In the first decision of its kind in the UK, the High Court has held that an Internet Service Provider ("ISP"), in this case BT, must block its customers from accessing an unlawful file sharing site (www.newzbin.com) on the basis that, under s97A Copyright, Designs and Patents Act 1988 ("CDPA"), BT had "actual knowledge" of its customers using its service to infringe copyright (in this case the copyright in films and television programmes owned by certain well-known studios).
This decision will be welcomed by copyright owners and the creative industry in general. However ISPs will be concerned that it will open the floodgates and lead to onerous obligations on them to control their customers' access to a potentially large number of sites. Twentieth Century Fox Film Corp & Ors v British Telecommunications Plc  EWHC 1981 (Ch) (28 July 2011).
Background to the case
This decision follows a prior decision of the High Court in Twentieth Century Fox Film Corporation & Anor v Newzbin Ltd  EWHC 608 (Ch) (29 March 2010) in which Kitchin J found that Newzbin Ltd (which at the time operated a website accessible from the same www.newzbin.com address) was liable for copyright infringement in that it had authorised the copying of films by its users, procured and engaged with its users in a common design to copy those films and communicated those films to the public. Please see our 31 March 2010 newsflash for further information.
Following the 2010 High Court decision, Newzbin Ltd went into voluntary liquidation and the original website ceased operating. However a successor website soon began operating from the same address, www.newzbin.com . The operators of this website were unknown and it appeared that its operation had been moved offshore, outside the Court's jurisdiction. Therefore, the claimants (being Twentieth Century Fox, Universal, Warner Bros, Paramount, Disney and Columbia, the "Studios") sought an injunction against BT, the UK's largest ISP. The injunction sought would oblige BT to block its subscribers from accessing the Newzbin website using a technology called "Cleanfeed" which BT already uses to block pornographic content. The Studios made it clear that they would seek similar orders against other ISPs if they were successful.
The Newzbin website
The Newzbin website indexes and categorises "Usenet" messages. Usenet was developed in the 1980s as a means to upload and view short text messages on an electronic equivalent of public bulletin boards. As well as text messages, Usenet also allows its users to post "binary" content, including DVD films, CDs and software. However, as such content is very large, it has to be split into many hundreds, if not thousands, of individual Usenet messages. The Newzbin website indexes these messages, ensures that they are all present and groups the content under headings such as "Movies", "Music", "TV" or "Apps".
The evidence indicated that the overwhelming majority of the files on the website were likely to be protected by copyright. This was particularly the case in the "TV" and "Movies" categories (where the Studios' copyrighted works would be found) which accounted for approximately 70% of the site's content.
The Studios sought an injunction under s97A CDPA, which provides in subsection 1 that "The High Court…shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright" (Emphasis added).
This section was inserted into the CDPA as a result of Article 8(3) of the Information Society Directive (2001/29/EC), which obliges Member States to ensure that injunctions can be granted "against intermediaries whose services are used by a third party to infringe a copyright or related right".
BT accepted that it was a "service provider" under s97A CDPA, but opposed the grant of the injunction on six main grounds.
1. There is no "use" of BT's service to infringe copyright
BT submitted that the infringement occurs "using" the services of the supplier of the infringing works (i.e. Newzbin) not BT's services. Arnold J considered the wording of Article 8(3) of the Information Society Directive and whether this is aimed at ISPs. He decided that it was, and therefore held that BT subscribers who are members of Newzbin and download infringing content over BT's networks are indeed "using" BT's service.
2. There is no "actual knowledge" as required under s97A CDPA
BT contended that it was not enough for BT to know simply that its service is being used for infringing activity in general, but that it was necessary to have actual knowledge of a specific person using its service to infringe a given copyright work.
Arnold J rejected BT's arguments based on the context, purpose and wording of s97A CDPA. The provision was therefore not to be interpreted in a restrictive manner, and it was not necessary to prove knowledge of a specific infringement by a specific individual.
3. The injunction sought would contravene Article 12(1) of the E-Commerce Directive (2000/31/EC)
BT also argued that the injunction should not be granted because it would contravene Article 12(1) of the E-Commerce Directive, which provides that an ISP is not liable for the information transmitted over its networks provided that it does not control the sending or the recipient of the information, or control the information transmitted. It was noted that Article 12(3) expressly states that this protection does not affect a Court's ability to require a service provider "to terminate or prevent an infringement". However BT compared this provision with Article 14(3) of the Directive, a similar provision aimed at hosting services, which in addition expressly allows Member States to "establish procedures governing the removal or disabling of access to information". This, BT said, was essentially what the Studios were seeking, but such relief should not be granted as it is not expressly provided for in Article 12(3).
