New Media Law, media and technology law for the music, television, film, IT, internet, publishing and entertainment industries

The UK High Court has ordered that the internet service providers (ISPs) Sky, Everything Everywhere, TalkTalk, O2, and Virgin Media (BP was also named but requested “a few more weeks to consider their position”) must block users from accessing the Pirate Bay website. 

Pirate Bay is a search engine used to locate torrent links for both legal and illegal filesharing. BPI Chief Executive Geoff Taylor stated that the High Court came to this decision after confirming that The Pirate Bay infringes copyright on a massive scale. “Its operators line their pockets by commercially exploiting music and other creative works without paying a penny to the people who created them”.  

There is speculation as to whether this ban will be effective since site operators, or indeed “volunteers” (as happened with the attempted ban on “Wikileaks”), may recreate a similar website to the Pirate Bay at another web address. Even if the ban is effective, the costs and inconveniences are a burden to the ISPs and not the people who are violating copyright. Whether the ban proves to be effective or not, it is a clear signal that the courts are keen to protect copyright. A Virgin Media spokesman said that changing internet users behaviour, for example by providing“compelling legal alternatives” which offer consumers access to music at the right price (like Spotify) are needed to “tackle copyright infringement” properly and in the long term. 

By Stephanie Leung, Intern, New Media Law LLP

2011 case of Hubbard v Scott EWHC 2750 (Ch) 2012 W.T.L.R.29.

In this case only just decided, the Claimant sisters Hubbard had been the default beneficiaries in the Testator’s 1997 Will if his principal beneficiary predeceased him which she did.  However, 11 days before he died in 2009, the Testator made his final Will in which he left his entire estate to K his cleaner.  Hubbard contested K’s evidence that she had met the Testator three years earlier and had formed a friendship with him and that there had even been talk of marriage; Hubbard contended that K had met him only 10 weeks before his death and had been nothing more than his cleaner.  Accordingly Hubbard submitted that K had exerted undue influence over the Testator when he made his last Will.  Hubbard asserted also that he had lacked Testamentary capacity to approve his Will.

The Judge held that in order to establish undue influence one needed to prove victimisation, domination or coercion; further, it had to be shown that the Testator’s final Will was not the “offspring of his own volition”.  Nothing in Hubbard’s evidence proved that K had induced the Testator to make his final Will in the terms he had.  A distinction was to be made between legitimate persuasion and overbearing a Testator’s volition.  There was no evidence of victimisation or coercion nor of any mental frailty on the part of the Testator.

In addition, there were other explanations for the 2009 Will; the Hubbard sisters and their mother’s visits to the Testator had decreased during the last two years of the Testator’s life and there was no one else that the Testator felt obliged to provide for.

This is a further example of how difficult it is to prove Undue Influence however compelling the prima facie evidence appears to be.

For further information, please contact: sonia.slater@newmedialaw.biz

Tel: +44 20 7291 1670

Perhaps we can shed some light on the discussion over the Eminem case.  [F.B.T. Productions v Aftermath Records 2011]

The fact is that the case, as with all Court cases, is decided on its facts, and the applicable law.

The law (in this case, US) states that giving someone permission to do something with your master recording, whilst retaining the rights within it, for periodic payments - based on use - is a “licence”.

That is precisely what Aftermath did (Eminem’s label), when it LICENSED use of its master recordings (yes, it owns them, not Eminem) to iTunes.  It did not, in any way “sell” the master recordings to iTunes.

In Eminem’s case, “licence” royalties were paid by Aftermath at 50% (whereas sales were paid at 12%).   Thus the iTunes royalty should have been paid to F.B.T at 50%.  That is what this case was about.

It has, however, subsequently been argued that iTunes does not  SELL permanent downloads to consumers, but rather that the downloads are SALES of “licenses”.  Certainly, that is New Media Law’s view.  Either way, that element is between iTunes and the individual consumer and in the Eminem case neither Eminem nor Aftermath were  a party to that license or sale.  Thus they have no involvement with it, so it was not examined in the case.

It should be noted, however, that there is no “periodic” payment made to iTunes (by the consumer) based on use (which the Court included as evidence of what differentiates a “licence” from a “sale” in Eminem) - rather, each download was permanent, for a one time payment.  What is certain, from this case, is that iTunes used its LICENCE from Aftermath to create a copy of the master recording for the download consumer each time, and paid a royalty to Aftermath based on each download, but that is all.

As yet, based on its restricted view, this case has not brought about the radical rethink of the entire music business payment structure for digital products that some people have expected it to, but seems at present to be a restricted  decision based on the specific language of one contract (between F.B.T and Aftermath).

