Upc communications ireland limited




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THE HIGH COURT

COMMERCIAL

[2009 No. 5472 P]

BETWEEN

EMI RECORDS (IRELAND) LIMITED, SONY MUSIC ENTERTAINMENT IRELAND LIMITED, UNIVERSAL MUSIC IRELAND LIMITED, WARNER MUSIC IRELAND LIMITED AND WEA INTERNATIONAL INCORPORATED

PLAINTIFFS

AND

UPC COMMUNICATIONS IRELAND LIMITED

DEFENDANT

JUDGMENT of Mr. Justice Charleton delivered on the 11th day of October, 2010

  1. The plaintiffs, who I will call the recording companies, record and release music and video for sale. They seek injunctions against the defendant, an internet service provider, to prevent the theft of their copyright by third parties illegally downloading it over the internet. The form of injunction sought is left to the discretion of the court. Hence, I will analyse various technical solutions.

  2. Those enthused by music and video may legally buy it in a disc format or download it on the internet for a fee. Prices vary, but music in CD format or film captured on DVD can typically cost between €10 and €20 in a shop. A CD will contain up to 80 minutes of music, perhaps 15 tracks, and a DVD can store a 180 minute film. This case is about music. Both music and films are widely available for purchase to one’s home computer over the internet. Because the material is in digital format, in the form of downloadable files, the quality is the same as that on a disc. To download a music track from the internet typically costs under €1 per music track but films are more expensive. All of these digital files are of original creative work. They are, as a matter of law, protected by copyright. Increasingly, as the evidence in this case has demonstrated, such protection has been undermined to the status of an empty formula. The recording companies complain that their entire business has been decimated by piracy on the internet. They claim that a whole generation is growing up, who instead of purchasing recordings in hard format or by legal download, simply access the sites on the internet that enable them to download for free the millions of music tracks that are available illegally worldwide.

  3. The defendant, who I will call UPC, sells internet service to about 15% of the Irish market. Its turnover is in the order of €250M per year and the underlying nature of the business is profitable. It employs 800 staff. In its interface with customers it deals with about 35,000 inbound calls per month, of which it answers about 90%. Later in this judgment, I will refer in detail to the fact that a substantial portion of its 150,000 customers, or the children in their teenage and twenties years of these customers, are using the internet service provided by UPC to steal copyright material which is the property of the recording companies. UPC, as the internet service provider, transmits, in digital form, this copyright protected music through its system and into, and out of, the home personal computers that are used for copyright piracy. UPC claims it has no liability in respect of this activity because it is merely a conduit. The recording companies disagree.

  4. The recording companies say they are entitled to an injunctive order of the Court requiring UPC to stop this infringing activity from taking place over its network. The recording companies say that UPC is in the best position to do this. The record companies have communicated with UPC not only as to the nature of the problem, but by actually giving it details whereby the infringers of copyright were detected, by the unique IP numbers assigned to their computers, illegally downloading their songs; but that they have been ignored. The recording companies claim that UPC is turning its face aside from this problem while maintaining a front of righteousness by having in place a customer use policy that condemns internet piracy but which it ignores deliberately in order increase its profit. The customer use policy of UPC makes it very clear that the internet service of UPC cannot be used to steal copyright material. This is a matter of contract, and for a breach of this obligation by the customer, UPC can terminate the contract. It never does. It is not so inclined.

  5. At the end of their amended statement of claim, the recording companies are specific only to this extent as to what they seek:-

“1. An injunction, pursuant to s. 37 and s. 40(4) of the Copyright and Related Rights Act, 2000, restraining the defendant internet service provider from infringing the copyright in sound recordings owned by, or exclusively licensed to, the plaintiffs by making available to the public copies of those sound recording without the plaintiffs’ consent using its internet service facilities.

2. Without prejudice to the generality of the foregoing order, an order pursuant to s. 40(4) of the Copyright and Related Rights Act, 2000 that the defendant block or otherwise disable access by its subscribers to the website thePirateBay.org and related domain names, IP addresses and URL’s, as set out in the schedule hereto attached, together with such other domain names, IP addresses and URL’s as may reasonably be notified as related domain names by the plaintiffs’ to the defendant from time to time.”



  1. Preferably, the recording companies seek a three strike solution: they would monitor the internet for infringements, inform UPC who then would be required on each occasion of breach of copyright to warn the infringer, up to three times, and then to discontinue service. In the alternative, blocking and diversion equipment is sought to be imposed on UPC by court order. These alternatives are later described in detail.

