Has illegal filesharing just become "a little cheaper" in Germany?

An interesting decision on damages in cases of copyright infringing file-sharing has been handed down by the Regional Court Hamburg (LG Hamburg, decision of 8 October 2010, case reference 308 O 710/09).

In a press release the Hamburg court informs that it decided that a 16 year old file-sharer was only liable to pay damages of 15 Euros for each title he had illegally shared online. In this case the overall damages amounted to 30 Euros for two songs he had offered illegally on an Internet file sharing site. The claimant, who owned the distribution rights for these songs, had asked for damages of 300 Euros per title, which appears to be a fairly common amount usually awarded for such damages.

When deciding the amount of damages to be awarded - which had to be based on what a respective licence for these songs would have cost ("fiktiver Lizenzvertrag") - the court took into consideration that titles in question were songs of well-known artists (at least well known in Germany: the song "Engel" by Rammstein and the song "Dreh‘ dich nicht um“ by German singer song writer Westernhagen. However, the court also took into consideration that the songs were already several years old when they were offered online. As such, the court assumed that there was little demand for the songs. Furthermore, the court held that it was important that the songs had only been offered for a short time and the court hence assumed that each song had only been downloaded about one hundred times.

The Hamburg court further held that the father of the 16 year old was not liable for copyright infringement. While he had allowed his son to use the Internet access and was to regarded a "disturber" ("Störer") and had a duty of care ("Überwachungspflicht") concerning the Internet access that was used to commit the copyright infringing acts under the German principle of disturber liability. However, the father had not himself committed copyright infringement and as such was not liable for damages.

This Kat will certainly not go as far as to say that copyright infringement in German has just become a little bit cheaper, since every case very much will turn on its specific facts, but this decision by the Hamburg court nonetheless gives a good indication that the German courts appear to adopt a rather pragmatic real life approach when assessing the level of damages to be awarded.

The court's press release can be accessed here.

Blackburn, Royal Albert Hall -- Hendrix, not Beatles

The Royal Albert Hall is a cultural icon, so it's strange that it so rarely gets a mention on this most cultural of weblogs. It received a plug in Experience Hendrix LLC and another v Times Newspapers Ltd, [2010] EWHC 1986 (Ch), decided earlier this week in the Chancery Division for England and Wales by Sir William Blackburne. It's good to see that the courts, however busy they are, can still find some odd jobs for retired judges -- a sort of post-occupational therapy -- and the learned judge must have had a rare old time reminiscing over the musical icons of his own younger days.

Jimi Hendrix, born in the United States, adopted the United Kingdom in 1966 when he teamed up with two British colleagues to form the Jimi Hendrix Experience. In February 1969 this band performed at the Royal Albert Hall, this being the culmination of its European concert tour. Gerald Goldstein and Steve Gold (respectively, and -- the Kat hopes -- respectably, a successful producer and songwriter based in Hollywood) popped up at this point. Gerald secured the band's merchandising rights as well as the right to film the concert tour of Europe by an exclusive recording contract while Steve made separate sound and film recordings of the concert.

Gerald and Steve were still in the middle of editing the film in September 1970 when Hendrix died. There then ensued some heavy legal proceedings in the US in which Experience Hendrix --a US company formed in Washington State, owned and controlled by Hendrix's family -- gained control of his musical legacy. Last Experience (Gerald's company) was incorporated in California: this held the legal right to the copyright in the sound recordings of the concert. In June 2003 Experience Hendrix and Last Experience struck a deal to cooperate in producing a feature-length film of the concert, for cinema release across the world, with the simultaneous (or near simultaneous) release of accompanying CDs and DVDs, merchandising bits and pieces, the costs and eventual profits being split 50-50.

Following their decision to cooperate, the footage of the concert was restored and an entertainment agency was hired to promote the project. In early 2006 the film was ready for its final mix, this being scheduled to start in October 2006. By September 2006, the two companies were poised to produce the finished film and were already dreaming about the excitement of its now-imminent launch.

In the summer of 2006 The Sunday Times newspaper decided to hike its cover price from £1.80 to £2. To make this more palatable to paying readers, its management decided to stick three covermounts (as the term suggests, free CDs or DVDs attached to the cover of each paper) on successive Sundays, starting with the 10 September 2006 issue, this being the date of the increase to £2. The covermount selected for that issue was, as luck would have it, a CD recording of materials from Hendrix's Royal Albert Hall concert. On 6 September 2006 Experience Hendrix's lawyers wrote to Times Newspapers, asserting the company's copyright and asking for confirmation that the paper was proposing to use material from the concert. A lawyer for Times confirmed this was the case and said it was licensed to do so by Charly Acquisitions Ltd which, it said, Experience Hendrix had accepted as having a good chain of title to the recordings. A second letter was then sent to the paper, reiterating the legal position and warning that any unauthorised use would infringe its rights. In further correspondence, The paper said it really did have permission via Charly, setting out its chain of title and saying it was far too late to stop the covermounting: the advertising and poly-bagging were already too far gone.

