22 November 2011

Patents: Court of Appeal flushes Earth Closet Orders Down the Pan


The Court of Appeal's decision in Fresenius Kabi Deutschland GmbH and Others v Carefusion 303 Inc [2011] EWCA Civ 1288 (8 Nov 2011) is likely to make life just a little bit harder for patentees, especially the individual inventors and small businesses that I tend to advise and represent. It's tough enough trying to enforce a patent because a common if not the most usual defence is that the patent is invalid. The usual ground for challenging the validity of a patent is obviousness and lack of novelty. Obviousness means that the invention involves no inventive step having regard to the prior art (that is to say everything that has been made available to the public anywhere in the world) while lack of novelty means that the invention has already been invented.

It was not easy to keep up to date with the prior art when most of the world's new technical literature was in English or some other European language but with the rapid growth of China, Korea and East Asian countries an increasing volume of it is in a language that not many Westerners can read. So it happens increasingly frequently that both sides go into a patent dispute without knowing whether the patent is valid or not.

Until Lord Justice Lewison rather contemptuously consigned them to the place that bore their name in paragraph [16] of his judgment, Earth Closet Orders provided some solace for a patentee who suddenly found him or herself confronted with some prior art of which neither party had previously been aware. By the terms of that order (which was also more delicately known as a See v Scott Paine Order (1933) 50 RPC 56) a defendant who suddenly came up with some prior art that put the kibosh on a claim had to pay the costs from the date of his initial challenge to the patent up to the date of his amendment if that amendment forced the patentee to abandon his claim. That was at variance to the usual rule in civil litigation where a claimant has to pay the costs of the action if he discontinues his claim but there was some justice in the practice.

Now the order which has stood the test of time since Baird v Moule's Patent Earth Closet Co. Ltd. on 3 Feb 1876 has been rubbished by a strong Court of Appeal that included The Master of the Rolls and Lord Justice Aikens as well as Lord Lewison. In attacking the order, Lord Justice Lewison imagined the bafflement of a commercial litigator not steeped in patent law when told that "a patentee can sue for infringement and then discontinue his claim against the alleged infringer and consent to the revocation of his patent, yet require the alleged infringer to pay a substantial proportion of his costs". His Lordship considered Lord Esher MR's well known cri de coeur in Ungar v Sugg (1892) 9 RPC 113, 117 that "a man had better have his patent infringed, or have anything happen to him in this world, short of losing all his family by influenza, than have a dispute about a patent" but then asked rhetorically at paragraph [5] whether there was a better reason as "we all know that litigation is expensive."

Apparently counsel for the respondent couldn't think of a better reason but I certainly can. Patent litigation is different from other forms of litigation because it is concerned with the public interest as well as the interests of the parties. A patent is a monopoly which is at first blush against the public interest. It is allowed only because it is a means of encouraging inventors not only to invent but to share the invention with humanity. The courts like the legislature have to balance the imperatives of promoting competition and consumer choice without undermining incentive.

Now despite the fact that litigation in the Patents County Court is a lot cheaper and a lot more predictable than it once was it is still hazardous for SME. Especially if they can find themselves against a multinational with a long pocket. The See v Scott Paine order provided an incentive to such companies to present their best case at the earliest opportunity. Now they can spring a killer amendment on the patentee at any time.

The only crumb of comfort I could find in that judgment is that the Court of Appeal noted a discretion in CPR 38.6 which was considered by Judge Waksman in Brookes v HSBC Bank Plc [2011] EWCA Civ 354 (29 March 2011). I hope that our assigned judges exercise their discretion liberally and wisely.

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09 November 2011

Patents: Human Genome Sciences Inc. v Eli Little and Co.

In its second intellectual property appeal (the first being Lucasfilm v Ainsworth [2011] UKSC 39 see my case note "Lucasfilm v Ansoworth The Supreme Court's First IP Appeal" 31 July 2011 IP/IT Update) the United Kingdom Supreme Court had to consider the way in which the requirement of industrial applicability extends to a patent for biological material. One of the conditions for the grant of a patent in art 52 (1) of the European Patent Convention ("EPC") is that the invention is "susceptible of industrial application." Art 57 further provides that "[a]n invention shall be considered as susceptible of industrial application if it can be made or used in any kind of industry, including agriculture." S.1 (1) (c) and s. 4 (1) of the Patents Act 1977 makes identical provision in respect of British patents. Footnote 5 to art 27 of TRIPS suggests that the term "capable of industrial application" may be deemed by a WTO member as synonymous with the term "useful".

