Plain packaging for tobacco products: some legal issues

Sooty didn't mind endorsing the
product, but he did object to being
paid in cigarettes ...

This Kat was wondering what has been happening in Australia, where plain packaging for tobacco products has been mooted as a means of discouraging smoking.  He is indebted to his friend John Nobel (British Brands Group) for letting him have this helpful update on a topic which this blog has covered on two earlier occasions, here and here:

"On 6 July two Bills were tabled in Australia’s House of Representatives: the Tobacco Plain Packaging Bill and the Trade Marks Amendment Bill. Coincidentally on the same day the UCL Law Faculty circulated a paper, “Implications of WTO law for plain packaging of tobacco products” (by Tania Voon and Andrew Mitchell) to those who hoped to attend the aborted event “'Tobacco or trademarks: Australia's plain packaging of cigarette products and the WTO”.  

Closer to home ['home' is a relative term, but in this context it's Britain], the Department of Health is to launch a consultation by the end of this year on plain packaging, while the European Commission (DG Sanco), having already consulted on this subject last year, is due to publish its response early in 2012. The consultation is understood to have generated a substantial number of submissions covering IP. All this suggests the topic may be worth re-visiting for IPKat readers.  

Whatever one’s view of tobacco products, these developments are of keen interest to those involved in brands and trade marks, raising questions on the lengths to which countries may go to regulate legal products but more particularly on the extent to which they can disrupt long-established, legitimate and immensely valuable trade marks.  

The paper by Tania Voon and Andrew Mitchell addresses both the international trade and IP aspects of plain packaging, arguing that the proposal is consistent with TRIPS, the Technical Barriers to Trade (TBT) Agreement and GATT 1994, calling any challenge by tobacco companies under such agreements “a desperate last gasp” (having said that, Australia has notified its draft Bill to the WTO under the TBT agreement and a number of states have raised concerns over both the legality and the proportionality of the measure).  

Leaving aside the trade arguments – which Voon and Mitchell dismiss and which are now the subject of a legal challenge by Philip Morris International (on the basis of Australia’s Bilateral Investment Treaty with Hong Kong) – it is the IP aspects which will be of particular interest and relevance to brand owners and IP practitioners. The Voon Mitchell paper sets out some of the IP areas where debate is likely to rage and it is worth looking in particular at two key ones: 

(1)     Would plain packaging deny the registration of trade marks or invalidate existing trade marks contrary to international agreements? This is addressed by TRIPS (Article 2 and 15.4) and the Paris Convention (Article 6 quinquies). Voon and Mitchell argue that these provisions are not relevant as trade mark rights are negative rights, in that they prevent others from doing something (this reflects TRIPS Article 16). Plain packaging proposals would prevent use, not deny registration or invalidate rights. Neither TRIPS nor the Paris Convention provides a right to trade mark owners to use their rights. Where a Member State requires proof of use in order to validate a trade mark (like the UK), a trade mark owner can prevent invalidation by demonstrating a valid obstacle to use, which a plain packaging regulation would be.  

The counter arguments are that trade mark rights are a bundle of rights (not just a negative right to exclude others) and that registration and use are inherently linked. In addition, the right of the trade mark owner to exclude others from using the mark implies that the use of the mark is reserved to its owner. The right to a trade mark that cannot be used is not a right in any legal sense. In countries where an application for registration depends on existing use or an intention to use, registration would be effectively impossible. Further, in such countries that require evidence of use, there is a positive obligation to use. It is also worth noting that the Paris Convention and TRIPS provide protection against invalidation and plain packaging amounts to an invalidation.  

(2)     Would plain packaging represent an unjustifiable encumbrance on a trade mark and therefore contrary to TRIPS (Article 20 requires that “The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements….”)? Voon and Mitchell acknowledge that plain packaging is a special requirement that may be considered an encumbrance but claim this is justifiable on health grounds. Article 20 should be read in conjunction with Article 7 (protection and enforcement of IPRs being conducive to social and economic welfare), Article 8 (Members may adopt measures necessary to protect public health) and the Doha Declaration which re-affirmed Members’ rights to protect public health. Further, were a Member State to claim that Australia was in violation of Article 20, it would be down to that Member State to prove it.    