Of course, some artists (notably those who signed contracts prior to 2003, when iTunes launched) will have similar language in their contracts as that found in Eminem, and will likely be entitled to a much higher digital royalty as a result, but others may not yet be so lucky…..

That said, it is our view that iTunes is licensing music (by “selling” licenses to use the tracks to consumers), so anyone that has signed a record deal [especially prior to 2003, when iTunes started] that does not specifically deal with digital “sales” should examine the specifics of their royalty clauses ASAP.

For further information, or to set up an appointment for a consultation on this area, please contact Ian Penman:

ian.penman@newmedialaw.biz

+44 20 7291 1670

Full text of the F.B.T v Aftermath decision can be viewed here: http://www.ca9.uscourts.gov/datastore/opinions/2010/09/03/09-55817.pdf

THOUGHT FOR THE DAY – Search out your old LPs

The recent Hargreaves Review has recommended that format shifting (or making a copy onto a new format for your own use of a copyright work that you have purchased in a different format) should be legalised.

This is because it is no more than allowing by law a practice that the vast majority of our society already exercises, and has done for some time.

Those of you old enough to remember buying those vinyl LPs, with their (sometimes) beautiful covers and sleeve artwork, will recall the debate as to whether to invest in a decent Nakamichi  cassette deck, and spend the extra money on “chrome” (as opposed to “normal”) cassettes, before making a “safety” copy of a newly purchased LP.  Hey, how many times did we take our favourite Led Zep album (IV in my case) to a friend’s party only to find a nasty scratch on “Rock n’Roll” – when the party was over and the hangover had receded?

As the Hargreaves Review says:

“Copying should be lawful where it is for private purposes, or does not damage the underlying aims of copyright…

The UK has chosen not to exercise all of its rights under EU law to permit individuals to shift the format of a piece of music or video for personal use and to make use of copyright material in parody. Nor does the UK allow its great libraries to archive all digital copyright material, with the result that much of it is rotting away. Taking advantage of these EU sanctioned exceptions will bring important cultural as well as economic benefits to the UK. Together, they will help to make copyright law better understood and more acceptable to the public.”

Of course, this will bring a cold sweat of fear to any old school music biz execs, who know only too well that the music industry boom of the 1980’s was propelled largely by the fans of the 60’s and 70’s who bought their favourite albums on CD for a second time – thereby providing a massive windfall profit to the industry (some CDs were some £15 odd, for a piece of plastic that cost pennies to produce, and in respect of which the recording costs had been recouped years before from vinyl sales).

But CDs were sold as being “perfect” and “made to last forever” (the latter being rapidly proven as rubbish by anyone who scratched their CD’s surface or got them wet), so they sold in their millions to music fans who already had paid once for the copyright works, albeit that most people still copied illegally onto cassettes in their millions, before CD players became standard in cars.

Hargreaves is clear on what needs to be done:

“5. Limits to copyright. Government should deliver copyright exceptions at national level to realise all the opportunities within the EU framework, including format shifting, parody, non-commercial research, and library archiving.”

Hargreaves goes on to say:

“The copyright regime cannot be considered fit for the digital age when millions of citizens are in daily breach of copyright, simply for shifting a piece of music or video from one device to another. People are confused about what is allowed and what is not, with the risk that the law falls into disrepute.”

So, look out those vinyl records, it won’t be long before they can be legally copied onto an iPod or CD, at long last.

Ian Penman

Partner

New Media Law LLP

Ian Penman gave a presentation on New Media Law’s proposed ISP “music charge” at the Westminster eForum on “Implementing the Digital Economy Act - site-blocking, notifications and encouraging behavioural change”  (Thursday 20th October 2011)

The transcript will be published here: http://www.westminsterforumprojects.co.uk/forums/showpublications.php?pid=354

Between October 2008 and April 2011, Nominet - the body responsible for the registration of ‘.uk’ domain names - suspended 2,650 names without a court order telling them to, due to alleged criminal activity. This was the case even though Nominet doesn’t presently (nor ever has) imposed restrictions on criminal activities in its registrant terms and conditions.  

However, Nominet is currently in the midst of constructing a policy which would significantly increase the powers of the police to censor websites containing or providing illegal content or goods. Present suspensions have often been justified on the grounds that domain name owners have breached the terms of their contract with the UK domain registrar by failing to provide accurate contact details.  Many of the suspended websites have also been subject to allegations by police of being involved in counterfeiting operations and it has been suggested that the former explanation by Nominet is merely a convenient consequence of this type of activity.  But what will the repercussions of this proposed policy be, and how will offending sites be identified?

