Blocking Orders - Capitol Records v British Telecommunications Plc

Royal Courts of Justice
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Jane Lambert

Chancery Division (Mr Justice Miles) Capitol Records and others v British Telecommunications Plc and others [2021] EWHC 409 (Ch) (25 Feb 2021

This was an application by representatives of the British sound recording industry for an order under s.97A of the Copyright, Designs and Patents Act 1988 requiring the 6 largest internet service providers in the UK accounting for 91% of the fixed-line internet market to block their subscribers' access to a website known as "NitroFlare" on the grounds that that site infringed the claimants' copyrights on a massive scale.  The application came on before Mr Justkce Miles on 3 Feb 2021. In Capitol Records and others v British Telecommunications Plc and others [2021] EWHC 409 (Ch), which he handed down on 25 Feb 2021, he grated the claimants' application.

The Legislation

S.97A provides:

"(1) 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. 
(2) In determining whether a service provider has actual knowledge for the purpose of this section, a court shall take into account all matters which appear to it in the particular circumstances to be relevant and, amongst other things, shall have regard to--
(a) whether a service provider has received a notice through a means of contact made available in accordance with regulation 6 (1) (c) of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013); and 
(b) the extent to which any notice includes-- 
(i) the full name and address of the sender of the notice; 
(ii) details of the infringement in question. 
(3) In this section "service provider" has the meaning given to it by regulation 2 of the Electronic Commerce (EC Directive) Regulations 2002."

The Case Law

The first application for an order under this section was made in Twentieth Century Fox Film Corporation and another v Newzbin Ltd. [2010] ECC 13, [2010] EMLR 17, [2010] ECDR 8, [2011] Bus LR D49, [2010] FSR 21, [2010] EWHC 608 (Ch). I appeared for the defendant and successfully resisted the application.  Subsequent applications were made successfully in Dramatico Entertainment Ltd v British Sky Broadcasting [2012] EWHC 268 (Ch) ("Dramatico") at [30]-[38], EMI Records Ltd v British Sky Broadcasting Ltd [2013] EWHC 379 (Ch) ("EMI"), The Football Association Premier League Limited v British Sky Broadcasting [2013] EWHC 2058 (Ch) ("Premier League"), Paramount Home Entertainment International Limited v British Sky Broadcasting [2013] EWHC 3479 (Ch) ("Paramount"). 1967 Ltd v British Sky Broadcasting [2014] EWHC 3444 (Ch) ("1967 Ltd"), Twentieth Century Fox Film Corp v Sky UK Ltd [2015] EWHC 1082 (Ch) ("Popcorn Time"), Football Association Premier League Limited v British Telecommunications Plc [2017] EWHC 480 (Ch), Nintendo Co Ltd v Sky UK Ltd [2019] EWHC 2376 (Ch) ("Nintendo") and Matchroom Boxing Ltd v BT Plc [2020] EWHC 2868 (Ch) ("Matchroom").   I discussed Dramatico in Injunctions against ISPs Part IV: Dramatico Entertainment Ltd and Others v British Sky Broadcasting Ltd. and Others (No. 2) 7 May 2012, Premier League in Injunctions against ISPs Part VI: The Football Association Premier League Ltd v British Sky Broadcasting Ltd and Others on 20 July 2013 and Nintendo in Blocking Injunctions - Nintendo Co Ltd v Sky UK Ltd and Other on 14 Sept 2019.

Whether the Defendants were "Service Providers"

Referring to Dramatico and EMI, the judge found that the defendants were service providers within the meaning of reg 2 of the 2002 regulations and hence s.97 (3) of the Act at para [19] of his judgment.

The Copyrights

The uncontested evidence before the judge was that the claimants held the UK rights to approximately 99% of all sound recordings lawfully distributed in this country.

NitroFlare

At para [13] of his judgment, Mr Justice Miles found that NitroFlare encouraged the sharing of links which it generated and the downloading of content that it stored. It did that by allowing users to upload content to the site's servers for free. Downloads could then be made free of charge by the site's premium' and 'non-premium' users. Download speeds were faster where a user paid for a premium account. The site also offered an 'affiliate programme' which rewarded users who uploaded content. It enabled those users to earn money each time their uploaded content was downloaded by another user.

