Norwich Pharmacal Orders: Golden Eye and Others v O2

We have all given a warm welcome to the small intellectual property claims track but, as I warned in "The New Small IP Claims Jurisdiction" on 5 March 2012, there are likely to be a lot of claims against little people in the new tribunal.  I mentioned claims by photo libraries in my article but there may well be a torrent  (apologies for the pun) of claims against file sharers too. An indication that could happen is Golden Eye (International) Ltd and Others v Telefonica UK Ltd [2012] EWHC 723 (Ch) (26 March 2012).

Importance of the Case
This was a claim by Golden Eye (International) Ltd. and 13 other claimants against O2  (the trading name of Telefonica UK Ltd) for Norwich Pharmacal orders. These are orders requiring a person who is not himself a wrongdoer but who has documents or information identifying wrongdoers to make that information available to an injured party.   The jurisdiction takes its name from the appeal in Norwich Pharmacal Company & Others v Commissioners of Customs and Excise [1973] 3 WLR 164, [1973] FSR 365, [1973] 2 All ER 943, [1974] RPC 101, [1973] UKHL 6, [1974] AC 133.   The reason for such orders was stated by Lord Reid at paragraph [12]:

"if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers."

The object of the claim was  to obtain disclosure of the names and addresses of customers of O2 who are alleged to have committed infringements of copyright through peer-to-peer ("P2P") file sharing using the BitTorrent protocol. To understand how that technology works see Mr. Justice Arnold's judgment in Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] EWHC 268 (Ch) at paragraphs [19] and [20] and also my case note "Injunctions against ISPs Part III: Dramatico Entertainment Ltd and Others v British Sky Broadcasting Ltd. and Others" of 21 Feb 2012.  Golden Eye raises fundamental questions as to the operation of the Norwich Pharmacal regime, the legitimacy of so-called "speculative invoicing" and how to balance the rights of copyright owners against those of consumers.

Consumer Focus
Although it was named as the defendant, O2 chose not to oppose the application.   It took no part in the proceedings beyond amending the applicants' proposed minute of order.  As the application concerned alleged file sharers who could not be joined to the proceedings for obvious reasons, the judge invited Consumer Focus  to make representations on their behalf.  Consumer Focus, also known as The National Consumer Council, describes itself as "the statutory consumer champion for England, Wales, Scotland and (for postal consumers) Northern Ireland" formed by The Consumers, Estate Agents and Redress (CEAR) Act 2007.   The judge explained at paragraph [8] that:

"It represents the interests of consumers, particularly low income and vulnerable consumers. It has been recently been active in the field of copyright. For example, in January 2011 Consumer Focus published a consultation document entitled "Competition, copyright and collective rights management" inviting comments from the public to inform its intended submission to the Hargreaves Review of IP and Growth; on 1 March 2011 it duly made a submission to the Hargreaves Review; on 8 November 2011 it jointly organised with PICTFOR (the Parliamentary, Internet, Communications and Technology Forum) a panel discussion of some of the Hargreaves Review's recommendations entitled "Copyright collecting societies: does the UK need minimum standards"; and on 21 February 2012 it jointly organised with the Creators' Rights Alliance a one day seminar entitled "Consumers' and creators' common ground".

Mr. Justice Arnold allowed Consumer Focus to intervene under the inherent jurisdiction of the court as there is no provision in the Civil Procedure Rules to do so just as he allowed me to make submissions on behalf of a BT subscriber in  Twentieth Century Fox Film Corporation and Others v British Telecommunications Plc [2011] EWHC 2714 (Ch) (26 October 2011) [2012] 1 All ER 869.  Allowing such representations certainly mitigates one of the difficulties in Norwich Pharmacal and s,97A applications.   

Unfortunately, Consumer Focus is to be replaced shortly by Citizens' Advice (see the press release from the Department of Business Innovation and Skills of 11 April 2012).  At least one other blogger sees the end of Consumer Focus as a blow to UK tech policy (see  James Firth "Why the end of Consumer Focus is a blow to UK tech policy" 18 April 2012),  

Speculative Invoicing

In its submissions Consumer Focus complained that the application had been made for the purpose of "speculative invoicing" which it described as follows at paragraph [36]:

"In essence, it involves the sending of letters before action to thousands of internet subscribers whose internet connection is alleged to have been used for small-scale copyright infringement and whose names and addresses have been obtained by means of Norwich Pharmacal orders against their IPSs. Without seeking to confirm whether the internet subscriber was the person responsible for the uploading/downloading of the copyright work that has been detected, the internet subscriber is requested to pay a substantial sum which has no relation to the actual damage caused by the alleged copyright infringement or the costs incurred. Typical sums demanded are in the range £500 to £1000. Invariably, there is a profit-sharing arrangement between the party conducting the litigation and the client, with the former getting the lion's share. The tactic is to scare people into paying the sums by threatening to issue court proceedings. If this does not work, proceedings are not normally issued. This is because the economic model for speculative invoicing means that it is more profitable to collect monies from those who pay rather than incur substantial costs in pursuing those who do not pay in court. Where proceedings are issued, they are not pursued if a default judgment cannot be obtained."

The most notorious example of speculative invoicing was the Media CAT litigation which I covered in "Practice: Media CAT Ltd. v A and others" on 12 Dec 2010, "Practice: More from Media CAT" 21 Dec 2010, "Practice: Media CAT Ltd. v A and others Part 3" on 22 Feb 2011 and "Practice: Media CAT v Adams and Others - The End" 28 April 2011.  Consumer Focus pointed to a large number of similarities between Golden Eye and Media CAT.   Mr. Justice Arnold noted those similarities but also some differences.  He proceeded to decide the application on its own merits.

The Claimants

Golden Eye and Ben Dover Productions Ltd. shared directors and were closely connected companies.   Ben Dover had granted exclusive licences to Golden Eye for a number of films of which it owned the copyrights.   Golden Eye had also entered agreements with the other claimants who claimed copyright in other films whereby those claimants licensed Golden Eye to pursue infringers of those copyrights on their behalf in return for a proportion of any damages or other moneys that Golden Eye might recover.

The Order
Mr. Justice Arnold granted the application in respect of Golden Eye and Ben Dover albeit on condition that their letter before claim to alleged infringers was in a form approved by the judge and that any proceedings that might be brought would proceed in the Patents County Court but he refused to grant such relief to the other claimants.

The Balancing Exercise
As is the wont of this particular judge, Mr. Justice Arnold listed all the statutes and European legislation of which he had to take account between paragraphs [64] and [75]:

• the Copyright, Designs and Patents Act 1988;
• the Enforcement Directive
• the Human Rights Act 1998
• the European Convention on Human Rights
• the Charter of Fundamental Rights of the European Union
• the Data Protection Directive, and
• the Data Protection Act 1998,

He did so by addressing the following questions:

(1) whether arguable wrongs had been perpetrated against the claimants;

(2) whether O2 was mixed up in those arguable wrongs;

(3) whether the order sought was necessary for redress;  and

(4) whether the order sought was proportionate.

As to the first question the judge considered whether the agreements between Golden Eye and the other claimants was champertous and concluded that it was not.  As to proportionality, he considered the claims that the claimants might bring, the damages to be sought and the letter before claim.

Conclusion

The refusal of the relief sought by the claimants other than Golden Eye and Ben Dover suggests that the judge paid more than lip service to human rights and privacy.   He said at paragraph [146]:

 "It does not follow, however, that it is appropriate, when balancing the competing interests, to make an order which endorses an arrangement under which the Other Claimants surrender total control of the litigation to Golden Eye and Golden Eye receives about 75% of the revenues in return. On the contrary, I consider that that would be tantamount to the court sanctioning the sale of the Intended Defendants' privacy and data protection rights to the highest bidder."

By contrast Golden Eye and Ben Dover did have a legitimate claim.   He said at paragraph [145] 

"the claim for a Norwich Pharmacal order is one made by a copyright owner and its exclusive licensee, both of whom have been joined to the claim and will be joined to any infringement claims. Given the commercial background explained above, there is nothing particularly unusual, let alone objectionable, about the Ben Dover Agreement. ....... I am satisfied that they do intend to seek redress for those wrongs and that disclosure is necessary to enable them to do so. In these circumstances, I conclude that the Claimants' interests in enforcing their copyrights outweigh the Intended Defendants' interest in protecting their privacy and data protection rights, and thus it is proportionate to order disclosure, provided that the order and the proposed letter of claim are framed so as properly to safeguard the legitimate interests of the Intended Defendants, and in particular the interests of Intended Defendants who have not in fact committed the infringements in question."

Further Information

So there we are.   If anyone wants to discuss this topic with me they should call me on 0800 862 0055 or contact me through Facebook, Linkedin, twitter or Xing, or through my contact page.