Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE ARNOLD
Between :
(1) ENGLAND AND WALES CRICKET BOARD LIMITED (2) SKY UK LIMITED | Claimants |
- and - | |
(1) TIXDAQ LIMITED (2) FANATIX LIMITED | Defendants |
Robert Howe QC and Nick De Marco (instructed by Onside Law) for the Claimants
James Mellor QC and Maxwell Keay (instructed by Lee & Thompson LLP) for the Defendants
Hearing dates: 29 February-2, 4 March 2016
Judgment
MR JUSTICE ARNOLD :
Contents
Topic Paragraphs
Introduction 1
The parties 2-5
The witnesses 6-7
The Claimants’ witnesses 6
The Defendants’ witnesses 7
Factual background 8-40
The Claimants’ copyright works 8-9
Exploitation of the Claimants’ copyright works 10-15
Sports News Access Code of Practice (“SNAC”) 16-20
The genesis of the dispute 21-28
The App 29-32
The evolution of the App 33-38
The Website 39
The Social Media Accounts 40
The legislative context 41-52
International treaties 41
Rome Convention 42-43
WIPO Copyright Treaty 44-46
European directives 47-49
Information Society Directive 47-48
E-Commerce Directive 49
Domestic legislation 50-52
Electronic Commerce Regulations 52
Applicable legal principles 53-93
Interpretation of domestic legislation in the context of 53
European directives
Interpretation of European directives 54-57
Copyright in broadcasts and films 58-59
Substantial part 60-67
Interpretation of section 30(2) in accordance with Article 68-70
5(3)(c)
The CJEU’s approach to the interpretation of exceptions 71
The relevance of Article 5(5) 72
The relevance of Article 10 ECHR and Article 11 of the 73
Charter
Domestic authorities on the interpretation of section 30(2) 74
“For the purpose of” 75
“Reporting current events” 76-82
Fair dealing 83-85
Sufficient acknowledgement 86-87
The three-step test 88-92
Mere conduit and hosting 93
Liability for the commission of any infringing acts 94
Was each clip a substantial part of one of the Claimants’ copyright 95-102
works?
Scale of use 103-104
Assessment of the fair dealing defence: versions 8.2 and 8.3 of the 105-151
App
Was the use for the purpose of reporting current events? 106-129
Were the clips accompanied by a sufficient 130-135
acknowledgement?
Version 8.2 130-132
Version 8.3 133-135
Was the use fair dealing? 136-150
Does the use conflict with normal exploitation of the 137-147
works?
Have the works been published? 148
The amount and importance of the work taken: 149-150
is it justified by the informatory purpose?
Overall balance 151
Assessment: versions 8.3.2 and 8.4 of the App 152-156
Was the use for the purpose of reporting current events? 154
Were the clips accompanied by a sufficient 155
acknowledgement?
Was the use fair dealing? 156
Assessment of the fair dealing defence: versions 8.5 to 8.5.4 159-166
Is the use for the purpose of reporting current events? 160
Are the clips accompanied by a sufficient 161
acknowledgement?
Is the use fair dealing? 162-166
Mere conduit or hosting 167-171
The website and the Social Media Accounts 172
Flagrancy 173
Summary of principal conclusions 174
Introduction
The Claimants are the owners of the copyrights in television broadcasts, and in films incorporated within such broadcasts, of most cricket matches played by the England men’s and women’s cricket teams in England and Wales. The Defendants operate a website located at www.fanatix.com (“the Website”) and various mobile applications, in particular the fanatix app for use on Apple iPhones and iPads (“the App”). Prior to the giving of interim undertakings on 27 July 2015, the Defendants’ employees, contractors and users uploaded a considerable number of clips of broadcasts of cricket matches lasting up to 8 second to the App where they could be viewed by users. Users could also view such clips on the Website and on the Defendants’ Facebook page and Twitter feed (“the Social Media Accounts”). The Claimants contend that the Defendants have thereby infringed their copyrights. The Defendants deny infringement, relying primarily upon the defence of fair dealing for the purposes of reporting current events and secondarily upon immunities for acting as a mere conduit and hosting. A defence of fair dealing for the purposes of criticism or review was not pursued in closing submissions, and no defence of fair dealing for the purposes of quotation was ever advanced. The Defendants also counterclaim for a declaration of non-infringement in respect of the most recent versions of the App, namely version 8.5 and subsequent versions. Although the allegations of infringement range more widely, it is the App which is at the centre of the dispute, and accordingly I shall concentrate on that.
The parties
The First Claimant (“the ECB”) is the governing body of cricket in England and Wales. It is a private company limited by guarantee, which re-invests any profits which it generates for the benefit of all levels of cricket in England and Wales. The ECB is responsible, among other things, for the organisation and commercial exploitation of all cricket matches played by the England men’s and women’s cricket teams in England and Wales, save for matches played by those teams in England and Wales in events staged by the International Cricket Council (“the ICC”), such as the ICC World Cups.
The Second Claimant (“Sky”) is a well-known United Kingdom pay-television operator which operates (amongst others) the Sky Sports satellite broadcast television channels and related digital services.
The First Defendant is an English private limited company which was incorporated on 13 December 2006. It operates the various “fanatix” services referred to above. In addition, it operates a number of football-related websites and mobile applications. It also operates a website at www.tixdaq.com, which is a search engine for sports and entertainment event tickets.
The Second Defendant is another English private limited company which was incorporated on 11 March 2011. It has the same registered office as the First Defendants, and a common director and shareholder (Mr Muirhead). At present, the Second Defendant is dormant. For convenience, however, I shall generally refer to the Defendants collectively.
The witnesses
The Claimants’ witnesses
The Claimants called the following witnesses:
Sanjay Patel is the Commercial Director of the ECB.
Richard Verow is the Commercial Director of Sky Sports at Sky.
Philip Davies is Head of Cyber Security and Content Protection at Sky.
David McLean is the Head of Media Rights and Video Services at News Corp UK & Ireland Ltd (“News UK”).
Paul Molnar is the Director of Broadcasting at the Football Association Premier League Ltd (“FAPL”). FAPL is not directly involved in these proceedings, but it is interested because the Defendants’ services also feature clips of broadcasts of Premier League football matches (as well as other sporting events).
Richard Burgess is Head of Sports News and Radio Sport at the British Broadcasting Corporation (“the BBC”). Through no fault of his own, Mr Burgess was placed in a difficult position. The Claimants asked the BBC to verify the accuracy of Mr Grigg’s analysis of the BBC’s use of Sky cricket broadcasts (as to which, see below). The Claimants failed, however, to provide the BBC with copies of Mr Grigg’s recordings (i.e. the data underlying his analysis). Mr Burgess responded to this request in a letter which the Claimants served under cover of a hearsay notice. Unsurprisingly, the Defendants asked to cross-examine Mr Burgess. The analysis contained in his letter had not been carried out by Mr Burgess personally, but by a BBC team. The letter did not explain the methodology they had followed or include the underlying data they had analysed. Mr Burgess was not sure of the methodology employed, and had difficulty in explaining discrepancies between the BBC analysis and Mr Grigg’s.
Richard Moyes is a forensic expert employed by the Federation Against Copyright Theft Ltd (“FACT”). Although Mr Moyes was called as an expert witness, his evidence did not involve his expertise in computer forensics. Rather, it involved testing the functionality of the Website and App and recording the results. As such, it was what I would describe as quasi-expert evidence, in that it needed to be prepared in a methodical, thorough, objective and transparent manner. Counsel for the Defendants submitted that Mr Moyes had not even attempted to produce a fair and balanced report on the functionality of the Defendants’ service. I do not accept this criticism of Mr Moyes’ evidence. His instructions were to ascertain whether the restrictions relied on by the Defendants were consistently applied and/or could be avoided by users, and that is what he did. The Defendants do not suggest that his conclusions were inaccurate.
The Defendants’ witnesses
The Defendants called the following witnesses:
William Muirhead is the Chief Executive Officer, a director and a shareholder of the First Defendant, and a director and the sole shareholder of the Second Defendant. Counsel for the Claimants submitted that Mr Muirhead was not an honest witness. I do not accept this, although I do agree that some of the evidence in his first witness statement was not entirely frank and that there was a troubling discrepancy between what he had told investors about the extent of use of the App and his evidence to the court. Mr Muirhead was, however, a distinctly argumentative witness who was determined to answer questions in accordance with the Defendants’ case. Given the nature of the issues, on the other hand, this is not of great significance.
James Grigg was formerly the Defendants’ Chief Operating Officer. He is now employed elsewhere. Mr Grigg gave evidence about an evidence-gathering and analysis exercise that he and a team of the Defendants’ employees carried out which involved the recording and analysis of broadcasts of cricket by the BBC News channel, ITN, Channel 4 and Channel 5 and comparing it with what had appeared on the App. Mr Grigg’s evidence was adduced as evidence of fact, rather than as expert evidence. Like Mr Moyes’ evidence, it was quasi-expert evidence. There was no real challenge to the methodology Mr Grigg employed or to the accuracy of his analysis so far as it went.
Stephen Griffiths is Vice President of Engineering. He gave evidence about the operation of the algorithm incorporated in version 8.5 of the App (as to which, see below).
Factual background
The Claimants’ copyright works
For the purposes of this claim, the Claimants rely upon two categories of copyright work, namely (i) television broadcasts of cricket matches staged under the auspices of the ECB and (ii) films made during the course of the production of the broadcasts, in particular by recording broadcast footage for the purposes of action replays. There is no dispute as to the subsistence of United Kingdom copyright in these works or that the creation of the copyright works requires substantial investment by Sky on both equipment and staff.
Nor is there any dispute as to the ownership of the copyrights. In summary, by virtue of an agreement between the ECB and Sky dated 31 January 2012 (“the Sky Agreement”), Sky assigned the entire copyright in the Broadcast Footage (as defined in the Sky Agreement) to the ECB, but Sky retained the copyright in commentary, so-called Iso-Feeds and Ancillary Footage for the period from 1 January 2014 to 31 December 2019. The ECB granted Sky the Broadcaster Rights, but reserved the Web Rights, Mobile Rights and Reserved Rights, in the Broadcast Footage. Notwithstanding ECB’s reservation of the Web Rights and Mobile Rights, the ECB granted Sky the rights to include in its services, among other things, (a) six clips (each of average duration of 30 seconds averaged over the Match Day) per hour per Match Day the total duration of which was not to exceed three minutes per hour of Footage and (b) a package of up to 2½ minutes of highlights of Footage, which could be updated up to five times during the Match Day and once after close of the play. The fees payable by Sky during the term of the Sky Agreement run into hundreds of millions of pounds. The precise details of the Sky Agreement do not matter for present purposes.
Exploitation of the Claimants’ copyright works
Sky exploits its rights under the Sky Agreement primarily by broadcasting matches on its satellite television channels and digital services.
The ECB has granted terrestrial television highlights in respect of the matches in the 2014 to 2017 seasons to Channel 5 Broadcasting Ltd (“Channel 5”) in exchange for a substantial fee. Channel 5 also has the right to include clips within its website and mobile applications provided that clips do not exceed 30 seconds, are not transmitted sooner than 10 am on the day after the relevant Match Day and are shown for promotional purposes only.
By an agreement dated 17 April 2014 the ECB granted News UK exclusive audio-visual clip rights in respect of matches during the 2014 and 2015 seasons in exchange for a significant six figure annual sum. This agreement entitled News UK to stream a limited number of clips on certain digital platforms, being the websites and mobile and other applications of The Times and The Sunday Times (and The Sun, but this ceased to be relevant in 2015 for unconnected reasons). Under the agreement News UK could stream (a) six clips (each of average duration of 30 seconds averaged over the Match Day) per hour per Match Day the total duration of which was not to exceed three minutes per hour of Footage, (b) a package of up to 2½ minutes of highlights of Footage, which could be updated up to five times during the Match Day and once after close of the play and (c) a package of up to 2 ½ minutes of highlights of Footage from previous matches which could be updated on a weekly basis.
The agreement between the ECB and News UK will come to an end on 31 March 2016. News UK had an exclusive negotiating period for a replacement agreement which ended on 31 December 2015 without any agreement having been concluded. As explained in more detail below, it is clear from the evidence that the uncertainty generated by this litigation has deterred News UK and other potential licensees from concluding an agreement.
In this regard Mr Patel explained that, towards the end of last year, he had reviewed the ECB’s digital strategy bearing in mind the forthcoming expiry of the News UK agreement. He concluded that it was in the ECB’s interests to move to a model whereby, in addition to the limited clip rights enjoyed by Sky, with effect from the start of the 2016 season the ECB would exploit its clips rights by (i) retaining some limited rights to exploit clips on its own official website and other digital platforms and (ii) selling other clips rights to a third party on an exclusive basis. The purpose of the ECB retaining limited rights is to drive significantly more traffic to its own platforms, thereby raising their profile and providing the ECB with income from advertising and sponsorship. Mr Patel’s projection was that the ECB should be able to generate significant six figure revenues per year from a standing start. Despite this change in strategy, it would have been Mr Patel’s intention to have had concluded a new deal with a third party by now, but the litigation had prevented this.
The ECB also grants limited clip rights to its title sponsors such as Investec Bank plc, which sponsors ECB test matches. These agreements do not allow use of the clips until at least 12 hours after the action.
