In a 18 March 2016 decision in England and Wales Cricket Board Limited and Sky UK Limited v. Tixdaq Limited and Fanatix Limited (England & Wales High Court,  EWHC 575 (Ch)), the ‘fair dealing’ defence to copyright infringement failed for Tixdaq, whose service commercialised numerous eight second clips of cricket matches, and was found not to be truly for the purpose of reporting current events.
George Sevier of Gowling WLG (UK) LLP discusses the case, which, in his view, makes clear that the law in relation to fair dealing is far from settled, particularly away from traditional media channels.
England and Wales Cricket Board Limed (‘ECB’) and Sky UK Limited (‘Sky’) own copyrights in television broadcasts and films of most cricket matches played by the England men’s and women’s cricket teams in England and Wales. The defendants operated a website and mobile app where the defendants’ employees, contractors and users of the app uploaded numerous eight second clips of broadcasts of cricket matches, which could be viewed by other users. Clips could also be viewed on the defendants’ Facebook page and Twitter feed.
The claimants succeeded in their claim for copyright infringement. The defendants pleaded the defence of fair dealing for the purpose of reporting current events provided in section 30(2) of the Copyright Designs and Patents Act 1988. They also sought to rely on the mere conduit and hosting defences provided in Article 12 and 14 of Directive 2000/31/EC (the E-Commerce Directive). Having reviewed the European jurisprudence that underlies the defences, Mr Justice Arnold rejected them both.
ECB and Sky own and have the right to exploit the copyright in films and broadcasts of certain cricket matches. The ECB derives substantial income from the copyright by licensing different rights to several broadcasters - Sky alone pays hundreds of millions of pounds over the course of its agreement with the ECB. Other broadcasters are permitted to use limited clips by virtue of the Sports News Access Code of Practice (‘SNAC’). SNAC is an agreement between the UK’s principal broadcasters setting out the parameters for the use of another broadcaster’s sports footage in news programmes. As part of the agreement, the broadcasters acknowledge that such use will constitute fair dealing for the purpose of reporting current events.
The defendants sought to disrupt the market in sports media rights by uploading, and getting the public to upload, clips of up to eight seconds, taken from official footage of cricket matches. In investor presentations, they claimed to have achieved 250 million replays in 100 days since launch, and to have 20,000 daily active users of the Fanatix app. Whilst Tixdaq’s CEO tried to suggest that the app was used far less, the Judge held them to the figures in the investor presentations. In addition, there were up to 100,000 visitors to the Fanatix website each day and up to 450,000 daily visitors to its Facebook page.
The defendants accepted that they were pushing the boundaries of the law. In early versions of the Fanatix app, there were few controls on uploads. However, in more recent versions, changes were introduced to support the defendants’ position that its use amounted to fair dealing for the purpose of recording current events - users were obliged to attribute each clip to a broadcaster, accompany each clip with commentary of at least 70 characters, and were prevented from uploading more than two eight second clips per hour. The amount of footage that could be watched was also limited, depending on the type of match, to 60 or 90 seconds per day per match.
Development of the law
Whilst the law of copyright infringement in the UK is set out in the Copyright, Designs and Patents Act 1998, it must be interpreted in light of the InfoSoc Directive and European jurisprudence on the interpretation of the Directive. Arnold J highlighted that the recitals to the InfoSoc Directive say that “The existing exceptions and limitations to the right set out by the Member States have to be reassessed in the light of the new electronic environment.” As such, Arnold J warned that decisions of the UK courts that pre-date implementation of the InfoSoc Directive need to be treated with caution. Law that was drafted in the days of reproduction of photographs in newspapers may need to be interpreted differently in the online world.
The 1988 Act provides that there is an infringement of copyright by copying or communicating to the public the whole or a substantial part of a copyright work.
Arnold J drew a distinction between copyright in films and broadcasts on the one hand (which he termed ‘signal rights’), and copyright in literary and artistic works (‘content rights’) on the other hand. Whilst content rights seek to protect the intellectual creation of the author or artist, the purpose of copyright in films and broadcasts is to protect the investment of the producer or broadcaster. In the case of a film, the artistic input of a film director and others in selecting camera angles, close ups, slow motion, etc is protected by copyright in a dramatic work, but there was no pleaded case of infringement of a dramatic work in the current case.
As such, the Judge considered that case law concerning substantial part that is addressed to content rights such as that in Case 5/08 Infopaq International A/S v. Danske Dagblade Foregning  ECR I-6569 cannot be applied to the current case, which concerns alleged infringement of signal rights.
Arnold J reasoned that broadcasters and producers invest in the production and first fixations for films knowing that some parts of the footage of an event, such as goals in the case of a football match, will be more interesting to viewers than other parts, and there is a market for highlights programmes and the like in addition to the market for continuous live coverage.
Quantitatively, eight seconds is not a large proportion of a broadcast or film lasting two hours or more. Qualitatively however, short highlights such as wickets taken, appeals refused and centuries scored, may be of the most interest, and value. The judge considered that each clip constituted a substantial part of the relevant copyright work. This is consistent with the conclusion of Kitchin J in Football Association Premier League Ltd v. QC Leisure  EWHC 1411 (Ch) who considered that action replays lasting a few seconds were a substantial part of a film lasting at least 90 minutes.