Controversy is likely to focus on whether plain packaging is justifiable. It is likely to be argued that an encumbrance can only be justified if it is necessary to protect public health. There is no convincing evidence that plain packaging will lead to a reduction in smoking, there are other less restrictive measures available and countries have reduced smoking without recourse to plain packaging. All this suggests that plain packaging is open to challenge whether the measure is justifiable, necessary and proportionate. 

There must be some relief in UK and European government circles that it is Australia experimenting with such regulation. There seems plenty to argue that plain packaging would amount to a denial of registration, effective invalidation and an unjustifiable encumbrance on trade marks. Bearing in mind the value of the trade marks at stake, we can expect these arguments to be made formally and forcefully".

The IPKat thinks this is a very useful summary of the lines of argument which we are most likely to be hearing when the debate in Europe takes place. Merpel wonders whether the legal arguments will indeed be weighed and balanced or whether, this being the real world, the result will be based on the fact that people who oppose smoking lobby harder to wipe it out than people who support it fight to preserve it.

Friday fantasies

Friday has come round again and, with it, the usual reminder to check the IPKat's Forthcoming Events page to see what's looming up in the future. There are conferences, seminars, all sorts of attractions. Might we see you at any of them?


Youth opportunity of the week.  The IPKat is getting quite a few requests these days from young enthusiasts in search of that elusive first rung on the ladder of life in the IP field.  This week's eager youngster is Simon Graham, who writes:

"I am a highly motivated postgraduate looking for an internship with a patent firm or in-house patent team ideally in the UK, Europe or America. Having gained the Master in the Management of Intellectual Property and the certificate in Intellectual Property Law from Queen Mary [for the benefit of first-time readers, the Kat explains that Queen Mary is the college, not the ship or even the pub], I am part qualified and currently studying for the UK Patent Practice (P2) exam.

My technical background is in life sciences and computing gained in the pharmaceutical industry with some experience of working in an IP environment.

Please contact sgraham_ip@yahoo.com if you can help." 

Well, readers -- if you are interested, you know what you can do!

Around the weblogs. The Cyberleagle blog, authoritatively authored by the IPKat's friend Graham Smith, carries this eloquent piece on "10 essential points from Newzbin2".  Graham's very discreet about which law firm he works for, but it has four wings and plenty of feathers.  The jiplp weblog features a Current Intelligence piece by Kingsley Egbuonu and Chukwuyere Izuogu on the only case known to this Kat in which an injunction to restrain a patent infringement had repercussions for the conduct of a general election. PatLit's latest PCC Page investigates the often essential inconvenience of finding the right expert witness here.

Want to impress your friends?
Judicial fancy dress available
here

The IPKat wonders what fate is about to befall intellectual property litigation in England and Wales. Only a short while ago he was celebrating the elevation of two of the country's Patents Court judges to the Court of Appeal.  Now he has just read the following snippets:

• The Queen has been pleased to approve the appointment of Robert Henry Thoroton Hildyard, Esq., Q.C., to be a Justice of the High Court with effect from 3 October 2011 on the elevation of Mr. Justice Lewison to the Court of Appeal.
• The Queen has been pleased to approve the appointment of Rabinder Singh, Esq., Q.C., to be a Justice of the High Court with effect from 3 October 2011 on the elevation of Mr. Justice Kitchin to the Court of Appeal.

Like any well-mannered feline, the Kat welcomes the new appointments, who appear well qualified for the bench, and wishes them the best of luck. He is however a little anxious since, to his great embarrassment, he hasn't heard of either of the new judges before and has a trifling suspicion that they're not main-line IP-ers.  This leaves him wondering whether the vacancies in the Patents Court will be left empty, or filled by 'outsiders' (as has been done before, sometimes with notable success). Or maybe we'll be cutting down on those expensive High Court types and stocking up on cheap-and-cheerful Patents County Court judges instead, now that Judge Birss has made that court so popular.  Does any reader know?

When is a secret not a secret?

Question: when is a secret not a secret? Answer: when everyone who wants to be told has a right to find out. This is the moral of a fascinating and really important decision of Mr Justice Arnold on Wednesday in the Patents Court, England and Wales, in LG Electronics Inc v Sony Europe Ltd, Sony Computer Entertainment Europe Ltd, Sony Computer Entertainment Inc and Sony Corporation.

LG sued Sony for infringement of three Blu-Ray patents. In these proceedings LG applied for summary judgment in relation to Sony's defence that LG's patents were invalid in light of an item of alleged prior art. The earliest priority date for any of those patents was March 2003.