Experience Hendrix and Last Experience didn't seek an injunction to halt the covermount CD, of which over 1.3m copies were distributed in newspaper's 10 September edition. In result of this, work on the companies' project was suspended. In March 2007 both companies sued Times Newspapers. In their view, by authorising and procuring the making and free distribution of the covermount the paper had infringed their rights and caused them substantial damage. It seems that the paper's reliance on Charly's chain of title was illusory because the companies' application for summary judgment was granted in December 2007. Injunctive relief plus delivery-up was ordered, and an inquiry was ordered as to the damage suffered by the companies and/or, if the companies preferred it, an account of profits. Not surprisingly, seeing as the claimants both had the word "experience" in their names, they chose damages.

In these proceedings Sir William had to decide (i) precisely why and when the companies' cherished project was put on hold; (ii) when might the launch have occurred if it hadn't been for the newspaper spoiling the pitch for it, (iii) how far did the newspaper's use of the covermount campaign delay the launch? (iv) on what basis were damages to be assessed?

According to Sir William the companies had two reasons for suspending the project's launch. First, quite reasonably they wanted to obtain a declaratory judgment that Charly (which was not party to these proceedings) had no entitlement to license use of the concert material, this being both to stop the project sponsors worrying about the risk to their investment in it and to discourage others from using the material via the let's-ask-Charly route. The launch could not occur before this happened. Secondly, the UK market for Hendrix products needed time to recover following the huge distribution of inferior quality recordings from the concert.

As things stood, the film could have been ready for viewing by prospective distributors by January 2007, and primed for global release by 1 July 2007. However, given the relatively laid-back attitude taken towards seeing the project through, the earliest likely date for public release of the film, CDs and DVDs would have been September 2007 -- and perhaps later, but certainly not earlier given the lack of any sense of urgency. In any event, both of the reasons for delaying the launch were no longer valid by September 2008 -- assuming that the market had indeed been damages, though this had not been proved.

Sir William then moved on to one of the IPKat's favourite issues -- the calculation of damages following the adoption throughout Europe of the little-understood and much-ignored Intellectual Property Enforcement Directive (2004/48), Article 13(1) of which states:

"Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement. When the judicial authorities set the damages: (a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement; or (b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question".

This, said Sir William, meant that the court had to order the infringer to pay the injured party damages "appropriate to the actual prejudice suffered by him/her as a result of the infringement" [This 'prejudice' bit, with which UK lawyers are unfamiliar, has long been awaiting some explanation]. Thus the court had to do one of two things: (i) to "take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered…" (the "loss sustained" approach) or (ii) "in appropriate cases" to fix loss by reference to "elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question" (the "notional licence" approach) [this now looks like the UK's pre-Directive approach]. Punitive damages for flagrant infringement or moral prejudice were not however appropriate here since, all things considered, the newspaper had acted responsibly, having taken what it believed to be the appropriate steps to obtain the necessary permissions.

In this case the "loss sustained" approach was right, taking account of losses sustained outside the jurisdiction as well as inside it [Ireland being an obvious case in point here]. When assessing the quantum it was impossible to forecast, so as to provide a reliable basis for computing losses, what the box-office takings were likely to be for a film which had yet to be released, which at the time of trial remained uncompleted and which none of the expert witnesses had even seen or were equipped to comment on. On a best-guess, the maximum profit the companies would receive from the release of the film and the sale of recordings would be US$3m, to which could be added the income from the usual merchandise and ringtones (US$2.8m or more). The Sunday Times' actions had delayed receipt of these profits for a year.

The companies having been deprived of the receipt of $5.8m for 12 months, it was still necessary to discount this sum to the date of infringement, then add interest to the discounted figure in order to reach an overall award of damages to the date of the judgment. In doing so, the US base rate plus 1% would be the appropriate measure since the companies would have received their profits in the US and in dollars.

Says the IPKat, this is a mammoth 229-paragraph judgment, following 11 days in court. Normally this would attract a comment along the lines of "too long" -- but in this case, given the volume of evidence for the court to consider, the quantity of conjecture offered and and the number of legal and accounting issues before it, he thinks the court did pretty well to keep it as short and sweet as it did. Merpel says, of all the judges and retired judges to be involved in a case concerning the Royal Albert Hall, there is none more aptly named than Blackburne ...

