continuing to enforce a contract term which was an illegal restriction on competition under EU law and of legislation which was no longer applicable. The fact though that the matter was argued at all demonstrates that it is worth taking care to ensure that such undertakings given in the context of court proceedings are drafted carefully taking all possible developments in mind".

Mind your metaphors: how to conceptualise your digital phenomena

"Metaphors, law and digital phenomena: the Swedish pirate bay court case" is the title of a fascinating article by Stefan Larsson which has been published in the most recent of Oxford University Press's International Journal of Law and Information Technology (Int J Law Info Tech 2013 21: 354-379). According to the abstract

"This article uses conceptual metaphor theory to develop the concept of ‘skeumorphs’ (re-use of old concepts for new phenomena) in order to analyse the Swedish The Pirate Bay court case [on which see, eg, earlier 1709 Blogposts here, here, here, here and here]. In line with conceptual metaphor theory, which states that abstract thinking is largely metaphorical, the article argues that this is true also for digital phenomena that, thus, are largely understood through metaphors and skeumorphs. Also, when attempting to understand and conceptualize new digital phenomena such as The Pirate Bay (TPB), law in a digital society is inevitably affected. Hence, new phenomena can be fought over in a ‘battle of metaphors’, in the TPB court case, for example, evidenced by the arguments of seeing TPB as ‘a platform’, ‘bulletin board’, or an ‘impure search engine’. This, here argued, was of key relevance for the outcome of the case".

This blogger has been fascinated by the use, and indeed the re-use, of metaphors ever since he heard Bill Patry's 2007 Stephen Stewart Lecture on the subject. But metaphor in IP is not the sole province of copyright: let's not forget the patent troll, or the concepts of dilution and free-riding in trade mark law.

Orphans and legitimacy: a new article

Our dear friend and colleague Eleonora is of course far too modest to let you know, but she has just had a major article published in the European Intellectual Property Review (the EIPR, published monthly by Sweet & Maxwell). The piece, "The Orphan Works Provisions of the ERR Act: Are They Compatible With UK and EU Laws?", [2013] 12 EIPR 724-740, is neatly summarised by its abstract as follows:

"This article analyses the legislative framework for orphan works as resulting from the Enterprise and Regulatory Reform Act 2013. Although the actual shape of UK orphan works legislation has yet to be fully defined, this contribution questions whether in principle its orphan works provisions are compatible with the Copyright, Designs and Patents Act 1988, Directive 2001/29, the Charter of Fundamental Rights of the European Union and the Orphan Works Directive. It holds the view that there must be serious doubts about the legitimacy of the Enterprise and Regulatory Reform Act's orphan works provisions under UK and EU laws".

Clutching at Straw: counterclaim in Eva Cassidy dispute fails

Straw & Another v Jennings & Others [2013] EWHC 3290 (Ch) is a vast (369 paragraph) Chancery Division, England and Wales, ruling of Mr Justice Warren from 1 November, following 11 days of hearings, in which the claimants, the exclusive licensees of musical recordings of the late American singer Eva Cassidy, claimed £1.6 million from four defendant companies, alleging that they had failed to account for distribution profits owed due under a distribution agreement. The defendants denied the claims and counterclaimed for copyright infringement.

In short, the claimants (Bill Short and Blix Street Records) owned the worldwide distribution rights to the Eva Cassidy catalogue. They entered into an oral joint venture agreement with the four defendants (Jennings and three companies) in 1998 for the promotion and distribution of Cassidy's recordings in certain territories. By this agreement the distribution profit was to be shared equally, but there was no express agreement as to how profit would be calculated.

In the first accounting period, the defendants made deductions from profit for a "distribution fee". The claimants objected and this led to a further oral agreement (the distribution agreement) in which it was agreed that a 30 per cent distribution fee could be charged.

Following termination of the joint venture on 31 July 2006, a number of issues arose regarding whether losses, as well as profit, were to be shared equally, how the periods in respect of which distribution profit were to be ascertained, what was the correct approach to computing profit and hoe much was actually due.