Sony's defence was based on invalidity, basing its position on a document on DVD specifications for read-only discs which was available to the public in 1997.  According to LG, this 1997 document was not prior art that was capable of undermining its patents' novelty. The information in it was held by a standards body, the DVD Format/Logo Licensing Corporation, for the limited purpose of developing DVDs and related products. This document was only accessible by people who paid the required fee and signed a non-disclosure agreement. Accordingly it was not made available to the public.

Mr Justice Arnold refused the application for summary judgment. Among other reasons for doing so, he concluded that, even though he would accept LG's evidential submissions in support of confidentiality and the restriction of the use of the information in the 1997 document, a not-unrealistic possibility remained that Sony would be able to establish that all interested persons, who might want to manufacture under the standard, had an opportunity to gain knowledge of the contents of that document and to use that information for their own purposes.

Notes the IPKat: if a standard truly is a standard, everyone who wants to make any product that is governed by the standard has to make it in accordance with that standard -- or it wouldn't be standard.  What's more, since we allow the setting of standards and don't stigmatise them automatically as being anticompetitive clubs where information concerning the standard is pooled between club members so that no-one else can make products that conform to the standard, it would be not just anti-competitive but positively churlish to refuse to provide details of a standard to anyone who asks. Now, what sort of people ask for details of standards? Obviously, anyone who is interested in making DVDs.

This case raises another important question: is information which is available in the public domain to be treated as confidential for the purposes of patent law by virtue of the fact that it's labelled "confidential"? The answer must be "no": though the information may not be available to the public free, what the public does have is a known source for the information which will be available to all on similar, justifiable terms as of right.  In these circumstances, the purpose of the obligation of confidence is clearly only to ensure that a standards body is able to recover its own charges. That is quite different from an obligation of confidence designed to restrict the supply of information per se.

This case is not yet available on BAILII.  Merpel keeps hearing dire rumours of cases which have recently been posted on BAILII and then have suddenly disappeared again, apparently for "copyright reasons". She fervently hopes that copyright is not about to come into conflict with the public's interest in gaining access to the law, including decided cases with precedental value by which that public is bound. If any readers have experienced this phenomenon, will they please let Merpel know.

Blu-Ray here
Sting Ray here
Sugar Ray here
Catt Ray here

Further Thoughts on "IP Transactions: A Possible IP Course"

First a little bit of personal history. Before IP became my 24/7 preoccupation, during the days that Franz Beckenbauer, Johan Cruyff, and Watergate competed for headlines (aka the 1970s), this Kat chased another intellectual muse and pursued a doctoral program in education. A Ph.D. and assorted publications accompanied that quest, but what was most lasting is my interest in the way that educational courses and programs are structured. As Mrs Kat frequently observes, the "educator" in me has still occupies a prominent part of my professional psyche.

All of this was brought to bear in reading Jeremy's blog post and the ensuing comments of last Friday--"IP Transactions: A Possible IP Course" here. No better person to fashion such a course than the IPKat's friend, Mark Anderson, and we wish him the best of luck in this endeavour. And yet, I came away from the exchange with a certain feeling of unease. In a word, is it ultimately most productive to try and teach transactional principles to IP types, or rather to teach the rudiments of IP to transactional types? [Let's make a forced choice here, replying that both are equally desirable will not do.]

This Kat has done both. First there was a multi-year attempt to fashion a course on IP transactions for law students. He struggled with the course curriculum ("how much to emphasize the distinctive versus the holistic aspects of IP licenses, assignments and the like?"; "how much to don the cap of the would-be professor and how much to wear the cap of the dispenser of practical wisdom"; "how much to lecture and how much to actively engage the students"). Frustration dogged him throughout.

So this Kat jumped at the invitation to fashion a course for Economics students, with the charge from the dean of the faculty to impart in these students a working knowledge of IP principles. That seemed clear enough, but then he starting thinking--"how exactly is he going to know what IP principles are most relevant for Economic students?" For sure, he had the privilege of sitting at the feet of the iconic Richard Posner in trying to learn "law and economics", but the immediate task was quite different. What was of interest was not applying economic principles to the law, but applying legal principles and, in particular, IP principles, in order to promote better learning of Economics. The challenge was daunting and the results were mixed, say 7.5 out 10.