  2. In defending this claim, UPC state that there is no liability in law for acting as a mere conduit for copyright infringement, and that it neither initiated the communication involved in piracy, chose the recipient, altered the information nor condoned the activity. In other words, sections 37, permitting an injunction, and 40(4) of the Copyright and Related Rights Act 2000 (“the Act”), defining liability, do not apply to UPC at all. Even if the legislation mandates an injunction, UPC argues that no injunction should be granted because it would not be just or convenient; specifically that such an injunction would infringe the fundamental rights of internet users as to their privacy, as guaranteed by the European Convention on Human Rights and Fundamental Freedoms, would not be in accordance with the fundamental principles of European law, most particularly, proportionality and that the court would be drawn into the supervision of its own order.


The Nature of the Problem

  1. I am satisfied that the business of the recording companies is being devastated by internet piracy. This not only undermines their business but ruins the ability of a generation of creative people in Ireland, and elsewhere, to establish a viable living. It is destructive of an important native industry. While the evidence focussed on the recording industry, the retail sector must also be affected by this wholesale theft. Furthermore, the evidence presented convinces me that a substantial portion of the generation now in their teenage years and twenties are actively dissuaded by illegal alternatives from legitimately purchasing music.

  2. Some telling figures were produced during the course of evidence. Helen Sheehy, the solicitor on behalf of the plaintiffs, initiated three actions against Eircom plc, another internet service provider, with a view to discovering the names of infringers. I will shortly examine that action in detail. For the moment, suffice it to say that the recording companies had used DtecNet, a detection programme described later in this judgment, to uncover the IP addresses of individuals who were persistently infringing their copyright. Only the internet service providers know what IP address was ascribed to what customer on what particular day. In 2005, Ms. Sheehy applied for orders from the High Court so that seventeen individuals who were customers of Eircom, an internet service provider, would be named. In January, 2006 an order was sought in respect of a further forty-nine individuals. Then in June, 2007 a further twenty-three names and addresses were sought. All these three sets of orders were granted. Of the first seventeen individuals, the largest single uploader had 3,078 music files pirated, while the average was 628 files. The numbers increased with the second application. On the third application, the highest single infringer had 37,511 files while the average infringer had taken 8,400 files. It is reasonable to infer, from these figures alone, that even over the short period of two years involved that the problem of piracy through the internet was increasing rapidly.

  3. Mr. Dick Doyle, Director General of the Irish Recorded Music Association (“IRMA”) gave evidence which substantially supports the proposition that piracy of recorded music is a severe economic problem. Whereas the recording companies were aware of the issue of illegal downloading through the internet at the time of the enactment of the Copyright and Related Rights Act 2000, which was passed on the 10th July of that year and came into force on the 1st January of the following year, the problem was not then substantial. It is apparent from the action taken by the recording companies, to which I have just referred, from 2005 to 2007, that at an earlier date they had become alarmed by internet policy. Section 40(4) of the Act was first invoked by the recording companies against Eircom plc in aid of seeking some form of injunction against an internet service provider, which required them to block copyright theft, by the issuing of a plenary summons in 2008. Eircom is the largest internet service provider, with over 40% of the national market. I am satisfied that this was the logical place to start. In January 2009, the action against Eircom settled in the course of the hearing before this Court when they agreed to act in cooperation month-by-month on the detection of internet piracy by the recording companies, first warning their customers twice that what they were doing was illegal, and then shutting them off from internet access on a third infringement. Eircom has, as does UPC, an acceptable usage contract with its customers mandating termination for illegal internet use. Eircom takes its customer contract seriously. UPC, as will emerge later, does not unless it can profit from it. In settling the case with Eircom, the recording companies agreed to bring proceedings against the other internet service providers but, as Mr. Doyle told me, and I accept, they would probably have done so anyway.

  4. Between 2005 and 2009 the recording companies experienced a reduction of 40% in the Irish market for the legal sale of recorded music. This is equivalent to €64 million in sales. Up to August, 2008 the country was experiencing a decade of growing and heavy consumer spending. The figure is probably, therefore, an underestimate. Mr. Doyle suggests that a large proportion of that decline was due to illegal downloading. Fairly, he states that it is impossible to say that every single illegal download resulted in the loss of a sale, because what is free is often just taken, and perhaps never listened to. The figures produced by Mr. Doyle indicate that the relevant surveys show a loss of between 20% and 30% as a proportion of decline in sales to what is illegally downloaded. In referring to the relevant research, Mr. Doyle posited at about 1:0.42 as to the ratio of unauthorised downloaders per broadband internet line. There are 1,571,000 broadband subscribers in Ireland of which, if the international studies translate, some 675,000 people are likely to be engaged in some form of illegal downloading from time to time. I am satisfied these studies are accurate and apply to Ireland. The average number of files illegally downloaded per month for each of these individuals, international research suggests, was 20.2. The evidence posits the probability that there are around 163.7 million illegally downloaded songs sitting on computers in Ireland waiting for people here, or in other parts of the world, to, in turn, download these songs from them. This represents a loss to the music industry which, if measured at 99c per illegal download speaks for itself. Mr. Doyle posited that the lower 20% ratio might be applied whereby at least €20m in lost sales are being caused to the Irish market by illegal downloads on an annual basis. Similar losses in revenue must also undermine revenue to record shops.

