Need to Know – 2015.03.09

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General

Court of Justice of European Union considers rules on the payment of fair compensation to rights holders in the context of the private copying exception.

Technology

Government consults on reform of Electronic Communications Code.

PhonepayPlus announces action in response to High Court judgment in Ordanduu GmbH v PhonepayPlus Ltd.

Litigation

Government responds to Law Commission’s report on groundless threats in IP proceedings.

Music

IFPI announces global release day is to go ahead.

Publishing

High Court in Northern Ireland finds convicted sex offender had expectation of privacy in relation to certain postings on Facebook and awards £20,000 damages for misuse of private information and harassment.

Film & TV

Government announces ratification of film co-production treaty between UK and China.

Advertising

ASA finds Amazon Prime “30-day free trial” promotion misleading because automatic paid subscription “unless cancelled” was not referred to in main body of ad.

Advertising Standards Authority publishes response to consultation on introducing new prioritisation principles to guide its work.

Advertising Standards Authority and Competition Markets Authority take action to improve information for ticket buyers.

General

Court of Justice of European Union considers rules on the payment of fair compensation to rights holders in the context of the private copying exception.

Copydan Båndkopi, a Danish collecting society, is responsible for the administration of copyright in audio and audiovisual works and is authorised to collect, administer and distribute the copyright levy charged for the use of such works.

Nokia Danmark A/S markets mobiles in Denmark.  It supplies mobiles to business customers, who sell them on both to individuals and to other business customers. 

All mobiles have an internal memory.  Certain models have an additional memory card separate to the SIM card on which a user can store data, such as telephone numbers, contact details and photographs, as well as musical works, films and other protected works downloaded from the internet or from DVDs, CDs, MP3 players or the user’s computer.

It was common ground that if a user stores protected works on a mobile with both an internal memory and a memory card, such works are usually stored on the memory card.  However, the user can alter the settings on his/her mobile to store the works in the internal memory of the phone.

Copydan argued that all mobile memory cards, except for those with very low storage capacity, should be covered by the fair compensation system set out under Danish legislation.  Copydan issued proceedings in the Danish courts against Nokia, claiming that Nokia should pay a private copying levy in respect of memory cards imported into Denmark during the period 2004 to 2009.

Nokia argued that the levy was not payable where the reproduction was not lawful or where use of the reproduction following, for example, the downloading of a protected work is authorised by the copyright holder.

The Danish court asked the CJEU various questions in respect of the private copying exception under Article 5(2)(b) of the Copyright Directive (2001/29/EC).  One of the main questions was whether Article 5(2)(b) precludes national legislation from providing for the payment of fair compensation in respect of the supply of multifunctional media, such as mobile memory cards, irrespective of whether the principal function of such media was to make copies for private use or not.

The CJEU found that, following case law, given the practical difficulties associated with identifying private users and obliging them to compensate rights holders for the reproduction of their works, Member States can impose a private copying levy on those who make digital reproduction equipment available to private users or who provide copying services for them.  It is not necessary to show that users are making private copies and it is irrelevant whether the medium used is multifunctional or not, or whether the copying function is ancillary to the other functions, as users are deemed to be taking full advantage of all the functions provided by the medium.  However, the CJEU said, the question of whether the function is a main or an ancillary one, and the relative importance of the medium’s capacity to make copies, are liable to affect the amount of fair compensation payable.  If harm to the rights holder is minimal, the making available of the equipment does not necessarily give rise to an obligation to pay fair compensation, the CJEU said.

The Danish court also asked the CJEU whether Article 5(2)(b) precludes national legislation from providing that the supply of media to make copies for private use, such as memory cards, is subject to the private copying levy, but that the supply of component parts whose primary purpose is to store copies for private use, such as internal memories of MP3 players, is not subject to that levy.

Here, the CJEU said that the principle of equal treatment applies.  Therefore, Member States cannot provide for fair compensation rules that would discriminate, without any justification, between the different categories of economic operators marketing comparable goods covered by the private copying exception.  However, it is for the national court to determine whether there are circumstances that would justify the conclusion that, notwithstanding the fact that the integral components in question have the same copying function as mobile memory cards, those components are not comparable in respect of the requirements relating to fair compensation. 

The CJEU also found that Member States are precluded from providing for fair compensation to be paid in respect of reproductions made using unlawful sources, i.e. works that are made available to the public without the right holder’s consent.  (Case C-463/12 Copydan Båndkopi v Nokia Danmark A/S, 5 March 2015 (unreported) – to access the judgment in full, go to the curia search form, type in the case number and follow the link).

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Technology

Government consults on reform of Electronic Communications Code.

The Code regulates the relationship between electronic communications network operators and site providers.  It provides the legal framework for the rollout and maintenance of the physical networks of apparatus that support the provision of electronic communications services throughout the UK.