So this Kat moved further even afield, headlong into the world of MBA education. For five years now, his curricular work-in-progress has sought to provide a grounding in IP within the broader educational goals of managerial education. The result is a 20/80 split, providing enough IP to allow meaningful conversation, and then weaving IP issues into the context of the managerial and case study literature, garnished with the occasional guest lecturer from various segments of industry. For whatever reason, the balance between lectures and student engagement has been easier to manage, the integration between IP and business a more seamless enterprise, the overall experience much more satisfying pedagogically speaking.

The cynic might say that the reason for this rests in the nature of MBA education, the point often being made that it is a mile long and six inches deep. The whiff of alleged dilettantism is palpable. Such a claim misses the point. If asked whether to prefer transaction principles for IP types, or IP principles for transactional types, I prefer the latter. But maybe my experience is idiosyncratic. It will be interesting, therefore, to see how this proposed curricular initiative to blend IP and transactional law will work out.

No surprise as pharma repackaging rulings rush through

The labels on the box never troubled the IPKat,
but the contents sometimes caused surprise ...

Not every case which is bound for the Court of Justice of the European Union for a preliminary ruling takes forever.  The two cases noted here, Joined Cases C‑400/09 and C‑207/10, Orifarm v Merck Sharpe & Dohme; Paranova v Merck Sharp & Dohme, sped through in pretty good time.  One was referred in October 2009, attracting a ruling in substantially less than two years, while the other hurtled past the judges' noses at almost the speed of light, having been referred as recently as April 2010.  Speedy cases aren't usually the sign of an efficient court, though: they're an indication that the questions referred for a reference were too easy to spend a lot of time on -- as is the case here.

In Case C‑400/09 pharma giant Merck made trade mark-protected medicinal products which Orifarm imported in parallel on to the Danish market by the Orifarm group. Orifarm and another company, Handelsselskabet, held the authorisations to market and sell those medicinal products, while Orifarm Supply and Ompakningsselskabet, which carried out the repackaging, held authorisations to do so. All decisions concerning the purchase, repackaging and sale of these products, including decisions relating to the design of the new packagings and their labelling, were taken by Orifarm or Handelsselskabet. Ompakningsselskabet and Orifarm Supply bought and repackaged the medicinal products, assuming liability for compliance with the requirements for repackagers laid down by the Danish Medicinal Products Agency. The packaging of the products indicated that they had been repackaged by Orifarm or Handelsselskabet, as the case may be.

Merck sued Orifarm, Handelsselskabet and Ompakningsselskabet, on the ground that the name of the actual repackager did not appear on the packaging of the products. The trial court agreed that the defendants had infringed Merck’s trade mark rights by failing to indicate on the packaging the name of the undertaking which had actually performed the repackaging, ordering them to pay damages. The defendants appealed to the Danish Supreme Court, which decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:

‘(1) The Court of Justice is requested to clarify whether [Bristol-Myers Squibb and Others and MPA Pharma --earlier ECJ decisions] are to be interpreted as meaning that a parallel importer which is the holder of the marketing authorisation for, and possesses information on, a medicinal product imported in parallel, and which issues instructions to a separate undertaking for the purchase and repackaging of a medicinal product, for the detailed design of the product’s packaging and for arrangements in relation to the product, infringes the rights of the trade mark proprietor by indicating itself – and not the separate undertaking which holds the repackaging authorisation, has imported the product and has carried out the physical repackaging, including (re)affixing of the trade mark proprietor’s trade mark – as the repackager on the outer packaging of the medicinal product imported in parallel. 

(2) The Court of Justice is requested to clarify whether it is of significance in answering Question 1 that an assumption might be made that, where the marketing authorisation holder indicates itself as the repackager instead of the undertaking which physically carried out the repackaging to order, there is no risk that the consumer/end user might be misled into assuming that the trade mark proprietor is responsible for the repackaging. 

(3) The Court of Justice is requested to clarify whether it is of significance in answering Question 1 that an assumption might be made that the risk of misleading the consumer/end user into assuming that the trade mark proprietor is responsible for the repackaging is excluded if the undertaking which physically carried out the repackaging is indicated as being the repackager. 