Sports News Access Code of Practice (“SNAC”)
Following the decision in British Broadcasting Corp v British Satellite Broadcasting Ltd [1991] Ch 141 (as to which, see below), the then current television broadcasters (the BBC, ITV, ITN, BSkyB, TV-AM and Channel 4) established an industry code of practice called the Sports News Access Code of Practice (“SNAC”) which was signed in 26 April 1991. This has subsequently been updated and revised and the current version was signed by the BBC, ITV, ITN, BSkyB, GMTV, Channel 4, Channel 5 and MUTV on 16 May 2014. SNAC sets out the circumstances in which one broadcaster is permitted to use footage from the sports broadcasts of another. In the preamble to SNAC the signatories acknowledge that the use of another broadcaster’s footage within the terms of SNAC will constitute fair dealing for the purpose of reporting current events.
SNAC does not displace or constrain the law of fair dealing as enacted by Parliament and interpreted by the courts. As Mr Burgess noted, SNAC provides certainty that use of footage within its terms will not provoke complaint, but does not preclude signatories (or anyone else) from relying on the fair dealing provisions of the 1988 Act to defend use of footage that may be beyond the scope of SNAC.
SNAC only applies in certain circumstances. In particular:
SNAC only applies to “linear television broadcast channels offering bona fide news programmes regardless of the method of delivery of such channel” (paragraph 9 of the preamble).
SNAC only permits the inclusion of sports footage in News, Regional News and Local News programmes (clause 2). It expressly does not permit the inclusion of such footage in other programmes such as specialised sports news programmes which were the subject of the decision in BBC v BSB (clause 3.4).
SNAC contains a number of provisions that limit the amount of sports footage that may be shown by broadcasters. In particular:
In general, a maximum of 60 seconds of footage from a sports event can be shown in a news item reporting that sports event (clause 4.2).
For a certain class of “specified events”, a maximum of 90 seconds of footage can be shown in a news item reporting that specified event (clause 5.2). Cricket test matches fall within the class of specified events (clause 1.12).
No more than six minutes of sports footage in total can be shown in any single programme hour (clause 8).
An extract can be shown no more than six times in news programmes on any one national channel (clause 9.1).
As counsel for the Defendants pointed out, SNAC does not in terms prevent clips from one broadcaster’s coverage of a sports event from being broadcast by another broadcaster on a “near-live” basis. At trial the Defendants sought to demonstrate that it was the practice of the signatories to do just that, and in particular that in the summer of 2015 the BBC News channel had broadcast clips of England cricket matches near-live. I do not accept that the evidence established this. Rather, what it established was that BBC News had regular scheduled news bulletins, and that clips of cricket action, particularly wickets, were often included in such bulletins not long after the incident in question. The extent to which this occurred, however, depended on the timing of the incident relative to the time of the bulletin and on other factors such as the excitement of the match and the extent to which there were other competing news stories. Thus in some cases a clip of a wicket might be shown only a few minutes after it had fallen, whereas in other cases it might not be shown for several hours (if it was shown at all). Thus I accept that there was frequent usage during the course of the match (“in-play”), particularly at lunch time and towards the end of the afternoon, although there was also usage after the end of play. But this is not the same thing as near-live coverage.
The genesis of the dispute
Mr Muirhead has been a sports media technology entrepreneur since founding a business called SportEV whilst at university in 1999. SportEV provided sports rights holders with technology for commercialising video assets online and on mobile devices via Internet Protocol delivery. SportEV’s platform was licensed directly and indirectly to a number of prominent sports rights holders, including the ECB for the 2001 Ashes test series and FAPL from 2004 to 2007.
Mr Muirhead’s evidence was that the idea for the App initially came to him in early 2013 when he first used the short video-sharing application Vine. Vine made it very easy for users to capture and share short videos. As Mr Muirhead put it in his first witness statement:
“My immediate thought was how this might impact the sports media markets. I thought that the ability for individuals to easily capture content from their televisions with their smartphones and to share it over social networks was going to quickly lead to the development of short-video sharing services focussed on sports events.”
Mr Muirhead’s assessment was that such services would be particularly popular with 18-35 year olds, who were becoming accustomed to accessing content through mobile phones and tablets using 4G and Wi-Fi networks at work, at home and in public.
Mr Muirhead appears to have done little to progress this idea in 2013, but between April and August 2014 he devised a plan. This included taking legal advice with respect to fair dealing in August 2014 (and subsequently). On 23 August 2014 Mr Muirhead sent an email to Mr Grigg and two other employees of the Defendants setting out guidelines for the use of video clips on the Defendants’ football blog caughtoffside.com which were subsequently used for the App.
The Defendants started developing the App in September 2014. The Defendants launched version 8 of the App (earlier versions did not include the sports clip facility) in January 2015. Although this was described in contemporaneous documents as a beta version of the App (i.e. a version released for public testing), Mr Muirhead told me that it was more of an alpha version (i.e. a private test version). A beta version, or a second beta version, was released in February 2015. A number of subsequent versions have been released, as described below.
Mr Muirhead was keen to stress in his evidence that he had proceeded throughout the project with an awareness of the rights of copyright owners like the Claimants and that he had been careful to take steps to try to ensure that the Defendants stayed within the law with respect to those rights. Up to a point, I accept this. On the other hand, it is clear from the Defendants’ internal and external documents that Mr Muirhead was always well aware that the Defendants were (as he put it in a presentation to investors) “pushing legal boundaries”. Moreover, the documents show, and Mr Muirhead accepted, that he and his team were not as careful in the early stages of the project as they could have been.
The ECB first became aware of the Defendants’ activities on 24 June 2015, when it noticed that the Defendants had a highlight clips reel of the key moments of three recent England Cricket Matches (the first day of the first test match between England and New Zealand on 21 May 2015, the fifth one day international between England and New Zealand on 20 June 2015 and the T20 international between England and New Zealand on 23 June 2015) uploaded onto the Website and Social Media Accounts. The ECB also realised that clips could be copied from live Sky broadcasts and uploaded on a near-live basis. The ECB was concerned about this. At around the same time, it was contacted by News UK and it contacted Sky, which also both expressed concern.
The Claimants’ solicitors wrote to the Defendants on 25 June 2015, requiring them to remove certain identified infringing clips and asking for various undertakings. Mr Muirhead responded on 29 June 2015. Further correspondence then ensued. The Defendants refused to take down more than a limited number of clips and indicated that they would allow users to upload further clips in the future. In view of the Defendants’ refusal to provide undertakings, the Claimants then started the present proceedings on 17 July 2015. The Claimants applied for an interim injunction at the same time as issuing the claim. A full hearing of the application took place before Asplin J on 27 July 2015, which led to the Defendants giving undertakings pending trial.
The App
In outline, the way in which the App works is as follows:
The Defendants’ employees and contractors, and members of the public who have downloaded the App, use screen capture technology to copy clips of broadcast footage of sporting events. They then upload the clips to the App. Each clip can last up to 8 seconds. It is worth noting that the visual quality of the clips is much better than one might expect.
Users are instructed to add commentary to the clips they upload. During the upload process the user is told to “Let other fans know about the action you’ve captured…” In more recent versions of the App, users are also instructed to attribute the clip to a particular broadcaster, where applicable, and a particular sports event.
The Defendants superimpose a “fanatix” logo on each uploaded clip.
The App has, or used to have, sections known as “Trending”, “Latest”, “My Feed”, “News” and “Games”. The Trending section is no longer a feature of the App and so I will not describe it. The Latest section contains clips posted by “whitelisted users” (employees or contractors of the Defendants) and clips posted by ordinary users which have been selected by the Defendants’ employees. The My Feed section contains clips posted by other users whom the user “follows”, clips commented on by such users and clips posted by whitelisted users which are matched against the user’s favourite teams. The News section contains social media items related to the user’s favourite teams, clips posted by whitelisted users and matched against those teams and clips selected for inclusion by the Defendants’ employees. The Games section is only relevant to football.
Users can browse and search the clips that they and others have uploaded. Each clip will play repeatedly once selected until the user moves on.
Subject to the restrictions discussed below, the App enables clips to be posted seconds after the incidents depicted throughout the match. Thus it enables users to create and view highlights on a near-live basis.
The Defendants send users so-called Apple push notifications to alert them to the availability of new content of interest to them.
Advertisements are displayed to users.
Users can download the App from the Apple App Store. The Defendants advertise the App on the Website with the following text:
“Capture, Caption. Share!
Create 8 second sports news snippets. Caption with Attitude. Share sports video with millions of fans.”
According to an investor presentation prepared by the Defendants dated June 2015 (the eighth of the presentations discussed below), the Defendants achieved “250m Replays in 100 days since launch – 50m in-app” (although the accompanying graph showed 30m in-app). Mr Muirhead explained in his evidence, however, that this metric (which seems have to been repeatedly used by the Defendants in discussions with investors) was misleading, because it simply represented a count of the number of times clips had been played. It did not represent the number of times a user had actually watched a clip, still less the number of active unique users.
Mr Muirhead claimed during cross-examination that, during the period from May to July 2015, the App had as few as 1,000 daily active unique users. I do not accept this, because it conflicts with the figures given in the Defendants’ contemporaneous documents. Thus in a presentation dated May 2015 (the sixth of the presentations discussed below) the Defendants claimed to have 20,000 daily active users, and in the June 2015 presentation referred to above they claimed to have 65,000 monthly active users. No doubt those figures were rounded up, but it is unlikely that they were wrong by an order of magnitude. I accept the submission of counsel for the Claimants that the most reliable figures are those given by Mr Muirhead to an investor called Sam Li in an email dated 30 June 2015, namely 52,713 monthly active users and 18,292 average daily active users in May 2015. Although it is less immediately relevant, I note for completeness that Mr Griffiths’ evidence was that there had been 130,000 active users in the 30 days before he gave evidence.
The evolution of the App
The evolution of the App is summarised in the following table.
Date | Version | Principal features |
Jan 2015 | Alpha | 8 seconds maximum. Users instructed to add commentary. |
Feb 2015 | Beta | |
11.05.15 | v.8.2 | Landscape functionality (to increase capture of broadcaster’s logo). |
09.07.15 | v.8.3 | Formal attribution process. |
15.08.15 | v.8.3.2 | Clips removed after 24 hours. Minimum 70 characters of commentary. Maximum 2 clips per hour. |
21.12.15 | v 8.4 | “Pictures from”. Obligation to associate with sport event. |
14.01.16 | v 8.5 | Additional restrictions applied via the algorithm. No sharing to third party platforms unless they apply the same restrictions. |
20.01.16 | v 8.5.1 | Refinements of the algorithm. |
27.01.16 | v.8.5.2 | Algorithm fully operational. |
12.02.16 | v. 8.5.3 | Correction of algorithm. |
23.02.16 | v. 8.5.4 | Correction of algorithm. |
In more detail, the changes made have been as follows. From version 8.3 onwards, users have been obliged to attribute clips to a specific source broadcaster or to confirm that the clip contains no third party broadcast footage.
From version 8.3.2 onwards:
users have been required to add at least 70 characters of commentary before a clip can be uploaded;
users are restricted to uploading a maximum of 16 seconds (two 8 second clips) per hour and the amount of content uploaded to the editorially controlled feeds is restricted to 16 seconds (two 8 second clips) per hour from each sports event; and
all clips are removed after 24 hours unless one of the Defendants’ employees or agents prevents this using an “eternal” function, which they are only supposed to if the clip contains no third party broadcast footage. (As Mr Muirhead accepted, however, the eternal function has occasionally been used incorrectly.)
From version 8.4 onwards, users have been obliged either to associate each clip with a specific sports event or to confirm that no sports event is associated with the clip. In addition, the attribution has been clarified by use of the expression “pictures from”.
Version 8.5 of the App incorporates an algorithm that restricts the amount of footage from each sports event which can be viewed by a user during a 24 hour period whether or not it is included in the editorially controlled feeds. After the first 8 seconds from a particular event have been viewed, the algorithm limits the rate at which clips can be viewed to 0.256 seconds per minute of live broadcast (or 16 seconds per hour). (Content can continue to be viewed at the same rate after the end of the live broadcast, however.) Furthermore, the algorithm imposes an overall daily limit on the amount which can be viewed. In the case of specified events (which are defined in the same way as in SNAC and include test matches played by the England cricket team), the maximum is 90 seconds per day. In the case of other sports events (which include other matches played by the England cricket team), the maximum is 60 seconds per day. Finally, there is an overall limit of 360 seconds per day. It is important to appreciate, however, that these restrictions are applied at the stage of viewing rather than uploading. Thus they do not restrict the amount of footage that a number of users can cumulatively upload.
The operation of the algorithm was refined and corrected in versions 8.5.1, 8.5.2, 8.5.3 and 8.5.4. The details of this process do not matter.
The Website
Some of the clips uploaded to the App are also uploaded by the Defendants’ employees or contractors to the homepage and “Latest Videos” section of the Website together with commentary. Users can browse these. The Website also has a news section which displays advertisements. The news section of the Website had a total of approximately 5.8 million visitors in the period from 1 January 2015 to 7 September 2015, but Mr Muirhead’s evidence was that during the period from May to July 2015 there were between 20,000 and 100,000 daily users, half of whom were from the UK.
The Social Media Accounts
As mentioned above, some clips are also uploaded to the Social Media Accounts. The Social Media Accounts have a combined following of in excess of 2.25 million users, but Mr Muirhead’s evidence was that from May to July 2015 the Facebook page had between 10,000 and 450,000 daily users, 30% of whom were from the UK, while the Twitter account had about 5,000 daily users during that period.