The Patent
The patent in suit described the encoding nucleotide, the amino acid sequence, and certain antibodies, of a novel human protein, which it called Neutrokine-α. It included contentions as to its biological properties and therapeutic activities, as well as those of its antibodies. It began by explaining that Neutrokine-α is a new protein, and a member of the TNF ligand superfamily of cytokines, which are proteins which act as inter-cellular mediators in inflammation and other immune responses. It stated that all the known members of that superfamily "are involved in regulation of cell proliferation, activation and differentiation, including control of cell survival or death by apoptosis or cytotoxicity...". It went on to reveal the existence and structure of Neutrokine-α, to claim it as a member of the superfamily, and to explain that it is "expressed … in neutrophils … in kidney, lung, peripheral leukocyte, bone marrow, T-cell lymphoma, B-cell lymphoma, activated T-cells, stomach cancer, smooth muscle, macrophages and cord blood tissue." The specification then described the claimed invention as potentially useful for the diagnosis, prevention, or treatment of an extraordinarily large and disparate number of, sometimes widely expressed, categories of disorders of the immune system, and other conditions and actions, either through Neutrokine-α itself or through its antagonists. The question for the Court was whether that was "susceptible of industrial application" (in other words useful) for the purpose of art 52 (1) of the EPC.

Proceedings in the European Patent Office
The patent was granted to Human Genome Sciences Inc. ("HGS") on 17 Aug 2005. The grant was opposed by Eli Lilly under art 99 of the EPC and revoked by the Opposition Division on the ground that that the claimed invention was for "arbitrary member of the the TNF ligand super family without a known function." HGS appealed to the Board of Appeal which allowed its appeal in T0018/09 Human Genome Sciences Inc. v Eli Little & Co. on 21 Oct 2009. The Board reasoned that Neutrokine-α would be "active in directing the proliferation, differentiation, and migration of [T-cells]", and that was sufficient for art 57.

Proceedings in England
Eli Lilly also launched revocation proceedings in England which came on before Mr. Justice Kitchin in Eli Lilly & Company v Human Genome Sciences Inc [2008] EWHC 1903 (Pat) (31 July 2008) [2008] RPC 29, (2008) 31(10) IPD 31066, (2009) 105 BMLR 27. The judge revoked the patent on the ground that the "functions" of Neutrokine-α "were, at best, a matter of expectation and then at far too high a level of generality to constitute a sound or concrete basis for anything except a research project". HGS appealed to the Court of Appeal in Eli Lilly & Company v Human Genome Sciences Inc [2010] EWCA Civ 33 (9 Feb 2010) [2010] RPC 14, (2010) 112 BMLR 161 which affirmed the judgment of the court below on more or less the same grounds.

Grounds of Appeal
HGS appealed to the Supreme Court on the ground that in the light of the decision of the Board of Appeal the Court of Appeal and Mr. Justice Kitchin were wrong. Counsel for HGS adopted the reasoning of the Board of Appeal and argued that the Court of Appeal and trial judge set"too high a standard for industrial applicability in the context of a patent for biological material."

The Judgment
Even though Mr Justice Kitchin's judgment had been affirmed by a very strong Court of Appeal which included Lord Justice Jacob, all five justices of the Supreme Court allowed the appeal. Lord Hope was well aware at paragraph [165] that "it is a strong thing to disagree with the concurrent findings of judges with such experience in this field". Lord Walker said at paragraph [168] that all his instincts as an appellate judge were for dismissing this appeal. Lord Clarke said much the same thing at paragraph [172]. Lord Neuberger noted at paragraph [6] that the specification was "confusingly long, diffuse, and widely expressed, running to over 25 closely typed pages, and nearly 200 paragraphs of descriptive text, and a further twelve pages of sequences of polypeptide amino acids and DNA nucleotides" containing "extravagant and sometimes contradictory claims". After mentioning the possible medical benefits Lord Neuberger observed that "nowhere in the Patent is there any data or any suggestion of in vitro or in vivo studies, so there is no experimental evidence to support any of those suggestions." So why did those judges who practised in completely different areas of the law when at the bar differ from the conclusions of judges who had spent all their working lives in intellectual property."

