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.

Observations

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.

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

A close friend and a confidante of mine passed on this judgment delivered by the UK High Court of Justice (Chancery Division). This judgment will be discussed in this post and the next.

The judgment, regardless of its ability to justify the Court’s stance on the core issue of jurisdiction, is a must-read for litigators, more so for IP litigators. I say this because, seldom do we come across pleadings in India where sufficient attention has been paid to the issue of jurisdiction.

This may be because, although there are quite a few Indian judgments on jurisdiction, Courts in India tend to take only a broad stab on the issue without actually taking Plaintiffs to task. In that sense, I think this judgment gives valuable tips on how must the cause of action be pleaded in sufficient detail to establish jurisdiction of a Court.

I’ll deal with the facts of the case only to the extent to which they are needed for this post. 

The Plaintiffs in the case were UK-based entities, and both Defendants were entities foreign to the UK, one German and the other Swiss, the Swiss entity being the parent company of the German entity.

The Plaintiffs owned an online database “Football Live”, which provided statistics on football matches held by other co-Plaintiffs. The German defendant too ran a competing service called “Sports Live Data”; the Plaintiffs’ grievance was that certain entities, which were UK-based, provided links to the site of the German Defendant.

The German Defendant’s site in turn had pop-up windows that contained match statistics, which the Plaintiffs alleged infringed their copyright and database right.

What is to be noted here is that the UK entities, which provided links to the site of the German Defendant, were not impleaded in the suit.   

The primary questions before the Court were:

1. Had the Plaintiffs sufficiently pleaded the act of authorization of the infringement by the Defendants?

2. Was the Swiss parent company a necessary or even a proper party by virtue of it being the parent company of the first defendant/German entity?

3. Had the Plaintiffs made out a case establishing jurisdiction of the English Court, considering that both defendants were non-English entities? This required the Plaintiffs to establish there was indeed a “good arguable case” that the Defendants had “made available” the copyrighted content of the Plaintiffs.

“Authorization”

It was the Plaintiffs’ case that although the Defendants themselves did not reproduce the copyrighted content, they had “authorised” such reproduction. That said, if authorization had not been pleaded in the statement of claims, there could have been no cause of action disclosed against the Defendants.

At the outset, the Court considered it trite to state that the act of authorization need not have occurred in the UK, so long as the act so authorised has been committed in the UK and is an infringing one.To decide if authorization had been pleaded, the Court referred to Para 37 of the Plaintiffs’ statement of claims, which read thus:

“From a date presently unknown to the Claimants but prior to the issue of the Claim Form in these proceedings, the Defendants have used the whole or a substantial part of Football Live, without the consent of the Claimants or any of them. Pending disclosure and/or evidence, the Claimants rely on the following facts and matters:

(i) The reproduction of data from Football Live on pop-up windows hosted on the Defendants' Website which are linked to from the Bet365 Website and the Stan James Website, during the 2008/2009 and 2009/2010 seasons. These pop-up windows appear when the "Live Score" option on the Bet365 Website and the Stan James Website is clicked on.[Screen prints of the windows from the two websites are then attached and referred to]. These screen prints show examples of the data displayed (at the end of each game) in relation to all of the games played in each of the Leagues, on the relevant dates. The data which is displayed for each game is left on the Defendants' Website until the end of the day on which the game is played.

(ii) By way of further illustration, attached as Annex 4 is a table showing the extent of types of live data displayed…

(iii) By reason of the matter is aforesaid, it is to be inferred that the defendants reproduce and/or authorise the reproduction of the following events for every game in every League…(a) goals; (b) goalscorers (shown by the player's name, and a football icon); (c) own goals (shown by the player's name followed by "(og)" and a football icon); (d) penalties (shown by the player's name followed by "(pen)"; (e) yellow cards (shown by the player's name, and a yellow card icon); (f) red cards (shown by the player's name and a red card icon); and (g) substitution (shown by the names of the players coming on and off, and an icon comprising two circular arrows). …

(iv) By reason of the matters aforesaid, it is to be inferred that the Defendants reproduce and store all of the aforesaid data in an underlying electronic database.”

(v) The Defendants' Website states that the Defendant has been operating an "in-house Live Score service" since February 2005. In the premises, it is to be inferred that the Defendants had carried out the aforesaid (or similar) activities since at least 2005.

The Court took the view that although the Plaintiffs could have connected the allegation of authorization with the act of reproduction better in their pleadings, it would border on inane technicality to conclude that authorization hadn’t been pleaded at all.

As to what amounted to authorisation, the Court quoted the definition provided in Twentieth Century Fox Film Corp v Newzbin Ltd [2010] FSR 21, which is as follows:

""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."

To restate the above, an act is deemed as an authorizing one, provided it goes beyond mere supply of equipment which can be put to infringing use. The above definition goes a step further and states, rightly so, that even enablement, assistance or encouragement do not amount to authorization.

It’s hard to disagree with this proposition, but one wonders what difference would it make if enablement or assistance or encouragement were to be pleaded instead of authorization? In terms of establishing existence of liability, I am not sure it makes a difference. However, it may certainly affect practical apportionment of liability in terms of damages.

On the specific facts of the case, the Court took the view that the German defendant was in complete control of the content being reproduced in its pop-up windows. This, the Court opined, justified its conclusion that a case of "authorization" had indeed been made out.

I am not clear as far as this finding is concerned because "authorization" is to be construed as referring to authorization of the infringing act i.e. reproduction within the territory of UK Courts. Merely because the German Defendant had complete control over the contents being reproduced on its own website, how did it follow that reproduction within UK by UK-based entities had been "authorised" by the German defendant? 

I would think that authorization would have been made out only if the German defendant had authorized the linking of its contents by the UK entities. Since the website of the German Defendant is universally accessible, the Plaintiffs ought to have shown that there was specific express or implied authorization by the defendant to UK entities to link back to the reproduced content. In the absence of any proof of any such authorization, UK Courts ought not to have seized the matter. 

If I have mis-read the judgment on this issue, I welcome corrections.

The other essential findings of this judgment will be discussed in the next post.