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Posted by on Feb 7, 2013 in Australia | 0 comments

Property in the proceeds of infringement

Property in the proceeds of infringement

By war

In a decision which no doubt has some further distance to run, Newey J (sitting in the Chancery Division of the High Court in England) has ruled that the owner of copyright does not have a proprietary interest in the proceeds (read profits) made by an infringer of the copyright.

Harris et al. are alleged to be the person (or persons) behind the Newzbin file sharing sites which, amongst other things, have been found to infringe the movie studios’ copyrights in a range of films (here and here, where Arnold J ordered the ISPs to block access).

In December last year, the Newzbin sites appear to have closed down, claiming they had run out of money.

Having obtained freezing orders (formerly called Mareva injunctions) against the assets of the defendants (such as the house in which Mr Harris lives and the Maclaren car he parks in its driveway), the movie studios sought “proprietary injunctions” over the assets as well. This seems to involve a court determination that the assets in question were the property of the movie studios rather than the defendants. For example, Newey J explained the difference between the (already in place) freezing order and the injunctions now sought by reference to Millett LJ’s description:

“The courts have always recognised a clear distinction between the ordinary Mareva jurisdiction and proprietary claims. The ordinary Mareva injunction restricts a defendant from dealing with his own assets. An injunction of the present kind, at least in part, restrains the defendants from dealing with assets to which the plaintiff asserts title. It is not designed merely to preserve the defendant’s assets so as to be available to meet a judgment; it is designed to protect the plaintiff from having its property expended for the defendant’s purposes”.

The movie studios based their argument on observations in the Spycatcher cases that Peter Wright may have held the rights in Spycatcher on constructive trust for the Crown in view of his breaches of duties of confidence and fidelity.

Newey J seems to have rejected this claim partly on the basis that there were cases binding on him (albeit apparently disapproved by the Privy Council) ruling that there was no such proprietary interest and partly on the basis that s 18 of the Copyright Act 1956 had expressly deemed the copyright owner to be the owner of infringing copies and provided remedies in conversion and detention. That remedy, however, had been repealed by the Copyright Design and Patents Act 1988 as unjust and unfair.

There are some interesting issues for Australians.

First, the conversion/detention remedy on the basis of deemed ownership has not been repealed (but is now discretionary) – see s 116 (but the Full Court may not be too keen on the remedy – see [94] of French and Kiefel JJ (as their Honours then were).

Secondly, in Lenah Game Meats, Gummow and Hayne JJ did say at [102]:

A cinematograph film may have been made, as in Lincoln …read more
Source: IPWars

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