Reason for the Judgments
The lead judgments were delivered by Lord Hope and Lord Neuberger and a close reading of those judgments suggests that they were swayed, first, by a desire for consistency with the decisions of the Boards of Appeal of the EPO and, secondly, by the submissions of the Bio-Industry Association ("BIA").

Consistency with the EPO
Though Lord Neuberger acknowledged at paragraph [87] that decisions of the Boards of Appeal were not binding on national courts, His Lordship referred to cases such as Generics (UK) Ltd and Others v H Lundbeck A/S [2009] UKHL 12 (25 Feb 2009) [2009] Bus LR 828, [2009] UKHL 12, (2009) 32(5) IPD 32033, 107 BMLR 121, [2009] RPC 13, [2009] 2 All ER 955, (2009) 107 BMLR 121 andCase Xa ZR 130/07 (10 Sept 2009), para 33 where the highest courts of England and Germany had stressed the need for national law to align itself so far as possible with the jurisprudence of the EPO. After considering the EPO's case law on industrial applicability of biotechnological inventions, His Lordship discerned the following principles at paragraph [107]:
"(i) The patent must disclose "a practical application" and "some profitable use" for the claimed substance, so that the ensuing monopoly "can be expected [to lead to] some … commercial benefit" (T 0870/04, para 4, T 0898/05, paras 2 and 4);
(ii) A "concrete benefit", namely the invention's "use … in industrial practice" must be "derivable directly from the description", coupled with common general knowledge (T 0898/05, para 6, T 0604/04, para 15);
(iii) A merely "speculative" use will not suffice, so "a vague and speculative indication of possible objectives that might or might not be achievable" will not do (T 0870/04, para 21 and T 0898/05, paras 6 and 21);
(iv) The patent and common general knowledge must enable the skilled person "to reproduce" or "exploit" the claimed invention without "undue burden", or having to carry out "a research programme" (T 0604/04, para 22, T 0898/05, para 6);

Where a patent discloses a new protein and its encoding gene:

(v) The patent, when taken with common general knowledge, must demonstrate "a real as opposed to a purely theoretical possibility of exploitation" (T 0604/04, para 15, T 0898/05, paras 6, 22 and 31) ;
(vi) Merely identifying the structure of a protein, without attributing to it a "clear role", or "suggest[ing]" any "practical use" for it, or suggesting "a vague and speculative indication of possible objectives that might be achieved", is not enough (T 0870/04, paras 6-7, 11, and 21; T 0898/05, paras 7, 10 and 31);
(vii) The absence of any experimental or wet lab evidence of activity of the claimed protein is not fatal (T 0898/05, paras 21 and 31, T 1452/06, para 5);
(viii) A "plausible" or "reasonably credible" claimed use, or an "educated guess", can suffice (T 1329/04, paras 6 and 11, T 0640/04, para 6, T 0898/05, paras 8, 21, 27 and 31, T 1452/06, para 6, T 1165/06 para 25);
(ix) Such plausibility can be assisted by being confirmed by "later evidence", although later evidence on its own will not do (T 1329/04, para 12, T 0898/05, para 24, T 1452/06, para 6, T 1165/06, para 25);
(x) The requirements of a plausible and specific possibility of exploitation can be at the biochemical, the cellular or the biological level (T 0898/05, paras 29-30);

Where the protein is said to be a family or superfamily member:

(xi) If all known members have a "role in the proliferation, differentiation and/or activation of immune cells" or "function in controlling physiology, development and differentiation of mammalian cells", assigning a similar role to the protein may suffice (T 1329/04, para 13, T 0898/05, para 21, T 1165/06, paras 14 and 16, and T 0870/04, para 12);
(xii) So "the problem to be solved" in such a case can be "isolating a further member of the [family]" (T 1329/04, para 4, T 0604/04, para 22, T 1165/06, paras 14 and 16);
(xiii) If the disclosure is "important to the pharmaceutical industry", the disclosure of the sequences of the protein and its gene may suffice, even though its role has not "been clearly defined" (T 0604/04, para 18);
(xiv) The position may be different if there is evidence, either in the patent or elsewhere, which calls the claimed role or membership of the family into question (T 0898/05 para 24, T 1452/06, para 5);
(xv) The position may also be different if the known members have different activities, although they need not always be "precisely interchangeable in terms of their biological action", and it may be acceptable if "most" of them have a common role (T 0870/04, para 12, T 0604/04, para 16, T 0898/05, para 27)."
Applying those principles to the facts as found by the trial judge Lord Neuberger concluded at paragraphs [108] to [111] that the reasoning of the Board of appeal on the opposition was entirely consistent with its case law while the decisions of the courts below in the English revocation proceedings was not. Lord Hope reached a similar conclusion after a similar review of the EPO's case law at paragraph [165].

