Judge orders that the claims against alleged copyright infringers must continue regardless of the claimant’s wish to discontinue.

Last Tuesday, HHJ Birss QC, sitting in the Patents County Court, determined that he would not accept notices of discontinuance filed by Media CAT's legal advisers, ACS Law, in its claims for alleged infringement of film copyrights by users of peer to peer networks. Within the space of the few short days between the 24 January hearing and last week’s decision, Media CAT had reportedly filed for insolvency and ACS Law closed its doors.

For those who have not followed this long-running soap opera, the story runs something like this...

Back in 2008, two partners at Davenport Lyons, Brian Miller and David Gore, oversaw an operation whereby the firm wrote to alleged file-sharers on behalf of copyright owners and sought payment of a fixed sum for the infringement. This method was to become known as "speculative invoicing" and came in for heavy fire from consumer groups and has also led to an inquiry by lawyers’ regulator, the SRA.

Such criticism or difficulties did not, however, deter Andrew Crossley, principal at ACS Law, embarking on a similar course on Media CAT’s behalf. Crossley was not shy about his role in chasing alleged file-sharers or his earnings from the operation: when his firm's website came under a denial of service attack files left open for all to read, through allegedly lax security, revealed that he anticipated to earn some £3 million from “speculative invoicing”.

There is no definitive account as to the number of letters that ACS Law sent out but it is believed to be in excess of 10,000. All seemed to be going so well with the operation until late last year when some 27 individuals had the temerity to challenge it. With the prospect of a judge reviewing their methods, Media CAT (and ACS) sought to pull out of the litigation and filed notices of discontinuance. This left HHJ Birss QC deeply unimpressed.

Acting as we do for a number of rights’ holder, we appreciate the care that must be put into the preparation and formulation of any infringement claim. This is something which seemed to have escaped the attention of ACS Law in that it paid scant regard for not only fundamental principles of copyright law but also the courts’ rules.

Key highlights from the ruling include:

  • Media CAT had claimed at various stages to be (i) a copyright protection society (whose members are the owners of the copyright in the works), (ii) the exclusive territorial licensee of rights in the work, and (iii) to represent the owners of copyright or exclusive licensees of that copyright. It was in fact none of those. At best, it had a bare contractual right to pursue claims for copyright infringement on behalf of rights' owners.
  • Media CAT's evidence was found lacking in that while an IP address may locate a network / computer involved in an infringing act it did not necessarily follow that the owner was the infringer or had authorised the infringement.  
  • HHJ Birss QC also recognised what many data security professionals have acknowledged for a long time: wireless networks are inherently insecure and there is no obligation on operators of such networks to secure them. Further, even if there was such an obligation, there are a number wireless data security standards with varying degrees of protection.  
  • Under UK copyright law, Media CAT was required to join the rights' holders as parties to the claim. It never did so. The judge has ruled that it now must do so but given its demise this seems unlikely.

What future for "speculative invoicing"? Well, in light of HHJ Birss QC criticism of ACS Law's methods, the SRA's Disciplinary Tribunal hearing against Mssrs Miller and Gore (scheduled for May 2011) may force the profession to put its house in order and see an end to the practice.

As for the unfortunate defendants in this case, with the demise of Media CAT, it is unlikely they will see any form redress from them. HHJ Birss QC may, however, contemplate making a “wasted costs” order against Andrew Crossley when the case is finally concluded.

Another casualty arising from this case may be the "three strikes’" rule that is to be introduced under the Digital Economy Act. If an IP address alone cannot identify an infringer, it is difficult to see how this rule will work in practice. Are we likely to see rights' holders relying on the disclosure process to establish the existence of pirated materials on an alleged infringer's hard drive?

What seems certain is that the film and music industries will continue to see an attrition in their value if they cannot find a solution to piracy. It is only right that content-rich industries should be able to protect and enforce their rights and see a return on their investment. It may be a case of “back to the drawing board” as they consider how they can engage with consumers and ISPs to reduce piracy.