Repost from the Sports, Media and Entertainment Intelligence bulletin from the Media & Sports Group at DLA Piper
INTERNET AND DIGITAL MEDIA
UK: Proprietary rights from copyright infringement – Twentieth Century Fox Film Corporation v David Harris
A copyright owner does not have a proprietary claim to the profits from an infringement of its copyright, a UK court has ruled in a case involving a website that offered its users unlawful copies of copyrighted films, TV shows and other materials.
In 2008, members of the Motion Picture Association of America Inc. (the Studios) brought proceedings against a company called Newzbin Ltd, alleging that the sole purpose of the Newzbin website was to make available to its users unlawful copies of copyrighted works including films and television programmes. In March 2010, Kitchin J held Newzbin Ltd liable to the Studios for infringement of their copyrights, finding that Newzbin had “engaged in a deliberate course of conduct well knowing that the vast majority of the materials in the Movies category of [the] Newzbin [website] are commercial and so likely to be protected by copyright and that the users of Newzbin who download those materials are infringing that copyright”.
Soon after the Newzbin website was taken down, another website with a similar name (Newzbin2) was created, operating in the same way and sharing the original site’s purpose. The claimants brought proceedings seeking relief against individuals and companies alleged to have links to the Newzbin2 website (Mr Harris was said to be either the sole operator of the website or one of its operators). The claimants applied for proprietary injunctions against the defendants, relying on s 96(2) of the Copyright, Designs and Patents Act 1988, which states that, in an action for infringement of copyright:
“…all such relief by way of damages, injunctions, accounts or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right”.
They argued that, when a copyright is infringed, a copyright owner has a proprietary claim to the entire proceeds of the copyright infringement sales, which are held on constructive trust for them. For more on the previous Newzbin decisions please refer to our client alert of August 2011.
Does a copyright owner have a claim to the fruits of an infringement?
Newey J noted that there was no direct reference to the availability of proprietary relief for breach of copyright in case law or in textbooks. The owners of IP whose rights have been infringed will often be entitled to an account of profits, but the court refused the argument that the fruits of an infringement are subject to a trust. The court ruled that it might be both “unfair and stultify enterprise” to find that the entire proceeds of sale were held on trust for the copyright owner, because the proceeds might be out of all proportion to the profits generated (for example, because of the cost of raw materials used in the infringing product). Therefore, the judge declined to grant proprietary injunctions, finding that a copyright owner does not have a proprietary claim to the fruits of an infringement of copyright.