The High Court judgment of 28 July against British Telecommunications plc (BT) and in favour of several major movie studios (Studios) was the first recorded order (under English law) against an internet service provider (ISP) requiring the ISP to block access to a website.  The judgment is particularly interesting as it comes after the Studios had already obtained a judgment and injunction in their favour against Newzbin, only to see their efforts potentially defeated when the Newzbin website (which enables users to download copyright-protected audio-visual works using the Usenet service) was taken down and then reappeared on other servers in a different country – this is a fact of life for anyone seeking to control the activities of infringing websites and there has for some time now been a debate in the industry as to the role that ISPs may be able to play in tackling online infringement of intellectual property rights.

This paper will deconstruct the detailed judgment (which can be accessed here) by concentrating on the following questions:

  1. Why target BT if the Studios had already proven that Newzbin infringes their copyright?
  2. What did the Studios have to prove to be awarded the order?
  3. What are the lessons from this judgment, in particular for ISPs?

Why target BT if the Studios had already proven that Newzbin infringes their copyright?

Newzbin Limited was found to have breached the Studios’ copyright in a 2010 decision[1], the result of which was an injunction granted against Newzbin to (i) cease infringing copyright itself and (ii) ensure that its users cease infringing copyright, by reference to lists of copyright protected works handed to Newzbin by or on behalf of the Studios. Unfortunately, Newzbin sold all its assets to one Mr Harris and ceased operating before the costs awarded to the Studios were paid and it is unlikely that the Studios will be paid the damages or costs they were awarded.

Within two weeks of the first Newzbin website (Newzbin1) ceasing to operate, a new Newzbin website was up and running (Newzbin2) at the same URL used previously by Newzbin1.  Newzbin2 offers essentially the same services as Newzbin1 and in particular the same premium service which allows users to access and download copyright material.  The Studios submitted a volume of statistical evidence to back up their claim that Newzbin2 was engaged in the same business, including the results of an analysis by Detica which appears to show that in early September 2009, 94.3% of the records available in the “Movies” section was commercially available content, i.e. most likely copyright-protected material – the figures in the “TV”, “Music”, “Books” and “Games” sections were similarly high. What made proceedings against Newzbin2 a practical impossibility was that its servers are located in Sweden and the domain name registered to a company in the Seychelles – a real snapshot of the difficulty of combating online infringement.

Why target BT of all the ISPs? Evidence submitted showed that Newzbin2 was heavily focused towards users based in the UK – payment was expressed in Pound Sterling and the terms and conditions refer to UK legislation. Since BT has by far the largest share of the UK’s internet subscribers, it was reasonable to assume that a significant portion of Newzin2 users had BT internet accounts and in fact the Studios did present evidence of such users. Targeting BT therefore was a practical decision – a function of the largest number of potential UK-based Newzbin2 users that use the same ISP to access Newzbin2.

What did the Studios have to prove to be awarded the order?

The order to stop access to Newzbin2 was brought on the basis of section 97A of the 1988 Copyright Designs and Patent Act (CDPA), as amended in particular by the Copyright and Related Rights Regulations 2003, which implemented certain provisions of the EU’s Information Society Directive into English law. 

In brief, the section above gives the High Court the power to grant an injunction against a service provider which has actual knowledge of another person using its service to infringe copyright.

In order to be successful, the Studios had to convince the court of the following:

BT is a service provider within the meaning of s97A:

BT tried to muddy the waters by arguing that it was not its internet service which was being used to infringe copyright, but Newzbin2’s and that sections of the 2010 Digital Economy Act suggested clearly that there was a distinction to be made between the location where infringement is taking place and the service which is used to access that location (and, by implication, that it is the location which should be the target of legal action and not the service). 

The court rejected these artificial dichotomies and sought guidance in a decision of the Austrian Supreme Court in 2009[2] in relation to a similar case, where the Austrian court referred some questions to the European Court of Justice (ECJ) for guidance. The ECJ in that case interpreted the relevant provisions of the Information Society Directive[3] as clearly indicating that access providers (such as ISPs) must merely provide a service capable of being used by a third party to infringe copyright, in order to be “service providers” for the purpose of those provisions.

BT had actual knowledge of the infringing acts:

The court looked to first answer two questions: (i) what must the service provider have actual knowledge of and (ii) how may a service provider be given actual knowledge of something it did not know before?

In relation to the first question, BT’s argument was that the service provider was required to know of specific infringing acts by specific, identifiable people (and this was not possible to determine in relation to the use of the Usenet technology). The court, after analysing the numerous cases and legislative references put forward by BT, decided that one has to determine only the meaning of the words in s97A (and the relevant sections of the Information Society Directive which this section implements as well as the recitals to that directive), which the court decided comes down to ‘knowledge of the use of the service to infringe’ and not the more restrictive ‘knowledge of specific infringements’.  Clearly, if ‘actual knowledge’ means knowledge of specific individuals infringing specific works, the threshold is much higher.

In this particular case, the detailed evidence given to BT by the Studios (even prior to the court action) was such that there was no dispute of BT having the less restrictive actual knowledge of some users using BT’s services to access and use Newzbin2.