BIA's Submissions
The BIA described itself as "a trade association for innovative enterprises in the UK's bioscience sector" with a membership extending to hundreds of companies with an aggregate turnover in 2010 of about £5.5bn, and around 36,000 employees made the following written submissions to which Lord Neuberger referred to its written submissions at paragraph [97]:
"The requirements of clarity and certainty in this area of law are emphasised by the BIA. As its submissions also explain, after the discovery of a naturally occurring molecule, particularly a protein and its encoding gene, a large amount of research and development is required before there can be any therapeutic benefit. It is therefore important for bioscience companies to be able to decide at what stage to file for patent protection. Thus

'If the application is filed early, … [t]he company will be left with no patent protection, but would have disclosed its invention in the published patent application to competitors. If the application is filed late, there is a risk in such a competitive environment where several companies may be working on the same type of research projects, that a third party will already have filed a patent application covering the same or a similar invention, in which case the company may not be able to gain any patent protection for its work and by continuing their programme they may risk infringing that third party's patents. In both cases, the company will have lost much of the benefit of its costly research and development.'"
His Lordship added at paragraph [98]:

"Similarly, funding for research and development on the potential therapeutic value of a newly discovered and characterised protein or its antibodies is dependent on the funders being reasonably confident that the patent (or patent application) concerned will be reasonably safe from attack (or likely to be granted). It is also relevant that bioscience companies attract investment by reference to their patent portfolios, which gives rise to the same need for certainty."

The practical need for funding also seems to have influenced Lord Hope at paragraph [141]:
"It is well known that modern techniques in the field of biomedical science offer immense benefits in the promotion of human health, particularly in the combating of a wide range of degenerative diseases previously thought to be incurable and in the provision of techniques for the effective treatment of cancers. As the BioIndustry Association has pointed out in its written intervention, patent portfolios are often the most valuable asset of companies in the bioscience industry. So assessments of the value of a bioscience company's patent portfolio are likely to be a key consideration in deciding whether to acquire or invest in such a company. This in turn affects the funding that is made available for research and development, without which effective progress in putting a patented invention to practical use is likely to be very limited."

So a venture capitalists' charter perhaps.

Importance of this Decision
Lord Walker described this as an important case at paragraph [167]. Lord Neuberger on the other hand was more circumspect. He said at paragraph [2] that "while this issue can be said to raise an important question of principle, its resolution is inevitably fact-sensitive, and therefore any answer may be of limited value in other cases." Since it does make rather startling reading to those of us who were schooled in the distinction between inventions and mere discoveries it may have little effect outside the biotechnological field. If not, we have to rewrite the text books from the beginning.

Further Information
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06 November 2011

Injunctions against ISPs

On 26 Oct 2011 Mr. Justice Arnold ordered British Telecommunications Plc to:
"adopt the following technical means to block or attempt to block access by its customers to the website known as Newzbin2 currently accessible at www.newzbin.com, its domains and sub-domains and including payments.newzbin.com and any other IP address or URL whose sole or predominant purpose is to enable or facilitate access to the Newzbin2 website. The technical means to be adopted are:
(i) IP address re-routing in respect of each and every IP address from which the said website operates and which is notified in writing to the Respondent by the Applicants or their agents; and
(ii) DPI-based URL blocking utilising at least summary analysis in respect of each and every URL available at the said website and its domains and sub-domains and which is notified in writing to the Respondent by the Applicants or their agents."
This order was granted upon the application of a group of film and TV programme makers in Twentieth Century Fox Film Corporation and Others v British Telecommunications Plc (No. 2) [2011] EWHC 2714 (Ch) (26 Oct 2011). It was the first order in the UK under s.97A of the Copyright, Designs and Patents Act 1988 ("CDPA") as amended by reg. 27 (1) of The Copyright and Related Rights Regulations 2003. That section implemented art. 8 (3) of the Copyright and Related Rights in the Information Society Directive (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society). Since that order it has been reported that the BPI has asked BT to block access to the file sharing website Pirate Bay (see "Arts Group tell BT to block access to The Pirate Bay", BBC website 4 Nov 2011).