(4) The Court of Justice is requested to clarify whether it is only the risk that the consumer/end user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question 1, or whether other considerations regarding the trade mark proprietor are also relevant, for example 

(a) that the entity which undertakes the importation and physical repackaging and (re)affixes the trade mark proprietor’s trade mark on the product’s outer packaging potentially on its own account infringes the trade mark proprietor’s trade mark by so doing, and 

(b) that it may be due to factors for which the entity that physically carried out the repackaging is responsible that the repackaging affects the original condition of the product or that the presentation of the repackaging is of such a kind that it must be assumed to harm the trade mark proprietor’s reputation (see, inter alia, … Bristol-Myers Squibb and Others …). 

(5) The Court of Justice is requested to clarify whether it is of significance in answering Question 1 that the holder of the marketing authorisation, which has indicated itself as being the repackager, at the time of the notification of the trade mark proprietor prior to the intended sale of the parallel imported medicinal product once repackaged, belongs to the same group as the actual repackager (sister company).’

In Case C‑207/10 much the same thing happened, but the same court referred slightly different questions:

‘(1) Are Article 7(2) of [Directive 89/104] and the associated case-law, in particular the judgments of the Court of Justice in … Hoffmann-La Roche … and … Pfizer … and … Bristol-Myers Squibb and Others … to be interpreted as meaning that a trade mark proprietor may rely on these provisions in order to prevent a parallel importer’s marketing company, which is the holder of a marketing authorisation for a medicinal product in a Member State, from selling that product with an indication that the product is repackaged by the marketing company, although the marketing company has the physical repackaging carried out by another company, the repackaging company, to which the marketing company gives instructions for the purchasing and repackaging of the product, for the detailed design of the product’s packaging and for other arrangements in relation to the product, and which holds the repackaging authorisation and reaffixes the trade mark on the new package in the course of repackaging? 

(2) Is it of significance in answering Question 1 that an assumption might be made that the consumer or end-user is not misled with regard to the origin of the product and will not be led to believe that the trade mark proprietor is responsible for the repackaging through the indication by the parallel importer of the manufacturer’s name on the packaging along with the indication as described of the undertaking responsible for the repackaging? 

(3) Is it only the risk that the consumer or end-user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question 1, or are other considerations regarding the trade mark proprietor also relevant, for example 

(a) that the entity which in fact undertakes the purchasing and repackaging and reaffixes the trade mark proprietor’s trade mark on the product’s packaging thereby potentially infringes independently the trade mark proprietor’s trade mark rights, and that that may be due to factors for which the entity that physically carried out the repackaging is responsible, 

(b) that the repackaging affects the original condition of the product, or 

(c) that the presentation of the repackaged product is of such a kind that it may be assumed to harm the trade mark or its proprietor’s reputation? 

(4) If, in answering Question 3, the Court finds that it is also relevant to take account of the fact that the repackaging company potentially infringes independently the trade mark rights of the trade mark proprietor, the Court is asked to indicate whether it is of significance to this answer that the marketing company and repackaging company of the parallel importer are jointly and severally liable under national law for the infringement of the trade mark proprietor’s trade mark rights. 

(5) Is it of significance in answering Question 1 that the parallel importer which holds the marketing authorisation and has indicated itself as being responsible for repackaging, at the time of the notification of the trade mark proprietor prior to the intended sale of the repackaged medicinal product, belongs to the same group as the company which undertook the repackaging (sister company)? 

(6) Is it of significance in answering Question 1 that the repackaging company is indicated as the manufacturer in the package leaflet?’

What with all these questions, some readers might have been expecting a lengthy set of answers -- but not this Kat. He knew they'd be short and sweet:

"Article 7(2) of First Council Directive 89/104 ... must be interpreted as not allowing the proprietor of a trade mark relating to a pharmaceutical product which is the subject of parallel imports to oppose the further marketing of that product in repackaged form on the sole ground that the new packaging indicates as the repackager not the undertaking which, on instructions, actually repackaged the product and holds an authorisation to do so, but the undertaking which holds the marketing authorisation for the product, on whose instructions the repackaging was carried out, and which assumes liability for the repackaging".

In other words, never mind the technicalities as to whose name appears on the packaging -- look at the reality. The trade mark owner's interest in preserving the integrity of its trade marks is unaffected and the consumer is not threatened or misled,  End of story.