The Code was enacted in 1984.  Since then the telecommunications sector has changed almost beyond recognition.  The existing Code is therefore out of date and lacks the clarity to inform the agreements between Code operators and site providers that enable and sustain networks.

The Government says that its key objective remains to provide a “modern and robust legal framework for the rollout of electronic communications apparatus”.  In order to develop a Code that ensures connectivity, expands mobile coverage, and takes into account the interests of all parties, it is important to seek further views from those who use, rely on and are affected by the Code, the Government says.

The Government invites submissions on all areas within the scope of the Code, however invites specific responses on:

  • the definition of land;
  • how consideration is to be determined;
  • upgrading and sharing apparatus;
  • contracting out of the revised Code;
  • the role of land registration; and
  • transitional arrangements, savings and retrospectivity. 

The consultation closes on 30 April 2015.  To access the consultation documentation, click here.

PhonepayPlus announces action in response to High Court judgment in Ordanduu GmbH v PhonepayPlus Ltd.

As previously reported in N2K, in Ordanduu GmbH v PhonepayPlus Ltd [2015] EWHC 50 (Admin) (16 January 2015), which was a claim for judicial review, the High Court ruled that PhonepayPlus had acted unlawfully when it invoked the “Emergency Procedure” under its Code of Practice, and suspended the whole of the claimants’ business in the UK, froze their revenue, and imposed penalties and administrative charges for breaches of the Code. 

PhonepayPlus has just announced that, in recent weeks, it has considered the judgment and has held discussions with the parties involved.  Following legal advice, PhonepayPlus lodged an appeal on a limited basis against the finding that the claimants were entitled to damages.  A settlement was then reached between the parties on confidential terms.  The regulator says that it can manage payment of the settlement in one year without going beyond the parameters consulted on for the 2015/16 levy.

PhonepayPlus notes in its announcement that the judge “made clear that the judgment does not affect PhonepayPlus’ Code of Practice or the processes set out within it”.  The judgment is therefore specific to this case and the way in which the Emergency Procedure was applied in the context of the law.  PhonepayPlus says that it will “continue to apply our Code with due regard to all relevant law, making necessary changes to our processes and the Code to ensure we are able to do so effectively”.

Following internal review, discussions with Ofcom and other stakeholders, PhonepayPlus says that it is “taking the necessary steps to learn lessons and to address the issues raised in the judgment”.  It is also taking external legal advice on the small number of Emergency Procedure cases against other providers that arose around the same time and involved the same affiliate marketing and ransomware as in the Ordanduu case.

PhonepayPlus says that it is also looking to undertake a more in-depth review of the investigations, adjudicatory procedures and sanctions part of the Code (Part 4).  The regulator says that it has taken on board the industry’s feedback on its proposed changes to Part 4 in last year’s consultation on the proposed new Code 13.

PhonepayPlus says that it will be considering whether other changes may be appropriate in relation to its Code, processes and procedures.  To read the PhonepayPlus press release in full, click here.

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Litigation

Government responds to Law Commission’s report on groundless threats in IP proceedings.

In April 2013, the Law Commission published a consultation on reforming the rules on groundless threats in IP proceedings.  The Government has now responded to the Law Commission’s report on the outcome of the consultation (published in April 2014), outlining various new measures.

Protection against groundless threats of infringement proceedings will be retained for patents, trade marks, registered and unregistered design right.  However, a number of new reforms will be introduced:

  • making sure that the threats provisions are much clearer;
  • making it easier for parties to make good faith attempts to settle an IP infringement dispute before litigation; and
  • stopping legal advisers from being subject to threats and accusations when the dispute is between the parties that they represent.

The Government notes that threats of legal action for IP infringement can cause “significant commercial damage to small businesses”.  They are “costly and disruptive, drive customers away and stop business from selling goods and services”, it says.  It is hoped that the new measures will address these concerns.

Intellectual Property Minister Baroness Neville-Rolfe said: “We are improving protection against the groundless threats of intellectual property infringement that small businesses can face.  Our reforms will make sure the law properly protects businesses from being threatened unfairly, but also allow innovative businesses to resolve disputes legitimately and enforce their rights”.  For links to the Law Commission’s report and the Government response, click here.

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Music

IFPI announces global release day is to go ahead.

Following consultation with artists, musicians’ unions, record companies and retailers, IFPI has now confirmed that the release day for new music will be aligned internationally on a Friday.

Release days currently vary from one country to another, causing frustration for consumers when music fans in other parts of the world can access new releases before them.  IFPI says that, as well as helping music fans, the move will benefit artists who want to harness social media to promote their new music.  It also creates the opportunity to “re-ignite excitement and a sense of occasion around the release of new music”.

