Fair dealing defence in copyright infringement – a key summary
A recent key decision on fair dealing defence impacts reporting current events in copyright infringement claims.
In this article for Entertainment Law Review first published in June 2016, Andrew Crystal and Joshua Charalambous discuss Arnold J's decision in the England and Wales Cricket Board Ltd -v- Tixdaq Ltd  EWHC 575 (Ch).
In England and Wales Cricket Board Ltd v Tixdaq Ltd Arnold J has provided a characteristically long judgment which assists practitioners by exploring a number of areas of copyright law which, to date, have had limited consideration in the UK courts.
It was held that the reproduction and communication to the public of short eight-second clips from the claimants' sport broadcasts and films via the defendants' mobile app was not protected by the defence of fair dealing for the purpose of reporting current events. Arnold J stated that even if the use was for the purpose of reporting current events, it was not fair dealing. In finding that the defendants had therefore infringed the claimants' copyrights, the judge also determined the correct test of substantiality in relation to the reproduction and communication to the public of excerpts from broadcasts and film fixations under the Copyright, Designs and Patents Act 1988 (the CDPA).
The first claimant (the ECB) is the governing body of cricket in England and Wales. The ECB reinvests any profits that it generates for the benefit of all levels of cricket in England and Wales. The ECB organises the commercial exploitation of cricket matches played by the England men's and women's teams in matches and events not staged by the International Cricket Council.
The second claimant (Sky) is the well-known pay-television operator that operates the Sky Sports satellite broadcast television channels.
The claimants entered into an agreement with each other in January 2012. Sky exploits its rights under the agreement primarily by broadcasting matches on its television and digital services. The ECB retained the copyright in the broadcast footage and granted the right to show highlights on terrestrial television to Channel 5 in exchange for a substantial fee. Other rights were granted to show short highlights of the broadcasts on various digital platforms.
The defendants operate a website at www.fanatix.com (the Website) and various mobile applications including the fanatix app (the App). They also operate a number of football-related websites including www.tixdaq.com.
Mr Muirhead, shareholder of the defendants, thought up the idea of the App when first using the short video-sharing application Vine. Arnold J's judgment describes the development of the App over the course of 2013 and 2014 and Mr Muirhead's assertions that he had been careful to take steps to ensure that the defendants stayed within the law. However, from the defendants' internal documents it was clear that they were (as Mr Muirhead put it) "pushing legal boundaries". Essentially, the defendants' employees and contractors, and members of the public who have downloaded the App, use screen capture technology to copy clips of broadcast footage of sporting events. They then upload the clips to the App, each clip lasting up to eight seconds.
The App developed over time with later versions:
- obliging users to attribute clips to a specific source broadcaster or confirm that the clips contained no third-party broadcasts;
- requiring users to add at least 70 characters of commentary before uploading a clip; and
- using an algorithm to restrict the amount of footage that could be viewed from each sports event in 24-hours.
The ECB first became aware of the defendants' activities in June 2015 when it noticed that a clips reel of key moments in three England cricket matches were uploaded onto the Website and related social media accounts. The ECB realised that the clips were copied from live Sky broadcasts and uploaded on a near-live basis.
The claimants claimed copyright infringement in relation to two categories of copyright work: (i) television broadcasts of cricket matches staged under the control of the ECB; and (ii) films made during the course of the production of the broadcasts (i.e. the recorded footage which is used for action replays). The defendants denied infringement, relying primarily upon the defence of fair dealing for the purposes of reporting current events and secondarily upon immunities for acting as a mere conduit and hosting.
The legal backdrop
CDPA s.1 provides that copyright subsists in films and broadcasts. Section 16 lists those acts that an owner of copyright has the exclusive right to perform, and includes copying the work and communicating it to the public. To perform one of those exclusive acts using copyright belonging to another person, without that other person's consent, is infringement.
CDPA 1988 s.30(2) provides that there will be no infringement of copyright in instances of a work that has the purpose of reporting current events (fair dealing):
"(2) 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 (subject to subsection (3)) it is accompanied by a sufficient acknowledgement.
(3) No acknowledgement is required in connection with the reporting of current events by means of a sound recording, film or broadcast where this would be impossible for reasons of practicality or otherwise."
Copyright Directive (2001/29/EC) art.5 also provides exceptions and limitations to when a work may infringe copyright. Article 5(3) provides that works should be allowed, "to the extent justified by the informatory purpose".
