Tuesday, 20 September 2011

NewzBin2: the first section 97A injunction against an ISP

Author: Darren Meale (SNR Denton UK LLP)

Twentieth Century Fox Film Corp & Others v British Telecommunications Plc [2011] EWHC 1981 (Ch) (28 July 2011), Chancery Division, England and Wales

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr153, first published online: September 19, 2011

After many years of fighting online piracy, the film studios finally deploy, successfully, section 97A of the Copyright, Designs and Patents Act 1988 (‘CDPA’) to force internet service provider BT to block its customers' access to an online service used for mass copyright infringement.



Legal context

Online copyright infringement remains one of the key copyright-related issues, if not the key issue, of the modern age. Film studios and record labels have been fighting piracy on the internet for more than a decade, and despite many victories, infringement still persists. One of the greatest problems rightsholders face is that, almost every time a significant infringer is defeated, another simply rises in its place. When this happened in this case, the Studios successfully made use of an until-now unused power under the CDPA to require ISPs to prevent their users from accessing the offending service.

Facts

Over a year ago, in Twentieth Century Fox v Newzbin Ltd [2010] EWHC 608 (Ch) (29 March 2010), the Studios scored a significant victory when the High Court held that NewzBin was committing primary and secondary infringements of the Studios' copyright in major Hollywood films on a grand scale. For more information on the first NewzBin decision, see "Copyright: Online service provider's liability for the activities of its users", Journal of Intellectual Property Law & Practice (2010) 5(7): 491–492. NewzBin was turning over £1 m a year and generating significant profits by charging users for a service which greatly facilitated their downloading of copyright-protected films and other material from the Usenet, a bulletin board system predating, but less popular than, the World Wide Web.

Following the High Court's ruling, NewzBin very quickly shut down. But shortly thereafter, under different ownership, a sequel service was created named, as Hollywood convention dictates, NewzBin2—which provided exactly the same infringing service as its predecessor. Rather than bring the same costly infringement action again (in circumstances where NewzBin had now moved itself entirely out of the jurisdiction), the Studios instead sought to rely on section 97A of the CDPA, which provides simply 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.’ The Studios thus brought a test application before Mr Justice Arnold, targeting the largest ISP in the jurisdiction, BT, which opposed the application.

Analysis

Section 97A was inserted into the CDPA in 2003 by the implementing regulations for Directive 2001/29 (the Information Society Directive), Article 8(3) of which provides that rightsholders must be ‘in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright’. Section 97A(1) is set out above and section 97A(2) essentially provides that ‘actual knowledge’ is to be determined having regard to all the circumstances.

The Studios' case was that there was already a finding of copyright infringement against NewzBin1. NewzBin2 was an identical service to NewzBin1. BT was aware of both the judgment and NewzBin2, and there was evidence that BT's users were accessing it. This provided the requisite knowledge and an injunction should be granted requiring BT to block access to NewzBin2 using the same system it deploys to block access to other unlawful websites, such as those containing child pornography: (1) IP address blocking, using the unique IP address of a website to block a user's access to it; and (2) Deep Packet Inspection (‘DPI’) based URL blocking, which monitors internet traffic to block users destined for particular internet pages.

BT disagreed, advancing five arguments against an imposition of a block. Each failed to convince the judge.

  • BT's service was not being used to infringe copyright

BT contended that its users were using NewzBin2, not BT's internet service, to infringe copyright. This argument failed in light of Tele2 Case C-557/02 [2009] ECR I-227, a judgment of the Court of Justice of the European Union (ECJ) which held that providers whose services provide merely internet access are nevertheless to be regarded as ‘intermediaries’ for the purposes of Article 8(3) of the Information Society Directive, and thus injunctions were available against them.

  • BT does not have actual knowledge

BT contended that its ‘actual knowledge’ must be of its service being used to commit a particular infringement of a particular work by a particular identified individual. Arnold J rejected this contention. Noting that the wording of section 97A was of a general and open-ended nature he held that, while knowledge that a particular infringing act was being committed, that a particular work was being infringed, or that a particular individual was infringing would all be indicators towards a finding of actual knowledge, it was not necessary to establish one or all of these facts in order to make such a finding. The more information the service provider can be shown to have about infringing activity, however, the more likely a finding of actual knowledge.

BT, the judge held, had actual knowledge in this case: it knew that users of NewzBin2 infringe copyright on a large scale (including the copyrights of the Studios); those users include BT subscribers; and those subscribers use BT's service to receive infringing copies of works made available to them by NewzBin2.

An injunction would be contrary to Article 12(1) of Directive 2000/31 (the E-commerce Directive)
This Article provides an exclusion of civil and criminal liability for service providers who are ‘mere conduits’. A service provider is a mere conduit where information merely flows through its service without the provider knowing what it comprises, in circumstances where the provider neither initiates the information flow nor modifies that information. The Article does not, however, prevent an injunction being imposed—in fact Article 12(3) specifically preserves such jurisdiction. Given the wording of Article 12(3), BT's reliance on the exclusion failed.