The judge based his finding on the following uncontroverted evidence:
i)  The NitroFlare site allowed users to upload and download files.
ii) It had a policy whereby uploaded files which were not downloaded by anyone for a period of 90 days would be removed. The previous period had been 30 days. That avoided storage space being taken up by files that no-one wished to download. However, it also made the site unsuitable for the storage of files that an innocent user might wish to retain thereby undermining any defence that it was an ordinary file-storage site.
iii) The affiliate programme enabled uploaders to earn money on the basis of 
(a) the number of downloads of files uploaded by them and 
(b) the number of sales of premium accounts originating from links from their uploaded content pages. 
That encouraged users to upload material they believed to be popular.
iv) When a file was uploaded, the user was provided with a hypertext link for sharing. That gave access to the file to enable it to be downloaded. Access to the uploaded files could only thereafter be obtained via those links. The uploader had no privileged right of access. The default position was that the file was then accessible by anyone. Unlike legitimate file-sharing sites, there was no ability to limit access to the uploader or users to whom a password had been supplied. The only ability to control access was that an uploader could stipulate that the file should only be accessible by the site's premium users which would benefit the operators of the site by promoting subscriptions. If the uploader did not limit access to premium members, the file could be accessed by anyone.
v) The links to files were widely disseminated on so-called referral sites (which might use the site as a back-end storage resource). Those referral sites often specialized in aggregating links to music or other copyright content.
vi) The site offered large limits on storage capacity – much larger than that typically offered as the basic free tier by legitimate cloud storage services.
vii) The site did not routinely encrypt users' data when it was being transmitted.
viii) The site did not provide any facilities to integrate and synchronize between different devices.
ix) The ownership of the site and the identity of those operating it was opaque. The evidence showed the following:
a) The site did not identify the name or address of its operator. It merely invited correspondence to support@nitroflare.com.
b) The domain registrant was concealed behind a domain privacy service based in Panama ("WhoisGuard Inc").
c) IFPI (the International Federation of the Phonographic Industry) took action in 2017 to get WhoisGuard to disclose the identity of the registrant. The information disclosed was that the registrant was a "Jonnie Edhardy", with an apparently false address in the Seychelles and a false telephone number, who was said to be CEO of "NitrobSolutions Ltd".
d) NitroSolutions Ltd had a website in which it identified itself as a hosting provider based in the Seychelles. The telephone number given on the website was again false.
e) BPI had identified that payments to the Site were to be made via a UK registered company called "Nitroflare Limited". The directors of that company were a management services company called Northwestern Management Services Limited (which appears to be part of a group based in the Seychelles) and an individual called Roger Stuart Poppleton with an address in Devon. Mr Poppleton seemed to be a director of numerous companies. There were indications that Mr Poppleton had used a number of aliases.
f) Nitroflare Limited was dissolved on 13 Jan 2020 following an application for voluntary strike-off dated 14 July 2020, Mr Poppleton had ceased to be a director and shareholder of the company on 18 Nov 2019.

There was evidence that NitroFlare's file-sharing activities were taking place on a very large scale. Based on data for the period between May 2017 and April 2018 inclusive, it was estimated that there had been 190 million visits to the NitroFlare site of which 4.7% were from the UK.  Between June 2019 and November 2020 it was estimated that there had been 191.9 million visitors of which nearly 5.8 million were from the UK. Extrapolating from some sample files, it was estimated that 98% of the music files on Nitroflare were commercially available. Commercially available files were usually protected by copyright.

Alleged Infringement

The claimants complained that their copyrights had been infringed by both operators and users of the site: 
(i) The operators had infringed by communicating works to the public and by authorizing or acting as joint tortfeasors with users in their commission of the infringing acts described below.
(ii) Users had infringed by making copies of the copyright works in the course of downloading and by communicating copyright works to the public through uploading. 

Communicating to the Public

Referring to Mr Justice Birss's decision in Warner Music UK Ltd v TuneIn Inc [2019] EWHC 2923 (Ch) ("TuneIn") in which Mr Justice Birss had reviewed the authorities on communication to the public, Mr Justice Miles directed himself that, for present purposes, there were three main questions to be considered:
(a) Was there a communication of copyright works by way of electronic transmission? 
(b) Was the communication to the public? 
(c) Did the act of communication to the public take place in the UK? If the communication originated from outside the UK, was it targeted at the public in the UK?

