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IP/Entertainment Case Law Updates

Twentieth Century Fox Film Corp. v. British Telecommunications PLC

Court issues order directing British Telecom, an internet service provider, to prevent access to, a website that had been found by the court in a previous decision to be infringing on plaintiffs’ copyrights by distributing commercial content without their permission.

Plaintiffs, the Motion Picture Association and member motion picture studios (the Studios) brought a successful claim for copyright infringement against Newzbin, Ltd., which operated Newzbin1 at, a website that distributed commercial content without permission from the copyright owners. After the injunction was awarded, the Newzbin1 website ceased operating and an almost identical website, Newzbin2, commenced operation at the same location. The Studios then brought an application against British Telecom (BT), an internet service provider (ISP), in the High Court of London, invoking section 97A of the Copyright, Designs and Patents Act (CDPA) and seeking a court order directing BT to block its users from accessing the websites Newzbin1 and Newzbin2.

Justice Arnold began by accepting that online copyright infringement is a serious problem for copyright owners, though in general it is one whose impact is difficult to quantify in a statistically robust way. However, he qualified that acceptance that in this case, there is “fairly good evidence of the scale of the wrongdoing.” Judge Arnold then discussed the rights of expression under European law, rights of an internet service provider under European and UK law, and rights of copyright holders under European and UK law. BT argued that though it is a service provider within the meaning of 97A of the CDPA, the court lacked jurisdiction because there was no “use” of its service to infringe copyrights and it had no “actual knowledge.” The court disagreed, finding that use is sufficient where BT as the ISP provided the connection for communication of infringing materials between the subscriber and the third party, and that actual knowledge existed where the service provider had notice that subscribers were using its service to commit restricted activities that infringed on rights of certain copyright holders. Having found appropriate jurisdiction to issue the order, the court went further and found that the order would not be contrary to European law.

Justice Arnold then discussed how Newzbin worked, and the substantive findings in the judgment against Newzbin1. He explained that Newzbin1 operated as part of an internet system called Usenet which allowed its users to upload and view messages on the web equivalent of public bulletin boards. Newzbin allows the posting of both binary and text files. Binary files are frequently split up by RAR encoding, which splits the file into smaller parts, each of which is in turn split into 50 or more messages, and each of those messages is posted to the newsgroup separately. If a user wishes to download the film file, he must identity each one of those messages, download the message files and assemble them to form a whole copy of the film file. Access to Newzbin1 was restricted to members, who were either basic or premium. Basic members could not download files while premium members could, for £0.30 per week. For 2009, Newzbin had a profit in excess of £360,000.

A crucial part of being a premium member is that they could create and access NZB files, which contained all the information a client required to fetch all the messages and reassemble the original file from its component parts. The final output was a set of files suitable for burning to a DVD and that could then be played on a DVD player. Premium members also could search the bulletin boards according to categories, including “Movies” and “TV.” The overwhelming majority of the Movies category had content that was commercially available and very likely to be protected by copyright. Judge Kitchin in Newzbin1 found that Newzbin Ltd “knew that the vast majority of films in the Movies category were commercial and very likely to be protected by copyright and the members who used the NZB facility to download those materials, including the Studios’ films, were infringing copyright.”

Judge Kitchin held in Newzbin1 that the Studios’ copyrights had been infringed by Newzbin1’s premium members and that Newzbin1 had infringed the copyrights by (1) authorizing its premium members to make infringing copies of the Studios’ films, (2) procuring the premium members to infringe and participating in a common design with the premium members to infringe, and (3) communicating the copyright works to the public. Further, Judge Kitchen held that Newzbin Ltd “had engaged in a deliberate course of conduct well knowing that the vast majority of the materials in the Movies category were protected by copyright and that the users of the website who downloaded the materials were infringing copyright,” enjoined Newzbin Ltd from making available copyrighted materials identified by the Studios, and assessed damages of £230,000. Newzbin Ltd then sought voluntary liquidation. Shortly thereafter, Newzbin2 appeared at the same web address. However, Newzbin2 was operated by anonymous individuals, with servers located outside of the UK, with a company registered in the Seychelles, and with a Swedish company receiving the payments made to the website. The Studios then sued BT, the largest ISP in the UK, to block access to the website.

BT has the largest number of internet subscribers in the UK of any ISP. BT facilitates the communication between its customers and third-party websites, and it does not monitor the communications. It also does not provide any services to the operators of the Newzbin2 website nor does it host the website. As an ISP, BT currently implements a blocking system that blocks access to websites identified by the Internet Watch Foundation (IWF) as those that make available child sexual abuse content.

The Studios sought in their application that BT implement the same measures with regard to the Newzbin2 website that it already operates with regard to the websites reported to it by the IWF. The measures include (1) DNS name blocking, which blocks access to the IP address associated with the registered domain name, (2) IP address blocking using routers, which blocks a customer’s communications to a website by blocking access to the IP address, (3) DPI-based URL blocking, which employs Deep Packet Inspection (DPI) and would reset or block a specific website that shares an IP address with other websites that are not to be blocked. In 2004, BT launched a system known as Cleanfeed to disrupt access to websites identified by the IWF. Cleanfeed is a hybrid of IP address blocking and DPI-based URL blocking. It involves minimal and summary analyses of contents of the data packets, but not a detailed, invasive analysis.

Judge Arnold then discussed the rights of expression under European law, rights of an internet service provider under European and UK law, and rights of copyright holders under European and UK law. Section 97A of the CDPA allows the issuance of injunctions against an ISP where the ISP has “actual knowledge” of another person “using” their service to infringe copyright.