Although the claimants issued the claim form on 8 April 2011, there were some limitation issues because the action only came to court on the basis of amended particulars which were issued in March 2013. In addition, the defendants counterclaimed that copyright in the "compilation and sequencing" of the Cassidy recordings into albums was jointly owned, that the claimants had infringed theircopyright by continuing to reproduce and issue copies of the relevant works without the defendants' consent.

Warren J upheld the claim and awarded the claimants £758,127, while also dismissing the counterclaim.  In his view:

* on the evidence, nothing express had been said about sharing any losses of the distribution business or about capping the distribution fee at 30 per cent. What's more, even if there had been a loss attributable to the distribution agreement, there was no suggestion that the venture as a whole would have shown a loss -- so it was unnecessary to determine whether the sharing of losses had been contemplated. It was neither obvious nor commonsense that such losses would be shared, and it was quite unnecessary to imply such a term into the agreement necessary in order to provide business efficacy [this blogger recalls that a request that the court imply a term into a contract for the sake of business efficacy is usually the last throw of the dice by a party with nothing left to rely on. However, it just occasionally comes off. See the next bullet-point].

* while the distribution agreement made no express provision for the periods over which distribution profit was to be calculated, it could not have been intended that there would be no profit distribution until the agreement terminated: to give business efficacy [told you!] to the agreement, it would be implied that the claimants would receive payment from time to time during the agreement. The court did not have to identify a reasonable period of account because the defendants had actually provided accounts twice within the agreement's duration.

* the correct methodology for calculating the distribution profit was to ascertain the income relevant to the calculation, ie the distribution fee of 30 per cent of gross receipts, and then deduct the direct costs of the distribution business. Alas, the defendants''s record-keeping was less than ideal, so another method would have to be adopted. The April 2005 accounts were a good starting point because they adopted a methodology almost identical to that which ought to apply in an ideal world of full and readily available data and because the underlying figures were reliable.

* the limitation defence largely failed on the facts.

* on the evidence, the defendants had not established that they enjoyed co-ownership rights in relation to compilation and sequencing of the albums apart from, possibly, in relation to certain track notes. The claimants controlled the process and were the ultimate decision-makers; it was their interests alone which had been responsible for commercial exploitation in other territories. The defendants' input fell short of giving rise to copyright ownership; the fact that the greatest success of the albums was in one of the defendants' territories made no difference to that conclusion.

The judge made a couple of obiter comments of interest, one on copyright, the other on contract law:

First, if joint copyright had been established, the implied licence, arising from the circumstances of the creation of copyright, for the continued use by the claimants of that copyright would not have ended with the termination of the joint venture. In any event, it was difficult to see what loss the defendants might have suffered or the quantum of the compensatory award to which they might have been entitled. In the absence of anticipation of a more than nominal favourable pecuniary result, the counterclaim appeared to be a tactical manoeuvre which bordered on an abuse of the court's process. Secondly, the various formulations used by courts in established case law concerning the implications of terms in contracts were not legislation and were not to be allowed to take on a life of their own.

The CopyKat - and the Ring of Fire

Google has received over 200 million requests to remove links from its search engine so far this year, up from 50 million in 2012.  In 2011 Google was asked to remove less than 10 million links from its search engine. According to TorrentFreak, their research shows that record label trade bodies the BPI and RIAA are the most active issuers of take down notices, issuing 31 million and 43 million respectively. The site most targeted by copyright holders with take downs is FilesTube, with over 7.5 million notices issued against links to it in Google's system. In 2012 Google issued its own statistics for the organisations issuing the most take downs, with the Microsoft then the leading player, followed by the BPI. Is piracy really booming to that extent? Or are the content owners just catching up with a backlog of what is already online - or maybe just getting better at adapting to the take down system and removing infringing content more efficiently?