Whether there has been a Communication of Copyright Works by way of Electronic Transmission

In Case C-610/15 Stichting Brein v Ziggo BV and others [2018] CEC 191, [2017] WLR(D) 406, [2017] Bus LR 1899, [2017] EUECJ C-610/15, EU:C:2017:456, ECLI:EU:C:2017:456, [2017] ECDR 19, the Court of Justice of the European Union formulated the following test at para [26] of its judgment:

"[A] user makes an act of communication when he intervenes, in full knowledge of the consequences of his action, to give his customers access to a protected work, particularly where, in the absence of that intervention, those customers would not be able to enjoy the broadcast work, or would be able to do so only with difficulty"

Although the Court referred to "users" Mr Justice Miles believed the test applied equally to operators.  

He concluded at para [24] of his judgment that he was satisfied that the operator of the Site made such an intervention:

"It is responsible for the transmission of the files to the downloading user. Thus, the Site is therefore responsible for the communication of the Claimants' Recordings (and other copyright content) to the public by electronic transmission. The intervention is not passive; the Site gives access to copyright works to the Site's users. I have described some of the key features of the Site above. It is set up and exists to enable users to access and to download content (uploaded by others) in an easy and convenient way and the Site encourages such downloading."

He added at para [25] that a further relevant factor identified in Paramount at [12(13)] was whether the communication involved a profit-making activity. He noted that the Nitroflare site was monetized through advertising and subscriptions. The claimants' expert had estimated the likely range of annual revenue for the site based on user figures available to him at the time of his first statement to be in the range of £559,119 to £1,830,320 (with a median of £1,220,214) worldwide, and £28,239 to £97,790 (with a median of £65,193) from the UK. Figures for UK use of the site in the period from June 2019 to November 2020 were lower but were of a similar magnitude to that used by the expert in his calculations.

The judge noted the opinion of the Advocate-General in Joined Cases C-682/18 and 693/18 Peterson v Google LLC that the site operator in that case did not communicate works stored on its server, but concluded that it was inconsistent with other decisions of the Court and was unlikely to be followed.

Whether the Communication was to the Public

His lordship said that there were two aspects to communicating work to the public: 
  • the works had to be made accessible to a sufficiently large number of people; and
  • they had to be made accessible either to a new public or by a different technical means
It was obvious from the statistics mentioned above that the first aspect had been met.  If and in so far as the second requirement had to be met, it was satisfied by the absence of any prior authorization from the copyright owners of any original communication.

Whether the communication is targeted at the UK

As for the third question, Mr Justice Miles referred to paras [16] and [17] of Mr Justice Bisss's judgment in TuneIn:

"16. The legal principles are:

i) The mere existence of a website and its accessibility by local consumers is never enough to establish a territorial link, see Kitchin LJ in Merck v Merck [2017] EWCA 1834 para [168] and L'Oreal v eBay para [64].
ii) The issue of targeting is to be considered from the perspective of the public in the relevant state (i.e. the UK), see Merck v Merck para [169] and L'Oreal v eBay para [65]. The trade mark cases refer to consumers or average consumers because that is the relevant person in trade mark law. For cases about communication to the public, the question focusses on the public, see EMI v BskyB and my decision in OmniBill v EGPSXXX [2014] EWHC 3762 (IPEC).
iii) The test is objective in the sense that a party's subjective intention cannot turn a website or page which is objectively not targeted at the UK into one which is (Argos v Argos [2018] EWCA Civ 2211 para 51). However that does not mean evidence of intention is irrelevant. On the contrary such evidence is relevant and possibly determinative in an appropriate case (Merck v Merck paras [169]-[170] and Argos v Argos para [51]).
iv) The court must carry out an evaluation of all the relevant circumstances, see Merck v Merck para [169= and L'Oreal v eBay para [65].
v) It may be appropriate to treat a website as a whole, but in another case it may be appropriate to conduct a more fine grained analysis. Depending on how a website is organised, not all pages are necessarily targeted at the same place(s), see Argos v Argos para [51] and OmniBill para [15].
[17]. The following is a non-exhaustive summary of factors which may be considered, the weight they bear necessarily varying from case to case:

i) The appearance of the web pages themselves, which can include explicit statements of an intention to provide goods or services to the public in the UK and the highlighting of the UK in lists or maps.
ii) Other aspects of the web pages such as language(s), currency(ies), telephone numbers, and the use of national top level domain names.
iii) The nature and size of the service provider's business, the characteristics of the goods or services offered and provided, and the number of visits made by the public from the UK."