However Arnold J held that the differences between Articles 14(3) and 12(3) do not justify a restrictive interpretation of the latter clause and therefore the injunction would not contravene Art 12(1).
4. The injunction sought would be contrary to Article 15(1) of the E-Commerce Directive
Article 15(1) of the E-Commerce Directive provides that Member States cannot impose a general obligation on service providers to monitor the information they transmit or store. BT submitted that the injunction sought would breach this Article. However Arnold J disagreed, citing the Court of Justice in L'Oréal v eBay (see our newsflash of 13 July 2011), which had held that Article 15(1) applied to prevent the general active monitoring of all data of all customers of a provider, but does not prevent courts from ordering specific monitoring in particular cases.
5. The injunction would contravene Article 10(1) of the First Protocol to the European Convention on Human Rights ("ECHR")
Arnold J rejected a number of further arguments from BT that the injunction should not be granted by the Court, based essentially on the balance between the rights of the Studios under Article 1 ECHR (the right to peaceful enjoyment of possessions) and the rights of users of Newzbin under Article 10 ECHR (right to freedom of expression, i.e. the BT subscribers' right to receive information). He found that such balance was firmly in favour of the Studios and therefore the breadth of the injunction, which necessarily extended beyond the films and TV programmes of the Studios, was justified and proportionate due to the extent of copyright infringement occurring via the Newzbin website.
6. The Court should not exercise its discretion to grant the injunction
BT contended that, even if the Court had the jurisdiction to make the order sought by the Studios, it should not exercise its discretion to do so because (i) the Studios did not have rights to the entire content of Newzbin, (ii) there would be a flood of other similar claims, and (iii) the Order would be ineffective as BT subscribers could circumvent the Cleanfeed technology anyway.
Arnold J considered that the Studios were the single biggest group of copyright owners affected by Newzbin, and that their rights were being infringed on a massive scale such as to justify making the order. He considered that non-infringing uses of Newzbin were de minimis. He also noted that the injunction would not necessarily lead to a flood of similar applications by other copyright owners against other ISPs, since other applicants would still need to put a substantial amount of evidence before the Court in order to make out their case. Finally he acknowledged that there would be ways to circumvent these blocks, but said that even if only a minority of users are prevented from accessing the website, that would justify the injunction.
This is an important decision that will benefit the creative industry, particularly in relation to websites hosting infringing content which are outside the Court's jurisdiction. BT has stated that it will not appeal the judgment, but it is currently uncertain how easy it will be for copyright owners to seek injunctions in respect of other content on different sites and/or against different ISPs.
The Studios' application for an injunction against BT started from the point that they had already obtained judgment against Newzbin Ltd for copyright infringement. Future applicants will need to put forward a good deal of evidence, not only in support of the injunction but also in order to establish infringement itself. Furthermore, as the overwhelming proportion of infringing usage of the Newzbin site was a factor in justifying the breadth of the order granted, it may be harder for an applicant to obtain a similar order in respect of websites which enjoy relatively more legitimate use.
It is interesting in this context to note the announcements of the Government on 3 August 2011 following the recent Ofcom report into site blocking (available here). This report looked into the powers granted to the Secretary of State under sections 17 and 18 of the Digital Economy Act 2010 (the "DEA"), which allows the creation of legislation to require ISPs and other intermediaries to block access to internet sites found to infringe copyright. The Ofcom report concluded that none of the currently available techniques of site blocking is completely effective since there are various means to circumvent them and they can sometimes block legitimate content. It also commented that, to provide any real advantage over the s97A CDPA route, the procedure would have to result in blocks being put in place quickly, be low cost, and have a predictable outcome. In the light of this report, the Department for Culture, Media and Sport announced on 3 August 2011 (as part of wider announcements in connection with the Government's response to the Hargreaves review on intellectual property – see our 5 August 2011 newsflash here) that they will not "bring forward regulations on site-blocking".
However, the notification scheme under the DEA still remains as a means of combating online piracy. This enables customers of ISPs who infringe copyright to be sent warning letters at the request of copyright owners (see our 3 May 2011 newsflash). The Government has announced that the "Initial Obligations Code" under the DEA (which will set out the procedure) will be published soon, almost a year later than initially proposed. However, the first warning letters under this Code are not due to be issued until late 2012.