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End user: infringer or no harm done?

IP specialist Mark Engelman considers the Government's moves to exonerate the private copycat, and questions the reasoning behind it.


There are some old fashioned myths in various sectors that surround intellectual property law. One within the fashion industry is that a person can change a design by 9/10ths and avoid liability for copyright infringement. But we know that myth is busted by the quantitative and qualitative test for infringement. Much depends on the nature and quality of what is taken by the copycat designer, not merely the amount taken.

Another prevailing myth is that the end user of an intellectual property protected work would never be considered an infringer. Even the United Kingdom Intellectual Property Office believes so and advises consumers:

Copyright law is being changed to allow you to make personal copies of media (CDs, eBooks etc.) you have bought, for private purposes such as format shifting or backup.

And that was in fact true until very recently, when Mr Justice Green in R v Secretary of State for Business, Innovation and Skills & Anor. (Case No: CO/5444/2014) gave judgment on the issue in a 100-page document.

The European Parliament long ago sought to harmonise the law of copyright across the EU'S member states, which culminated in Directive 2001/29, 'The Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society'. Now affectionately known as the Information Society Directive, Art 5(2)(b) conferred on member states a discretion to exempt from copyright infringement reproductions by a person for private use and for ends that are neither directly nor indirectly commercial. The UK Government benevolently enshrined that discretion into statute as section 28B Copyright, Designs & Patents Act 1988, and by implementing The Copyright and Rights in Performance (Personal Copies for Private Use) Regulations 2014 (SI 2014/2361).

This was just as well, as many of us have been 'ripping' music for years already. The very nature of playing a CD or DVD on a PC or laptop involves copying it. However, the extra step of saving that copy turns that rip into a full blown tear. And we have been ripping away since we bought MP3 players and IPods.  

However, Mr Justice Green reminded us that the 2014 Statutory Instrument did not absolve us of our past sins, but could only grant absolution for any future transgressions. That is, had the Government implemented the Art 5(2)(b) exemption correctly. So it seemed, for a fleeting moment, that we were back to business as usual. But could it be said that what us rippers were doing was 'neither directly nor indirectly commercial', i.e., caused 'minimal or zero' harm to rights holders?

In fact, there existed strong evidence that rights holders were unharmed by our relentless private copying. For example, the Judge recorded that the Government sponsored Hargraves Report into intellectual property found that unrestrained private copying was 'already factored into the price that rights holders are charging', in a policy operated by rights holders known as 'pricing-in'.  This formed the basis of the UK Government’s decision to adopt the Art 5(2)(b) exemption, after arriving at the conclusion that s28B was not an unacceptable encroachment into the rights of copyright holders. It did them no harm. This was probably highly counterintuitive to many of the dyed-in-the-wool copyright lawyers.

But we need remind to ourselves that when you add a folder of your favourite music files to your iTunes library, you are ripping the original copyright protected musical work. The same is true of uploading to the Cloud. Services such as iTunes Match, which store music in what are known as 'dumb lockers' are another form of ripping, and so too are eBooks.

So was the Government right to exercise the discretion afforded it by the Directive and exonerate the private copycat?  According to Mr Justice Green, the Government posed itself the right question: Had the rights owners suffered harm? It possibly came up with the right answer (although he doesn’t actually say that), but for the wrong reason, as it dismissed the prospect of lost sales of music and film downloads by copyright owners.

There are some interesting discussions here for IP lawyers concerning the nature of the measure of damages for an IP damage claim. For example, was the Government right to adopt a lost sales test as against a lost notional licence test? The crucial issue when applying the former test was whether the Secretary of State correctly weighed up the complex economic evidence, which suggests that by considering 'pricing-in' (fixing a higher sale price than normal  in order to provide advance compensation for those lost sales caused by unrestricted copying), the Government drew the correct conclusions. Sadly, both for the Government and for the rest of us, it didn’t, and the judicial review of its decisions to provide us end users a get-out-of-jail-free card succeeded.

So what about companies such as Apple and Microsoft that sell format shifting products? They were never end users anyway. Apple seeks licences of copyright owners to do just that. But will they have any more customers like us who now don’t?

Mark Engelman is a barrister and head of intellectual property at Hardwicke Chambers.

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19 November 2015

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