IFPI is confident that the move to an aligned global release day will also reduce the risk of piracy by narrowing the gap between release days in different countries.

From summer 2015, new albums and singles will be released at 00:01 local time on Fridays.  Music consumers everywhere will know to look for new releases on Fridays regardless of where they are.

The move to a global release day follows several months of discussions between groups representing retailers, record companies, artists and musicians unions.  To read IFPI’s press release in full, click here.

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Publishing

High Court in Northern Ireland finds convicted sex offender had expectation of privacy in relation to certain postings on Facebook and awards £20,000 damages for misuse of private information and harassment.

The claimant, CG, was a convicted sex offender who in 2007 was sentenced to ten years imprisonment.  In 2012 he was released on licence. 

The second defendant, Mr McCloskey, operated a webpage called “Keeping Our Kids Safe from Predators 2” on Facebook Ireland’s Ltd social network. 

CG issued proceedings against both Facebook Ireland, the first defendant, and against Mr McCloskey in relation to a series of postings about him on Mr McCloskey’s “Keeping our Kids Safe from Predators 2” Facebook page.  CG alleged that the defendants had misused private information, were in breach of Articles 2, 3 and 8 of the ECHR and of the Protection from Harassment (Northern Ireland) Order 1997, and that each of them was guilty of actionable negligence.  CG sought damages and an injunction.

The publications generally consisted of a photograph of CG that had been in the public domain since his conviction, together with material identifying him as a convicted sex offender.  Viewers of the Facebook page then posted comments verbally abusing CG, threatening him and his family and identifying him and his suspected location.

The court found that CG had an expectation of privacy in relation to the following matters:

  • any photograph of the plaintiff given that it could be used to identify exactly where he lived and increased the risks of attacks upon him together with harassment of him, his father, his brother with effects on all of them;
  • his name, if used in conjunction with other information which might identify where he lived;
  • his present address or any description of the area in which he lived;
  • his previous address or any description of the area in which he had previously lived, if that information could be used to identify his present address;
  • his criminal convictions except in so far as they ought to be disclosed in accordance with the Public Protection Arrangements in Northern Ireland (PPANI);
  • the risks that he posed to the public again except in so far as they ought to be disclosed in accordance with PPANI; and
  • any information about his family members.

The court considered that the balancing exercise came down firmly in favour of CG.  The information that was being published harmed the public interest creating a risk of re-offending.  Further, it incited violence and hatred.  It was indiscriminate and led to the potential for public order situations to develop.  It was an attempt to hunt a sex offender, to drive him from his home and to expose him to vilification.

Facebook, who was responsible for the profile/page as the primary publisher, had therefore breached CG’s privacy rights.

The court found that all the content of the profile/page “Keeping our Kids Safe from Predators 2” in relation to CG was “oppressive and unreasonable” and that there was a course of conduct over a period of time which amounted to harassment of CG and which both of the defendants knew or ought to have known amounted to harassment of him.  The court considered that the language was oppressive and unreasonable amounting as it did to a campaign of vilification.  Mr McCloskey was therefore liable to CG for unlawful harassment.

Further, the court said, it was apparent to Facebook from the “Keeping our Kids Safe from Predators 2” page and from the content posted in relation to CG that individuals were trying to find out where convicted sex offenders, including CG lived, with an obvious risk of vigilante violence given the inflammatory language which condoned and incited such violence.  Facebook had therefore misused private information in not deleting that information.  The content was obviously unlawful, being misuse of private information.

The court granted an injunction against Mr McCloskey preventing him from harassing, pestering, annoying or molesting CG whether by publishing, distributing, broadcasting or transmitting any information on the website facebook.com or otherwise.  The court also ordered Facebook to terminate the profile/page “Keeping our Kids Safe from Predators 2”.

As for damages the court awarded to CG a total of £20,000 payable by the defendants. 

The Belfast Telegraph has since reported that an injunction has been granted to freeze any pay out of damages to CG.  This is because one of CG’s victims has since commenced civil proceedings against him to try and secure compensation.  (CG v Facebook Ireland Ltd [2015] NIQB 11 (20 February 2015) – to read the judgment in full, click here.  To read the article in the Belfast Telegraph from 8 March 2015, click here).

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Film & TV

Government announces ratification of film co-production treaty between UK and China.

The Government says that the deal, which was negotiated for the UK by the British Film Institute and China’s Film Bureau and China Film Co-production Corporation, with support from the Department for Culture, Media and Sport and UK Trade & Investment in Beijing, will allow qualifying co-productions to access national benefits including sources of finance and an easier distribution route to audiences.  In the UK this includes the Film Tax Relief and the BFI Film Fund, which is the UK’s largest public film fund.