  5. The nature of this problem was further described by Willie Kavanagh, the Chairman of EMI Records (Ireland) Limited. His evidence was that the mass illegal availability of sound recordings, made available without authorisation or payment through the internet, has done untold damage to the development of the legitimate music industry and has caused major damage to traditional CD sales and to legal internet sales. While Mr. Kavanagh fairly admitted that CD sales were likely to decline anyway, as legitimate downloads became available on the internet, and that these had increased from a zero base and continued to grow, the views expressed by Mr. Doyle, he said, were well accepted across the industry as to the nature of the decline and the reason for it.

  6. Illegal downloading is done with considerable ease. Mr. Kavanagh conducted an exercise, which in his case was legal because he works for the company which holds the copyright, whereby he attempted to illegally download the track “Viva la Vida”, a track produced by the group Coldplay. He went to a well-known site for facilitating music piracy called ‘The Pirate Bay’. First, he installed on his computer at home a peer-to-peer file sharing application called LimeWire. This took a few seconds. This was free and was enabled very swiftly after he became a member of the Gnutella/LimeWire peer-to-peer network. Then, using the relevant software and the same website, he did a search on the internet for the track. A huge number of hosts for the track came up and he downloaded the song onto his computer in a very short time. At one stage in the process a notice appeared as asking him to “respect copyright”. This, he correctly described, tactfully, as a form of hypocrisy. In less than three minutes he had joined the relevant website, downloaded the necessary software, accessed the relevant swarms of computers offering the track illegally, and downloaded the targeted song. Once this is done once, it is quicker the next time and a person is likely to steal again. His written witness statement gives other examples. He also recalled, in evidence, looking for the film “Batman-The Dark Knight”, before it was released in the cinemas and being able to get it illegally, for no payment, on the internet. If the pirated version is filmed covertly in a cinema, it is likely to be of poor quality; once the DVD is available in shops, or perhaps by other means prior to that event, the internet will be full of perfect digital reproductions. The particular track “Viva la Vida” was offered as an example of the losses that the recording companies suffer, and through them, those who have the strongest moral right to copyright, that is the creative artists behind music. The album from which “Viva la Vida” was taken cost around €1 million to make and €10 million to market.

  7. This scourge of internet piracy strongly affects Irish musicians, most of whom pay tax in Ireland. ‘Aslan’ is a distinguished Irish group which has a loyal fan base; but not all of them believe in paying for music. Previous sales of their albums were excellent, about 35,000 per album, and in respect of one called “Platinum Collection”, a three CD box set, 50,000 copies were sold. More recently, an album called “Uncased” was released and only 6,000 copies were sold. Perhaps, it might be thought, the album was not popular and did not sell well? In contrast, a search was made to see how many illegal downloads had been made on the internet from that album, and 22,000 were traced.

  8. The implications of this are that those involved in creative work will get a substantially, and unfairly, reduced return for the expenditure of their talent in creative work. From the point of view of the recording companies, if there are no profits, and no royalties to artists, the legal sale of recorded music, through the preparation of albums, will cease. As Mr. Kavanagh put it: “If you don’t get a return on an investment and you go down the same road again and invest the same money again and expect a different outcome, the likelihood is we would be reluctant to invest in another album”.

  9. The relevant evidence and surveys presented to the Court by Mr. Kavanagh and Mr. Doyle indicates that with the growth of broadband internet rollout, the easy and unimpeded piracy of music will grow. The Court sees no reason why a person, who is not habituated to purchasing recorded music, would not take it for free over the internet. I think that Ireland is broadly comparable to Australia in respect of our internet usage habits. The evidence convinces me that if we are not now at the stage, we are moving towards the situation where teenagers and students have, or will have, an average of many hundreds of illegally copied songs on each of their digital music players. The Australian survey referred to in evidence probably represents the present situation in Ireland; and the even bleaker future for the music industry. As between those who are under 20, and over 25, the proportion of tracks not paid for is likely to be over 60% in the first category, and under 15% for the older category. Time is moving on and more and more young people are embracing internet music piracy. When Mr. Kavanagh told me that he had no reason to believe anything that contradicted this survey, I noted that it might be challenged in cross-examination or rebutted by contrary evidence. This did not happen. Further, another careful international survey indicated that between 49% and 83% of all internet traffic, with a night time peak of 95%, is accounted for by peer-to-peer communications. The time when the internet is most used in this way is at night time. Significantly, UPC shapes its internet traffic so that peer-to-peer and other forms of communication are competing for internet use during business hours, when teenagers and students are less at home, but peer-to-peer downloading and uploading is throttled to around a third during the evening and night.