The legislative context
International treaties
Berne Convention. The International Convention for the Protection of Literary and Artistic works signed at Berne on 9 September 1886 (Paris Act of 1971 as amended in 1979) (“the Berne Convention”), to which all Member States of the European Union are parties, includes the following provisions:
“Article 2
(1) The expression ‘literary and artistic works’ shall include every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expression, such as books, pamphlets and other writings; lectures, addresses, sermons and other works of the same nature; dramatic or dramatico-musical works; choreographic works and entertainments in dumb show; musical compositions with or without words; cinematographic works to which are assimilated works expressed by a process analogous to cinematography; works of drawing, painting, architecture, sculpture, engraving and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science.
…
Article 9
(1) Authors of literary and artistic works protected by this Convention shall have the exclusive right of authorising the reproduction of these works, in any manner or form.
(2) It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.
…
Article 10bis
(1) It shall be a matter for legislation in the countries of the Union to permit the reproduction by the press, the broadcasting or the communication to the public by wire of articles published in newspapers or periodicals on current economic, political or religious topics, and of broadcast works of the same character, in cases in which the reproduction, broadcasting or such communication thereof is not expressly reserved. Nevertheless, the source must always be clearly indicated; the legal consequences of a breach of this obligation shall be determined by the legislation of the country where protection is claimed.
(2) It shall also be a matter for legislation in the countries of the Union to determine the conditions under which, for the purpose of reporting current events by means of photography, cinematography, broadcasting or communication to the public by wire, literary or artistic works seen or heard in the course of the event may, to the extent justified by the informatory purpose, be reproduced and made available to the public.
Article 11bis
(1) Authors of literary and artistic works shall enjoy the exclusive right of authorizing:
(i) the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images;
(ii) any communication to the public by wire or by rebroadcasting of the broadcast of the work, when this communication is made by an organization other than the original one;
…
(2) It shall be a matter for legislation in the countries of the Union to determine the conditions under which the rights mentioned in the preceding paragraph may be exercised, but these conditions shall apply only in the countries where they have been prescribed. They shall not in any circumstances be prejudicial to the moral rights of the author, nor to his right to obtain equitable remuneration which, in the absence of agreement, shall be fixed by competent authority.
…
Article 20
The Governments of the countries of the Union reserve the right to enter into special agreements among themselves, in so far as such agreements grant to authors more extensive rights than those granted by the Convention, or contain other provisions not contrary to this Convention. The provisions of existing agreements which satisfy these conditions shall remain applicable.”
Rome Convention. The International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations signed in Rome on 26 October 1961 (“the Rome Convention”), to which all Member States of the European Union are parties, includes the following provisions:
“Article 13
Broadcasting organisations shall enjoy the right to authorize or prohibit:
(a) the rebroadcasting of their broadcasts;
(b) the fixation of their broadcasts;
(c) the reproduction:
(i) of fixations, made without their consent, of their broadcasts;
(ii) of fixations, made in accordance with the provisions of Article 15, of their broadcasts, if the reproduction is made for purposes different from those referred to in those provisions;
…
Article 15
1. Any Contracting State may, in its domestic laws and regulations, provide for exceptions to the protection guaranteed by this Convention as regards:
…
(b) use of short excerpts in connection with the reporting of current events;
…
2. Irrespective of paragraph 1 of this Article, any Contracting State may, in its domestic laws and regulations, provide for the same kinds of limitations with regard to the protection of performers, producers of phonograms and broadcasting organisations, as it provides for, in its domestic laws and regulations, in connection with the protection of copyright in literary and artistic works. However, compulsory licences may be provided for only to the extent to which they are compatible with this Convention.
Article 22
Contracting States reserve the right to enter into special agreements among themselves in so far as such agreements grant to performers, producers of phonograms or broadcasting organisations more extensive rights than those granted by this Convention or contain other provisions not contrary to this Convention.”
TRIPS. The Agreement on Trade-related Aspects of Intellectual Property Rights (commonly known as “TRIPS”) which forms Annex 1C to the Agreement establishing the World Trade Organisation signed in Morocco on 15 April 1994, to whom the European Union and all its Member States are parties, includes the following provisions:
“Article 9
Relation to the Berne Convention
1. Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.
…
Article 13
Limitation and Exceptions
Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.
Article 14
Protection of Performers, Producers of Phonograms (Sound Recordings) and Broadcasting Organizations
…
3. Broadcasting organizations shall have the right to prohibit the following acts when undertaken without their authorization: the fixation, the reproduction of fixations, and the rebroadcasting by wireless means of broadcasts, as well as the communication to the public of television broadcasts of the same. Where Members do not grant such rights to broadcasting organizations, they shall provide owners of copyright in the subject matter of broadcasts with the possibility of preventing the above acts, subject to the provisions of the Berne Convention (1971).
…
6. Any Member may, in relation to the rights conferred under paragraphs 1, 2 and 3, provide for conditions, limitations, exceptions and reservations to the extent permitted by the Rome Convention. …”
WIPO Copyright Treaty. The World Intellectual Property Organisation Copyright Treaty agreed in Geneva on 20 December 1996 (“the WIPO Copyright Treaty”), to which the European Union and all its Member States are parties, includes the following provisions:
“ Article 1
Relation to the Berne Convention
(1) This Treaty is a special agreement within the meaning of Article 20 of the Berne Convention for the Protection of Literary and Artistic Works, as regards Contracting Parties that are countries of the Union established by that Convention. This Treaty shall not have any connection with treaties other than the Berne Convention, nor shall it prejudice any rights and obligations under any other treaties.
(2) Nothing in this Treaty shall derogate from existing obligations that Contracting Parties have to each other under the Berne Convention for the Protection of Literary and Artistic Works.
(3) Hereinafter, ‘Berne Convention’ shall refer to the Paris Act of July 24, 1971 of the Berne Convention for the Protection of Literary and Artistic Works.
(4) Contracting Parties shall comply with Articles 1 to 21 and the Appendix of the Berne Convention.
Article 3
Application of Articles 2 to 6 of the Berne Convention
Contracting Parties shall apply mutatis mutandis the provisions of Articles 2 to 6 of the Berne Convention in respect of the protection provided for in this Treaty.
Article 8
Right of Communication to the Public
Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them
Article 10
Limitation and Exceptions
(1) Contracting Parties may, in their national legislation, provide for limitations of or exceptions to the rights granted to authors of literary and artistic works under this Treaty in certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.
(2) Contracting Parties shall, when applying the Berne Convention, confine any limitations of or exceptions to rights provided for therein to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.”
At the Diplomatic Conference at which the WIPO Copyright Treaty was adopted, a number of statements concerning its interpretation were agreed. These include the following statement:
“Concerning Article 10
It is understood that the provisions of Article 10 permit Contracting Parties to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable under the Berne Convention. Similarly, these provisions should be understood to permit Contracting Parties to devise new exceptions and limitations that are appropriate in the digital network environment.
It is also understood that Article 10(2) neither reduces nor extends the scope of applicability of the limitations and exceptions permitted by the Berne Convention.”
Although the WIPO Copyright Treaty was approved by the Council of the European Community on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000, the European Union and many of its Member States, including the United Kingdom, did not ratify the Treaty until 14 December 2009, although some Member States ratified it at an earlier date. The Treaty entered into force with respect to the European Union and the United Kingdom on 14 March 2010.
European directives
Information Society Directive. European Parliament and Council Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (“the Information Society Directive”) includes the following recitals:
“(15) The Diplomatic Conference held under the auspices of the World Intellectual Property Organisation (WIPO) in December 1996 led to the adoption of two new Treaties, the ‘WIPO Copyright Treaty’ and the ‘WIPO Performances and Phonograms Treaty’, dealing respectively with the protection of authors and the protection of performers and phonogram producers. Those Treaties update the international protection for copyright and related rights significantly, not least with regard to the so-called ‘digital agenda’, and improve the means to fight piracy world-wide. The Community and a majority of Member States have already signed the Treaties and the process of making arrangements for the ratification of the Treaties by the Community and the Member States is under way. This Directive also serves to implement a number of the new international obligations.
…
(31) A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded. The existing exceptions and limitations to the rights as set out by the Member States have to be reassessed in the light of the new electronic environment. Existing differences in the exceptions and limitations to certain restricted acts have direct negative effects on the functioning of the internal market of copyright and related rights. Such differences could well become more pronounced in view of the further development of transborder exploitation of works and cross-border activities. In order to ensure the proper functioning of the internal market, such exceptions and limitations should be defined more harmoniously. The degree of their harmonisation should be based on their impact on the smooth functioning of the internal market.
…
(34) Member States should be given the option of providing for certain exceptions or limitations for cases such as educational and scientific purposes, for the benefit of public institutions such as libraries and archives, for purposes of news reporting, for quotations, for use by people with disabilities, for public security uses and for uses in administrative and judicial proceedings.
…
(44) When applying the exceptions and limitations provided for in this Directive, they should be exercised in accordance with international obligations. Such exceptions and limitations may not be applied in a way which prejudices the legitimate interests of the rightholder or which conflicts with the normal exploitation of his work or other subject-matter. The provision of such exceptions or limitations by Member States should, in particular, duly reflect the increased economic impact that such exceptions or limitations may have in the context of the new electronic environment. Therefore, the scope of certain exceptions or limitations may have to be even more limited when it comes to certain new uses of copyright works and other subject-matter.
…”
The Information Society Directive includes the following operative provisions:
“Article 2
Reproduction right
Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:
(a) for authors, of their works;
…
(d) for the producers of the first fixations of films, in respect of the original and copies of their films;
(e) for broadcasting organisations, of fixations of their broadcasts, whether those broadcasts are transmitted by wire or over the air, including by cable or satellite.
Article 3
Right of communication to the public of works and right of making available to the public other subject-matter
1. Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.
2. Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:
…
(c) for the producers of the first fixations of films, of the original and copies of their films;
(d) for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.
3. The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.
Article 5
Exceptions and limitations
...
3. Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases:
…
(c) reproduction by the press, communication to the public or making available of published articles on current economic, political or religious topics or of broadcast works or other subject-matter of the same character, in cases where such use is not expressly reserved, and as long as the source, including the author's name, is indicated, or use of works or other subject-matter in connection with the reporting of current events, to the extent justified by the informatory purpose and as long as the source, including the author's name, is indicated, unless this turns out to be impossible;
…
5. The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.”
E-Commerce Directive. European Parliament and Council Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (“the E-Commerce Directive”) includes the following provisions:
“Article 12
Mere conduit
1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, Member States shall ensure that the service provider is not liable for the information transmitted, on condition that the provider:
(a) does not initiate the transmission;
(b) does not select the receiver of the transmission; and
(c) does not select or modify the information contained in the transmission.
2. The acts of transmission and of provision of access referred to in paragraph 1 include the automatic, intermediate and transient storage of the information transmitted in so far as this takes place for the sole purpose of carrying out the transmission in the communication network, and provided that the information is not stored for any period longer than is reasonably necessary for the transmission.
3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States' legal systems, of requiring the service provider to terminate or prevent an infringement.
Article 14
Hosting
1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that:
(a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or
(b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.
2. Paragraph 1 shall not apply when the recipient of the service is acting under the authority or the control of the provider.
3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States' legal systems, of requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility for Member States of establishing procedures governing the removal or disabling of access to information
Article 15
No general obligation to monitor
1. Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity.
2. Member States may establish obligations for information society service providers promptly to inform the competent public authorities of alleged illegal activities undertaken or information provided by recipients of their service or obligations to communicate to the competent authorities, at their request, information enabling the identification of recipients of their service with whom they have storage agreements.”
Domestic legislation
Copyright, Designs and Patents Act 1988. The Copyright, Designs and Patents Act 1988 was amended pursuant to section 2(2) of the European Communities Act 1972 by the Copyright and Related Rights Regulations 2003, SI 2003/2498, to implement the Information Society Directive. As amended by the 2003 Regulations, and other legislation, the 1988 Act includes the following provisions:
“Copyright and copyright works
1.(1) Copyright is a property right which subsists in accordance with this Part in the following descriptions of work-
…
(b) sound recordings, films or broadcasts, and
…
The acts restricted by copyright in a work
16.(1) The owner of the copyright in a work has, in accordance with the following provisions of this Chapter, the exclusive right to do the following acts in the United Kingdom –
(a) to copy the work (see section 17);
…
(d) to communicate the work to the public (see section 20);
…
(3) References in this Part to the doing of an act restricted by the copyright in a work are to the doing of it –
(a) in relation to the work as a whole or any substantial part of it
(b) either directly or indirectly;
and it is immaterial whether any intervening acts themselves infringe copyright.
(4) This Chapter has effect subject to-
(a) the provisions of Chapter III (acts permitted in relation to copyright works)
…
Infringement of copyright by copying
17.(1) The copying of the work is an act restricted by the copyright in every description of copyright work; and references in this Part to copying and copies shall be construed as follows.
(2) Copying in relation to a literary, dramatic, musical or artistic work means reproducing the work in any material form. This includes storing the work in any medium by electronic means.
…
(6) Copying in relation to any description of work includes the making of copies which are transient or are incidental to some other use of the work.
Infringement by communication to the public
20.(1) The communication to the public of the work is an act restricted by the copyright in--
…
(b) a sound recording or film, or
(c) a broadcast.
(2) References in this Part to communication to the public are to communication to the public by electronic transmission, and in relation to a work include-
(a) the broadcasting of the work;
(b) the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them.
Criticism, review, quotation and news reporting
30.
…
(2) Fair dealing with a work (other than a photograph) for the purpose of reporting current events does not infringe any copyright in the work provided that (subject to subsection (3)) it is accompanied by a sufficient acknowledgement.
(3) No acknowledgement is required in connection with the reporting of current events by means of a sound recording, film or broadcast where this would be impossible for reasons of practicality or otherwise.
