Background
Facts
Decision
Comment
In a significant High Court judgment, O2 was recently ordered - by means of a Norwich Pharmacal order - to disclose details of certain customers who were suspected of infringing the claimants' copyright by illegally downloading and sharing pornographic films.
Section 101 of the Copyright, Designs and Patents Act provides that an exclusive licensee has the same rights and remedies as a copyright owner and can sue for copyright infringement.
A Norwich Pharmacal order requires disclosure of certain documents or information to the applicant by a respondent that has a connection to the wrong committed and is not merely an 'innocent bystander'. The respondent is usually not an intended party to the proceedings. In Rugby Football Union v Viagogo Ltd(1) five questions were identified which the the court should address when considering whether to grant such an order:
- Have "arguable wrongs" been committed (ie, is there an arguable case against the intended defendant)?
- Was the respondent involved in the arguable wrongs?
- Is the applicant intending to seek redress for those wrongs?
- Is the disclosure of the information which the applicant requires necessary for it to pursue that redress?
- Should the court exercise its discretion in favour of granting relief?
There were 14 claimants in the action, 13 of which were owners of copyright in pornographic films and one of which, Golden Eye (International) Limited, was an exclusive licensee. Golden Eye had entered into agreements with the other claimants whereby it was given the exclusive right to act for each of them, and to have sole control and conduct of any proceedings, in relation to "any alleged breaches of copyright arising out of peer-to-peer copying of material across the internet". In return, Golden Eye agreed to pay the other claimants a percentage of the revenue raised, which varied from 25% to 37.5%.
Golden Eye and the fellow claimants suspected that 9,124 of O2's customers had infringed their copyright through unauthorised file sharing. The claimants signed up to a tracking service to identify the users' IP addresses. Golden Eye then applied for a Norwich Pharmacal order - in its own name and on behalf of the other claimants - under Section 101 of the act, seeking that O2 be required to disclose the names and addresses of its allegedly infringing customers.
Golden Eye provided the court with a draft order and a draft letter that it proposed to send to the alleged infringers. The letter asked for payment of £700 in compensation for copyright infringement; otherwise, Golden Eye would seek to take legal action or "apply" to the users' internet service provider to slow down or terminate their connections.
O2 did not oppose this order and the court asked Consumer Focus - the statutory body which champions consumer rights in England, Wales and Scotland - to make submissions on behalf of the intended defendants.
Consumer Focus argued that Golden Eye's action was tantamount to 'speculative invoicing' - the practice adopted by copyright owners of sending threatening letters of claim en masse to alleged infringers. Consumer Focus argued that the letters wrongly asserted that the internet subscriber was responsible for the copyright infringement from its internet protocol address, whereas the responsible party could have been anyone who had accessed the address in question. In addition, it was argued that £700 was not a genuine estimate of the claimants' losses and was therefore unsupportable. Overall, Consumer Focus argued that the agreements between the claimants, together with the letters of claim, were more of a revenue-making scheme than a genuine attempt to seek legal redress; as such, they jeopardised the proper administration of justice.
The court analysed the contents of Golden Eye's draft letter of claim in accordance with the judgments in ACS:Law and Media CAT - two cases which also involved speculative invoicing. The cases demonstrated that where a court is asked to grant a Norwich Pharmacal order, it should consider the terms of the draft letter of claim and its impact on the ordinary consumers subject to the order. The consumers in this case might be innocent of copyright infringement, embarrassed by the allegations and without access to legal advice. As a consequence, they might feel forced to pay the £700 to avoid the publicity of legal proceedings. The court agreed with Consumer Focus and the objections that it raised about the draft letter.
These objections aside, the court considered the five tests in Rugby Football Union and found that Golden Eye was entitled to a Norwich Pharmacal order. It concluded that there was at least an arguable case that peer-to-peer file sharing had taken place through the identified internet protocol addresses and that many, if not all, of the identified customers had been the infringers. The respondent, O2, was involved in the infringements and, on the evidence, Golden Eye had demonstrated a genuine desire to obtain compensation for the copyright infringements. It was also clear that Golden Eye needed the names and addresses of the allegedly infringing customers in order to pursue legal redress.
On the public policy issue in relation to the agreements between the claimants, the court considered that these were commercial agreements and not purely for the purposes of conducting litigation; they were therefore unlikely to jeopardise the administration of justice.
The judge also considered the principle of proportionality. Article 3(2) of the EU Enforcement Directive (2004/48/EC) imposes a general obligation on the court to consider proportionality in assessing remedies for IP infringements. Therefore, the judge stated that the order being sought should strike a fair balance between the protection of the copyright owners' rights and the protection of consumer rights, thus following an approach similar to that which he had taken in the Newzbin file-sharing case.
On balance, the court concluded that the claimants' interests outweighed those of the defendants; it was therefore appropriate to grant Golden Eye a Norwich Pharmacal order, provided that the order and letter of claim were amended to ensure that they safeguarded the legitimate interests of the intended defendants. However, it was considered inappropriate to grant the same order to the other claimants, as the judge considered that this would amount to "the court sanctioning the sale of the intended Defendants' privacy and data protection rights to the highest bidder". The judge considered that if the other claimants were aggrieved about the wrongs that they had suffered, they should make an application themselves.
Achieving a balance between the rights of IP owners and the rights of individuals has been a recurring theme in recent copyright infringement cases involving illegal file sharing. The difference in this case is that the approach was applied in the context of an application for a Norwich Pharmacal order. When considering whether to grant a Norwich Pharmacal order in file-sharing cases, the court must ensure that consumers' rights are adequately protected, especially when they may be innocent of the alleged copyright infringement. This case shows that robust evidence of potential infringement is needed in support of an application for a Norwich Pharmacal order, and that the court will not look favourably on letters of claim which threaten to cut or slow down a potential infringer's internet connection. However, copyright owners will be relieved that the judge did not condemn speculative invoicing as a method of seeking redress for infringement. His comments on the type of letter that a copyright owner might legitimately send provides a useful guide for future anti-infringement campaigns.
For further information on this topic please contact Paul Joseph or Charlotte Ward at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email ([email protected] or [email protected]).
Endnotes