Cases Round-up

Laurence Eastham gives a brief outline of some of the cases covered by the SCL web site over the last couple of months that the IT lawyer needs to know about but which have not been covered in full articles in the magazine. Online readers should note that this article was created for the magazine for the sake of completeness and that fuller reports of each case are available online.

No Copyright Infringement in Mere Web Viewing 

In Case C?360/13 Public Relations Consultants Association Ltd v Newspaper Licensing Agency Ltd and Others, which for anachronistic reasons tends to be referred to as the Meltwater case, the CJEU has given a clear response to the question referred by the Supreme Court. To nobody's surprise, it has ruled that clicking on a link and viewing a legally published web page is not copyright infringement. The actual wording of the formal ruling is as follows:

Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the copies on the user's computer screen and the copies in the internet 'cache' of that computer's hard disk, made by an end-user in the course of viewing a website, satisfy the conditions that those copies must be temporary, that they must be transient or incidental in nature and that they must constitute an integral and essential part of a technological process, as well as the conditions laid down in Article 5(5) of that directive, and that they may therefore be made without the authorisation of the copyright holders.

The case concerns the services provided by the Public Relations Consultants Association (PRCA). The appeal was about the services provided to PRCA members by Meltwater which uses automated software to create an index of words appearing in newspaper web sites. Search terms are provided by Meltwater's customers (many of whom are PRCA members) relating to each customer's interests and Meltwater produces a monitoring report listing the results of a search of the index for those keywords.  

This monitoring report will show the opening words of the article, the keyword together with several words on either side of it and a hyperlink using the headline which enables the user to access the article on the relevant source web site. If the latter requires subscription or a payment of any sort then this is not subverted by the service; the customer must pay or subscribe as normal. 

Having disputed the need for a licence in the past, Meltwater now takes a licence from the Newspaper Licensing Agency (a collecting society for newspaper rights) to provide its service. It was common ground that the current service provided by Meltwater, which necessitated the transmission of the monitoring report by e-mail, did require a licence as the e-mail copy is not temporary and is stored on the recipient's hard drive until the end-user choses to delete it. 

The question which eventually came before the Supreme Court was whether the end-user (Meltwater's customers) would require a licence if the monitoring report were made available only on Meltwater's web site. To the extent that the customer downloads the report from the web site, he is making a copy that will infringe the newspaper's copyright unless he is licensed. However, the Supreme Court provisionally concluded that, if he merely views the material on the web site, this is not infringing because it is covered by the temporary or transient copy exemption under Article 5.1 of the Information Society Directive 2001/29/EC.  The Supreme Court considered that the issue was so critical that a reference should be made to the CJEU and that no final order should be given by the court until this reference was determined.  

Among other comments in the judgment, the observations at [54]-[61] may be of interest:

Under Article 5(5) of Directive 2001/29, the carrying-out of a temporary act of reproduction is exempt from the reproduction right only 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 rights holders.

… first of all, that, since the on-screen copies and the cached copies are created only for the purpose of viewing websites, they constitute, on that basis, a special case.

Next, although the copies make it possible, in principle, for internet users to access works displayed on websites without the authorisation of the copyright holders, the copies do not unreasonably prejudice the legitimate interests of those rights holders.

… it must be pointed out that the works are made available to internet users by the publishers of the websites, those publishers being required, under Article 3(1) of Directive 2001/29, to obtain authorisation from the copyright holders concerned, since that making available constitutes a communication to the public within the meaning of that article.

The legitimate interests of the copyright holders concerned are thus properly safeguarded.

In those circumstances, there is no justification for requiring internet users to obtain another authorisation allowing them to avail themselves of the same communication as that already authorised by the copyright holder in question.

Lastly, it must be held that the creation of the on-screen copies and the cached copies does not conflict with a normal exploitation of the works.

… the viewing of websites by means of the technological process at issue represents a normal exploitation of the works which makes it possible for internet users to avail themselves of the communication to the public made by the publisher of the website concerned. Given that the creation of the copies in question forms part of such viewing, it cannot operate to the detriment of such an exploitation of the works. 

Consumer Credit and Online Signatures 

The Hon Mr Justice Popplewell has found that clicking 'I accept' was a sufficient signature to meet the requirements of the Consumer Credit Act 1974.