…
Minor definitions
178. In this Part-
…
‘sufficient acknowledgement’ means an acknowledgement identifying the work in question by its title or other description, and identifying the author unless –
(a) in the case of a published work, it is published anonymously;
(b) in the case of an unpublished work, it is not possible for a person to ascertain the identity of the author by reasonable inquiry;
…
”
The WTO Agreement, which includes TRIPS, was declared to be an EU Treaty pursuant to section 1(3) of the 1972 Act by the European Communities (Definition of Treaties) (The Agreement Establishing the World Trade Organisation) Order 1995, SI 1995/265. The WIPO Copyright Treaty was declared to be an EU Treaty by the European Communities (Definition of Treaties) (WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty) Order 2005, SI 2005/3431. It does not appear, however, that the 1988 Act has been amended in any respect relevant to the present case as a consequence of either of these Orders.
Electronic Commerce Regulations. The E-Commerce Directive was transposed into domestic law by the Electronic Commerce (EC Directive) Regulations 2002, SI 2002/2013 (“the Electronic Commerce Regulations”). In particular, Articles 12 and 14 of the E-Commerce Directive are implemented by regulations 17 and 19 of the Electronic Commerce Regulations. There is little difference between the wording of the respective provisions, however, and it was not suggested by either side that they bore different meanings. Article 15 of the E-Commerce Directive has not been transposed into the Electronic Commerce Regulations, but it is common ground that Articles 12 and 14, and hence regulations 17 and 19, must be interpreted consistently with Article 15.
Applicable legal principles
Interpretation of domestic legislation in the context of European directives
It is well established that domestic legislation, and in particular legislation specifically enacted or amended to implement a European directive, must be construed so far as is possible in conformity with, and to achieve the result intended by, the directive: Case C-106/89 Marleasing SA v La Comercial Internacional de Alimentación SA [1990] ECR I-4135 at [8] and Joined Cases C-397/01 to C-403/01 Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV [2004] ECR I-8835 at [113]-[117]. This is a strong duty of interpretation. For a distillation of the relevant jurisprudence with regard to this duty, see Vodafone 2 v Revenue and Customers Commissioners (No 2) [2009] EWCA Civ 446, [2009] STC 1480 at [37]-[38] (Sir Andrew Morritt C).
Interpretation of European directives
A European directive falls to be interpreted according to principles of interpretation of European Union legislation developed by the Court of Justice of the European Union. The basic rule of interpretation, which has been frequently reiterated by the CJEU, is that stated in Case C-306/05 Sociedad General de Autores y Editores de España v Rafael Hoteles SA [2006] ECR I-11519 at [34]:
“According to settled case-law, in interpreting a provision of Community law it is necessary to consider not only its wording, but also the context in which it occurs and the objectives pursued by the rules of which it is part (see, in particular, Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraph 50, and Case C-53/05 Commission v Portugal [2006] ECR I-6215, paragraph 20)”.
As is well known, in applying this rule the CJEU routinely refers to the recitals of the measure as well as its operative provisions and frequently refers to pre-legislative materials such as the Explanatory Memoranda which accompany the Commission’s legislative proposals.
Another rule of interpretation applied by the CJEU is that stated in SGAE at [35]:
“Moreover, Community legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the Community (see, in particular, Case C-341/95 Bettati [1998] ECR I-4355, paragraph 20 and the case-law cited).”
In that case the Court of Justice interpreted Article 3(1) of the Information Society Directive in accordance with Article 8 of the WIPO Copyright Treaty.
It follows that, in a field of intellectual property law where the European Union has legislated, national courts must interpret both European and domestic legislation as far as possible in the light of the wording and purpose of relevant international agreements to which the EU is a party, such as TRIPS and the WIPO Copyright Treaty: see Case C-53/96 Hermès International v FHT Marketing Choice BV [1998] ECR I-3603 at [28]; Joined Cases C-300/98 and C-392/98 Parfums Christian Dior SA v Tuk Consultancy BV [2000] ECR I-11307 at [47]; Case C-89/99 Schieving-Nijstad VOF v Groeneveld [2001] ECR I-5851 at [35]; Case C-245/02 Anheuser-Busch Inc v Budejovicky Budvar NP [2004] ECR I-10989 at [55]-[57]; and Case C-431/05 Merck Genéricos – Produtos Farmacêuticos Lda v Merck & Co Inc [2007] ECR I-7001 at [35].
Copyright in broadcasts and films
As noted above, the copyright works relied upon by the Claimants are broadcasts and films. As I have pointed out before, it is important to appreciate that the subject matter referred to in the 1988 Act as “films” corresponds to the subject matter referred to in the Information Society Directive (and other parts of the European Union copyright acquis) as “first fixations of films”. Thus copyrights in “films” in the 1988 Act are signal rights and not content rights, just as copyrights in “broadcasts” are signal rights. That is why the 1988 Act does not require either “broadcasts” or “films” to be original in order for copyright to subsist in them.
The Claimants do not rely upon any “literary and artistic works” within the meaning of Article 2(1) of the Berne Convention, and do not contend that any of the broadcasts and films relied upon are intellectual creations. In theory it would have been possible for the Claimants to advance a case that, by virtue of the selection of camera angles, close ups, slow motion and the like, Sky’s personnel produce intellectual creations, which in English law would have to be classified as “dramatic works”; but no such case was advanced.
Substantial part
Given that the copyrights relied upon by the Claimants are signal rights, the question arises as to the correct test for the assessment of what amounts to a substantial part of the works in question. The reason why this matters is that, as counsel for the Defendants submitted, it feeds into the assessment of fair dealing.
Copyrights in broadcasts and films are entrepreneurial rights which protect the investment of the broadcaster and film producer respectively. They do not protect the creativity of an author of a literary or artistic work within Article 2 of Berne. (In the case of a film, the artistic input of the film director and others is protected by the copyright in the dramatic work.) It follows that the jurisprudence of the CJEU with respect to the reproduction of parts of literary and artistic works within Article 2 of Berne beginning with Case 5/08 Infopaq International A/S v Danske Dagblades Foregning [2009] ECR I-6569 (“Infopaq I”) is inapplicable.
By the end of the hearing, it was common ground between counsel that the same test was applicable to both broadcasts and films. There was not complete agreement, however, as to the nature of that test.
Counsel for the Claimants submitted that the test was qualitative as well as quantitative. In support of this, he relied in particular on the decision of the Full Court of the Federal Court of Australia in TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) [2005] FCAFC 53, (2005) 215 ALR 631, in which the majority applied the decision of the House of Lords in Newspaper Licensing Agency Ltd v Marks & Spencer plc [2003] 1 AC 351 and the decision of the High Court of Australia at an earlier stage of the TCN case [2004] HCA 14, (2004) 205 ALR 1.
Counsel for the Defendants accepted that the test was not purely quantitative, but nevertheless disputed that the interest or value of the part of the broadcast or film which had been reproduced or communicated to the public was relevant. He argued that it was not legitimate to bring into the assessment factors which were proper to cases involving intellectual creations.
In considering these submissions, the starting point must be that sections 16, 17 and 20 of the 1988 Act are to be construed so far as possible in conformity with Articles 2 and 3(2) of the Information Society Directive. Article 2 gives authors and others the right to authorise or prohibit reproduction of works and other subject matter “in whole or in part”. It is clear from Infopaq I and subsequent authorities that, in the case of literary and artistic works within Article 2 of Berne, this does not mean that reproduction of any part is a restricted act. Rather, the CJEU has held that Article 2(a) of the Information Society Directive is to be interpreted by reference to the rationale for granting protection, which in the case of literary and artistic works is the intellectual creativity they express. Thus, as the Court put it in Infopaq I at [39]:
“… the various parts of works thus enjoy protection under Article 2(a) …, provided that they contain elements which are the expression of the intellectual creation of the author.”
In my judgment a similar approach must be applied to Article 2(d) and (e) of the Information Society Directive. Thus parts of broadcasts and first fixations of films enjoy protection under Article 2(d) and (e) provided that they contain elements which reflect the rationale for protecting broadcasts and first fixations, that is to say, the investment made by the broadcaster or producer. I do not consider that it follows that reproduction of any part of a broadcast or first fixation amounts to an infringement. The broadcaster or producer’s investment does not justify making reproduction of an insubstantial part an infringement. Nor does it follow that the test is a purely quantitative one. At least in the case of broadcasts and first fixations of films of sporting events, broadcasters and producers invest in the production of broadcasts and first fixations knowing, first, that some parts of the footage of an event (e.g. wickets in the case of cricket matches and goals in the case of football matches) will be more interesting to viewers than other parts and, secondly, that there is a market for highlights programmes and the like in addition to the market for continuous live coverage. It is for these reasons that broadcasters and producers invest, among other things, in the technology to produce action replays of particular events, which often involve editing footage from multiple camera angles, close-ups, slow motion and the like. Thus the footage is not undifferentiated either in terms of its interest to viewers or in terms of its commercial value or in terms of the equipment and skills that is required to produce it. That being so, I consider that the correct test of substantiality is to consider the degree of reproduction both quantitatively and qualitatively, having regard to the extent to which the reproduction exploits the investment made by the broadcaster or producer.
Unlike Article 2, Article 3(1) and (2) of the Information Society Directive do not expressly refer to communication or making available of works and other subject matter in whole or in part. Article 3 must be interpreted consistently with Article 2, however. Thus the same approach to determining what amounts to a substantial part should be applied in this context as in the context of reproduction.
Interpretation of section 30(2) in accordance with Article 5(3)(c)
As is common ground, section 30(2) of the 1988 Act must be construed in accordance with Article 5(3)(c) of the Information Society Directive. As counsel for the Defendants pointed out, Article 5(3)(c) derives from Article 10bis of Berne. More specifically, the relevant part of Article 5(3)(c) for present purposes derives from Article 10bis(2). Article 5(3)(c) extends beyond “literary or artistic works seen or heard during the course of the event”, however, and thus also gives effect to Article 15(1)(b) of the Rome Convention. Less importantly, for present purposes, it also implements Article 14(6) of TRIPS and Article 10 of the WIPO Copyright Treaty.
Two points should be noted. The first is that it follows that Article 5(3)(c) must be construed in accordance with Article 10bis(2) of Berne and Article 15(1)(b) of Rome; but otherwise it should be given an autonomous European interpretation.
The second is that, if section 30(2) is compared to Article 5(3)(c), it can be seen that the expression “for the purpose of reporting currents” in section 30(2) is very close to the expression “in connection with the reporting of current events” in Article 5(3)(c), but that Article 5(3)(c) permits use “to the extent justified by the informatory purpose” whereas section 30(2) permits use which is “fair dealing”. It follows, in my judgment, that an important consideration in the assessment of fair dealing is whether the extent of the use is justified by the informatory purpose.
The CJEU’s approach to the interpretation of exceptions
The CJEU has held in numerous judgments that exceptions to intellectual property rights must be interpreted strictly: see e.g. Infopaq I at [56]-[57]. The CJEU has also held in a number of judgments, however, that such exceptions must be interpreted in a manner which enables the effectiveness of the exception to be safeguarded and its purpose to be observed: see e.g. Joined C-403/08 and C-429/08 Football Association Premier League Ltd v QC Leisure [2011] ECR I-9083 (“FAPL”) at [163].
The relevance of Article 5(5)
Article 5(5) of the Information Society Directive imposes what is commonly known as the “three-step test”. It is generally understood that Article 9(2) of Berne, Articles 13 and 14(6) of TRIPS and Article 10 of the WIPO Copyright Treaty are directed to Contracting States when framing their national laws. It is not entirely clear whether Article 5(5) is directed exclusively to Member States when framing their national laws, or whether it is also addressed to national courts when deciding individual cases. Nor is this entirely clear from recital (44). The CJEU has not yet definitively pronounced on this question, and has given a number of judgments some of which support the former interpretation (notably Case C-462/09 Stichting de Thuiskopie v Opus Supplies Deutschland GmbH [2011] ECR I-5331 at [21]-[22] and [33], Case C-145/10 Painer v Standard VerlagsGmbH [2011] ECR I-12533 at [110] and Case C-435/12 ACI Adam BV v Stichting de Thuiskopie [EU:C:2014:254], [2014] ECDR 14 at [25]) and some of which support the latter interpretation (notably FAPL at [181], Case C-360/13 Public Relations Consultants Association Ltd v Newspaper Licensing Agency Ltd [EU:C:2014:1195], [2014] AC 1438 at [53] and Case C-117/13 Technische Universität Darmstadt v Eugen Ulmer KG [EU:C;2014:2196], [2015] 1 WLR 2017 at [56]). It is not necessary for me to consider this question in the present case, however, since counsel for the Defendants agreed with counsel for the Claimants that Article 5(5) required the three-step test to be applied by national courts when deciding individual cases even though the United Kingdom (unlike some other Member States) has not transposed Article 5(5) into its national legislation.
The relevance of Article 10 ECHR and Article 11 of the Charter
It is common ground that Article 5(3)(c) and section 30(2) must be interpreted and applied in conformity with Article 10 of the European Convention on Human Rights (which is incorporated into English law by the Human Rights Act 1988) and with Article 11 of the Charter of Rights of the European Union. As is also common ground, however, the Defendants’ right to freedom of expression under Article 10 ECHR and Article 11 of the Charter is a qualified right and must be balanced against the Claimants’ intellectual property rights, which are protected by Article 1 of the First Protocol to the ECHR and Article 17 of the Charter. Finally, it is also common ground that section 30(2) contains a balancing mechanism within it, since it requires an assessment of fair dealing. Although Article 5(3)(c) does not so obviously contain such a balancing mechanism, the requirement that the extent of the use be justified by the informatory purpose can readily be interpreted as embodying a balancing mechanism. Moreover, it is clear from recital (31) and the decisions of the CJEU interpreting Article 5(3)(d) and (k) of the Information Society Directive in Painer at [134] and in Case C-201/13 Deckmyn v Vandersteen [EU:C:2014:2132], [2014] Bus LR 1368 at [27] that Article 5(3)(c) must in any event be applied, as the Court of Justice put it in the latter case, so as “to strike a fair balance between, on the one hand, the interests and rights of persons referred to in Articles 2 and 3 of that directive and, on the other, the freedom of expression of the user of a protected work who is relying on the exception”.