Copyright Directive art.5(5) provides the three-stage test that must be overcome for the exceptions and limitations to apply. It must be (1) a special case that (2) does not conflict with a normal exploitation of a work but which (3) does not unreasonably prejudice the legitimate interests of the rights holder. It was common ground in this case that art.5(5) required the three-step test to be applied by national courts when deciding individual cases even though the United Kingdom has not transposed art.5(5) into national law.
E-Commerce Directive (2000/31/EC) arts 12 and 14 provide that information society service providers (ISSs) will not be liable for information that is transmitted in circumstances when they are acting as mere conduits or hosts of information.
Arnold J concluded that the defence of fair dealing for the purpose of reporting current events did not apply to the defendants' use of the copyright work. The use was not for the purpose of reporting current events (rather it was primarily for sharing the clips with users). Even if the purpose was to report current events, it fell short of amounting to fair dealing. The judge's reasoning is discussed below.
Signal rights and the substantiality test
Broadcasts and films under the CDPA are signal rights rather than content rights. Arnold J considered that this interpretation corresponded with the Copyright Directive and that there was no need for the works to be original for copyright to subsist in them. Article 2 gives the copyright owners the right to prohibit reproduction of works "in whole or in part". For a work to infringe the copyright it must copy a substantial part of those works.
Although the CJEU ruling in Infopaq International A/S v Danske Dagblades Forening (Infopaq I) concerned literary and artistic works, Arnold J accepted that the same test applied to both broadcasts and films. As such, Arnold J held that parts of the broadcasts or films that were copied were protected by the Copyright Directive art.2 provided they contained elements that reflected the rationale for protecting them. As entrepreneurial rights, the rationale for protecting the broadcasts and films in this case was the level of investment made by the broadcaster.
Thus the correct test to apply was a qualitative and quantitative assessment of whether a substantial part of the claimants' works had been copied in each of the eight-second clips, having regard to the extent to which such reproduction exploited the investment made by the broadcaster or producer. The conclusion was that although quantitatively, eight seconds was not a large proportion of the broadcast or film, qualitatively most of the clips contained key moments of the matches (wickets, runs, umpire's decisions). Most of the clips contained something of interest that exploited the claimants' investment in producing the broadcast/film. As regards communication to the public, Arnold J considered that the same approach to determining what amounts to a substantial part should be applied in that context as in the context of reproduction.
Fair dealing for the purposes of reporting current events
The court decided that CDPA s.30(2) should be interpreted in accordance with the Copyright Directive art.5(3). Article 5(3)(c) allowed use of a copyright work "to the extent justified by the informatory purpose". Section 30(2) allowed use that was "fair dealing". Arnold J therefore considered that in assessing whether use was fair dealing, one should ask whether the extent of that use was justified.
Arnold J confirmed that the question of whether the use was "for the purpose" of reporting current events must be judged objectively. He commented that "current events" were not only events that were very recent but could be interpreted more widely. It was also noted that "news reporting" as referred to in the recitals of the Copyright Directive did not limit "reporting current events" only to "news reporting".
The parties agreed that a contemporaneous sporting event, such as a cricket match in this case, was a current event for the purpose of CDPA s.30(2). However, the judge commented that due to a lack of judicial authorities, it was difficult to decide on whether the purpose of the communications via the App was to report that current event.
Nonetheless Arnold J considered that the Copyright Directive art.5 together with CDPA s.30(2) were designed to limit copyright protection in the public interest and the exception should be given a "living" interpretation to take into account recent developments in technology and digital media. As a result, Arnold J decided that the interpretation should be wider than in the past and should not be limited to "traditional media". The concept of "citizen journalism" could qualify as reporting a current event if, for instance, a passer-by recorded a newsworthy event using their smart phone and uploading it to social media sites like Facebook or Twitter.
Despite this broader approach, however, it was held that the use of the App was not for the purpose of reporting current events but, rather, was for sharing clips with other users. It was the value of the clips that drew the audience in rather than the reporting on it.
In relation to fair dealing, Arnold J held that the most important factor to consider in this case was the amount and importance of the work that had been taken. After considering this factor one should ask: was the extent of the use justified by the informatory purpose? This was considered obiter by Arnold J who proceeded on the assumption for this analysis that the use was for reporting current events. Applying key factors in Ashdown and the three-stage test in art.5(5) (see below), the judge held that the use of the App commercially damaged the claimants and conflicted with the normal exploitation of the work. The amount and quality of the work taken could not be justified by the informatory purpose even if it existed.
