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Re:Marks on Copyright and Trademark

UK & Copyright Piracy: NEWZBIN2 TAKES ANOTHER BLOW

In a landmark ruling, the UK High Court has delivered its verdict in Round Two of Hollywood versus the Copyright Pirates – despite Newzbin2 not even taking part in the fight.

Ringside rules

Rights-holders have long sought an effective legal mechanism to reduce the scale of online piracy of copyright material by UK users. Rights-holders are often prevented from taking action against primary infringers because they locate themselves beyond the jurisdiction of the courts or use decentralised networks in order to distribute content.  On the other hand, taking action against individual consumers has never been the favoured option.  Internet service providers (“ISPs”), the rights-holders argue, are the gatekeepers that provide the facilities that allow UK users to infringe copyright on a massive scale.  Moreover, they are not a moving target and have the practical means to restrict access to sources of infringements.

This case turned on the application of section 97A of the Copyright, Designs and Patents Act 1988, which provides that the High Court has the power to grant an injunction against an internet service provider (“ISP”) where the ISP has “actual knowledge of another person using their service to infringe copyright“.  The section was adopted in order to implement Article 8(3) of the Information Society Directive (2001/29/EC): “Member States shall ensure that rightsholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right“.  However, despite having the potential to be a valuable weapon against infringers, the provision has long sat collecting dust, untested by rights-holders. 

Until now.

Those in the ring

Newzbin2 operates a website at www.newzbin.com, which functions as part of an internet discussion system called “Usenet”, through which users can upload and view messages onto electronic newsboards.  One popular use of the Usenet system is to upload films; however the size of the files involved (and unsophisticated structure of the Usenet system) means that such films need to be split into multiple parts as a series of messages.  Newzbin2 plugs this deficiency by operating an indexing and search system which both provides information about the files and allows premium Newzbin2 users to create “NZB” files which assist the user to retrieve all the files required to assemble the required messages and reconstitute their desired film. 

The Applicants are six of Hollywood’s most renowned film producers and distributors (“Studios”): Twentieth Centrury Fox Corporation, Universal City Studios Productions LLP, Warner Bros Entertainment Inc., Paramount Pictures Corporation, Disney Enterprises, Inc., and Colombia Pictures Industries, Inc.  The Studios are all members of the Motion Picture Association.

The Respondent, British Telecommunications PLC (“BT”), is the largest ISP in the UK.

 

Round One – On the ropes

In March 2010, the High Court heard the Studios’ case that Newzbin (then Newzbin1, a UK company called Newzbin Ltd) had, through its website, infringed their copyright in six sample films.  Newzbin1 defended the allegations on the grounds that its website is “content agnostic”, and simply functions as a search engine.

Kitchin J rejected Newzbin1’s arguments, holding that Newzbin1:

(i) clearly knew that the vast majority of the films on the site were likely to be protected by copyright, and that users who used the NZB facility to download them were infringing copyright;

(ii) had “authorised” its premium members to make infringing copies of the Studio’s films;

(iii) had procured the premium members to infringe the Studio’s copyright and had participated in a common design (with the premium members) to infringe such copyright; and

(iv) had itself infringed the Studio’s copyright by communicating the copyright works to the public.

Newzbin1 subsequently went into voluntary liquidation and the website closed around the middle of May 2010.  However, just days later it reared its head again (as Newzbin2), displaying virtually identical content but operated by covert individuals (going under Reservoir Dogs pseudonyms), hosted by Swedish servers and registered to a company in the Seychelles.  

 

Round Two – The gloves are off

Not to be defeated, the Studios applied to the High Court once again, this time for an Order under section 97A that BT block, or at least impede, its subscribers from accessing the Newzbin2 website (in its original or reincarnated form), by extending its existing CleanFeed technology (originally launched to block attempts to access child pornography). 

BT accepted that it was a service provider within the meaning of Section 97A.  However, it disputed the Court’s jurisdiction to make a ruling under it as requested by the Studios.  Following a two-day hearing, Mr Justice Arnold ruled in favour of the Studios, applying the following reasoning:

1. Was BT’s service used by subscribers to infringe copyright?

Arnold J rejected BT’s pleas of passivity: i.e. that when subscribers download an infringing film, they only use Newzbin2’s system and not BT’s service, holding that Section 97A applies to use of a service to transmit or to receive infringing material.