Domestic authorities on the interpretation of section 30(2)
I was referred to a number of domestic authorities on the interpretation and application of section 30(2) and its predecessors in the Copyright Acts of 1911 and 1956, most of which I shall mention below. In my judgment, however, these authorities must be treated with a degree of caution, since they were mostly decided prior to the implementation of the Information Society Directive and all of them were decided well before the recent jurisprudence of the CJEU concerning the interpretation of that Directive. Moreover, as discussed below, there is no consideration in any of them of the three-step test.
“For the purpose of”
As noted above, section 30(2) requires the use to be “for the purpose of”, whereas Article 5(3)(c) requires it to be “in connection with”, reporting current events. Even prior to the implementation of the Information Society Directive, however, English law had adopted an interpretation of “for the purpose of” which was consistent with the latter wording. Thus Robert Walker LJ, with whom Nourse and Henry LJ agreed, stated in Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605 at 614:
“In Sweet v. Parsley [1970] A.C. 132 the House of Lords emphasised the importance of construing a composite phrase rather than a single word. It seems to me that in the composite phrases ‘for the purposes of criticism or review’ and ‘for the purpose of reporting current events’ the mental element on the part of the user is of little more importance than in such everyday composite expressions as ‘for the purpose of argument’ or ‘for the purpose of comparison.’ The words ‘in the context of” or ‘as part of an exercise in’ could be substituted for ‘for the purpose of’ without any significant alteration of meaning.
That is not to say that the intentions and motives of the user of another's copyright material are not highly relevant for the purposes of the defences available under section 30(1) and section 30(2). But they are most highly relevant on the issue of fair dealing, so far as it can be treated as a discrete issue from the statutory purpose (arguably the better course is to take the first 24 words of section 30(1), and the first 16 words of section 30(2), as a single composite whole and to resist any attempt at further dissection). It is not necessary for the court to put itself in the shoes of the infringer of the copyright in order to decide whether the offending piece was published ‘for the purposes of criticism or review.’ This court should not in my view give any encouragement to the notion that all that is required is for the user to have the sincere belief, however misguided, that he or she is criticising a work or reporting current affairs. To do so would provide an undesirable incentive for journalists, for whom facts should be sacred, to give implausible evidence as to their intentions.”
Thus, as is confirmed by later authorities, the question whether the use was “for the purpose of” reporting current events is to be judged objectively.
“Reporting current events”
Although recital (34) of the Information Society Directive refers to “news reporting”, there is no warrant for interpreting “reporting current events” as being restricted to “news reporting”. As noted above, Article 5(3)(c) of the Information Society Directive gives effect to both Article 10bis(2) of Berne and Article 15(1)(b) of Rome, both of which refer to “reporting current events”, and the same language is employed in Article 5(3)(c).
The leading domestic authorities on the interpretation of the expression “reporting current events” are Pro Sieben and Ashdown v Telegraph Group Ltd [2001] EWCA Civ 1142, [2002] Ch 149. In Pro Sieben Robert Walker LJ stated at 614:
“‘Criticism or review’ and ‘reporting current events’ are expressions of wide and indefinite scope. Any attempt to plot their precise boundaries is doomed to failure. They are expressions which should be interpreted liberally, but I derive little assistance from comparisons with other expressions such as ‘current affairs’ or ‘news’ (the latter word being used in the Australian statute considered in De Garis v. Neville Jeffress Pidler Pty. Ltd. (1990) 18 I.P.R. 292). However it can be said that the nearer that any particular derivative use of copyright material comes to the boundaries, unplotted though they are, the less likely it is to make good the fair dealing defence.”
In Ashdown Lord Phillips of Worth Matravers MR delivering the judgment of the Court stated at [64]:
“As this court said in Pro Sieben Media AG v Carlton UK Television Ltd [1999] 1 WLR 605, 614G, the expression ‘reporting current events’ should be interpreted liberally. The defence provided by section 30(2) is clearly intended to protect the role of the media in informing the public about matters of current concern to the public. That was the approach adopted in Fraser v Evans [1969] 1 QB 349 to the predecessor of section 30(2), and in our judgment it remains applicable to the present subsection.”
The requirement to interpret the expression liberally is reinforced by the requirement in section 3 of the Human Rights Act 1988 to construe domestic legislation compatibly with Article 10 ECHR (as to which, see SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch), [2011] RPC 1 at [325] and the authorities cited) and by the requirement in European Union law to construe European legislation compatibly with Article 11 of the Charter.
Consistently with the general approach outlined above, it is clear that “current events” are not confined to events which are very recent, particularly where the ramifications of an event continue to be a matter of public debate or concern: see in particular Pro Sieben at 619, Hyde Park Ltd v Yelland [2001] Ch 143 at [28]-[32] (Aldous LJ) and Ashdown at [62]-[64].
On the other hand, there has been very little consideration in any of the case law of what amounts to “reporting” a current event. This is no doubt because most of the decided cases have involved what might be termed traditional media outlets, that is to say, newspapers and linear television channels (or in the case of PCR Ltd v Dow Jones Telerate Ltd [1998] FSR 170 a specialist news service). The principal exceptions are Newspaper Licensing Agency Ltd v Marks and Spencer Ltd [2001] Ch 257 and Newspaper Licensing Agency Ltd v Meltwater Holding AG [2011] EWCA Civ, [2012] RPC 1, the former of which concerned an analogue cuttings service and the latter of which concerned a digital media monitoring service. It is difficult to extract useful guidance from either decision, however. In Marks & Spencer the three judgments of the Court of Appeal all proceeded on different bases, while in Meltwater the Court of Appeal gave short shrift to the proposition that the reproductions were for the purpose of reporting current events without analysing what amounted to “reporting”.
Some light is, however, shed on this question by BBC v BSB. In that case Scott J held that BSB was entitled to rely on section 30(2) when it included short excerpts of BBC broadcasts of World Cup football matches in its regularly-scheduled sports news programme Sportsdesk. This was a half-hour programme which was broadcast three times a day (or four times on Saturdays and Sundays) and was updated through the day. It concentrated on sports news, results and information. Scott J concluded at 150 that the Sportsdesk programmes were “genuine news reports, albeit confined to news of a sporting character”, at 154 that there was “no justification for limiting the statutory defence so as to apply only to reporting current events in a general news programme” and at 159 that the programmes were “specialist news reports … not programmes of football analysis or of review”.
Fair dealing
In Ashdown Lord Phillips cited with approval at [70] the following summary of the law in Laddie, Prescott & Vitoria, The Modern Law of Copyright and Designs (3rd edition, 2000) at 20.16:
“It is impossible to lay down any hard-and-fast definition of what is fair dealing, for it is a matter of fact, degree and impression. However, by far the most important factor is whether the alleged fair dealing is in fact commercially competing with the proprietor’s exploitation of the copyright work, a substitute for the probable purchase of authorised copies, and the like. If it is, the fair dealing defence will almost certainly fail. If it is not and there is a moderate taking and there are no special adverse factors, the defence is likely to succeed, especially if the defendant’s additional purpose is to right a wrong, to ventilate an honest grievance, to engage in political controversy, and so on. The second most important factor is whether the work has already been published or otherwise exposed to the public. If it has not, and especially if the material has been obtained by a breach of confidence or other mean or underhand dealing, the courts will be reluctant to say this is fair. However this is by no means conclusive, for sometimes it is necessary for the purposes of legitimate public controversy to make use of ‘leaked’ information. The third most important factor is the amount and importance of the work that has been taken. For, although it is permissible to take a substantial part of the work (if not, there could be no question of infringement in the first place), in some circumstances the taking of an excessive amount, or the taking of even a small amount if on a regular basis, would negative fair dealing.”
For the reasons explained above, when considering the third factor, the key question in the present context is whether the extent of the use is justified by the informatory purpose.
In considering whether dealing is fair, it is legitimate to have regard to the motives of the user: see in particular Pro Sieben at 614, Meltwater at [41] (Sir Andrew Morritt C) and Time Warner Entertainments Co LLP v Channel Four Television Corp plc [1994] EMLR 1 at 14 (Henry LJ). It is also legitimate to consider the nature of any accompanying material and the relation it bears to what has been taken from the copyright work(s): see e.g. Sillitoe v McGraw-Hill Book Co [1993] FSR 535.
Sufficient acknowledgement
There is no requirement as to the form taken by the acknowledgement. Thus in Pro Sieben the Court of Appeal held that the transmission of the broadcaster’s logo constituted sufficient acknowledgment of the author of the television programme.
In Fraser-Woodward Ltd v British Broadcasting Corporation [2005] EWHC 472 (Ch), [2005] FSR 36 Mann J said:
“72. … All that is required is that it is an identification, though I think that I can accept that it probably has to be one that can readily be seen and not require some form of hunting around or detective work. It is probably not enough to say that the author can be identified if you look hard enough; the authorship must be more apparent than that. …
75. … I do not think that the concept of identification means that there has to be a precisely or virtually contemporaneous act of identification. Once the identification has been provided then it is capable of operating in relation to a later appearance of the copyright material. …”
The three-step test
There has been a great deal of academic commentary on the three-step test in Article 9(2) of Berne, Article 13 of TRIPS, Article 10(2) of the WIPO Copyright Treaty and Article 5(5) of the Information Society Directive. There has been very little judicial consideration of it, however. The best known decision on the three-step test is that of a World Trade Organisation Disputes Panel in a Report dated 15 June 2000 (WT/DS/160/R) holding that the business exception contained in section 110(5) of the US Copyright Act did not satisfy the three-step test in Article 13 of TRIPS. This decision has been extensively analysed in the academic commentary, but neither side cited it in argument. Although the CJEU has, as noted above, referred to Article 5(5) of the Information Society Directive when interpreting other provisions in Article 5, it has not yet undertaken a full analysis of Article 5(5) itself. I am not aware of any decision of any English court which analyses the three-step test (the nearest is my very brief consideration of it in Forensic Telecommunications Services Ltd v Chief Constable of West Yorkshire [2011] EWHC 2892 (Ch), [2012] FSR 12 at [113]). Certainly none was cited to me. Nor was any decision of any other court of a Member State of the EU. Nor was any of the academic commentary (even though I drew to the parties’ attention a recent article co-authored by myself which discusses some of it). Furthermore, neither counsel analysed the three-step test in any detail in their submissions, despite it being common ground between them that Article 5(5) required it to be applied. Rather, both counsel treated it as requiring consideration of essentially the same factors as fair dealing.
In these circumstances I do not consider that it would be appropriate for me to engage in detailed consideration of the requirements of the three-step test. Rather, I shall follow counsel’s example of treating it as requiring consideration of essentially the same factors as fair dealing. Nevertheless, I would make the following brief comments.
The first step is that the exception must be confined to “certain special cases”. It is not necessary to elaborate upon this requirement, since I understand it to be common ground that reporting current events is a certain special case.
The second step is that the application of the exception must not “conflict with a normal exploitation of the work or other subject-matter”. It is clear that this refers to exploitation of the work by the copyright owner, whether directly or through licensees. In my view it requires consideration of potential future ways in which the copyright owner may extract value from the work as well as the ways in which the copyright owner currently does so. On the other hand, it also embraces normative considerations i.e. the extent to which the copyright owner should be able to control exploitation of the kind in question having regard to countervailing interests such as freedom of speech.
The third step is that the application of the exception must not “unreasonably prejudice the legitimate interests of the rightholder”. Although this is often treated as a separate and additional requirement to the second step, it has also been forcefully argued that it qualifies the second step. In other words, it indicates that it is not sufficient for an exception not to apply that there is some conflict with the copyright owner’s legitimate interests, including the copyright owner’s normal exploitation of the work. Rather, the exception can apply unless those interests are unreasonably prejudiced. This requires consideration of proportionality, and a balance to be struck between the copyright owners’ legitimate interests and the countervailing interests served by the exception. That approach appears to be consistent with the jurisprudence of the CJEU discussed above, and therefore I shall adopt it.
Mere conduit and hosting
There is no dispute that the Defendants’ services are information society services for the purposes of Articles 12 and 14 of the E-Commerce Directive. Article 14 was interpreted by the CJEU in Case C-324/09 L’Oréal SA v eBay International AG [2011] ECR I-6011 as follows:
“111. … the fact that the service provided by the operator of an online marketplace includes the storage of information transmitted to it by its customer-sellers is not in itself a sufficient ground for concluding that that service falls, in all situations, within the scope of Article 14(1) of Directive 2000/31. That provision must, in fact, be interpreted in the light not only of its wording but also of the context in which it occurs and the objectives pursued by the rules of which it is part (see, by analogy, Case C-298/07 Bundesverband der Verbraucherzentralen und Verbraucherverbände [2008] ECR I-7841, paragraph 15 and the case-law cited).
112. In that regard, the Court has already stated that, in order for an internet service provider to fall within the scope of Article 14 of Directive 2000/31, it is essential that the provider be an intermediary provider within the meaning intended by the legislature in the context of Section 4 of Chapter II of that directive (see Google France and Google, paragraph 112).