Appearances Astrid Elena (Miss Indonesia 2011)

Name: Astrid Ellena Indriana Yunadi
Date of Birth: June 8, 1990
Age: 20 Years
Height: 170 cm
Weight: 51 Kg
Language: English, Spanish, Mandarin
Housing Now: East Java, Indonesia

appreciation
2011 Miss Indonesia 2011
Score 2011 Highest GPA for International Relations FMU 2008, GPA 3.9
2010 / 2009 Best Writing in Son - Puteri Indonesia 2009 Campus
2004 / 2009 Miss UPH Scholar
2004 / 2009 Miss Photogenic UPH Scholar
2002 / 2008 Maryland Distinguished Scholar, Honorable Mention
2004 - 2008 Student of the Year
2004 - 2008 Honor Rolls
2004 - 2008 Perfect Attendance
2002 - 2004 Best Character and Highest Grade Achievement

Gallery Photo Astrid Ellena :

Son of NewzBin: another victory for the film-makers

STOP PRESS: the full judgment -- 67 pages and 204 paragraphs -- can be read here, till it's available on BAILII.  11.23am: it's now available on BAILII here.

In a week that has been absolutely heaving with copyright rulings from the British courts, the IPKat now brings you NewsBin 2, courtesy of Mr Justice Arnold of the Chancery Division, England and Wales. If you remember NewzBin I, just scroll down to the heading NewzBin 2 below.

Background and NewzBin 1

Usenet is a "worldwide distributed internet discussion system". In NewsBin 1 (Twentieth Century Fox Film Corporation and others v Newzbin Ltd [2010] EWHC 608 (Ch)) Fox, together with other film makers and distributors, sued NewzBin, "a British Usenet indexing website notable for its introduction of new technologies and search techniques that aid users by facilitating access to content on Usenet" (per Wikipedia), for copyright infringement.  According to the claimants, NewzBin was focused on piracy in that it located and categorised unlawful copies of films and then (i) displayed the titles of these copies in its indices, (ii) provided a facility for its users to search for particular unlawful copies, (iii) displayed their search results and (iv) provided a simple one-click mechanism for users to acquire the unlawful copies of their choice.

 The defendant company, which owned and ran NewzBin, said its website was simply a search engine like Google -- but that it was directed to Usenet rather than to the worldwide web. It also said it was "content agnostic", being designed to index the entire content of Usenet. Where possible, it provided hyperlinks so that any supply of unlawful material was an act occurring exclusively between the hyperlink user and the relevant Usenet server operators -- but that it played no part in any such activity.

Following a review of both the technology and the relevant law, Mr Justice Kitchin concluded on the evidence that NewzBin clearly knew that its facility was used mainly by its members for the unauthorised downloading of infringing copies of the claimants' films. He then turned to Fox's action, which was based on the following:

(i) authorising acts of infringement by NewzBin's members;
(ii) procuring, encouraging and entering into a common design with its members to infringe;
(iii) communicating the claimants' copyright works to the public, namely the defendant's members;
(iv) categorisation of NewzBin as a service provider with actual knowledge of other persons using its service to infringe copyright, in respect of which the claimants seek an injunction under section 97A of the Copyright, Designs and Patents Act 1988.

As to "authorisation", Kitchin J reviewed and analysed the law relating to that word as it affected copyright infringement, with particular regard to the narrow, literal interpretation placed upon it by the House of Lords in C.B.S. Songs Ltd and others v Amstrad Consumer Electronics Plc [1988] 1 A.C. 1013, when the sale of tape-to-tape recording machines was not regarded as "authorising" infringement of the music copied by them since the company that made and sold the machines had not acted as though it had an entitlement to permit infringing acts by those machines' users. At paragraph 90 he summarised the position:

"... "authorise" means the grant or purported grant of the right to do the act complained of. It does not extend to mere enablement, assistance or even encouragement. 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".

Applying this to the facts, he held NewzBin liable:

" ... I am entirely satisfied that a reasonable member would deduce from the defendant's activities that it purports to possess the authority to grant any required permission to copy any film that a member may choose from the Movies category on Newzbin and that the defendant has sanctioned, approved and countenanced the copying of the claimants' films ...".

As for "procuring, encouraging and entering into a common design" to infringe, the judge drew again on C.B.S. v Amstrad and the stiff test which had to be satisfied if liability were to be found:

"... mere (or even knowing) assistance or facilitation of the primary infringement is not enough. The joint tortfeasor must have so involved himself in the tort as to make it his own. This will be the case if he has induced, incited or persuaded the primary infringer to engage in the infringing act or if there is a common design or concerted action or agreement on a common action to secure the doing of the infringing act" (para.108).

Even so, there was ample evidence from which to conclude that NewzBin had so involved itself.