Scope of the Injunction

Once actual knowledge has been established, a court will need to consider the appropriate scope of the injunction to be granted.  Predictably, BT argued that the injunction had to be restricted to specific acts of infringement, while the Studios argued for an injunction against future infringement generally.

The court considered the decision of the ECJ in response to one of the questions referred to it by the English courts (by the same judge, in fact) in the case L’Oreal SA v eBay International AG [4], as result of which the ECJ had to consider the scope of injunctions available in relation to online trade mark infringements. Even though the referred question did not relate to the identical provision in the Information Society Directive as the one on which s.97A of the CDPA is based, the court in the Newzbin2 case looked to the general principles of the ECJ’s decision.  The ECJ clearly stated that the scope of the relevant injunction was not restricted to measures that would bring to an end known infringements but also future infringements, as long as such injunctions are proportionate, dissuasive and don’t create barriers to legitimate trade.

Human Rights Angle

BT argued that the scope of the injunction was a breach of Article 10 of the European Convention of Human Rights, which guarantees freedom of expression, unless prescribed by law and in the public interest. BT’s argument rested on a recent Advocate General’s Opinion[5] in relation a Belgian copyright infringement case brought against an ISP. One of the conclusions in that Opinion was that the scope of the injunction, taking into account the cost to the ISP and the fact that such an injunction would be sought against other ISPs, was too generic and abstract to satisfy the requirements of Article 10(2) of the European Convention of Human Rights, which deals with permitted exceptions to the general principle in Article 10(1).

The judge distinguished the Newzbin case from the Scarlet v SABAM case by pointing out that the scope of the injunction sought by the Studios was in fact very specific  (that BT should implement an existing technological solution) and not excessive as to costs and therefore not in breach of Article 10 of the European Convention of Human Rights.

Floodgate Argument  

The court considered the popular “floodgates” argument which tends to appear anytime a course of action is first granted and while the court accepted that it was very likely that the Studios would seek similar orders against other ISPs if successful against BT, this was not the Studios’ concern. In fact, BT should welcome such actions so that it does not feel unfairly targeted.

As far as requiring ISPs to block access to other websites providing a service similar to Newzbin is concerned, the court explained that the success of this action did not mean that other actions against other websites would be “easy”, given that the Studios had to go through a lengthy process of evidence gathering and obtaining a prior judgment of copyright infringement against Newzbin itself.    

Efficacy

BT argued that the order, if granted, would be ineffective in preventing access to Newzbin2 by determined users and in fact submitted evidence of measures that could be taken by such users. While the court accepted that this was technically correct, it nevertheless believed that the order imposed sufficient additional cost (both in time and money) that it would prevent all but the most determined users from circumventing the measures imposed by BT and that even if they did, the measures would slow down the Newzbin2 service.

What are the lessons from this judgment, in particular for other ISPs?

This detailed judgment highlights some very useful general principles that can help determine whether an ISP may be required to block access by its users to a website which provides services that enable the ISP’s users to infringe copyright.

If an ISP has actual knowledge that users of its services are or are very likely to be guilty of infringement of intellectual property rights by accessing a particular website, the ISP may be a legitimate target for such an order. In this case, BT was provided with ample evidence (from the previous judgment as well as new evidence relating specifically to BT users) that the question of how this actual knowledge was to be gained did not need to be examined in detail. The decision certainly does not suggest that ISPs are under a general obligation to actively monitor their traffic in order to assess possible infringing uses. However, with recent legislation such as the 2010 Digital Economy Act giving rights holders additional incentives to gather evidence of infringement, there are likely to be a number of specialist service providers who can gather such evidence – although recent events in the UK in relation to a mass targeting of alleged infringers by solicitors shows that one must be careful when using such “evidence”.

In this instance the fact that the Studios had already obtained a decision against Newzbin1 in respect of copyright infringement and the subsequent, blatant efforts by Newzbin2 to insulate itself from the English courts’ reach, were undoubtedly factors that helped the Studios’ claim that the measures sought were necessary and proportional. While nothing in the judgment explicitly suggests that those seeking such injunctions must first obtain judgment in relation to the infringement itself, it is not difficult to predict that this line of argument will be used as a defence if an injunction is ever sought in the absence of such a judgment. In relation to an action based on s97A of the CDPA, for example, how can there be actual knowledge of infringement if the infringement itself can be disputed?

The fact that BT already had in place a working technological measure which could relatively easily be deployed to block access to Newzbin2 (its proprietary ‘Cleanfeed’ system, used to block access to URLs notified to it by the Internet Watch Foundation) was also a factor that enabled the court to argue for the proportionality of the injunction it granted. In any future case, it remains to be seen whether the need by an ISP to licence in such technology (in order to give effect to an injunction) has an effect on the scope of the injunction granted or even in relation to any sharing of costs that a court may order. This judgment gives rights holders an additional weapon to use in cases where a website is proven to have infringed intellectual property rights and as such it is not an easy way provided by the courts to bypass the need to prove infringement itself. It means that ISPs need to be aware that they can no longer consider themselves to be mere bystanders in such scenarios.