113. That is not the case where the service provider, instead of confining itself to providing that service neutrally by a merely technical and automatic processing of the data provided by its customers, plays an active role of such a kind as to give it knowledge of, or control over, those data (Google France and Google, paragraphs 114 and 120).
114. It is clear from the documents before the Court and from the description at paragraphs 28 to 31 of this judgment that eBay processes the data entered by its customer-sellers. The sales in which the offers may result take place in accordance with terms set by eBay. In some cases, eBay also provides assistance intended to optimise or promote certain offers for sale.
115. As the United Kingdom Government has rightly observed, the mere fact that the operator of an online marketplace stores offers for sale on its server, sets the terms of its service, is remunerated for that service and provides general information to its customers cannot have the effect of denying it the exemptions from liability provided for by Directive 2000/31 (see, by analogy, Google France and Google, paragraph 116).
116. Where, by contrast, the operator has provided assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting those offers, it must be considered not to have taken a neutral position between the customer-seller concerned and potential buyers but to have played an active role of such a kind as to give it knowledge of, or control over, the data relating to those offers for sale. It cannot then rely, in the case of those data, on the exemption from liability referred to in Article 14(1) of Directive 2000/31.”
Liability for the commission of any infringing acts
It will be appreciated from my description of the App above that, in some cases, clips of the Claimants’ broadcasts and films are made and uploaded by the Defendants’ employees and contractors and, in other cases, this is done by users. The Claimants contend that the Defendants are jointly liable for infringing acts committed by users. The Defendants do not dispute this, subject to the impact of Articles 12 and 14 of the E-Commerce Directive as discussed below.
Was each clip a substantial part of one of the Claimants’ copyright works?
The Claimants contend that each 8 second clip constituted a substantial part of one (or more) of the Claimants’ copyright works. The Defendants dispute this, but nevertheless accept that they have reproduced and communicated to the public substantial parts of the Claimants’ copyright works on the basis that, where several clips from a day’s play were uploaded, it is legitimate to aggregate those clips together when assessing substantiality.
For understandable reasons, neither side engaged in any close analysis of precisely what the Claimants’ works were for this purpose. In the case of a broadcast of a test match, counsel for the Defendants proceeded on the assumption that each day’s broadcast was a separate work. But why would not the broadcast of each session constitute a separate work? Weather and over-rates permitting, test matches are generally played in three two-hour sessions separated by the lunch and tea intervals and one-day games are generally played in two sessions of variable length separated by an interval. It is doubtful, however, that this would make any difference to the assessment of substantiality.
The question is more difficult, and the answer potentially more significant, in the case of the films. Sky records, and thus makes a film of, all the footage that its cameramen take for the purposes of the broadcast. But what gets incorporated into the broadcast are extracts from those films used for the purpose of showing action replays. As discussed above, these will often comprise various extracts edited together. What is the work? Clearly the recording of the footage taken by each cameraman during each day, or each session, is a work. But it is arguable that each action replay sequence which is the product of the editing process also constitutes a work. This could make a difference to the assessment of substantiality, although not necessarily so: see Navitaire Inc v EasyJet Airline Co Ltd [2004] EWHC 1725, [2006] RPC 3 at [160] (Pumfrey J).
Given the absence of any argument on this question, I shall proceed on the basis that the relevant copyright works are broadcasts and films of each session of play.
Quantitatively, 8 seconds is not a large proportion of a broadcast or film lasting two hours or more. Qualitatively, however, it is clear that most of the clips uploaded constituted highlights of the matches: wickets taken, appeals refused, centuries scored and the like. Thus most of clips showed something of interest, and hence value. The majority of the clips also involved action replays of the kind discussed above. Thus each clip substantially exploited the Claimants’ investment in producing the relevant broadcast and/or film. Accordingly, in my judgment, each such clip constituted a substantial part of the relevant copyright work(s).
This conclusion is consistent with that of Kitchin J (as he then was) concerning the Action Replays, each of which was a few seconds from a film lasting at least 90 minutes, in Football Association Premier League Ltd v QC Leisure [2008] EWHC 1411 (Ch), [2008] FSR 32 at [208]-[209]. Counsel for the Defendants submitted that all that Kitchin J had decided was that, cumulatively, a number of Action Replays reproduced a substantial part of each film. As I read his judgment, however, he went further than that and concluded that each Action Replay was a substantial part.
The Defendants relied upon the conclusion of Floyd J (as he then was) in ITV Broadcasting Ltd v TV Catchup Ltd [2011] EWHC 1874 (Pat) at [112] and [2011] EWHC 2977 (Pat) at [26]-[27] that 1-5 and 30-40 second fragments of video streams of the claimants’ television programmes stored in the memory buffers of the defendants’ servers did not reproduce a substantial part of the broadcasts. On the other hand, he also concluded ([2011] EWHC 1874 (Pat) at [109] and [2011] EWHC 2977 (Pat) at [25]) that the fragments did reproduce substantial parts of the films, albeit on the basis that the films were literary and artistic works within Article 2 of Berne. Moreover, the facts in that case were that the 1-5 and 30-40 seconds were random fragments (albeit together constituting the whole of each broadcast and film) which were being temporarily stored as part of the defendants’ service. Thus I consider that the present case is closer to the Premier League case.
I accept that there may be some clips which do not show a highlight of the match, and thus do not amount to a substantial part of the broadcast or film. That does not assist the Defendants, however, because this case is essentially concerned with the lawfulness of the Defendants’ services. That is not affected by the fact that a small amount of the use complained of is non-infringing use because it does not involve reproduction of a substantial part.
Scale of use
The versions of the App which had been released by the Defendants prior to the date when they gave undertakings were the versions up to and including version 8.3, and in particular versions 8.2 and 8.3. Thus these are the only versions which to date have been used for reproducing and communicating to the public clips of the Claimants’ copyright works, and the Claimants’ claim in respect of later versions is a quia timet one. (Later versions have been used for reproducing and communicating to the public clips of other sports broadcasts, notably football matches.)
The scale of use of the Claimants’ copyright works in versions 8.2 and 8.3 of the App was comparatively small. Moreover, the scale of use of similar works in subsequent versions of the App appears to have remained relatively small. While it is proper to take this into account, it must also be borne in mind that the App is designed, and intended, to be used by millions of users. This will become particularly relevant when I come to consider version 8.5 of the App and the Defendants’ counterclaim for a declaration of non-infringement. The counterclaim must be approached on the basis that the App may be used by very many users.
Assessment of the fair dealing defence: versions 8. 2 and 8.3 of the App
As noted above, the difference between versions 8.2 and 8.3 is that in version 8.2 the Defendants relied upon the broadcaster’s logo being captured by the user as part of the clip as satisfying the requirement for a sufficient acknowledgement, whereas in version 8.3 the Defendants introduced a requirement for attribution by each uploader of a clip which is reproduced by the App when users view the clip.
Was the use for the purpose of reporting current events?
There is no dispute that a contemporaneous sporting event, such as a cricket match, is a current event for these purposes. Most of the clips uploaded to the Defendants’ services are of contemporaneous sporting events. Indeed, as discussed below, typically they are uploaded on a near-live basis. It is important to note, however, that there is nothing in the App to restrict its use to contemporaneous sporting events. If, for example, a user wishes to upload a clip from a broadcast or film of a past sporting event, they can do so. In that case, the defence would not apply unless the use of that clip was for the purpose of reporting some other, current event.
A separate point is that, even where the sporting event is a contemporaneous one, some of the clips which have been uploaded are not of the footage from the event itself, but rather of pundits giving analysis or interviewers conducting interviews. In such a case, the defence would not apply unless the analysis or interview itself qualified as a current event or was used in a way which amounted to reporting the event in question.
In so far as the clips are of contemporaneous sporting events, the Defendants contend that the reproduction and communication to the public of them is for the purpose of reporting those events, but the Claimants dispute this. This is an important issue, because it is critical for success of the fair dealing defence. It is not one that I have found easy to decide, because of the lack of guidance in the authorities and the novelty of the factual circumstances.
Since the commentary which accompanies the clips forms an important part of the Defendants’ case on this issue, it is necessary to begin by saying a little more about this. In the case of versions 8.2 and 8.3 of the App, users were only required to add at least one character of commentary. In practice, the evidence is that, particularly in the case of the editorially controlled feeds, but also in the case of the non-editorially controlled material, clips were almost always accompanied by a longer comment than this. Moreover, although it was technically possible for users to post text which was entirely nonsensical, this rarely occurred. On the other hand, the commentary was frequently of a fairly jejune nature.
Counsel for the Defendants argued that the App was designed for 18-34 year olds who accessed news via their mobile phones and tablets rather than thorough linear television broadcasting and who nowadays expected such news reports to incorporate short videos. Furthermore, the App was based on a user-generated model where individual sports fans created and shared their own reports, as opposed to the professional reportage of traditional media organisations.
Counsel for the Claimants argued that, in reality, the purpose of the App was to provide a sporting highlights clips sharing service, which was a purely commercial purpose, and that this did not amount to reporting.
In considering these submissions, the starting point is that the verb “reporting” is capable of bearing a broad or narrow meaning depending on context. It follows that it is necessary to construe it purposively. The purpose of section 30(2) of the 1988 Act, Article 5(3)(c) of the Information Society Directive, Article 10bis(2) of Berne and Article 15(1)(b) of Rome is to provide an exception to, or limit upon, copyright protection in the public interest, namely freedom of expression. As discussed above, this favours a broad interpretation. Furthermore, the exception is not an unqualified one: even if a use is for the purpose of reporting current events, it will not be protected unless it satisfies the additional criteria considered above. Again, this favours a broad interpretation. In addition, the exception must be given a “living” interpretation, at least in the sense that it must be interpreted in manner that takes into account recent developments in technology and the media.
In these circumstances I consider that these provisions should now be interpreted more broadly than they may have been in the past. Thus I consider that it is clear that they are not restricted to the kind of situation which was under consideration when what is now Article 10bis of Berne was first introduced, such as a radio or newsreel report of a public ceremonial occasion which incorporated part of a musical work performed by a military band (see Ricketson and Ginsburg, International Copyright and Neighbouring Rights: The Berne Convention and Beyond (2nd ed, 2006) at 13.54).
Accordingly, I consider that counsel for the Claimants was right to accept that section 30(2) and Article 5(3)(c) are not restricted to traditional media and that “citizen journalism” can qualify as reporting current events. If a member of the public captures images and/or sound of a newsworthy event using their mobile phone and uploads it to a social media site like Twitter, then that may well qualify as reporting current events even if it is accompanied by relatively little in the way of commentary. Thus such a person may well have defence under section 30(2) and Article 5(3)(c) if the images and/or sound happen to include a substantial part of a copyright work.
Turning to the App, as discussed above, the question whether the use made of the Claimants’ copyright works is for the purpose of reporting events is to be objectively assessed. Nevertheless, I consider that light is shed on the question by a series of presentations to investors prepared by the Defendants in 2015. I shall take these in chronological order. Before doing so, I should acknowledge two points. The first is that the presentations grow in length and sophistication over time, but I shall focus on what I regard as the key passages for present purposes. The second is that, apart from the first and third presentations, each presentation includes a page (or two pages in the case of the sixth and seventh presentations and three pages in the case of the eighth) discussing fair dealing (and fair use under US law).
The first presentation is dated January 2015. The cover page is headed “fanatix – Social for Sport”. Page 2 states that “fanatix is a social platform that enables users to discover, create and share sports content”. These aspects are described on pages 3, 4 and 5 as follows:
“Discover: users are able to discover content posted by other fans as well as 3rd party content providers
Create: Users are also able to create content, such as video Replays and Huddles, to drive debate
Share: Users are able to share (Huddle) content they create and Huddle content created by users”.
The second presentation is dated February 2015. The cover page is again headed “fanatix – Social for Sport”. Pages 2, 3 and 4 state:
“Market: fanatix seeks to disrupt the US$40 billion global sports media rights market
…
Problem: keeping up to speed with the action from your team is complex and costly
…
Product: fanatix is a social platform that enables users to discover, create and share sports video”.
Page 5 states that “there are three key stages to fanatix app strategy” of which the first is “Secure global position as go-to mobile app for sports clips (end users and vloggers”. It continues:
“• ‘Mobile Clips packages’ are licensed on a territory-by-territory basis (usually non-exclusively) and sometimes hidden behind subscription services. This is sub-optimal for the fan
• By enabling fans to interact with each other around video content, fanatix is re-imagining the global sports mobile sector”.
In another document apparently addressed to investors from around the same date, this point is expressed as follows:
“By connecting sports fans from around the world and enabling them to capture and share their favourite sports moments, fanatix is disrupting the global sports ‘clips’ marketplace and creating a single brand that users can access from any territory in the world in order to discover and share the key moments from the sports that matter most to them.
Currently, ‘clips packages’ are sold on a territory-by-territory basis and sometimes hidden behind subscription services.
This is sub-optimal for the fan
By assembling existing technologies in new ways, adding some clever technology of our own and enabling fans to interact with each other around video content, fanatix is re-imagining the global sports mobile sector.”
The third and fourth presentations are both dated March 2015. The third is similar to the second. The cover page of the fourth presentation is again headed “fanatix – Social for Sport”. Pages 3, 4, 5 and 8 state:
“Problem: Missed the game?
Every fan misses key sporting moments. For a variety of reasons:
Travelling?
Shopping?
Looking after Kids?
At work?
No ticket?
Not subscribed to Pay-TV?
Not on TV?