Background to the BT Order
The order against BT followed Mr. Justice Arnold's judgment in Twentieth Century Fox Film Corporation and Others v British Telecommunications Plc (No. 1) [2011] EWHC 1981 (Ch) of 28 July 2011 which I discussed in my case note of 3 Aug 2011. The film had companies sought an injunction to require BT to
"prevent its services being used by users and operators of the website known as NEWZBIN and NEWZBIN2 to infringe copyright."
BT had fought the application very hard instructing two eminent silks to resist it. The order followed BT's largely successful appeal in BT Plc & Another, R (on the application of) v Secretary of State for Business, Innovation and Skills and Others [2011] EWCA Civ 1229 (7 Oct 2011) against the dismissal by Mr. Justice Kenneth Parker of BT and TalkTalk's application for judicial review of the copyright provisions of the Digital Economy Act 2010 and its regulations in British Telecommunications Plc and Another, R (on the application of) v The Secretary of State for Business, Innovation and Skills [2011] EWHC 1021 (Admin) (20 April 2011). The order also followed HM Government's acceptance of Prof. Hargreaves's recommendations in his "Digital Opportunity" report. These developments are, of course, not unconnected. Mr. Justice Arnold referred to Hargreaves in his judgment on 28 July 2011 and Prof. Hargreaves had previously been an executive member of the Ofcom board, the body that is to implement the 2010 Act.

The Legislation
Art 8 (3) of Directive 2001/29/EC provides:
"Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right."
The reason for this provision is set out in paragraphs (58) and (59) of the Directive's recitals:
"(58) Member States should provide for effective sanctions and remedies for infringements of rights and obligations as set out in this Directive. They should take all the measures necessary to ensure that those sanctions and remedies are applied. The sanctions thus provided for should be effective, proportionate and dissuasive and should include the possibility of seeking damages and/or injunctive relief and, where appropriate, of applying for seizure of infringing material.
(59) In the digital environment, in particular, the services of intermediaries may increasingly be used by third parties for infringing activities. In many cases such intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice to any other sanctions and remedies available, rightholders should have the possibility of applying for an injunction against an intermediary who carries a third party's infringement of a protected work or other subject-matter in a network. This possibility should be available even where the acts carried out by the intermediary are exempted under Article 5. The conditions and modalities relating to such injunctions should be left to the national law of the Member States."

In addition to s.97A of the CDPA, a new s.191JA implements art 8 (3) in relation to rights in performances.

The Case Law
Before the film companies' application for an order to oblige BT to block Newzbin, only one application had been made for an order under s.97A in the UK. That was made by the same film companies in Twentieth Century Fox Film Corporation and Others v Newzbin Ltd [2010] EWHC 608 (Ch) (29 March 2010), [2010] ECC 13, [2010] FSR 21, [2011] Bus LR D49, [2010] EMLR 17, [2010] ECDR 8. Newzbin Ltd. had operated a website that enabled its subscribers to locate, download and reconstitute films, television shows and other copyright works that had been posted to the Usenet in binary form by news group users. The film companies invited Mr. Justice Kitchin to
"grant an injunction to restrain the defendant from including in its indices or databases entries identifying any material posted to or distributed through any Usenet group in infringement of copyright."
The judge refused the application on that occasion for the following reasons (paragraph [135] of his judgment):
"First, it is apparent from the terms of Directive 2001/29/EC that it is contemplating the grant of an injunction upon the application of rights holders, yet the claimants are seeking an injunction to restrain activities in relation to all binary and all text materials in respect of which they own no rights and about which I have heard little or no evidence. Second, I do not accept that the defendant has actual knowledge of other persons using its service to infringe all such rights. Therefore I am not persuaded I have the jurisdiction to grant such an injunction in any event. Third, the rights of all other rights holders are wholly undefined and consequently the scope of the injunction would be very uncertain. In my judgment the scope of any injunction under section 97A(2) should extend no further than that to which I have already concluded the claimants are entitled, namely an injunction to restrain the defendant from infringing the claimants' copyrights in relation to their repertoire of films."
There had, however, been successful applications for injunctions under national legislation implementing art 8 (3) of the 2001 Directive in other EU member states. Mr. Justice Arnold listed them at paragraph [96] of his judgment of 28 July 2011. Since that judgment the Court of Appeal of Antwerp had made an order in Case 2010/AR/2541 VZW Belgian Anti-Piracy Federation v NV Telenet on 26 Sept 2011 which his lordship mentioned in paragraph [31] of his judgment of 28 Oct 2011.