In Bassano v Toft & Ors [2014] EWHC 377 (QB), a dispute over various loans secured on a valuable viola included a challenge to the online loan agreement that the debtor had arranged with a pawnbroker by completing an online form.

Under the Consumer Credit Act 1974, s 61(1)(a), a regulated agreement is not properly executed unless a document in the prescribed form containing all the prescribed terms is signed in the prescribed manner both by the debtor and by or on behalf of the creditor. The issue in this case was whether the Borro Loan Agreement was signed by Mrs Bassano so as to fulfil this requirement.

Mrs Bassano was present at Borro's offices in the company of a representative of Borro but all loans by Borro were made online. A customer has to create an account. When the loan terms are agreed, the customer is presented on screen with a pre contract agreement setting out the proposed terms of the loan. The customer then acknowledges and accepts this information, following which the formal loan agreement is presented on the screen. It includes amongst other things the name of the borrower as part of the agreement. The customer indicates acceptance of that loan agreement by clicking on an acceptance button marked 'I Accept' which is in a defined field on the screen. The concluded agreement is then generated in PDF form, which is available to the customer at any stage by logging on to the customer account and using the chosen password; and is available to be printed as a PDF document. The agreement is incapable of being changed after the customer has clicked on the "I accept" button. The agreement so generated also operates as the pawn receipt required by s 114 of the Act.

It was held that when Mrs Bassano followed this procedure so as to bring into existence the Borro Loan Agreement:

Generally speaking a signature is the writing or otherwise affixing of a person's name, or a mark to represent his name, with the intention of authenticating the document as being that of, or binding on, the person whose name is so written or affixed. The signature may be affixed by the name being typed in an electronic communication such as an email: see Golden Ocean Group Ltd v Salgaocar Mining Industries PVT Ltd [2012] 2 All ER (Comm) 978 at [32]. Section 7 of the Electronic Communications Act 2000 recognises the validity of such an electronic signature by providing that an electronic signature is admissible as evidence of authenticity.

Section 61 of the Act requires the agreement to be signed "in the prescribed form". The form prescribed at the time was that required by The Consumer Credit (Agreements) Regulations 2010 (SI 2010 No 1014). Regulation 4 governs signing. The only relevant prescription is in regulation 4(3)(a) which provides that the signature must be in a space indicated in the document for that purpose and dated. Regulation 4(5) recognises that a regulated agreement may be concluded electronically and that the document may contain "information about the process or means of providing, communicating or verifying the signature to be made by the debtor." There is therefore nothing in the Consumer Credit Act 1974 to suggest that regulated agreements should not be capable of electronic signature; and I can see no reasons of policy why a signature should not be capable of being affixed and communicated electronically to an agreement regulated by the Act, just as it can for other documents which are required to be signed.

Mrs Bassano electronically communicated to Borro her agreement to be bound by the terms of the Borro Loan Agreement by clicking on the "I Accept" button and thereby generating a document sent to Borro bearing her typed name which authenticated the document and communicated her agreement to be bound by its terms. That constituted signing it so as to fulfil the requirements of s. 61 of the Act.

The further question of whether the signature was located in the right place was also answered positively. The signature was in the designated space by reason of the words 'I Accept'. The 'I' in question clearly Mrs Bassano.  

Trade Mark Infringement Online

In Cosmetic Warriors v Amazon.co.uk Limited [2014] EWHC 181 (Ch) involved a claim from Lush, the specialist cosmetics company, that Amazon breached the Lush trade mark in a number of ways and that Amazon's UK and EU arms were joint tortfeasors in that each was a 'party to a common design to infringe the Lush trade marks'.

One head of claim concerned Internet advertising. Amazon had bid on the keyword 'lush', within the Google AdWords service so as to trigger a sponsored link advertisement appearing on the Google search engine results page whenever a consumer typed 'lush' into the search box. It is not in fact possible to buy any Lush products on Amazon but the sponsored search result suggested otherwise.

A second head of claim concerned the result of searches for 'bath bomb', a product which Lush claimed to have invented.

The third head concerned the search facility on Amazon's own web site. Typing in 'lu' for example led to a suggestions for completion which included 'lush cosmetics' and then threw up results for products similar to those for which Lush is famous.