The Perfect Solution: We all dream of the perfect solution…
Every fight, free kick, foul and funny delivered to your smartphone
Whatever country you’re in
Whenever you need it
Current Solution: Try and find it on social media…
The current solution is to try and find the clip on Twitter, Facebook or YouTube, but this is sub-optimal…
Often hard to find key sports videos in real-time
If you are successful, the clip may not always be there!
…
Solution: fanatix is an iPhone app that enables users to create and share sports video…
…so fans can quickly and easily find sports video they’re looking for!”
The fifth presentation is dated April 2015. The cover page is again headed “fanatix – Social for Sport”. Page 4 states:
“fanatix has established a global network that enables users to create and share their own sports video…
Enables users to watch every goal from every major football league within minutes of each goal taking place, where the user is, whenever the user wants
Industry 1st
Massive global demand for video clips, denied by legal media infrastructure
Ubiquity of smartphones and maturity of social web have created the framework to make this possible
…so fans can easily find the content they’re looking for!”
The sixth presentation is dated May 2015. The cover page is headed “fanatix – Social Network”. Pages 2-8 state:
“Sports Media Innovation: Currently, there is loads of great activity going on in sports media tech….
… but none of its addresses a pervasive need for all sports fans …
Short Video Clips: So many sports apps, yet none deliver short video clips from every league, wherever, whenever
Solution: fanatix has established a global network that enables users to create and share their own sports video clips…
Enables users to watch every goal from every major football league within minutes of each goal taking place, where the user is, whenever the user wants – fans know what to share and when!
Industry 1st
Massive global demand for video clips
Ubiquity of smartphones and maturity of social web have created the framework to make this possible
…so fans can quickly and easily find the content they’re looking for!
Three Key Problems to Solve: Video creation, video discovery and rights licenses
Three Key Problems
Video Creation How to make it easy for fans to create and discuss video content around the key sports moments?
Video Discovery How to make it easy for fans to find the most relevant sports video on the app?
Rights Licenses How to be sure that our users could create and share sports content without breaking any rules?
Video Creation: We created a feature that enables fans to simply point their mobiles at their TV screens …
… and capture the moment that matters most to them, adding their own comments as they do – the Replay
Huddle: We added the ability to discuss that content with their friends and followers on fanatix network …
… we call this the Huddle
Video Discovery: We made it easy for users to discover the best content by introducing three sections…
Trending section surfaces the most watched Replays of the day
Latest section makes it easy to find out what’s going on right now in the world of sport.
My Teams section let’s fans quickly skip to the action from their favourites.
... Trending, Latest and My Teams”
The seventh presentation is dated June 2015. The cover page is again headed “fanatix – Social Network”. Pages 2-5 state:
“Addressable Market: There will be 6 billion smartphones owners by 2020, 2 billion of them will be sports fans
…
Consumption Trends: Short-form video is the fastest growing type of content being consumed on smartphones
…
Content/Market Fit: Sports events produce key moments that are ideally suited to the short video format
1. Live
Short video Replays can be used in conjunction with play-by-play commentary to enable fans to follow a game live when no broadcast fed can be found
2. Enhanced Live
Short video Replays can be used to enhance the fan experience whilst the follow the game in-stadia or on television, providing replays of key moments
3. Catch-Up / Review
Short video Replays can be used to catch-up on missed games or to enrich match reports
4. Discussion/Chat
Sort video Replays can form the backbone of *all* (?) discussion and debate about key sporting incidents
fanatix Replay: fanatix has built a real-time sports video new network – powered by fans
Enables users to access new clips from every major football league within minutes of each incident taking place, where the user is, whenever the user wants
Fans know what to share and when!
UGC model enables global scale & zero production costs
Massive demand for real-time sports video news
Ubiquity of smartphones, maturity of social web and fast-growth of short-form video consumption have created the framework to make this possible
”
Pages 7-9 are very similar to pages 5, 6 and 8 of the sixth presentation.
The eighth presentation is also dated June 2015. The cover page is headed “fanatix – Real-Time Sports Video News Network”. Page 2 states:
“Background: Will Muirhead has been building technology products for the sports media sector since 1999
Live
Sports fans must have access to live games: This can be achieved through attendance, broadcast, streaming or simple textual minute-by-minute coverage.
Enhanced Live
Sports fans aren’t satisfied with live: Sports fans need to heighten the excitement of live with betting, fantasy games or the ability to delve into stats.
Catch-up/Review
Sports fans need Catch-Up: Fans need to relive action or catch-up with missed games, usually through broadcast highlights or written reports.
Discussion/Chat
Sports fans need debate: Sports fans need to debate the key talking points 24/7/365, in the pub, on the phone, online and on social”
Pages 3-5 are very similar to pages 2-4 of the seventh presentation. Pages 6 and 7 state:
“Problem: Sports fans have to go to a variety of different places in order to find sports video clips on their mobile
Different competitions (UCL, EPL, Serie A, NFL, etc...) are available through different providers at different times
Some of these providers bundle these clips into subscription packages for wider product offerings, making them even less accessible
Some games are not available at all
And every territory has a different set of players, making it a terrible experience for the fan…
The mobile video sports experience has been driven by the legacy media licensing infrastructure
It is not fit for the mobile/social generation
Decentralised Solution: fanatix has built a real-time sports video news network – a news marketplace powered by fans
‘Real-Time Sports Video News Live Cycle’
During
Goal crossed the line!
fanatix shows latest game videos for easy review of key, in-match moments
After
Beautiful game at best
Fan replays the controversial moments of the match and reviews the key goals from the other matches in the league – debating them with other fans on the network
UGC model enables global scale & zero production costs
Fans know what to share and when!
Enables users to access news clips from every major league within minutes of each incident taking place, wherever the user is, whenever the user wants”.
Page 12 states:
“Entrance strategy: fanatix makes it easy for users to share Replays across the social web
Upgrading 1st generation platform users
fanatix currently has a network of 5 – 10 m sports fans that use its blogs on a monthly basis – fanatix is already immersing this audience with fanatix Replays
Additionally, fanatix has enabled the embedding of ‘Replays’ in articles on digital publisher websites, building brand awareness and promoting usage by key vloggers. These can be leveraged to generate super-normal revenue – i.e post-roll in-feed video ads
We are not leaving the growth of this product to chance. We are making it happen…”
Although there are some later presentations, I believe that the extracts set out above are sufficient (perhaps more than sufficient) for present purposes.
In my view what these presentations show, consistently with (a) the way in which the Defendants advertise the App, (b) my own impression from seeing how the App operates and is used and (c) other evidence in the case, is that the clips are reproduced and communicated to the public for the purposes of (i) sharing the clips with other users and (ii) facilitating debate amongst users about the sporting events depicted. Of those two purposes, I think it is clear that the first is the primary or predominant purpose. Thus users add comments to the clips they are uploading, they do not create a report to which they add clips. Equally, the clips are presented to viewers accompanied by the comments, rather than reports being presented to viewers illustrated by clips.
In my judgment the use made of the copyright works in versions 8.2 and 8.3 of the App was not for the purpose of reporting current events. The clips were not used in order to inform the audience about a current event, but presented for consumption because of their intrinsic interest and value. Furthermore, although the fact that a news service is a commercial one funded by advertising revenue does not prevent its use from being for the purpose of reporting current events, I consider that the Defendants’ objective was purely commercial rather than genuinely informatory.
Were the clips accompanied by a sufficient acknowledgement?
Version 8.2. As explained above, in version 8.2 of the App the Defendants relied upon users capturing the Sky logo which appears in the corner of the screen in Sky’s broadcasts in order to acknowledge the source of the clips. There is no dispute that, as was held in Pro Sieben, the appearance of a broadcaster’s logo can be a sufficient acknowledgement. The Claimants complain, however, that many of the clips did not show the Sky logo either because it had not been captured by the user who uploaded the clip or because it had been obscured by superimposition of the fanatix logo. The Defendants accept that, in the case of about half of the clips, this was so. The parties disagree as to the exact numbers, but this does not matter for present purposes.
The Defendants also accept that, because no logo was visible on any clip of the footage of the third one day international between England and New Zealand on 14 June 2015, all of the clips from that day infringed.
In relation to all of the other days, however, the Defendants contend that any user paying a moderate amount of attention would have been likely to see the Sky logo in one or more of the clips and to have appreciated that all of the footage relating to a particular match (or at least a particular day of a test match) came from the same source. Relying on Fraser-Woodward, the Defendants argue that that amounted to a sufficient acknowledgement. I agree that, in principle, this argument is a sound one and that it may lead to the conclusion that many of the other clips which did not include the Sky logo were nevertheless sufficiently acknowledged. I am not able to make any finding as to the extent to this which would actually apply, however, since I have not been shown all of the relevant clips, still less in the sequence in which they would have been viewed. I will hear further argument on this question if necessary.
Version 8.3. As explained above, in version 8.3 the Defendants introduced a request for users uploading clips to attribute the source of the footage. It is not in dispute that, since then, most clips have been correctly attributed. The Claimants rely upon evidence that (a) it was technically possible for clips to be uploaded with no attribution or an incorrect attribution and (b) some instances of incorrect attribution have been found, in particular to YouTube.
The Defendants accept that, occasionally, Sky is not acknowledged as the source of a clip either by the user attribution or by the appearance of the Sky logo. The Defendants again argue that a moderately attentive viewer will appreciate that all footage from a particular match or day comes from the same source. Again, I agree that in principle this argument is a sound one.
The Defendants also argue that the fact that occasional clips are not sufficiently acknowledged is of no particular consequence for the following reasons. First, the Claimants can send the Defendants a take-down notice in respect of such clips, which the Defendants will comply with. For the reasons explained below, the Defendants say that, if they do comply, they will not be liable in respect of such clips. I will consider that argument in context. Secondly, and in any event, the Defendants contend that occasional infringements through want of sufficient acknowledgement would not justify the grant of an injunction which stopped the Defendants from reproducing and communicating to the public clips which were sufficiently acknowledged, assuming that the use otherwise amounted to fair dealing for the purpose of reporting current events. It is not necessary for me to express a concluded view in relation to the second argument, but at present it seems to me to have considerable force.
Was the use fair dealing?
I shall assume for these purposes that, contrary to the conclusion I have reached above, the use was for the purpose of reporting current events.
Does the use conflict with normal exploitation of the works? The Claimants contend that the reproduction and communication to the public of the clips conflicts with their exploitation of the copyright works at a number of levels. The Defendants dispute this and contend that it does the Claimants no harm at all, but if anything whets fans’ appetite for more. The Claimants contend that there is conflict in three main ways, which I will consider in turn.
Before doing so, it is convenient to address one point that is not in dispute and three points which are relied on by the Defendants. The point that is not in dispute is that, if the use for the purpose of reporting current events, the fact that the App is a commercial venture which is intended to be profit-making in due course does not prevent the use from being fair dealing.
The first point relied upon by the Defendants is that the Claimants do not presently offer members of the public a standalone England cricket clips service. If a member of the public wants to subscribe to a clips service, he or she can only take out a subscription that also includes other services. I am unimpressed by this. The Claimants, like many copyright owners, exploit their rights by providing, or licensing others to provide, bundles of different services which are designed to be attractive to subscribers. If such bundling is regarded as objectionable, that is a matter for competition law. The mere fact that the particular service offered by an alleged infringer is not presently available from the copyright owner does not make the alleged infringer’s use of the copyright works fair dealing. That is particularly so if there is the potential for the copyright owner to licence such a service in the future. On the other hand, I accept that it remains necessary to consider whether the alleged infringer’s use conflicts with a normal exploitation of the copyright works.
The second point relied on by the Defendants is that a considerable amount of content is made available for free by the broadcasters under SNAC. Again, I am unimpressed by this. SNAC only permits footage to be used in linear television broadcasts (including delivery by services such as the BBC iPlayer) and it only permits it to be used in scheduled news bulletins. The Defendants are plainly providing a rather different service, which is precisely why the Defendants think there is a large potential market for their App.
The third point relied upon by the Defendants is that, according to Mr Muirhead, the App competes with “illegitimate services such as Vine, Facebook, Twitter, YouTube, Instagram etc”. As counsel for the Claimants submitted, this amounts to an acknowledgment that the Defendants are competing for the attention of users who want to obtain copyright content without paying for it; but this does not mean that the Defendants’ use does not compete with the Claimants’ exploitation of their copyrights.
Turning to the conflicts relied on by the Claimants, first, the Claimants contend that the use conflicted with Sky’s live broadcasts. This contention was supported by Mr Verow in his evidence on the basis that the App provided users with coverage of the key highlights of matches on a near-live basis.
Counsel for the Defendants made two main points about this evidence. First, he pointed out that Sky broadcast a variety of sports which are available to subscribers in variety of packages, but Sky did not offer a subscription purely to ECB cricket matches (or even just cricket). Secondly, he submitted that, even if one concentrated on cricket, it was implausible that Sky would lose subscribers as a result of use of the App given that Sky provided both continuous live coverage and clips. On the contrary, use of the App would whet cricket fans’ appetite for more coverage of the matches. In this regard, he relied strongly on the reasoning of Scott J in BBC v BSB at 155:
“The use made by B.S.B. in its Sportsdesk programmes of excerpts from the B.B.C.’s live broadcasts took place necessarily after the broadcasts had been transmitted, but took place before the B.B.C.’s or the I.T.V.’s World Cup review programmes had taken place. It was suggested by Mr. Rayner James that thereby the audience appeal of the review programmes would have been reduced. I regard this suggestion as fanciful. If anything, the B.S.B. news reports, with their use of the excerpts, would have been likely in my opinion to have whetted the appetite of the football enthusiast. In any event the reporting of current events must be done promptly. Football matches, even important ones, very quickly cease to be current events. To have required B.S.B. to postpone its use of the material until after the material had been used in the B.B.C.’s or in I.T.V.’s World Cup review programmes would in practice have barred the use of the material as an adjunct to the reporting of the World Cup matches as current events. If B.S.B. was to use the material at all, it had to be used promptly.”