What will result in the suspension of a domain name?
As their current approach has caused controversy, Nominet has chosen to debate the matter within a specially established Issue Group to ensure that the views of its stakeholders are taken into account in the formation of the policy, which will allow for the expedited removal of certain websites which display illegal material.  The option of a parallel scheme is also being discussed, whereby websites identified as potentially illegal but not fulfilling the criteria necessary for expedited action, may be assessed and dealt with through the usual route of court proceedings.  

The Issue Group has met three times thus far to discuss the content of the policy, the most recent being 21^st September 2011 in which it set out its recommendations to put to the Nominet board.  At the time of writing, no official conclusions of that meeting have been released, although publications of previous meetings suggest that a consensus has been reached, at least in some areas.

Draft recommendations prepared in the meeting of 6^th July 2011 suggest that Nominet should address the issue of criminal activity in its terms and conditions of use, and put in place a formal mechanism for the suspension of offending sites, brought to their attention by Law Enforcement Agencies.

It was also recommended that a court order should be the preferred means of enforcing a suspension, and this alternative option should only be exercised as a last resort, following failed attempts at communicating with and thus resolving the issue with the registrar and the relevant Internet Service Providers. It was further proposed that this route of suspension must be the most viable option to prevent imminent or ongoing harm to consumers, and that Law Enforcement Agencies should declare such suspension as proportionate, necessary and urgent.  

Following previous uncertainty on the topic, the Group also agreed in July that Nominet should not possess the ability to suspend websites when the issues central to its argument to do so are those of freedom of speech and expression.  This has been a point of debate within both the Issue Group and the public, and one which now seems to have been agreed upon (erring on the side of caution to protect the basic rights of individuals).  

The Issue Group also considered it necessary for an appeal system and independent review panel to be established, to both ensure the appropriate suspension of suspected websites, and review the effectiveness of the policy once in force.  Although the idea of allowing private parties to request the suspension of a website was entertained, it was eventually advocated that for the time being, suspension should only be enforced following the recommendations of law enforcement agencies.  The option of only considering applications from reliable single points of contact was examined, but ultimately it was decided that this was not an appropriate route to take.  Police must have reasonable grounds to suspect the engagement of criminal activity, in line with the burden of proof required by present counterfeiting and piracy legislation, and this was thought of as adequate to ensure that false suspensions were not regularly experienced.

What will criminal activity encompass?
The Issue Group in its July meeting agreed that in most circumstances, Nominet itself should not define what constitutes criminal activity. Instead it was suggested that the activity should amount to serious consumer harm, including crimes as defined by Parliament under the Serious Crimes Act 2007, including fraud, physical harm and unlicensed distribution of controlled substances or medicines. However, in cases such as phishing and botnets, Nominet was considered the most appropriate body to decide whether action should be taken under the expedited scheme.

An interesting point is the position of copyright in this equation, as under UK law it is only actionable as a criminal offence if the defendant can be proven to have intended to infringe the relevant copyright laws.  This may prove difficult in cases of online infringement, especially if the owner of the website cannot be readily identified, as has been the case of recent suspensions. The Issue Group has also questioned whether it would be appropriate to include trademark infringement as a ‘serious crime’ and in its July meeting began discussions as to whether a tiered policy system with variable threshold levels would be appropriate.

Potential Liability
One final factor that must be assessed in this scenario is the potential liability that may face Nominet should it either wrongfully suspend a website, or fail to suspend one that has been brought to its attention by law enforcement agencies, or indeed any other third parties.

The wrongful suspension of a domain name may result in damage to the affected customer’s reputation  and/or business, and could result in claims for breach of contract, negligence, or defamation. In addition, a bereaved customer whose suspension was requested by the police may also submit a claim if their Convention rights were breached, although as a private entity Nominet is not liable directly under the Human Rights Act 1998.

The case for Nominet’s liability should it fail to suspend an illegal website if notified of its activity is at the moment rather unsure. Its knowledge of the criminality and failure to respond may lead to liability under the Accessories and Abettors Act 1861 s.8, while it could also be tried as a principal offender under the Serious Crime Act 2007 ss.45-46. These are both factors of which Nominet will need to be aware, and consider when deciding how it will proceed with both the construction of its policy, and its subsequent application.

It will be interesting to view the outcome of the Issue Group’s most recent meeting, and whether its previous recommendations have been upheld. Although criticised by many, this proposed change marks not only a dramatic increase in the powers of police to challenge criminal activity on the internet, but also the recognition by Nominet that it must take responsibility for and continue to monitor the domain names which it distributes.