Mr Justice Miles added at para [32] of his judgment "the obvious but important point that a website may be targeted at the public in the UK and other territories at the same time."   

He concluded that the site was targeted at the UK for the following reasons.  The site was in English. A lot of the users were based in the UK.  Payment could be made in sterling.  Many of the advertisements were for British retailers and services. 

Uploading

The judge held at [36] that users who upload content to the NitroFlare site infringe copyright by making it available to the public within the meaning of s.20 of the Act.  The analysis that applies to operators also applies to uploaders.

Downloading

His lordship held that downloading a digital file involves copying which is an act restricted by copyright.  He was satisfied that a substantial volume of copyright works had been downloaded by users in the UK.

Authorization

The learned judge referred to para [90] of Mr Justice Kitchin's judgment in Newsbin

"…The grant or purported grant to do the relevant act may be express or implied from all the relevant circumstances. In a case which involves an allegation of authorisation by supply, these circumstances may include the nature of the relationship between the alleged authoriser and the primary infringer, whether the equipment or other material supplied constitutes the means used to infringe, whether it is inevitable it will be used to infringe, the degree of control which the supplier retains and whether he has taken any steps to prevent infringement. These are matters to be taken into account and may or may not be determinative depending upon all the other circumstances".

The circumstances that Mr Justice Miles took into account were as follows:
  1. NitroFlare had made it very easy for users to upload and download content to its site. No charge was made for either uploading or downloading. If a user joined the affiliate programme he or she could even earn some money.
  2. NitroFlare provided users with the means to infringe by generating links to both uploaders and downloaders and by making symbiotic arrangements with referrer sites.
  3. It must have been obvious to NitroFlare that users were using the site's facilities to infringe the claimants' copyrights.
  4. The operators of the site could easily have stopped the infringements had they wanted to do so.
  5. Those operators took no steps to prevent such infringement.   They said that they had a takedown policy but that did not stop the site from hosting a lot of infringing material,  
There had been a similar takedown policy in EMI v Sky which Mr Justice Arnold had criticized for the following reasons:

"i) Requesting the takedown of individual files or links is overly burdensome and renders it impractical significantly to reduce the number of files illegally available on the Site in relation to any given piece of content.
ii) There are often multiple links for each recording. As a means of trying to prevent infringement of one particular work, the "provision of links" policy would therefore be impractical and ineffective.
iii) Things are made worse by the fact that constant additions are made to the files and links being offered.
iv) To seek to police against infringing activity for a particular copyrighted work, a rights holder (even assuming 100% compliance by the operator of the Site with takedown requests) would have to monitor the Site on a continuous and ongoing basis.
v) A "provision of link" policy might work for a website which generally hosts legal content, but which suffers from isolated instances of infringement. It does not work where (as here) there is a constantly replenished stock of infringing content."

Attempts had been made by IFPI and the claimants to remove infringing material under the takedown policy in EMI but it had not worked.  There was no reason to suppose that they would be more successful with NitroFlare.

Taking all of the above circumstances into account, the judge was satisfied that NitroFlare had infringed the claimants' copyrights by authorizing users to upload and download content to its site without the claimants' licence.

Joint Tortfeasance

Mr Justice Miles found that NitroFlare was liable as a joint tortfeasor for its users' wrongdoing for the following reasons:

"First, the Site has features which show that it is deliberately structured for the purpose of inducing users to upload commercial content. Users are offered a financial incentive to upload popular content which large numbers of other users are likely to wish to download. This is most likely to consist of commercial content and that in turn is likely to be subject to copyright. Second, the service is provided in a user-friendly fashion. It is free of charge; allows effectively unlimited capacity; and gives uploading users the ability to promote their own uploads by providing them with links which they can supply to others. Third, once content has been uploaded it is freely available to users. There is no restriction (say by password protection) on site-users' access. Fourth, the reach of the Site is amplified by the referrer sites. Fifth, the evidence summarised earlier shows that very large amounts of protected content is available for download from the Site; and that commercial material accounts for the vast preponderance of the content on the Site. This is not accidental: the Site is, for the reasons already given, designed and structured to facilitate the sharing of commercial (and therefore, probably protected) content. Sixth, the greater the amount of popular, commercial, content on the Site available for downloading, the greater the prospects of profits for the operator (through advertising and subscriptions). Seventh, the steps taken by the Site to remove infringing content are, as already explained, wholly inadequate. The operator has clearly not adopted an effective policy to remove copyright protected content. The reasonable inference is that it would be contrary to the operator's financial interests to do so (see the sixth point above). The Site does not merely make available the means of infringement; it thrives on infringement. This explains the incentives given to users to upload popular content."