Decision of 28 Oct 2011
Following his judgment on 28 July 2011 in which he announced that he would make an order substantially in the form sought by the film companies, Mr. Justice Arnold adjourned the matter for further argument as to the precise form of that order. Submissions were made by a BT subscriber on the grounds that he would be adversely affected by the proposed order and also by TalkTalk, Everything Everywhere (Orange and T-Mobile) and Virgin Media but the judge placed limited weight on them on the ground that they could and should have been made before 28 July 2011 and for other reasons. The main arguments were between the film companies and BT over the precise wording of the injunction, whether BT could apply to vary the order if the film companies failed to obtain similar injunctions against its competitors, whether BT would be liable for temporary shutdowns of its blocking system, whether there should be a cross-undertaking as to damages, who should pay the costs of blocking Newzbin and who should pay the costs of the application.

Wording of the Injunction
Shortly before the hearing of the film companies original application, their counsel had proposed the following form of words:
"1. The Respondent shall adopt the following technology directed to the website known as Newzbin or Newzbin2 currently accessible at www.newzbin.com and its domains and sub domains. The technology to be adopted is:
(i) IP address blocking in respect of each and every IP address from which the said website operates or is available and which is notified in writing to the Respondent by the Applicants or their agents.
(ii) DPI based blocking utilising at least summary analysis in respect of each and every URL available at the said website and its domains and sub domains and which is notified in writing to the Respondent by the Applicants or their agents.
2. For the avoidance of doubt paragraph 1(i) and (ii) is complied with if the Respondent uses the system known as Cleanfeed and does not require the Respondent to adopt DPI based blocking utilising detailed analysis.
3. Liberty to the parties to apply on notice in the event of any material change of circumstances (including, for the avoidance of doubt, in respect of the costs, consequences for the parties, and effectiveness of the implementation of the above measures as time progresses)."
At paragraph [6] of his October judgment Mr. Justice Arnold explained that he had substituted his own wording quoted above for the language proposed by the applicants for paragraph 1 (1) and (ii) because BT's "Cleenfeed" technology is a two-stage system of IP address re-routing and DPI (deep packet inspection) based URL blocking that could lead to over-blocking of sites or pages that ought not to be blocked. He made that clear in paragraph 2:
"For the avoidance of doubt paragraph 1 is complied with if the Respondent uses the system known as Cleanfeed and does not require the Respondent to adopt DPI-based URL blocking utilising detailed analysis."
The judge limited the injunction to "all BT's services which incorporate Cleanfeed whether that is imposed on the customer or taken as an option" because BT's Director of Group Industry Policy had explained that BT had
"an access services division (Openreach), an upstream division which provides products and services for use by communications providers (BT Wholesale) and two downstream divisions which provide products and services to end users (BT Retail and BT Global Services). BT Retail serves consumers and small and medium-sized enterprises. BT Global Services serves large businesses and public bodies. Cleanfeed is provided as an integral and non-optional part of the standard service offered by BT Retail. Cleanfeed is not imposed on BT's other customers, but some of BT Global Services' customers have it as an option. Counsel for BT explained that some customers, such as the police and banks, do not want Cleanfeed either because they do not want any filtering (the police) or because they have their own systems (banks)."
The judge accepted that it would be inappropriate to grant injunctions against BT's access and upstream divisions.

Mr. Justice Arnold explained that he had added the words "and any other IP address or URL whose sole or predominant purpose is to enable or facilitate access to the Newzbin2 website" to the order because Newzbin had offered anti-blocking software to its subscribers (see "Newzbin claims BT block not working" BBC website 3 Nov 2011). To prevent the downloading of such software the film companies asked for the order to permit them to notify additional IP addresses and URLs to BT so as to require BT to block those sites too. The film companies asked for an order that would enable them to refer sites whose predominant purpose was to enable or facilitate access to Newzbin while BT preferred an order should be restricted to sites whose sole purpose was to enable or facilitate such access. The judge sided with the film companies on the ground that the order could be circumvented by Newzbin's posting a weather forecast to the page from where anti-blocking software could be downloaded.