After a thorough review of the cases, from Reed to Interflora and venturing a little abroad, John Baldwin QC addressed each of the heads of claim. He thought that the average consumer seeing the example of an advert considered in the judgment would expect to find Lush soap available on the Amazon site and would expect to find it at a competitive price. Moreover, he thought that the consumer is likely to think that Amazon is a reliable supplier of a very wide range of goods and would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase. 

In the second class of claim, Lush failed with its 'bath bomb' arguments. The judge did not consider that the average consumer would be in any way misled by the type of links that were revealed on searches for bath bombs.

The third head of claim was the most interesting, especially as Amazon contended that it went to the root of its business model. The essence of the successful Lush claim is that Amazon could not distance itself from the operation of its search engine – the suggestion that it was the creature of consumer preferences because it converted past consumer behaviour into suggestions was not sustainable. The judge did not think that 'Amazon can escape from the conclusion that it has used the Lush sign in the course of trade in relation to the relevant goods based on the principles to be found in Google France and L'Oreal v eBay.  It has used the sign as part of a commercial communication that it is selling the goods on its website.' Moreover, on the confusion point, Amazon could not rely on the wit of the consumer to get himself out of the trap that has been set'.

Lush's allegation of joint tortfeasance also succeeded.

Hyperlinks are OK! Unless there's a 'New Public'

The Svensson judgment has excited a great deal of comment. We had Justin Dear's important reflections on the judgment in the last issue. But the basic judgment can be included in the round-up.

Basically Case C-466/12 Nils Svensson and Others v Retriever Sverige AB has given the green light to the use of hyperlinks, ruling that there is no breach of copyright automatically arising from their use. Moreover, hyperlinks are OK even if the internet users who click on the link have the impression that the work is appearing on the site that contains the link.

But of course it is not that simple. Where a hyperlink takes you to a site which is not freely available, different considerations apply. 

Background facts 

Press articles written by several Swedish journalists were published on a freely accessible basis on the web site of the Göteborgs-Posten. Retriever Sverige, a Swedish company, operates a web site that provides its clients with clickable internet links (hyperlinks) to articles published on other web sites, including the site of the Göteborgs-Posten. Retriever Sverige did not, however, ask the journalists concerned for authorisation to establish hyperlinks to the articles published on the site of the Göteborgs-Posten. The journalists saw this as a breach of their copyright.

The Svea hovrätt (Svea Court of Appeal, Sweden) brought the matter before the CJEU to ascertain whether the provision of such links constitutes an act of communication to the public within the meaning of EU law (ie in terms of the Copyright Directive). If was deemed to be an act of communicatiobn, the establishment of hyperlinks would not be possible without the authorisation of the copyright holders. EU law provides that authors have the exclusive right to authorise or prohibit any communication to the public of their works.  

Judgment 

The CJEU holds that the provision of clickable links to protected works constitutes an act of communication. Such an act is defined as the making available of a work to the public in such a way that members of the public may access it (even if they do not make use of that possibility). In addition, the potential users of the site operated by Retriever Sverige can be regarded as a public, since their number is indeterminate and fairly large.

The Court points out, however, that the communication must be directed at a new public, that is to say, at a public that was not taken into account by the copyright holders at the time the initial communication was authorised. According to the Court, there is no such 'new public' in the case of the site operated by Retriever Sverige. As the works offered on the site of the Göteborgs-Posten were freely accessible, the users of Retriever Sverige's site must be deemed to be part of the public already taken into account by the journalists at the time the publication of the articles on the Göteborgs-Posten was authorised. That finding is not called into question by the fact that the internet users who click on the link have the impression that the work is appearing on Retriever Sverige's site, whereas in fact it comes from the Göteborgs-Posten.

The Court concludes from this that the owner of a web site, such as that of Retriever Sverige, may, without the authorisation of the copyright holders, redirect internet users, via hyperlinks, to protected works available on a freely accessible basis on another site.

The position would be different, however, in a situation where the hyperlink permits users of the site on which that link appears to circumvent restrictions put in place by the site on which the protected work appears in order to restrict public access to that work to the latter site's subscribers only, since in that situation, the users would not have been taken into account as potential public by the copyright holders when they authorised the initial communication.

Lastly, the Court states that the Member States do not have the right to give wider protection to copyright holders by broadening the concept of 'communication to the public'. That would have the effect of creating legislative differences and, accordingly, legal uncertainty, when the directive at issue is specifically intended to remedy those problems.

 

 

Published: 2014-06-30T21:33:36

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