As to whether NewzBin had communicated the claimants' films to the public, Kitchin J found guidance in a European Court of Justice ruling in rather a different context, Case C-306/05 Sociedad General de Autores v Editores de España (SGAE) v Rafael Hoteles SA. In that preliminary ruling on a reference from Spain, the Court had said:

"46 While the mere provision of physical facilities, usually involving, besides the hotel, companies specialising in the sale or hire of television sets, does not constitute, as such, a communication within the meaning of Directive 2001/29, the installation of such facilities may nevertheless make public access to broadcast works technically possible. Therefore, if, by means of television sets thus installed, the hotel distributes the signal to customers staying in its rooms, then communication to the public takes place, irrespective of the technique used to transmit the signal".

On this basis, since NewzBin's premium members indeed downloaded the claimants' films from a place and at a time individually chosen by them, and since its members considere NewzBin to be making the films available to them, liability was established. An enquiry into damages, including additional damages for flagrant infringement was ordered. Injunctive relief would however be less dramatic:

"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" (para. 135).

NewsBin 2

Following a two-day hearing late last month, the Motion Picture Association succeeded in an action which it brought against a major internet service provider, BT to invoke Section 97A of the Copyright, Designs and Patents Act 1988 so as to require BT to take direct action to block the website NewzBin2 (which, since June 2010, was in effect the resurrected version of NewzBin, using the same code and database as its  predecessor but this time being hosted offshore from the Seychelles).  A fairly joyous joint media release from what seems like a representative selection of the top faces in the rights-owners' camp, reports as follows:

"Arnold J. ... ruled that the Motion Picture Association (MPA), supported by the creative industries, has won an order requiring BT to block access to the pirate website Newzbin2. The site makes unlawful copies of films and television programmes, alongside other content from games, publishers and music available without permission in direct violation of a previous court order against it.

Around 700,000 members use the Newzbin service generating the operators in excess of £1 million per year. This verdict will prevent the site from using BT’s internet service to make money through copyright infringement. 

In his ruling, [Mr, unless there's another media statement on the way, announcing his elevation to the Supreme Court] Justice Arnold stated: 

“In my judgment [not yet circulated at the tine this blogpost was posted] it follows that BT has actual knowledge of other persons using its service to infringe copyright: it knows that the users and operators of Newbin2 infringe copyright on a large scale, and in particular infringe the copyrights of the Studios in large numbers of their films and television programmes, it knows that the users of Newzbin2 include BT subscribers, and it knows those users use its service to receive infringing copies of copyright works made available to them by Newzbin2.”

This significant judgment reflects a clear recognition that, under the existing law, Courts can issue orders to prevent illegal activity online. It rejects BT arguments that they have no responsibility to act against copyright theft and states that the order is proportionate. 

This comprehensive and unequivocal judgment sets a clear legal precedent which will enable content creators and distributors to secure greater cooperation from ISPs to address content theft on the internet and in particular to deal with websites that are focused on wholesale copyright theft".

On proportionality of the remedy, a PDF attached to the media release adds this quote from Arnold J:

"…I am satisfied that the order sought by the Studios is a proportionate one. It is necessary and appropriate to protect the Article 1 First Protocol rights of the Studios and other copyright owners. Those interests clearly outweigh the Article 10 [presumably freedom of expression under the European Convention on Human Rights] rights of the users of Newzbin2, and even more clearly outweigh the Article 10 rights of the operators of Newzbin2. They also outweigh BT’s own Article 10 rights to the extent that they are engaged. The order is a narrow and targeted one, and it contains safeguards in the event of any change of circumstances. The cost of implementation to BT would be modest and proportionate.” [draft Judgment para 200]".

This was intended as a test case, as the court clearly stated, and other ISPs now have a clear idea what is expected of them:

"“The Studios have made it clear that this is a test case: if they are successful in obtaining an order against BT, then they intend to seek similar orders against all the other significant ISPs in the UK. The other ISPs were invited to intervene in the present application if they so wished, but have not done so [was this a strategic decision, wonders Merpel, to keep their powder dry and decide how to respond without being weighed down by the baggage of being parties in these proceedings?]".

The full text of the judgment is keenly awaited. Meanwhile, BT's defences and what happened to them are neatly summarised in the PDF mentioned above. Given the complexity of the issues, as well as the identity of the judge, the smart money is on the judgment being a long one ...