Orders against BT's Competitors
BT sought permission to apply to set aside or vary the order "in the event that the [Studios] fail, within a reasonable time after the date of this order, to apply for and obtain an equivalent injunction against other UK ISPs". The learned judge refused that request for two reasons. First, it was up to the applicants and nobody else to decide who they wanted to sue. If that gave rise to competition issues they could be decided elsewhere. Secondly, the terms of the relief sought were very vague. As his lordship remarked at paragraph [15]:
"What is a reasonable time? What precisely is an equivalent injunction? And, above all, does the provision bite if there is a single other UK ISP against whom no injunction is sought? If not, when does it bite?"
Temporary Shutdown
BT sought a provision it would not be in breach of the order if it had to shut down Cleanfeed temporarily. The judge refused that request partly because there was no evidence that BT had ever needed to shut down that system. Instead, he substituted the following paragraph 3:
"The Respondent shall not be in breach of paragraph 1 if it temporarily suspends Cleanfeed or the addition of IP addresses or URLs thereto with the consent in writing of the Applicants or their agents."

Who should pay for the Order
BT had argued that the film companies should pay the costs of the order on the ground that they were in the same position as a respondent to a Norwich Pharmacal order. In Norwich Pharmacal Co v Customs and Excise Commissioners [1973] 3 WLR 164, [1973] FSR 365, [1973] 2 All ER 943, [1974] RPC 101, [1973] UKHL 6, [1974] AC 133 the House of Lords had held that the costs of complying with the order should be borne by the party seeking disclosure since the respondent was essentially in the same position as a witness under a subpoena. The judge rejected BT's argument at paragraph [32]:
"The Studios are enforcing their legal and proprietary rights as copyright owners and exclusive licensees, and more specifically their right to relief under Article 8(3). BT is a commercial enterprise which makes a profit from the provision of the services which the operators and users of Newzbin2 use to infringe the Studios' copyright. As such, the costs of implementing the order can be regarded as a cost of carrying on that business. It seems to me to be implicit in recital (59) of the Information Society Directive that the European legislature has chosen to impose that cost on the intermediary. Furthermore, that interpretation appears to be supported by the Court of Justice's statement in L'Oréal v eBay at [139] that such measures "must not be excessively costly". The cost of implementing the order is a factor that can be taken into account when assessing the proportionality of the injunction, and in the present case I have done so: see the main judgment at [200]. Indeed, my conclusion there that the cost to BT "would be modest and proportionate" is supported by the evidence subsequently filed by BT, which estimates the initial cost of implementation at about £5,000 and £100 for each subsequent notification."
However, he added in the next paragraph that he did not "rule out the possibility that in another case the applicant may be ordered to pay some or all of the costs of implementation".

Cross-Undertaking as to Damages
BT sought a cross-undertaking as to damages or, alternatively, an indemnity against claims by third parties. The judge refused that request at paragraph [35]:
"In my view there is no reason to require the Studios to give a cross-undertaking in damages. There is no analogy between an order under Article 8(3) and an interim injunction. An interim injunction is granted before the parties' legal rights and liabilities have been ascertained. The original and main purpose of the cross-undertaking in damages was and remains to attempt to protect the party enjoined if it subsequently transpires that no injunction should have been granted because the party applying for the injunction did not have the rights claimed or they were not infringed or for some other reason: seeGriffith v Blake (1884) 27 ChD 474 and F. Hoffmann-La Roche & Co Ag v Secretary of State for Trade and Industry [1975] AC 295 at 360-361 (Lord Diplock). By contrast, final injunctions are not subject to cross-undertakings (except sometimes pending appeal). An order under Article 8(3) is a final injunction, and accordingly there is no warrant for a cross-undertaking."
As for an indemnity the judge could see no grounds upon which a claim could be made against BT for complying with the court's order.

Liberty to Apply
His lordship gave both parties permission to apply on notice "in the event of any material change of circumstances including, for the avoidance of doubt but without limiting the generality of the foregoing, in respect of the costs, consequences for the parties and effectiveness of the aforesaid technical means from time to time."