ANNA STINTON

for NEW MEDIA LAW LLP

ISP Ordered to block website that enables copyright infringement – UK first

Six film studios (20^th Century Fox, Universal, Warner Brothers, Paramount, Disney and Columbia) have successfully obtained a Court order which orders defendant BT (British Telecom) to block an Internet Website (Newzbin2) which clearly offers content that infringes the rights of the copyright owner.

The Studios yesterday (28th July) obtained an injunction under Section 97A of the Copyright Designs & Patents Act 1988 (the “CPDA”), forcing BT to block or at least impede access by BT’s subscribers to a website located at www.newzbin2.com

Key knowledge (of BT) identified by the Judge (Mr Justice Arnold):

  1.       BT had actual knowledge of people using BT’s ISP service to infringe copyright;

  2.       BT has actual knowledge of Newzbin users infringing copyright on a large scale (notably the copyrights of the film studios).

  3.       BT knew which of its users used Newzbin2.

This is a substantial step forward on behalf of content owners (notably those in the UK) who have not had the ability to prevent access to this type of website via blocking at the ISP connection before now.

The specific terms of the Court Injunction will be decided in October.

BT believes that rights holders should pay for enforcement, and that in any event BT should be indemnified against false accusations of infringement (and demands of “takedown”).

The rights holders believe that the ISPs (such as BT) should be brought to account if they allow sites that clearly infringe copyright on a mass scale to be accessed by their subscribers.

It is a big step forward in the UK, but in New Media Law’s opinion - it will ultimately fail to stop the demise of the content industries, in their attempt to prevent free dissemination of their content online.

This is why:

1.       Newzbin2 is already operating offshore, in a jurisdiction where copyright infringement is not necessarily easily addressed.  Thus the content owners have turned their attention to the ISPs who are in a jurisdiction where copyright infringement can be effectively tackled at law.  Even if BT are forced to block it, the originating site is still available everywhere else in the world.

2.       If the Newzbin2 UK Injunction is to be effective, it will have to be applied to all ISPs (not just BT).  And again, worldwide.

3.       Infringing sites can move fast – and can change their domain name/URL overnight (how many content owners can afford to apply for a new “blocking” injunction each time? And in every country of the world?)

4.       Infringing sites and their users can use encryption technologies to encrypt downloaded content – thus making it impossible for the ISP to identify what they are downloading.

5.       Users can also use IP address masking – to prevent as ISP knowing where they are.

Thus this attempt to stop infringement of content will fail.  As has every attempt before it.

As will the solution proposed by the Digital Economy Act 2010 (see our earlier postings on this subject e.g. 10^th April 2010: http://wp.newmedialaw.biz/?p=33 )

Thus New Media Law still proposes the “Music Charge” – which can easily be expanded to a “Content Charge” (to include films, TV, books and magazines and other content which is being stolen online).  See our posting of April 2011: http://wp.newmedialaw.biz/?p=37  And the subsequent update: http://wp.newmedialaw.biz/?p=38

Read the full BT / Newzbin2 case Judgment here: http://www.bailii.org/ew/cases/EWHC/Ch/2011/1981.html#para204

The European Commission has published (24th May 2011) a paper on IP, entitled:

You can read it here: http://ec.europa.eu/internal_market/copyright/docs/ipr_strategy/COM_2011_287_en.pdf

The introduction states:

1 Innovation not only helps the European economy to flourish. It is indispensable to

address the big challenges that humankind is facing in the 21

st century: ensuring food security,

containing climate change, dealing with demographic change and improving citizens’ health.

It also has an essential role to play in the quality of daily life by fostering cultural diversity.

IPR comprise industrial property rights, such as patents, trademarks, designs and geographical

indications, copyright and rights related to copyright.

The Hargreaves Report is out today and can be found here:

http://www.ipo.gov.uk/ipreview-finalreport.pdf

A review of Intellectual Property and Growth

An independent report by Ian Hargreaves

In November 2010 the Prime Minister David Cameron announced an independent review of how the Intellectual Property framework supports growth and innovation.

Chaired by Professor Ian Hargreaves and assisted by a panel of experts, the review reported to Government in May 2011.

The Review makes 10 recommendations designed to ensure that the UK has an IP framework best suited to supporting innovation and promoting economic growth in the digital age.

New Media Law is delighted to report that it will, together with Peter Jenner (General Secretary of the IMMF), be meeting with Lord Clement-Jones - the Liberal Democrat peer that is currently promoting the “Live Music” bill - at the House of Lords on April 26th, to present the concept of the “music charge” to the UK Government.  

Watch this space!

See: http://www.musictank.co.uk/resources/speaker-biographies/peter-jenner

See: http://bedfordlibdems.org/en/article/2011/456672/live-music-bill-will-benefit-hundreds-of-small-venue-owners-clement-jones