Royal Albert Hall here

Hendrix performing in the Royal Albert Hall here

Cat performing in the Royal Albert Hall here

Royal Albert Hall and 4,000 holes in Blackburn, Lancashire here and here

Copyright alive and kicking: MGMT v Sarkozy's UMP, Annie Leibovitz 'pawns' her copyrights

The IPKat has come across two news items concerning copyright matters. The Guardian reports that French president Sarkozy's UMP party (Union pour un Mouvement Populaire) is to compensate indie group MGMT for using their song 'Kids' at recent party rallies without seeking the band's permission. According to the news report the song was played at UMP party meetings on 24 and 25 January 2009 and was also used for official videos displayed on the UMP website. 'It seems that those who led the charge against internet users are not the most respectful of copyright', the band's French lawyer Isabelle Wekstein is cited in the Guardian.

According to a report by AFP, UMP's public relations firm has now confirmed the use of the song but insists that it was 'an unintentional mistake'. The UMP has offered the band one (1) Euro in symbolic damages for copyright infringement. AFP further reports that MGMT's lawyer has already rejected the offer as 'disrespectful of the rights of artists and authors' and 'insulting' and has demanded full financial compensation. According to Ms. Wekstein, the UMP has only paid a standard 53 Euro fee to SACEM, the French music licensing body, which did not cover subsequent uses of the song, particularly on the internet.

The timing of this copyright controversy is not devoid of a certain irony given that the new French anti-file sharing law is due to be presented to the French national assembly in about a week's time. Even more so because of the UMP's strict stance in France's debate over file sharing and online piracy. The UMP has repeatedly demanded stricter laws against those who infringe on musicians' copyright.

Et voilà .... thinks Merpel, while the IPKat says merci to his friend and famous blogger Frédéric Glaize for alerting the Kat to the UMP's 'symbolic' compensation offer.

In other copyright related news famous photographer Annie Leibovitz (shown left) has reportedly 'pawned' the rights to her life's work in order to borrow £10.8m from Art Capital Group, a Manhattan lender, to pay off debts. The Telegraph reports that Ms. Leibovitz secured the loan partly against copyrights and contract rights to 'every photograph she has ever taken or will take in future as collateral'.

The Telegraph explains that in the current economic climate more and more wealthy US art collectors are turning to their art collections to raise capital. Art lenders appear to work 'like a high class pawnshop' by lending up to 40 per cent of the work's worth, and taking possession of the actual work.

More information on France's proposed new law can be found here (in French) and here (in English)

More information on Annie Leibovitz can be found here.

Valuation and copyright

Last Sunday the IPKat posted a request for information from an African reader regarding the assessment of damages for copyright infringement. Specifically, "Is there any case law that you are aware of that determines what falls to be paid by a user if no agreement was arrived at prior to a public performance". The Kat hasn't received much in the way of responses, but he did receive this very interesting information from Professor David Brennan (University of Melbourne, Australia):

"Your correspondent and readers may be interested in some Australian developments in two Australian Copyright Tribunal cases, in particular the latter which deals with the public performance right in sound recordings specifically: Audio-Visual Copyright Society (t/a Screenrights) v Foxtel [2006] ACopyT 2 and Re PPCA [2007] ACopyT 1. In both cases, survey evidence of consumer valuation of copyright was adduced with (wildly) varying results! I have attached the slides related to a recent public presentation I gave on point in Australia for IPRIA.

I have written on the valuation of copyright and section 4.7 of my book Retransmission and US Compliance with TRIPS (2003) deals with fair market value awards in English, US and Australian general common law and IP settings".

Performance damages: a reader asks ...

One of the IPKat's friends -- an intellectual property practitioner in one of the English-speaking jurisdictions in Africa -- has expressed an interest in the assessment of damages for copyright infringement. He asks, specifically:

"Is there any case law that you are aware of that determines what falls to be paid by a user if no agreement was arrived at prior to a public performance?"

We know the basic theory regarding damages for copyright infringement. The wrong is a tort/delict/breach of statutory duty (call it what you will) in respect of which damages are principally compensatory.

Right: This performing cat -- a dancing cat -- is one of a number of enjoyable pieces found on the Graf Gallery website

This principle is fine-tuned when the infringing act covers the sort of activity that is normally licensed, when compensation will generally be fixed with an eye to (i) what sort of licence fee would normally be charged or (ii) how much a willing licensee would be reasonably expected to pay to a willing licensor. But it would be great to look at extant case law and see how the courts have handled the issue on our questioner's facts. If you've any useful cases to share with him, please let the IPKat know. It doesn't matter which jurisdiction they're from, since it will be fun to compare decisions from different places.

Please post any responses below or email them to the IPKat here. All useful data will be posted on this weblog for the edification of all readers.