Helpfully, and characteristically, Arnold J considered some legal points obiter that clarified the law surrounding sufficient acknowledgement, conduit and hosting and the three-stage test in art.5(5).
CDPA s.30(2) allows fair dealing so long as it is accompanied by a sufficient acknowledgement. Following Pro Sieben Media AG v Carlton UK Television Ltd, the court accepted that the use of the broadcasters' logo could be a sufficient acknowledgement. The defendants argued that although in some instances that logo was missing, a moderately attentive viewer would appreciate that the footage would come from the same source. In accepting this as a possible argument, Arnold J expands the understanding of sufficient acknowledgement.
Arnold J also briefly explored whether the defendants could rely on the mere conduit and hosting defences under the E-Commerce Directive arts 12 and 14. Article 12 gives a full defence to ISSs if the service only involves the transmission of information. As the App also stored the information this argument failed. When interpreting art.14 Arnold J held that, following L'Oreal SA v eBay International AG, there may have been a defence in respect of any user post that was not editorially reviewed. However, as the point was not fully argued, Arnold J stated that this was his provisional view.
There has been little judicial comment (if any) on the three-stage test in the Copyright Directive art.5(5). Arnold J agreed with counsel in this instance that the approach was effectively the same as the considerations in fair dealing but made the following comments that are useful for practitioners in the future:
Step 1: the art.5(5) exception is confined to "certain special cases" and reporting current events was such a certain special case.
Step 2: when applying the art.5(5) exception one must not conflict with a normal exploitation of the work. It is important to consider the potential future ways in which a copyright owner might extract value from the work (licensing plans etc). Step 3: the art.5(5) exception must be applied so that it did not unreasonably prejudice the legitimate rights of the rightsholder. Arnold J notes that although it is a separate step, there have been strong arguments that it qualifies Step 2. Step 3 requires a consideration of proportionality, and a balance to be struck between the copyright owners' legitimate interests and the countervailing interests served by the exception.
The decision is a much-needed up to date analysis of the relevant tests to apply when considering fair dealing and substantiality in relation to broadcasts and film fixations. As regards fair dealing, the judge noted the difficulty in relying on UK authorities that could be seen to be out of date given that most were decided before the Copyright Directive was implemented.
The key point in this case is that the users uploaded the clips predominantly for others to view and not to illustrate points made in a wider report of the event. Even though viewers commented on the clips this still held true. The clips used had intrinsic value in themselves and the defendants intended them to have a commercial value.
Arnold J's key decision on fair dealing was summarised by him at :
"the use … did not amount to fair dealing. The conflict with the Claimants' exploitation of their copyrights was not warranted by the nature and extent of the use, and thus the use was not proportionate."
It was also interesting to note that some of the clips would have failed the fair dealing test in any event because they lacked the sufficient acknowledgement of who owned the copyright.
Interestingly, Arnold J noted that the claimants did not rely on "literary and artistic works" within the meaning of the Berne Convention art.2(1), and did not contend that any of the broadcasts and films relied upon were intellectual creations. He considered that, "in theory" it would have been possible to advance a case that, "by virtue of the selection of camera angles, close ups, slow motion and the like", Sky's personnel produce intellectual creations, which in English law would have to be classified as "dramatic works". There will also be some conjecture over whether the defendants considered relying on a defence of fair dealing for the purposes of quotation under CDPA s.30(1ZA). This would have given Arnold J the opportunity to lay down some ground rules on the new exception which one assumes would have failed for the same reason, namely that the clips on the defendants' App conflicted with the claimants' normal exploitation of their copyrights.
In the end this was a significant victory for rights holders, with the High Court clarifying that the fair dealing exceptions do not allow digital operators to snaffle the key moments of sporting events (here wickets, runs etc. and by analogy goals, tries, the final furlong and so on), where such highlights constitute a substantial part of the broadcast, which applying the purposive substantiality test expressed by the judge will often be the case.
This material was first published by Sweet & Maxwell in Entertainment Law Review (Volume 27; Issue 6; issn 0959-3799), and is reproduced by agreement with the Publishers.
 Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society  OJ L167/10.
 Directive 2000/31 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market  OJ L178/1.
 Infopaq International A/S v Danske Dagblades Forening (C-5/08)  Bus LR 102;  ECR I-6569.
 Ashdown v Telegraph Group Ltd  EWCA Civ 1142.
 Pro Sieben Media AG v Carlton UK Television Ltd  1 WLR 605.
 L'Oreal SA v eBay International AG (C-324/09)  Bus LR 1369.