2. Did BT have “actual knowledge of infringement”?

BT argued that it was necessary for the Studios to prove that it had actual knowledge of a particular infringement of a particular copyright work by a particular individual.  Arnold J rejected this submission, commenting that “[t]he purpose of Article 8(3), and hence section 97A, is to enable an injunction to be granted against a service provider which “carries” an infringement because service providers are best placed to bring “infringing activities” to an end. This again suggests that the requirement for actual knowledge should not be interpreted too restrictively.”  

With this purpose in mind, Arnold J defined the test for actual knowledge of an ISP as whether it has “actual knowledge of one or more persons using its service to infringe copyright“.  Applying this to the facts, “it follows that BT has actual knowledge of other persons using its service to infringe copyright“.

3. European legislation

Arnold J went on to reject defences based on the EU E-Commerce Directive (2000/31/EC) and the European Court of Human Rights (“ECHR”), in particular finding that: “The order sought by the Studios does not require BT to engage in active monitoring…but simply to block (or at least impede) access to the Newzbin2 website by automated means that do not involve detailed inspection of the data of any of BT’s subscribers.

4. Discretionary points

Arnold J also considered a number of discretionary points, finding that:

  • the order was proportionate (for the purposes of justifying any restriction on the “right to property” under the ECHR);
  • the order was justified even if it could be circumvented and only prevented access to the website by a minority of users;
  • although the Studios had no interest in around 30% of the material on the Newzbin2 website, they had a “sufficient interest to justify the making of the order sought“, and the fact the order sought would also benefit other rightholders was not a reason for refusing it; and
  • no reference to the ECJ was necessary.

BT reportedly has no intention to appeal the judgment.

 

It’s a knock-out?

The judgment marks a watershed in the fight against online piracy.  As Geoff Taylor, chief executive of the British Phonographic Industry commented “This judgment sends a clear signal that ISPs have a role to play in protecting their customers from rogue websites that exploit and profit from creative work without permission, ignore takedown notices and locate themselves beyond the reach of law enforcement“.

The full terms of the order against BT will be issued in October, and it remains far from clear how the blocking mechanism will be applied.  However, it is safe to say that that it will open the door to similar actions against other websites that provide access to infringing copies of copyright material, such as Pirate Bay as well as unauthorised websites that re-transmit live broadcasts.  The ruling does not have any direct or immediate application to other ISPs, but will have an  indirect impact on all ISPs, large and small, who may be subject to blocking injunctions should the requisite elements of section 97A be made out.  The ruling also gives weight to the secret working group discussions between Ed Vaizey (culture and communications minister), rights holders and ISPs around the formulation of a voluntary site-blocking system.

The decision could also have repercussions for other legislation; in particular the Digital Economy Act (“DEA”).  Rights-holders lobbied hard for the inclusion of “blocking injunctions” in the consultations on the DEA and were partly successful in that section 17 of the DEA gives the government the ability to introduce such injunctions at a later date.  However, depending on how the Newzbin decision is implemented in practice, regulations under section 17 of the DEA may no longer be needed. Moreover, if the decision yields a regime that is effective in preventing infringements, there will be much less pressure to fully implement or make use of the sections of the DEA that provide enforcement tools for rights-holders against individual consumers.

 

Newzbin2 refuses to go to the dogs…

Notwithstanding the rights-holders’ claims to victory, consumer groups have been more reticent to crack open the champagne.  Mike O’Connor, chief executive at statutory body Consumer Focus offered this cautionary reaction to the ruling: “Website blocking only treats the symptoms, not the cause, of why consumers infringe copyright…We are heading into a blocking injunction arms-race – what we really need is the members of the Motion Picture Association to be innovative and focus on meeting UK consumer demand legally.”

There also remains a technical issue as to whether the CleanFeed filtering technology can be adapted to this new “blocking” mandate.  James Blessing, council member of industry body the Internet Service Providers’ Association, gave BBC Radio 4’s PM programme his view: “Currently CleanFeed is dealing with a small, rural road in Scotland. Trying to put Newzbin and other sites into the same blocking technology would be a bit like shutting down the M1. It is not designed to do that“.

Perhaps the last word goes to Newzbin2, whose self-titled “Mr White” posted the following statement of defiance on the NZ blog: “Newzbin2 is currently evaluating methods to defeat Cleanfeed without the need to adopt radical technological changes (although we are looking at those too for the future). Blocking us is futile and the MPA have made Cleanfeed technology a target to be defeated by those determined to counter censorship technologies.

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