  10. I have carefully observed the evidence given by Ms Sheehy, Mr. Doyle and Mr. Kavanagh. From the point of view of consistency of narrative, demeanour and internal cohesion, I am satisfied to rely on all of their evidence.



Economic Issues

  1. The evidence establishes definitively that copyright is being infringed on the UPC network. I do not accept any of the evidence from UPC as to its unawareness of this process. Nor do I accept that it has not thought about this issue and considered whether it is making a profit from it.

  2. More widely, however, internet piracy is an economic and a moral problem. Were men to walk into a cinema and in the dark, set up a small tripod for a machine to digitally record the latest movie blockbuster, to use the appropriate colloquial terminology, most right thinking people would be appalled. To entertain themselves and their families at home, they would have to wait three or four months to buy the DVD on its release and spend about €15 to have the film and whatever extras were added on to make it attractive. It is hardly credible that cinema owners would not be aware of this problem taking place. If they did nothing, and allowed people to proceed with illegally capturing the film, the first step would have been taken with their acquiescence in the undermining of copyright. Attendance at the film would plummet, because a group of friends would be drawn into deciding that a cheaper alternative for say five or ten of them, instead of having to spend between €50 and €100 on cinema admission, would be to buy a pirated copy of the film and watch it in the comfort of their home on the now almost ubiquitous flat screen television of large size that graces our home life. If nothing were done about the men, their camera and their tripod, their digital reproduction equipment and their sales, on the release of the DVD of the film, legal purchases would be minimal. Similarly, in the week of commencing writing this, the National Youth Orchestra of Ireland presented a stirring new composition, ‘Summer Overture’ by Shaun Davey, in the National Concert Hall. . Nowadays it is possible to attend a concert and to have CDs of it legally for sale fifteen minutes after conclusion. A person could covertly capture the music on a small digital recorder. If that individual went out to a van in which he had a great deal of digital copying equipment, reproduced it without permission and sold the CDs to those leaving the concert, it would rightly be regarded as flagrant abuse of copyright. I cannot see how an illegal recording on site and the subsequent public or internet offering for free, with no return to the composer or performer for their creativity, is anything other than a scandal. I have no doubt that any responsible cinema owner, or concert hall owner would stop internet piracy, if made aware of it. I am further satisfied that a reasonable person in that position would be vigilant to prevent it in a cinema or in a concert venue. A failure to address those problems, by those who can address the abuse, is not excusable. It constitutes the abuse of the economic interests of the creative community. This kind of theft is shameful. Many who see that activity on the street would shun the commerce of exploiting the rights of artists for no return. Peer pressure would prevent much of it. But the internet allows a dispensation from shame, as internet thieves figure that no one will know what is being done behind the closed doors of internet access. Essentially, that coupled with the failure of internet service providers to act like a responsible cinema or concert venue owner would act, is why the problem is so extreme

  3. There is no difference between the public situations I have described and the piracy of music tracks over the internet. It has the same consequence. The conduit for that illegal activity is, however, not the street or the pavement outside a cinema; it is the internet service providers. It is clear that they have an economic and moral obligation to address the problem. I do not accept any of the evidence from UPC, referred to later in this judgment, as to why this has not been done. Instead, the effect on the market place of illegal downloads, through the internet, is to increase the profit levels of internet service providers. Relevant correspondence from within UPC is profoundly disturbing as to the reality of their approach.

  4. The evidence establishes that this problem is a massive one. This is an instance where the multiplication on a huge scale of small problems has changed the nature of the issue into a huge pilfering of the resources of creative artists. For each individual person, the number of downloads cannot be regarded as being on a commercial scale. It is the multiplication of the problem through millions of individuals feeling free to use the internet to pirate the copyright of creative artists and recording companies that has created the undermining of that right on a foundational scale.

  5. I now need to describe the nature of internet communications in detail, for it is on this detail that the legal authority of the court to grant injunctive relief is circumscribed. In that regard, the nature of the potential solutions to the issue of internet piracy must also be addressed. The interaction of the parties requires also to be examined. The relevant legislation is then analysed.


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