The leaked IP section from the planned Trans Pacific Partnership Treaty has cause quite a stir: The Treaty, now being negotiated between the USA, Canada, Mexico, Peru, Chile, Australia, NZ, Malaysia, Vietnam, Brunei and Singapore, is ostensibly a free trade agreement which is promoted as one which will modernise copyright and harmonise IP - but opponents have said the Wikileaks documents show that treaty “Focuses on the United States' federal and corporate interests, while largely ignoring the rights and interests of consumers” with Wikileaks founder Julian Assange saying If instituted "the TPP's IP regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons. If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you're ill now or might one day be ill, the TPP has you in its crosshairs" and it will be interesting to see if a secretly negotiated treaty could effectively fetter Congress's ability to legislate on IP reforms in the future.

There currently seems to be little cohesion between the ten nations, and whilst the text is slated as US dominated, the US is being opposed by many potential signatories and there seems a lack of common ground. However, some provisions are seemingly US driven such an increased term of copyright protection for sound recordings and films (Article QQ.G.6), infringement would include temporary storage in electronic form of copyright material (Article QQ.G.1) and Article QQ.I.1 promotes a voluntary ‘3 strikes’ system. Interestingly the treaty provisions on parallel imports seemingly contradict the US Supreme court in Kirtsaeng v. John Wiley & Sons, Inc and there is no mention of fair use as an exception - something commentators have used to suggest that the Hollywood studios and other content owners have been busy drafting Articles for the USTR. There is an excellent blog on the IP Kat by Angela Daly on this topic.

And finally to China where Baidu, the largest Chinese language search engine, is facing legal action for copyright infringement by those pesky Hollywood studios. The Motion Picture Association of America (MPAA) is seeking 300m yuan (approx £31 million) in damages claiming Baidu has been using an automated system to obtain their content without permission and that aidu provides online access to pirated material, in some cases directing Internet users with direct links to websites that traffic in pirated content. Alleging that Baidu and software maker QVOD make it easier for users to find and download pirated video, Wei Feng, president of MPAA China, said in a press release sent by the group "A large number of Chinese and foreign films and television productions are distributed on rogue video sites that are easily built using light content management systems."  The search engine said it "has always attached high importance to the problem of protecting copyrights in the online video industry" and that amongst other steps, Baidu said it handles complaints on piracy around the clock and has a filter that screens out illegal content.

Old Jersey fit to Berne

Victor Hugo would
be pleased ...

By Berne Notification No. 260: Berne Convention for the Protection of Literary and Artistic Works the World Intellectual Property Organization announces as follows:

Declaration by the United Kingdom of Great Britain and Northern Ireland

The Director General of the World Intellectual Property Organization (WIPO) presents his compliments to the Minister for Foreign Affairs and has the honor to refer to the deposit by the Government of the United Kingdom of Great Britain and Northern Ireland, on September 29, 1989, of its instrument of ratification of the Berne Convention for the Protection of Literary and Artistic Works of September 9, 1886, as revised at Paris on July 24, 1971, and amended on September 28, 1979 (see Berne Notification No. 125).

In this respect, the Director General has the honor to notify the deposit, on October 31, 2013, by the Government of the United Kingdom of Great Britain and Northern Ireland of the following declaration:

- "in accordance with Article 31 of the Convention as revised and amended, the Government of the United Kingdom of Great Britain and Northern Ireland wishes the United Kingdom’s ratification of the Convention, be extended to the territory of the Bailiwick of Jersey [note: this is old Jersey, not to be confused with New Jersey -- the first one that search engines will offer you] for whose international relations the United Kingdom is responsible".

The said declaration shall enter into force, with respect to the territory of the Bailiwick of Jersey, on January 31, 2014".

A small historical side note is that the Berne Convention was very much the result of far-sighted activism on the part of French novelist Victor Hugo -- who lived in exile in Jersey from 1852-1855, when he took the short trip to the neighbouring island of Guernsey, his home from 1855 to 1870.