BT argued that the court has no jurisdiction to make an order requiring BT to block access. First, BT argued that there has been no “use” of their service by the users or the operators of the website and analogized their participation in the infringement to that of the postal service who delivers a pirated DVD to a customer. Judge Arnold rejected this argument, finding that ISPs who enable clients to access the internet provides a service capable of being used by a third party to infringe a copyright by providing the user with the connection, making possible the transmission of unauthorized materials between the subscriber and a third party. Judge Arnold also referred to Judge Kitchin’s opinion, which found the operators infringing by making available to the public the copyrighted works in such a way that users can access them. In this case, the works are made available for access over BT’s network, and Judge Arnold found it sufficient to constitute use.

Second, BT argued that there has been no “actual knowledge.” Judge Arnold found that the purpose and wording of section 97(A) is most decisive in determining of what the service provider must have actual knowledge. Because section 97(A) implements Article 8(3) of the Information Society Directive, Judge Arnold found instructive the Information Society Directive. Recital 59 of the Information Society Directive states that the purpose of Article 8(3), and hence section 97(A) is to enable an injunction to be granted against “an intermediary” (the ISP), which “carries” an infringement because ISPs are “best placed” to bring the infringing activities to an end. Judge Arnold found that this suggests that the requirement for actual knowledge should not be interpreted too restrictively. Accordingly, he found that all that must be shown is that “the service provider has actual knowledge of one or more persons using its service to infringe copyright.” Additionally, he stated that the more information the service provider has about the infringing activity, including whether and to what extent it has knowledge of particular copyright works or classes of works are involved, particular restricted acts or types of restricted acts committed, and particular persons or groups of persons committing the acts, the more likely it is that the service provider will have actual knowledge. It is “not essential to prove actual knowledge of a specific infringement of a specific copyright work by a specific individual.”

Judge Arnold found that it is also relevant to consider whether the ISP has been given notice of the infringement, and found that an ISP may be given actual knowledge by “receipt of a sufficiently detailed notice and a reasonable opportunity to investigate the position.”

Because BT knew that users and operators of Newzbin2 infringe copyrights on a large scale, in particular the copyrights of the Studios, knew that the users of Newzbin2 include BT subscribers, and knew that those users use its service to receive infringing copies of copyright works from Newzbin2, BT had actual knowledge of other persons using its service to infringe copyright, and the court has sufficient jurisdiction under 97(A) of the CDPA to issue an injunction.

BT then argued that the order requested by the Studios would contravene several European laws. Judge Arnold disagreed.

First, an injunction also would not be contrary to Article 12(1) of the E-Commerce Directive, which provides that an ISP would be protected from liability for infringement of copyright as it is a mere conduit in this case, because Article 12(3) provides that the protection under Article 12(1) does not affect to possibility for a court to require an ISP to terminate or prevent an infringement. The injunction is also not contrary to Article 15(1) of the E-Commerce Directive, which prohibits Member States from imposing a “general obligation” on ISPs to “monitor the information which they transmit.” However, under both recital (47) of the E-Commerce Directive and judgment of the Court of Justice in L’Oreal v. eBay, Article 15(1) does not concern specific monitoring obligations, and it does not prevent courts from making orders requiring ISPs to take measure to prevent future infringements. Because the order sought by the Studios only refers to passive automated filtering rather than active, detailed inspection of data of BT’s customers, to the extent that the blocking activity is monitoring, it is specific rather than general and would not be contrary to Article 15(1).

Lastly, the injunction would not be contrary to Article 10 of the European Convention on Human Rights (ECHR), which provides that everyone has the right to freedom of expression. Judge Arnold found that the order sought by the Studios is clear and precise as to the meaning and nature of the applicable measure and define with adequate clarity the scope and conditions of the exercise of the power to restrict the right to freedom of expression, because it requires BT to implement an existing technical solution for a specific purpose, and is not general in all respects, an order requiring this restriction is one not contrary to Article 10 of the ECHR.

BT further contended that even if the court has jurisdiction to make this order, it should decline to do so in the exercise of its discretion. Judge Arnold considered all three reasons advanced and a fourth potential reason and rejected them all. Judge Arnold rejected the argument that it would be wrong to deny access to the entire website even though the Studios are only interested in the 70 percent of the materials offered on the website because the Studios form the biggest single group of rightholders interested in obtaining such relief, that their rights are being infringed on a massive scale, and because the order would also benefit other rightholders. Judge Arnold also rejected the argument that granting the order would lead to multiple future claims against ISPs including BT, because the fact that there may be further application in the future is not a sufficient reason to refuse the present application because the effects of making future orders can be addressed when they are applied for. Judge Arnold also rejected the argument that the order would be ineffective since subscribers can circumvent the blocking, because not all users have the additional expertise to circumvent the blocking, the blocking will lead to slower and lower quality downloads and the users will have to pay extra for the circumvention, which will decrease the overall number of users who will circumvent the blocking measures, and the order would be justified even if it only prevented access by a minority of the users.

Judge Arnold also found that the order is proportionate between interfering with the right to freedom of expression granted by Article 10 ECHR and protecting the copyrights of the Studios. Protecting the copyrights of the Studios and other copyright owners clearly outweigh the Article 10 ECHR rights of the users of Newzbin2 and those of the operators of Newzbin2. Having found jurisdiction under section 97(A) of the CDPA and rejected all of BT’s arguments, Judge Arnold granted the Studio’s application for an order directing BT to block access to the Newzbin2 website.

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