In addition, the treaty will mean that all eligible co-productions will be able to be shown in China.  Currently, China permits only 34 revenue-sharing non-domestic titles to be shown in Chinese cinemas each year.  As such, many more UK films will be shown to Chinese audiences than current restrictions allow.

Amanda Nevill, BFI CEO, said: “This film Co-Production Treaty represents a hugely significant moment for UK film and opens the door to a relationship with the largest growing film industry in the world, allowing our filmmakers to collaborate with and contribute to this success story. I’m very excited by the opportunities for growth and shared success, both creatively and commercially, that this treaty presents for the UK and China”.  To read the Government’s press release in full, click here.

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Advertising

ASA finds Amazon Prime “30-day free trial” promotion misleading because automatic paid subscription “unless cancelled” was not referred to in main body of ad.

A direct mailing sent to Amazon accounts holders included a plastic card which stated: “30-DAY FREE TRIAL For [recipient’s name]. Go to amazon.co.uk/videoprime”.

Details of compatible devices were listed in the letter and text continued: “Getting started is easy. Start your 30-day free trial today.  Find the … app on your device, download it and sign in with your Amazon account.  Or go to www.amazon.co.uk/videopiv to learn more.”  Small text at the bottom of the letter in the “Offer terms” stated: “Paid subscription starts automatically after free trial unless cancelled”.

Six customers complained that it was not clear from the ad that a paid subscription would automatically start if not cancelled during the free trial.  They also complained that it did not state the cost of subscription.

The ASA said that the small print was “not enough” to warn consumers that the trial would end in a paid subscription if not cancelled in time.  It also ruled that the price of the subscription to Amazon Prime was “material information” that should have appeared in the ad.  Because the information was not sufficiently prominent and because consumers were not made aware of the extent of the financial commitment they would face if they did not cancel subscription, the ASA said that the ad breached CAP Code rules 3.1, 3.3 (Misleading advertising), 3.10 (Qualification) and 3.23 (Free).  To read ASA Adjudication on Amazon Europe Core Sarl (4 March 2015), click here.

Advertising Standards Authority publishes response to consultation on introducing new prioritisation principles to guide its work.

The principles were developed in line with the ASA’s five-year strategy 2014 to 2018, which is the ASA’s public commitment to “Having more Impact” and “Being more Proactive in how its regulates.  They express the ambition to “make every UK ad a responsible ad”.

Under the prioritisation principles the ASA says that it will:

  • consider what harm or detriment has occurred or might occur;
  • balance the risk of taking action versus inaction;
  • consider the likely impact of our intervention; and
  • consider what resource would be proportionate to the problem to be tackled.

The principles will help the ASA decide what resources it commits, or activities it undertakes, in response to issues identified either through complaints or other forms of information, e.g. research or intelligence from another regulator.

The ASA says that this more proactive and targeted approach will “allow us to have the biggest impact on the issues that matter most, benefitting consumers, society and responsible advertisers alike”.

The ASA says that, following the consultation launched in November 2014, it is satisfied that it had identified the appropriate prioritisation principles to help guide the allocation of its regulatory resources.

Now that the new prioritisation principles are live, the ASA will be developing new ways of working to put them into practice.  This will be a gradual process, allowing the regulator to “build towards becoming a more proactive regulator without putting at risk what we already do well, which will continue to underpin our work in future”.  To read the ASA’s press release in full, click here.

Advertising Standards Authority and Competition Markets Authority take action to improve information for ticket buyers.

The ASA and CMA say that they have been working to ensure that secondary ticket websites are transparent about pricing and deal fairly with consumers.  Alongside this, the CMA has also taken action to help improve the information consumers are provided with when using secondary ticket websites.

The ASA says that it has taken action over the last 12 months to clamp down on websites that display misleading price information.  Consumers have been misled by ticket pricing information that has not made clear, or has not included, additional fees that apply per ticket or fees that apply to each order.  These consumer facing websites have also quoted prices exclusive of VAT, which is prohibited by the advertising rules.  As a result of this work, various companies have amended their websites to be more clear and upfront.

The ASA says that work in this area is ongoing.  It has placed several operators on its “non-compliant advertiser list”, which is designed to highlight problem practices and increase pressure on companies to bring advertising into line.  The compliance team is currently exploring if further sanctions are necessary.

The CMA’s action has resulted in four of the largest UK secondary ticket platforms giving undertakings to give buyers improved information about the tickets listed on their sites.  This includes:

  • information on restrictions on entry or view that may apply to the ticket;
  • whether or not multiple seats that are listed together are located together;
  • whether there are any additional charges not included in the listed ticket price; and
  • the face value of the ticket, which may be different from the price the ticket is available for through the secondary ticketing website.

To read the ASA press release in full, click here.

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