Sony Music Entertainment Ireland Ltd v UPC Communications Ireland Ltd

JurisdictionIreland
CourtCourt of Appeal (Ireland)
JudgeMr. Justice Gerard Hogan
Judgment Date28 July 2016
Neutral Citation[2016] IECA 231
Docket NumberNo. 2015, 338,[C.A. No. 338 of 2015]
Date28 July 2016

[2016] IECA 231

THE COURT OF APPEAL

Hogan J.

No. 2015, 338

Finlay Geoghegan J.

Hogan J.

Faherty J.

BETWEEN/
SONY MUSIC ENTERTAINMENT (IRELAND) LTD.,
UNIVERSAL MUSIC IRELAND LTD.

AND

WARNER MUSIC IRELAND LTD.
PLAINTIFFS/RESPONDENTS
AND
UPC COMMUNICATIONS IRELAND LTD.
DEFENDANT/APPELLANT

Intellectual property – Copyright infringement – Jurisdiction – Appellant seeking to appeal against a High Court order – Whether the order made by the High Court was one which it had the jurisdiction to make

Facts: The appellant, UPC Communications Ireland Ltd, is a non-infringing internet service provider (ISP). On 27th March 2015, the High Court (Cregan J, [2015] IEHC 317) made an order requiring UPC qua ISP to implement a form of graduated response system (GRS) within its network for the benefit of the respondents, Sony Music Entertainment Ireland Ltd, Universal Music Ireland Ltd and Warner Music Ireland Ltd, who are the relevant copyright holders. The term GRS refers to types of steps which an ISP may be required to take against copyright infringers, ranging from warning letters at one end of the spectrum to orders blocking access to particular websites at the other. The GRS order made by the High Court required UPC to send each relevant subscriber a ?cease and desist? letter upon receipt of notification of the first and second copyright infringement notifications which it received from the rightsholders. On receipt of the third copyright infringement notice, UPC was then required to send the relevant rightsholders a notification that the particular subscriber has been the subject of three such notifications. The rightsholders were then entitled to apply to court for an order terminating the subscriber?s internet broadband service. There was a monthly limit of some 2,500 notifications of this kind. The order further provided that the rightsholders were required to pay 20% of any capital expenditure incurred by UPC with a cap of ?940,000 on each such expenditure, which sums were to be paid in five equal annual instalments. Business users were excluded from the scheme. The order provided that the matter was to be listed for review before the High Court in five years from the date of the perfection of the order, but the order was otherwise to last indefinitely. This was the first GRS order of this kind made anywhere within the European Union. It was found by Cregan J in the High Court that the making of such an order as this would entail significant capital and operating expenditure on the part of the ISPs. The copyright holders maintained that the effect of both Article 8(3) of the Directive 2001/29/EC (the 2001 Directive) and s. 40(5A) of the Copyright and Related Rights Act 2000 is to grant such jurisdiction. For its part UPC maintained that the court has no jurisdiction to make an order of this kind. The appellant appealed to the Court of Appeal from the judgment of Cregan J, submitting that the order actually made was more appropriate to that of a specialist regulator vested with appropriate expertise and which is best placed to make policy decisions of this kind and that the order was not one which a court required to make judgments based only on legal rights (including equitable rights) and wrongs could appropriately make.

Held by Hogan J that, subject to the reservations regarding future review after five years and applications for costs in future cases, the GRS order made by the High Court was one which the High Court had jurisdiction to make. Hogan J held that the order satisfied the requirements of Article 8(3) of the 2001 Directive, as transposed by s. 40(5A) of the 2000 Act.

Hogan J held that, subject to the minor variations by the deletion in the High Court order of 17th June 2015 of the provision for the review after 5 years and the prohibition on UPC seeking costs in future proceedings, he would otherwise dismiss the appeal brought by UPC.

