Friday, December 24, 2010

Internet Jurisdiction: UK Chancery Court Takes a Restrictive View- II

In the last post, I discussed this judgment of the UK Chancery Court; in particular, the issue of authorization was dealt with. In this post, the remaining highlights of the judgment have been discussed.

Role of the Parent Company in the Infringing act/Joint Liability
The Court recalled authorities/precedents to explain that joint tortfeasance/liability of the parent and the subsidiary companies would follow only if there was active participation on the part of both companies. Mere knowledge of one company of the other’s actions would not suffice to establish joint liability, even if the former had complete control over the assets and management of the latter.

Somehow this principle seems to erode the concept of vicarious liability because it doesn’t ring of conviction when a holding company conveniently claims innocence with respect to a particular questionable activity. I must admit I am not sure of the position under Indian law on this point.

In the instant case, the Court held that both the Swiss and German Defendants were jointly liable because the General terms and Conditions available on the websites of the Swiss Defendant showed that it was responsible for delivering products/services to customers in return for a consideration.

This, the Court felt, established the joint liability of both the defendant entities.

Good Arguable case of Copyright Infringement
The central issue to be decided on this point was if the Defendants’ actions would qualify as communication of the copyrighted content to members of the public i.e. “making available the work to the public” either by electronic transmission or wire/wireless means.

The Court wondered if it could draw parallels between the emission theory associated with satellite broadcasting, and online transmission. The emission theory, as applied to broadcasting, states that the place where the act of broadcast occurs is “where the signals are introduced under the control of the person making the broadcast into an uninterrupted chain of communication”.

In other words, the place where one puts information in a communication conduit is the place of broadcasting, as opposed to the place where the broadcast is received by the end consumer.  The Court seemed to endorse the view that the emission theory applied to satellite broadcasting and online transmission because it did not appear from the UK provision that the principle was applicable only to satellite broadcasting.

Further, the Court was of the view that even if it was within the power of the defendants to restrict access to the content in certain jurisdictions, the absence of any such restriction need not by itself imply that they intended to communicate the information in that jurisdiction. (How is it that this logic did not apply to the issue of authorization?)

The Court also observed that since online transmission of the infringing content could be curtailed within the UK, the application of the emission theory did not render the copyright useless.

In short, the Court held that the infringing act occurred only where the act of online transmission had been committed, which for the Court, was the place where the server was situated.

In light of the above, the following conclusions were reached by the Court:
1. The Court did not have jurisdiction against the foreign defendants since the server of the defendants was located outside the UK, and hence there was no primary infringement by communication by the foreign defendants
2. Since the UK-based entities had not been impleaded, claims had to be amended accordingly for the court to take cognizance of the infringing activities of the UK-based entities.

The judgment doesn’t appear consistent or coherent because the Court takes the view that:

A. The foreign defendants had authorised reproduction of the infringing content, and yet the Court does not elaborate as to where and how was such authorisation established.
B. Then it proceeds to accept that there was joint liability of the foreign defendants with the UK-based customers for reproduction, extraction and re-utilization.
C. However, since the server of the foreign defendants was outside the UK, there was no communication to the public by the foreign defendants.

Since joint liability of the foreign defendants with UK-based customers for reproduction is another way of stating “authorization of reproduction”, I think the issue hasn't been addressed satisfactorily because the underlying premise of  authorization hasn’t been sufficiently dwelt upon by the Court.

As for the issue of “communication”, communication or transmission, as understood in common parlance, are acts which are not and cannot be termed successful if the information so communicated or transmitted is not received by the recipient. Stated otherwise, there is no complete communication without reception. Accordingly, in this case, since communication to UK-based customers was complete, the foreign defendants ought to have been held as communicating the copyrighted content.

That said, does communication without a specific concerted attempt to cater to customers in the UK, amount to communication to the UK public? If the answer is in the negative, then communication is only by the UK-based entities, and not by the foreign defendants.

What I mean is that since there is no proof to show that the foreign defendants intended to communicate the infringing content to users in the UK, it is the UK-based entities which have themselves ensured the communication of the content to users in the UK by linking to the German website. Therefore, the liability for infringement by communication falls on the UK-based entities, and not on the foreign defendants.

All in all, one is of the opinion that the judgment does not strike a consistent note on the line of logic it adopts to arrive at a decision on both issues of authorization and communication.

Comments/alternative views on the judgment are welcome.

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