BREAKING NEWS: Google Books Library Project is FAIR USE

As just announced on the IPKat, Google Books Library Project is FAIR USE.

It was just a bit more than a year ago that Google and the Association of American Publishers (AAP) concluded a settlement agreement (here) that put an end to copyright infringement proceedings first brought against Google in 2005 by five AAP member publishers (McGraw-Hill, Pearson Education, Penguin Group USA, John Wiley & Sons, and Simon & Schuster) over its Google Books Library Project. 

However, the settlement achieved with AAP did not affect the (still) ongoing litigation between the Authors Guild and Google.

As reported by the IPKat, in late 2012 Google submitted a brief to the US Second Circuit Court of Appeals, in which it basically asked the Court to reject Judge Denny Chin's ruling in May 2012 that let the Authors Guild sue Google on behalf of all authors whose books were scanned without permission. 

In July last the Second Circuit delivered its decision, substantially agreeing with Google and holding Judge Chin's class certification as "premature in the absence of a determination by the District Court [ie Judge Chin] of the merits of Google's 'fair use' defense". 

Hence, the Second Circuit decided to remand the cause to the District Court for consideration of the fair use issues.

As reported by Reuters a few minutes ago, today Judge Chin accepted Google's argument that that its scanning of more than 20 million books for an electronic database, and making "snippets" of text available for online searches, constituted fair use. "In my view, Google Books provide significant public benefits", said Judge Chin.

Today's ruling is BIG news for anyone interested in copyright. Further analysis surely to follow, so: stay tuned!

UPDATE: The summary judgment order is now available here.

More Section 97A Victories

BPI success in blocking 21 sites and MPA following in their footsteps with a blocking order against 2 streaming sites.

Section 97A appears to be moving from strength to strength as the weapon of choice in the quest to combat digital piracy since its introduction and initial Newzbins 2 success. 

The BPI have used the legislation to force the six largest UK internet service providers to block access to The Pirate Bay in2012; followed by Kat, Fenopy and H33t earlier this year. The Summer also saw success at the hands of FAPL obtaining a blocking order against live streamingservices of football matches. Now, section 97A has struck again.

A court order has been issued, at the request of the BPI, stating that on 30^th October, UK ISPs had to have blocked access to 21 infringing websites. The list of sites ordered to be blocked closely resembles the list published by the PPL earlier this year, against which the BPI intended to take action.   The websites blocked include not only "first generation" torrent sites, but also aggregators, thereby demonstrating the courts' willingness to accept the use of this piece of legislation to combat piracy, through the means with which consumers access the infringing content.

However, this time around, there is seemingly no judgment. Although the law itself is well-established in previous judgments, this may well have angered the burdened ISPs, particularly BT who in the Newzbin case, argued that floodgates could open.

In addition to the quantitavely largest success on behalf of the BPI to date, the MPA is having equal joy. In October, 5 further infringing sites were ordered to be blocked by the close of November, and yesterday, the High Court issued further orders against ISPs to block streaming sites SolarMovie and Tubeplus by early December. 

This time, Arnold J has issued a written verdict [in [2013] EWHC 3479, available on LexisNexis, but not yet, I am afraid, on BAILII], in which he states that the section 97A 'principles…are now settled.' In establishing communication to the public, and in reference to his FirstRow judgment, he ‘acknowledge(s) that it is arguable that the mere provision of a hyperlink is not enough’, as could be the case for aggregator and similar sites. 

However, he still finds no material difference between the cases in hand, and FAPL, and states that the offending sites do communicate to the public, as they ‘intervene in a highly material way’ for users to access illegal content, and therefore their part goes beyond the provision of a hyperlink. 

His key conclusion is that ‘viewed from the perspective of the user, the Websites do in a very real sense make the content available to the public’. This practical and literal viewpoint further demonstrates the breadth of application of section 97A, implying its impact has only just begun. 

[Thanks to my colleague Katharine Alexander for her help in this posting]