  • An injunction would be contrary to Article 15(1) of the E-commerce Directive

Article 15(1) forbids Member States from imposing general obligations on providers to monitor the information which they transmit. An injunction which required BT to block access to a particular website would, BT contended, amount to a general obligation to monitor. The Studios argued that no monitoring was required and that even if it were, the obligation would be specific and limited, not general. Arnold J agreed with the Studios, drawing on the ECJ's judgment in L'Oréal v eBay Case C-324/09, in which the ECJ noted that ‘a general obligation to monitor’ meant ‘an active monitoring of all the data of each of a website's customers in order to prevent any future infringement via that provider's website’: this would not be the effect of the injunction the Studios sought.

An injunction would be contrary to Article 10 of the European Convention of Human Rights (‘ECHR’)
Article 10 of the ECHR provides the right to freedom of expression, subject to such restrictions as are ‘prescribed by law’ and are necessary in a democratic society in the interests of security, public safety, and so on. BT contended that the injunction sought by the Studios was not ‘prescribed by law’. Arnold J again disagreed, considering that the injunction sought fell well within the range of orders which would foreseeably be ordered pursuant to section 97A.

  • Could but should not?

Having rejected the above arguments, Arnold J satisfied himself that he could make the order sought. BT then tried to dissuade him from exercising his discretion to do so on three grounds, but failed in each case.

Scope of the injunction too wide

Relying on the reasoning of Kitchin J in the first NewzBin case for declining to grant a section 97A injunction against NewzBin1, BT argued that the Studios were interested only in that part of NewzBin2 that involved infringement of film and television material. That only accounted for 70 per cent of NewzBin2's content, and so the Court should not grant an injunction which covered 100 per cent of the content including the 30 per cent in which the Studios had no legal interest but which was owned by an uncertain number of third parties not parties to the case. Arnold J, however, considered that the injunction sought would be certain, as it would require NewzBin2 to be blocked. While it would benefit third party rightsholders, this was a reason in favour of the injunction, not against it.

Floodgates will open

A flood of requests for blocking orders from rightsholders against BT would follow were the Studio's application to be granted, warned BT. Arnold J felt this concern unfounded: the Studios had only got this far by taking a separate action against NewzBin1 and then bringing this second action, all at considerable effort and expense. Although this was a test case, success in it would not, he thought, lead to a section 97A free-for-all. Instead he considered that rightsholders would not undertake future applications lightly and would concentrate their resources on the ‘more egregious infringers’.

Circumvention is too easy

BT contended that a block on NewzBin2 would have little effect as it would be too easy to circumvent. The Studios accepted the block it wanted BT to impose—a mix of IP address blocking and DPI-based URL blocking—could be circumvented by determined users (a proxy server might be one method). Although a real issue, Arnold J did not think that every user would circumvent, or would have the ability to circumvent, the block, which would be justified even if it only prevented access by a minority of users. Circumvention might require users to pay for a further service (such as a good proxy server) and that, once that cost was added to the cost of NewzBin2 membership, users might be persuaded that, economically, they would be better off simply paying to obtain content lawfully.

Practical significance

It is surprising that it has taken the content industries so long to deploy section 97A in their war against internet piracy. On the face of it, it is a straightforward provision with little get-out for the ISP once it has been proven that a website is infringing copyright. And there are many such websites where infringement is beyond doubt. With this success, the Studios will ask (or, failing that, force) all other major UK ISPs to also block NewzBin2. Provided they can do so in a cost-effective manner, the Studios (and other rightsholders) are likely to bring further applications against ISPs in respect of other infringing websites.

Whether the floodgates will be opened may depend on perceptions of how effective the block really is. The simplest of Google searches will reveal a list of possible circumvention methods and, four months before the judgment was handed down, NewzBin2 announced a new web address to which users can navigate (utilizing the free-of-charge TOR anonymous network) which, it says, is impossible for ISPs to block. If that method works, this may be but another pyrrhic victory for the film and television industry.

For reasons that were never clear, the Digital Economy Act 2010 was originally intended to include provision for website blocking, notwithstanding that section 97A long pre-dated it. After much controversy, in August 2011 the Government dropped plans for those new measures. This followed a report from Ofcom which noted that, while blocking was possible, current methods were imperfect and technically challenging, with circumvention of all techniques possible by users and site owners—the latter often being able to relocate their services fairly easily. Ofcom considered the same methods which are available pursuant to section 97A, so while rightsholders may now have an old (but previously unused) weapon to add to their anti-piracy arsenal, it is evidently far from the silver bullet that will stop infringement dead. The war will continue.

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