Fair dealing defence
Section 30(2) of the 1988 Act provides that ‘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…it is accompanied by a sufficient acknowledgement.’ The Judge considered it important to read this in light of Article 5(3)(c) of the InfoSoc Directive, which is similarly worded, but permits use ‘to the extent justified by the informatory purpose’ rather than permitting use that is ‘fair dealing.’
It was established law that reporting current events need not be restricted to general news programmes. However, given the novel business model, courts have not previously addressed the question of whether the sharing of short clips in this manner via the app or website could be considered to be for the purpose of reporting current events. Arnold J was of the view that ‘citizen journalism’ - such as a member of the public recording a newsworthy event on their mobile phone and uploading it to Twitter - could amount to the reporting of current event.
Article 5(5) of the InfoSoc Directive imposes what is known as the ‘three-step test’ in considering fair dealing. Arnold J openly said that it was not clear whether the test was applicable to national courts when deciding on individual cases. However, all parties in the current case agreed that it should be applied, even though the UK has not transposed the three-step test into domestic legislation. The steps, and the Judge’s approach in this case, are as follows:
- The exception ‘shall only be applied in certain special cases.’ The parties agreed that reporting current events is such a special case.
- The application of the exception must not ‘conflict with a normal exploitation of the work or other subject-matter.’ The Judge was of the view that there was clear conflict with the copyright owners’ exploitation, if app and website users could access footage for free, which would otherwise be made available by paying licensees. There was evidence that potential licensees had been reluctant to enter licence agreements with the ECB whilst the Fanatix services were operating.
- The application of the exception must not ‘unreasonably prejudice the legitimate interests of the rightholder.’ The Judge explained that this may qualify the second step - the exception may apply unless the copyright owner’s interests are unreasonably prejudiced. He concluded that the defendants’ use was commercially damaging to the claimants.
The Judge considered the question of whether the amount and importance of the works taken were justified by the informatory purpose. Whilst each clip was only up to eight seconds long, and in respect of certain matches there were relatively few clips, the Judge took account of the extent of the clips being essentially limitless. The app was designed to be used by very large numbers of users, and the defendants were seeking to attract as many users as possible.
Ultimately, the Judge was of the view that in reality, the clips were not used for the purpose of reporting current events. Rather, they were presented for consumption because of their intrinsic value and interest. He made the point that even in later versions of the app where uploaders were obliged to add a certain amount of commentary, clips are presented to viewers accompanied by comments, rather than reports being presented to viewers and illustrated by clips.
Later versions of the app prevented users from uploading more than two eight second clips per hour, and prevented users from watching more than 60 or 90 seconds per day per match (depending on the type of match). This model was much closer to the model acknowledged in SNAC to be fair dealing. However, SNAC is limited to linear television and to scheduled news programmes, whereas the app is on-demand and near-live. The judge held that despite the changes in later versions, the use could not be considered to be fair dealing, because it was still excessive, and conflicted with the claimants’ exploitation of their copyright.
As noted above, for the fair dealing defence to apply, Section 30(2) of the 1988 Act requires that the copied work is accompanied by sufficient acknowledgment. For the purposes of films and broadcasts, acknowledgment is not necessary ‘where this would be impossible for reasons of practicality or otherwise.’
In later versions of the app, users were required to state the source of the clip, and there was no dispute that most clips were sufficiently acknowledged. In earlier versions, there was not such explicit acknowledgment, but several clips included the Sky logo in the corner of the screen; as was held in Pro Sieben Media AG v. Carlton UK Television Ltd  1 WLR 605, inclusion of a broadcaster’s logo can amount to sufficient acknowledgment. In many cases, some but not all clips on a particular day included the Sky logo. However, the Judge took the view that any user paying a moderate amount of attention is likely to have seen the Sky logo in some clips and would have appreciated that the other clips from the same day of a match are likely also to have come from Sky, so there could be sufficient acknowledgment without labelling every clip.
Mere conduit or hosting defences
The defendants sought to rely on exceptions to copyright infringement that were designed to protect internet service providers (‘ISPs’).
The mere conduit exception in Article 12 of the E-Commerce Directive provides that there is no infringement by service providers in respect of information they transmit, provided they do not (a) initiate the transmission; (b) select the receiver of the transmission; or (c) select or modify the information contained in the transmission. The mere conduit exception was not available in the current case, because the defendants’ service is not limited to transmission; it also includes storage.
Article 14 of the InfoSoc Directive provides that hosts may not be liable for storing infringing content, provided they have no knowledge of illegal activity, and upon being made aware of it, act expeditiously to remove or disable access to the content. The judge remarked obiter that the Article 14 defence might have been available in respect of user-generated clips that were not editorially reviewed by the defendants. However, on the facts, it appeared that most user-generated content had been reviewed.
The Judge made the point that even if the Article 12 and 14 defences did apply, they are only effective in relation to a claim for financial remedies, and would not prevent the grant of an injunction.
What this judgment makes clear is that the law in relation to fair dealing is far from settled, particularly away from traditional media channels. Whilst thoroughly reasoned, the judgment raises more questions than it answers, indicating that there is likely to be much more litigation in this area.
This article was first published in E-Commerce Law & Policy, May 2016.