He was satisfied that the operators of the site have induced, incited or procured users to commit infringements of copyright, that they had profited from these infringements and that the operators and the users had acted pursuant to a common design to infringe.

Actual Knowledge

S.97 (1) of the Copyright, Designs and Patents Act 1988 requires a service provider against whom an order is to be made to have actual knowledge that someone is using its service to infringe copyright.  The judge found that that requirement had been complied with.  The claimants had notified the defendants of NitroFlare's activities in July 2018. They warned them of their intention to make this application in December 2018. They later supplied them with the evidence in support of the application.  Citing Mr Justice Arnold's judgment in EMI, Mr Justice Miles ruled that the defendants had actual knowledge of the use if their services to infringe.

Discretion

Like all injunctions, an order under s.97A is discretionary.   The principles by which that discretion was to be exercised in Nintendo as follows:

"The injunction must be (i) necessary, (ii) effective, (iii) dissuasive, (iv) not unduly costly or complicated, (v) avoid barriers to legitimate trade, (vi) a fair balance between the fundamental rights engaged, (vii) proportionate and (viii) safeguarded against abuse."

Mr Justice Miles considered that an order similar to the one in Cartier International AG v BSkyB  [2015] ETMR 1, [2015] RPC 175, [2015] 1 All ER (Comm) 641, [2014] EWHC 3354 (Ch), [2015] Bus LR 298, [2014] WLR(D) 464, [2015] RPC 7, [2015] BUS LR 298, [2015] 1 All ER 949, [2015] EMLR 10 was appropriate for the following reasons:

"[73] First, the Defendants do not oppose the making of the order. It can therefore be taken that it is proportionate as between the parties.
[74[ Second, I am satisfied that the order is necessary to protect the rights of the Claimants and the other record company Members of BPI and PPL. The Site is being used to infringe those rights on a large scale (see above).
[75] Third, the Claimants' Recordings and more generally the copyright recordings of the Members are available to be enjoyed by ISP subscribers using legal digital music services.
[76] Fourth, the Site is not only being used to infringe the copyrights in music recordings (and the musical and literary copyrights embodied in them). Mr Walsh's evidence shows that over 90% of the links on the Site are to content which is likely to be copyright-controlled.
[77] On the other hand, it is possible that the Site could be used for some legitimate storage purposes, which will be adversely affected by any blocking order. However I am satisfied that users are highly unlikely to be using the Site in this way on a significant scale. There are a number of features including the automatic deletion policy and the lack of password protection, encryption or syncing functions, which render the Site unsuitable for cloud storage. I therefore consider that the risk of interfering with legitimate storage of data is negligible.
[78[ Fifth, the Order has been carefully drafted (following judicial guidance in earlier authorities) so as to ensure that it does the minimum necessary to achieve its objective.
[79] Sixth, as the Courts have repeatedly noted in the cases I have already referred to, such orders are effective. The evidence shows that blocking orders have proved effective, notwithstanding attempts to circumvent them: following the making of previous blocking orders on the application of BPI, UK visitors to those websites have been drastically reduced. For the 38 websites for which data was available in the month prior to their being blocked, the data shows an average reduction of UK visitors of 98%.
[80] Seventh, to the extent that rights of users or operators of the Site are engaged, given my conclusions on infringement, their interests are outweighed by the interests of the Claimants and of the Members in enforcing their copyrights: cf. FAPL v Sky at [59]."

Order

The judge made an order in the terms requested by the claimants.

Comment

There are a lot of problem with these orders. They are very expensive.  They can take a long time to prepare. They are not always effective.  Those who are affected by them who may include innocent third parties who rarely have notice of the application and are, therefore, unrepresented at the hearing of the application. Worse, High Court judges are used for what is a quasi administrative procedure. Other countries avoid some of those difficulties as Prof. Mostert and I reported in our Study on Intellectual Property Enforcement Measures, Especially Anti-piracy Measures in the Digital Environment which we presented to the WIPO Advisory Committee on Enforcement in between 2 and 4 Sept 2019/

Anyone wishing to discuss this article or blocking orders generally may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

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