I am not persuaded that this reasoning can be translated to the facts of the present case. Whereas BSB was making limited use of highlights solely within a few scheduled (sports) news programmes, version 8.2 and 8.3 of the App provided users with potentially extensive highlights (there was no restriction on either the number of clips a user could upload or the amount a user could view) on a near-live basis. In those circumstances I accept Mr Verow’s evidence that it would have reduced the attractiveness of Sky’s cricket offering. For some subscribers at the margins, this might have an effect on their willingness to subscribe to Sky services which included cricket. On the other hand, it would not affect the vast bulk of subscribers.
Secondly, the Claimants contend that the use conflicted with News UK’s use. This contention was supported by Mr McLean in his evidence. Counsel for the Defendants made three main points about this evidence. First, he pointed out that the principal service offered by News UK was access to The Times and The Sunday Times. Secondly, he pointed to evidence that the majority of users of the service were over 35. Thirdly, he pointed out that subscribers to the service were provided with up to 18 minutes of clips and 15 minutes of packaged highlights per day. Mr McLean’s evidence, however, was that one of the reasons for the inclusion of the sports clips service in News UK’s subscription package was precisely in order to target users who were younger than 35. Moreover, it was his evidence that the availability of such clips on the App, even in reduced quantity, might well affect the rate at which subscriptions were taken out or renewed amongst such subscribers, in particular because such clips were available near-live, although many subscribers would be unaffected. I accept this evidence, which I regard as plausible.
Thirdly, the Claimants contend that the use conflicted with the ECB’s own proposed use of clips and future licensing plans following the expiry of the News UK agreement. This contention was supported by the evidence of Mr Patel. In this regard Mr Patel gave evidence both that the ECB was concerned about the potential impact on its own proposed service and that the ECB had had difficulty in concluding an agreement with a replacement licensee because of the existence of the present dispute. So far as the ECB’s own proposed service was concerned, counsel for the Defendants suggested that this would be unaffected both because it would be provided by the official website and because it would offer a similar quantity of clips to the News UK service. As to the difficulty in concluding a replacement licence, he suggested that this was merely due to the uncertainty caused by litigation. I am not persuaded by these points. In my view it is likely that the App would have a damaging effect on the audience for the ECB’s own service. Moreover, it is entirely understandable that licensees are reluctant to commit to paying the kind of sums that the ECB is seeking for clips rights given the possibility that the Defendants might be able to offer clips via the App for free.
Accordingly, I conclude that the use complained of is commercially damaging to the Claimants and does conflict with normal exploitation of the copyright works.
Have the works been published? There is no dispute that this is the case.
The amount and importance of the works taken: is it justified by the informatory purpose? So far as versions 8.2 and 8.3 are concerned, the Defendants rely mainly on the fact that users were only able to upload 8 second clips. But even assuming that the use was for the purpose of reporting currents, the clips were mostly highlights of the matches and the extent of the use was potentially limitless. As discussed above, each user could upload an unlimited number of clips from each match and there was no restriction of the amounts of clips that each user could upload. In fact, the relatively small number of users of versions 8.2 and 8.3 while they were in use (most of whom were the Defendants’ employees or contractors) means that the quantities of clips uploaded and viewed were not as extensive as they might have been. Even so, in the case of the first Ashes test at Cardiff, 44 clips were uploaded showing many of the highlights of the match. In any event, in my view the relatively small scale of the use does not affect the principle given that versions 8.2 and 8.3 were designed to be used by very large numbers of users and that the Defendants were seeking to attract as many users as possible. Accordingly, I do not consider that the extent of the use was justified by the informatory purpose.
An additional factor which supports this conclusion is that the interconnected nature of the Defendants’ services resulted in the proliferation of clips across them. Thus clips which were uploaded to the App were in many cases then uploaded to the Website and/or one or more of the Social Media Accounts.
Overall balance. I have no hesitation in concluding that the use of the Claimants’ copyright works by versions 8.2 and 8.3 of the App did not amount to fair dealing. The conflict with the Claimants’ exploitation of their copyrights was not warranted by the nature and extent of the use, and thus the use was not proportionate.
Assessment: versions 8.3.2 and 8.4 of the App
In versions 8.3.2 and following of the App, users are required to post at least 70 characters of commentary. 70 characters is not the upper limit, and it is not clear to me what the upper limit is. The longest comment I have noted in the evidence is 309 characters, but most are rather shorter than that. Mr Muirhead’s unchallenged evidence was that the clips uploaded to the editorially controlled feeds have been accompanied by an average of 125 characters of commentary. There is no evidence as to the average length of the commentary on non-editorially controlled material, but I infer that it is not significantly more than 70 characters or the Defendants would have produced evidence of this.
It is common ground that it is technically possible for users to post text which is nonsensical, for example, 70 repetitions of the letter A. The evidence is that most users post intelligible comments, however.
Was the use for the purpose of reporting current events?
In my judgment the fact that users were required to add at least 70 characters of comments did not alter the basic purpose of the reproduction and communication of the clips. Nor did the requirement which was introduced in version 8.4 to associate the clips with a particular sports events. The purpose of the use was not informatory, but for consumption. It was not for reporting current events, but for sharing clips of footage of sporting events.
Were the clips accompanied by a sufficient acknowledgment?
There is no material difference between these versions and version 8.3 in this respect.
Was the use fair dealing?
Each of the changes in version 8.3.2 is relevant to the assessment of fair dealing: the requirement to add 70 characters of commentary, the restrictions on each user to uploading two clips per hour and on the amount of content posted to editorially controlled feeds to two clips per hour per event, and the removal of clips after 24 hours.
In my judgment none of the changes makes any real difference to the assessment of conflict with normal exploitation, but they potentially have more relevance when it comes to assessment of the extent of the use and whether it was justified by the informatory purpose. Considering them in turn, the requirement to add 70 characters of commentary to each clip does not affect the overall extent of the use, but it does in most cases ensure a baseline for the amount of information conveyed. So far as the two clips per hour restriction is concerned, the problem with this is that a large number of users can each upload two clips per hour from each match, and indeed the App is designed to encourage them to do so. Although there is an overall restriction for editorially controlled feeds, this does not apply to non-editorially controlled material. As for removal of clips after 24 hours, the evidence shows that the Defendants’ employees and contractors have sometimes made mistakes in their use of the eternal function, and so clips that should have disappeared after 24 hours have not. Even disregarding that, however, the point of the App is that it provides users with near-live coverage. A lot of the interest and value of the clips will have dissipated after 24 hours.
Taking all three changes into account, I consider the extent of the use was still excessive in these versions. In any event, the overall balance comes down against a finding of fair dealing. Again, the conflict with the Claimants’ exploitation of their copyrights was not warranted by the nature and extent of the use.
Assessment of the fair dealing defence: versions 8.5 to 8.5.4
As discussed above, the key difference between these versions and the earlier versions of the App is the introduction of the algorithm to restrict the rate at which users can view clips from each sporting event and to impose an overall daily limit. It will be appreciated that the algorithm depends on users accurately associating clips with the relevant events. This cannot be guaranteed, and it is likely that some users will make mistakes. It is reasonable to assume, however, that most users will associate clips accurately with the relevant events.
Is the use for the purpose of reporting current events?
In my judgment the introduction of the algorithm makes no material difference to the assessment of this. It simply restricts the extent of the use. It does not change the basic purpose of the use.
Are the clips accompanied by a sufficient acknowledgment?
There is no relevant change in this regard.
Is the use fair dealing?
In my view the introduction of the algorithm is relevant to the assessment of fair dealing. As explained above, in essence, it limits the viewing of clips by each user from a particular event to 16 seconds per hour’s play (i.e. two 8 second clips per hours of play) and to 60 seconds per day (seven 8 second clips and one 4 second clip per day) or 90 seconds per day in the case of test matches (11 8 second clips and one 2 second clip per day). These limits are designed to ensure that the extent of the use corresponds more closely with that permitted under SNAC.
In my view the mere fact that the extent of the use corresponds more closely with that permitted under SNAC does not justify the conclusion that it is fair dealing. It remains the case that the nature of the use differs from that permitted under SNAC in two key respects: it is not linear television broadcasting and it is not limited to scheduled news programmes. On the contrary, the use is on demand and near-live.
Furthermore, it seems to me that, even as restricted, the App is likely to lead to greater overall consumption of highlights than would be the case under SNAC. Although different broadcasters can in theory all choose different highlights for their news bulletins, there is likely to be a great deal of overlap. By contrast, a multiplicity of users of the App is likely to upload a greater range of highlights even though any one user is restricted in the amount he or she can view in any 24 hours.
On the other hand, I accept that the limits on what a user can view mean that the use is less likely to conflict with normal exploitation of the work and that it is more likely to be proportionate. In particular, the limits make it less likely that the use will conflict with Sky’s live coverage. Nevertheless, I am not persuaded that the limits mean that there will be no conflict with normal exploitation of the copyright works. Mr Patel and Mr McLean remained concerned about the impact on the ECB’s own use and upon News UK’s use, and in my view reasonably so. Counsel for the Defendants submitted that no-one would pay for the amount of content which was available to users via version 8.5 of the App. I do not think that this is correct, although I accept that it is debatable how much users would be prepared to pay. In any event, even if it is correct that no-one would be prepared to pay for the App, it does not follow that it does not conflict with normal exploitation of the Claimants’ copyrights.
Nor am I persuaded that the extent of the use is justified by the informatory purpose. The essence of the Defendants’ service remains the same: to enable fans to share on demand and near-live clips of the highlights from sporting events that are of interest to them. Overall, the balance still comes down against this being fair dealing.
Mere conduit or hosting
As counsel for the Defendants explained, the Defendants rely upon Article 12 and 14 of the E-Commerce Directive in order to address the scenario where (a) in general the reproduction and communication to the public of clips via the App is fair dealing for the purposes of reporting current events, but (b) acts committed in relation to some clips do not benefit from this defence, in particular because the clip is not correctly attributed to Sky or because the commentary is nonsense. As noted above, the Defendants contend that in those circumstances the Claimants’ proper remedy is to send the Defendants a notice to take down the offending clips and that they will do so.
For present purposes I do not understand the Claimants to dispute that the Defendants will not have actual knowledge that a particular clip has not been correctly attributed or that the commentary is nonsense unless and until either (a) the clip is editorially reviewed or (b) the Defendants are specifically notified of this. Nor do the Claimants dispute that the Defendants may be expected to act upon any take-down notices which are sent.
The question then is whether the Defendants would have a defence to a claim for financial remedies for copyright infringement by virtue of Articles 12 and 14. Having regard to my previous conclusions, this question is academic and I will therefore deal with it briefly. First, I consider that it is clear that Article 12 on its own would not provide the Defendants with a defence because the Defendants’ service does not merely involve transmission of information, but also storage.
Secondly, the Defendants accept that Article 14 does not provide a defence in relation to wrongly attributed or uncommented clips appearing in the editorially controlled feeds, but contend that it does provide a defence in relation to such clips so long as they remain in user-generated sections of the App. The Claimants dispute this, contending that it is impossible to divorce the two. For understandable reasons, this issue was not as fully argued as it might have been. In those circumstances, and given that it is not necessary to do so, I have not reached a conclusion on this issue. My provisional view is that, in the light of L’Oréal v eBay, the Article 14 defence would be available to the Defendants in respect of user-posted clips which were not editorially reviewed, but not in respect of clips which were editorially reviewed. As I understand it, to date most clips have been editorially reviewed even if they have not been selected for inclusion in, say, the Latest feed.
Thirdly, I would point out that, even where the Article 12/14 defence is available in respect of a claim for financial remedies, it would not prevent the grant of an injunction, subject to the prohibition of general monitoring in Article 15. There was almost no argument on this point, and therefore I shall say no more about it.
The Website and the Social Media Accounts
Given that I have concluded that the reproduction and communication to the public of clips via the App infringed the Claimants’ copyrights, it follows that the reproduction and communication to the public of some of those clips via the Website and Social Media Accounts also infringed.
Flagrancy
The Claimants seek a finding that the Defendants’ infringements committed via the versions of the App up to version 8.3, and via the Website and the Social Media Accounts, were flagrant, with a view to claiming additional damages upon an inquiry as to damages. In my view, however, the Defendants’ infringements were not flagrant. The Defendants were, as I have noted above, knowingly “pushing legal boundaries”, but nevertheless I consider that they were seeking to act lawfully. Moreover, they have made a series of modifications to the App which attempted to address points raised by the Claimants even if I have concluded that they were not ultimately successful.
Summary of principal conclusions
For the reasons given above I conclude that:
The reproduction and communication to the public of clips from the Claimants’ broadcasts and films via versions of the App up to version 8.3 was not protected by the defence of fair dealing for the purpose of reporting currents. The use was not for the purpose of reporting currents events; and even if it was, it did not amount to fair dealing. Accordingly, the Defendants infringed the Claimants’ copyrights in those works.
In some cases the use of the clips would have infringed in any event because of the lack of sufficient acknowledgement.
The changes made to the App in subsequent versions do not alter the availability of the defence of fair dealing for the purpose of reporting current events.
The reproduction and communication to the public of some of the clips via the Website and Social Media Accounts also infringed the Claimants’ copyrights.
The Defendants’ infringements were not flagrant.