Costs
The judge ordered the film companies to pay BT's costs down to 16 Dec 2010 but BT to pay the film companies' from 17 Dec 2010 to 28 July 2011 inclusive. Each party was ordered to bear its own costs since 28 July 2011. The judge's rationale for ordering the applicants to pay BT's costs up to 16 Dec was as follows:
"In my judgment, the starting point is that, even though the Studios are enforcing their legal rights, including their right to an injunction under Article 8(3), the rather unusual nature of the remedy under Article 8(3) means that it was reasonable for BT to require the matter to be scrutinised by the court. BT was entitled to a court order for its own protection, and it was reasonable for BT to require the Studios to adduce sufficient evidence to establish both that the court had jurisdiction to make the order and that it was appropriate in the exercise of the court's discretion to do so. Accordingly, I consider that the costs of the application down to 16 December 2010 should be borne by the Studios."

Guidance from the Cases
So what guidance do these two judgments from Mr. Justice Arnold and that of Mr. Justice Kitchin in Newzbin provide to those who want to apply for or resist an order against an ISP or indeed other intermediary under s.97A or s.191JA of the CDPA.?

The starting point is the legislation. S.97A (1) applies to copyright:
"The High Court (in Scotland, the Court of Session) 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."
S.191JA (1) applies to rights in performances:
"The High Court (in Scotland, the Court of Session) 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 a performer’s property right."
It is important to note that these sections do not apply to ISPs as such but to service providers. Although it is clear from Mr. Justice Arnold's judgments that ISPs are "service providers" it is not very easy to determine who else might be. Both s.97A (3) and s.191JA (3) provide that a “service provider” has the meaning given to it by regulation 2 of the Electronic Commerce (EC Directive) Regulations 2002. That regulation defines "service provider" as any person providing an information society service. The same regulation defines that rather messily as
( ........ summarised in recital 17 of the Directive as covering “any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service”) has the meaning set out in Article 2(a) of the Directive, (which refers to Article 1(2) of Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations(as amended by Directive 98/48/EC of 20 July 1998))."
Since art 8 (3) refers only to intermediaries it is not obvious why such a complex definition was adopted.

Both s.97A (1) and s.191JA (1) require the applicant to prove that the service provider had "actual knowledge of another person using their service to infringe copyright" or as the case may be a "performer's property right." S. 97A (2) and s.191JA (2) make clear that this can be done by sending an email to the ISP or other service provider setting out the full name and address of the sender of the notice and details of the infringement in question. However, the court must take into account all matters which appear to be relevant. In Newzbin, Mr. Justice Kitchin held at paragraph [135] that service of such a notice was not a precondition of a finding that a service provider has actual knowledge of a person using its service to infringe copyright. Nevertheless, on the particular facts of the case he did not accept that Newzbin Ltd. had actual knowledge of other people using its service to infringe copyright.

The third point to note is that s.97A (1) and s.191JA (1) confer a discretion on the High Court to grant an order against a service provider. Mr. Justice Kitchin did not see fit to exercise that discretion partly because the scope of an injunction would be very uncertain. By contrast, Mr. Justice Arnold considered at paragraph [182] that the order that he had been asked to make was "very different" and did not "suffer from that vice".

Although the point did not arise in any of the cases, it should be noted that s.97A and s.191JA confers jurisdiction upon the High Court in England, Wales and Northern Ireland and on the Court of Session in Scotland. It follows that it is not possible to seek an order under those sections from the Patents County Court.

Even though the film companies and BT had served statements of case Mr. Justice Arnold was not persuaded that pleadings had been essential. However, he did concede at paragraph [8] that it had been "a sensible step in the circumstances" of the particular case. Throughout the proceedings the terms "applicants" and "respondent". All this suggests that an application can and perhaps should be made by an application notice supported by witness statements.

Finally, if anyone wants to join the proceedings they should do so sooner rather than later. Mr. Justice Arnold considered submissions made in support of both sides but he gave less weight to those made in opposition to the application because they had not been made before the substantive judgment.

Conclusion
Should anyone wish to discuss this article, the cases or indeed s.97A and s.191JA of the CDPA they should not hesitate to call me or send me a message through my contact form.