The Facts

MediaCAT was an online monitoring company set up to make money by bringing copyright infringement claims (relating to adult content) against users of Internet file sharing sites. The company claimed to have the right to enforce such copyrights on behalf of copyright owners, by virtue of certain agreements it had concluded with them.

MediaCAT’s lawyers, ACS:Law, obtained the details of thousands of individual Internet users by getting disclosure orders against Internet service providers. ACS:Law then sent out thousands of aggressive letters to suspected file sharers, threatening court proceedings unless a settlement fee of £495 (approximately US$815) was paid. Most recipients of the letters evidently paid up rather than face embarrassing litigation. Legal proceedings were started in the Patents County Court (PCC) against some recipients who did not pay.

By Christmas of 2010, no defense had been filed in most of the cases nor had any attempt been made by Media CAT to proceed with them. Those cases were simply left hanging. In view of these odd circumstances, a PCC judge, Judge Birss, took the unusual step of making an order of the court’s own motion to convene a case management conference in all 27 cases on the court’s files at the time.

Just before the case management conference hearing, ACS:Law presented the court with 27 notices of discontinuance, stating that MediaCAT wanted to discontinue the actions and then re-issue all 27 claims because the company was concerned that the claim forms might not all have been served properly, and wanted to reconsider and reformulate its case.

The Issues

The key issues before the court were:

  1. Whether section 102 of the Copyright, Designs and Patents Act 1988 (CDPA) meant that a claimant in a copyright case, who was claiming some form of license but was not the copyright owner, needed permission to discontinue the action.

Section 102 CDPA states that where an action for copyright infringement concerns concurrent rights of action, the copyright owner or the exclusive licensee, as the case may be, may not, without the leave of the court, proceed with the action unless the other is either joined in as a claimant or added as a defendant.

Judge Birss held that “proceed with the action” in Section 102 referred to proceeding with any step in a case including serving a notice of discontinuance. Thus, Judge Birss concluded that MediaCAT could not discontinue the action without leave of the court.

  1. How Civil Procedure Rule (CPR) 19.3 applied to the case. That rule of court procedure provides that where a claimant claims a remedy to which some other person is jointly entitled, all persons entitled to the remedy must be parties unless the court orders otherwise. Was it the case that the copyright owners had to be joined as parties?

Judge Birss held that CPR 19.3 was “clear and mandatory” – all the copyright owners, therefore, had to be parties. To take steps in the proceedings (including discontinuing) without joining the copyright owners would be a breach of this rule.

  1. Because MediaCAT had stated that it wished to reissue the claims, Judge Birss needed to know the effect of CPR 38.7, which states that where a defense has been filed, the claim cannot be re-issued after discontinuance without the court’s permission.

MediaCAT argued that if the current cases were discontinued, although MediaCAT would need permission to restart them, the copyright owners would not need permission as they were not parties to the claims. Judge Birss rejected that argument, saying that the copyright owners were not strangers to the case as they were parties to the agreements with MediaCAT, which purported to give MediaCAT the right to pursue infringement actions.

The court had inherent power to prevent a party from obtaining, by the use of its process, a collateral advantage that would be unjust for the party to retain.

Judge Birss held that the notices of discontinuance would give the copyright owners a collateral advantage stemming from a breach of statute (Section 102 of the CDPA) and from the circumvention of a mandatory rule (CPR 19.3). Further, the copyright owners would have avoided being parties to proceedings at the point the case was discontinued and, therefore, would avoid being subject to CPR 38.7. This was, Judge Birss said, an abuse of process and the notices of discontinuance should be set aside.

Case authorities showed, Judge Birss concluded, that discontinuing proceedings can, in certain circumstances, amount to an abuse of process. The court had inherent power to prevent a party from obtaining, by the use of its process, a collateral advantage that would be unjust for the party to retain and the termination of litigation can, like any other step in the litigation process, be used to obtain such an unjust advantage.

Judge Birss said that this was clearly a case which needed scrutiny by the courts and he highlighted in particular that:  

  • The claimant’s case assumed that identifying an IP address linked to a particular adult content film and to a P2P network, at a particular point in time, established that the person who was connected to that IP address was an infringer. As the judge said, “Proof that a person owns a photocopier does not prove they have committed acts of copyright infringement.”
  • The quantum of damages claimed also deserved scrutiny. If all that was proved was one single download, then all that would have been lost was the profit on the sale of one copy of a work, the cost of which would amount only to a small fraction of the £495 claimed in the letters before action.
  • The position of ACS:Law and its letter writing campaign also called for scrutiny. In the judge’s view, “Media CAT and ACS:Law have a very real interest in avoiding public scrutiny of the cause of action because in parallel to the court cases, a wholesale letter writing campaign is being conducted from which revenues are being generated.”

Comment

Having been forced to continue with 27 separate claims, all of which appeared to be very weak in light of the judge’s cogent criticisms of them, it is perhaps hardly surprising that MediaCAT has now gone out of business. ACS:Law has also ceased to trade but the Solicitors Regulatory Authority in the UK has nonetheless opened a formal investigation into its erstwhile principal, Andrew Crossley.

Those who seek to enforce intellectual property rights by mass mailing Internet users should take note of this case and ensure that they get their house in order before they start their enforcement campaign.

The robust and proactive approach taken by Judge Birss was also a noteworthy feature of this case. Anyone thinking that the PCC, under its new judge Colin Birss, is going to be a soft touch with a laissez faire approach, is clearly wrong.