Appeal dismissed.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 28th day of July 2016
1

What (if any) steps may the High Court require internet service providers to take to assist copyright holders to identify those of its customers who use the network provided by these providers to access the internet for the purpose of illegally downloading or uploading copyright material? This is in essence the fundamental issue which arises in this appeal brought by UPC Communications Ireland Ltd. (?UPC?) from the judgment of Cregan J. in the High Court delivered on 27th March 2015 ( Sony Music Entertainment (Ireland) Ltd. v. UPC Communications (Ireland) Ltd. (No. 1) [2015] IEHC 317). The appellant, UPC, is a non-infringing internet service provider (?ISP?). In the judgment under appeal Cregan J. made an order requiring UPC qua ISP to implement what is sometimes known as a form of graduated response system (?GRS?) within its network for the benefit of Sony Music and the other respondents who are the relevant copyright holders. The term GRS is not a term of art, but it refers to types of steps which an ISP may be required to take against copyright infringers, ranging from warning letters at one end of the spectrum to orders blocking access to particular websites at the other.

2

The GRS order in question which was made by the High Court is a very detailed one but, in essence, the order requires UPC to send each relevant subscriber a ?cease and desist? letter upon receipt of notification of the first and second copyright infringement notifications which it receives from the rightholders. On receipt of the third copyright infringement notice, UPC is then required to send the relevant rightsholders a notification that the particular subscriber has been the subject of three such notifications. The rightsholders are then entitled to apply to court for an order terminating the subscriber's internet broadband service. There is a monthly limit of some 2,500 notifications of this kind. For ease of reference, the curial part of the High Court order is appended to this judgment.

3

The order further provides that the rightholders are required to pay 20% of any capital expenditure incurred by UPC with a cap of ?940,000 on each such expenditure, which sums are to be paid in five equal annual instalments. Business users are excluded from the scheme. The order provides that the matter is to be listed for review before the High Court in five years from the date of the perfection of the order, but the order is otherwise to last indefinitely. On the hearing of the appeal this Court was informed that this was the first GRS order of this kind made anywhere within the European Union.

4

This appeal accordingly concerns the jurisdiction of the High Court to grant GRS injunctions of this nature directed at non-infringing ISPs. It is common case – and so found by Cregan J. in the High Court – that the making of such an order this will entail significant capital and operating expenditure on the part of the ISPs. The copyright holders (whom for convenience I will term ?Sony?) maintain that the effect of both Article 8(3) of the Directive 2001/29/EC (?the 2001 Directive?) and s. 40(5A) of the Copyright and Related Rights Act 2000 (?the 2000 Act?) is to grant such jurisdiction. For its part UPC maintains that the court has no jurisdiction to make an order of this kind. It submits that the order actually made is more appropriate to that of a specialist regulator vested with appropriate expertise and which is best placed to make policy decisions of this kind and that the order is not one which a court required to make judgments based only on legal rights (including equitable rights) and wrongs could appropriately make.

5

It is obvious that this appeal presents issues of enormous importance so far as the effective protection of copyright is concerned. For good measure the appeal also raises important questions concerning the jurisdiction of the High Court to grant injunctions and the inter-action of national and EU procedural law in this regard.

6

Before considering these questions, it is necessary first to examine the background to this litigation. There is no question at all but that the development of the internet in the last twenty years or so has transformed the music industry, not always for the better so far as the copyright holders are concerned. In fact, the development of both web browsers and specialist software programmes has greatly facilitated what is known as peer-to-peer file sharing. All of this means that ordinary computer users can download or upload files to and from other users or groups of users. In practice this has the effect that the music loving population no longer has to purchase CDs from record shops or on-line as in the past: by paying for a broadband service they can effectively avoid the necessity to pay for the music which they enjoy.

7

These advances in digital technology and the increasing use of the internet have led to such widespread, anonymous infringement by computer users to the point where it is almost pointless for copyright holders to pursue such individuals who engage in on-line peer to peer file sharing. As counsel for Sony, Mr. McDowell S.C., explained, from time to time the copyright holders had pursued such consumer infringers in the past in this jurisdiction by means of civil action in the High Court. This proved to be a futile exercise which consumed great amounts of time and effort and at considerable cost, because as often as not the infringer proved to be a teenager or young adult who had used a home computer for such file sharing and against whom an award of damages (which might in any event have been small or even negligible) would have been a wholly empty exercise.

8

The basic ineffectiveness of these remedies are not disputed by either party to this appeal and, in any event, graphic accounts of the futility of the traditional remedies for copyright...

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