British high court denies Hollywood repayment from online piracy

Apparently, it’s not as easy to profit from online movie piracy as studio executives once believed. The revelation came after a British high court judge denied an attempt on behalf of a consortium of movie studios to lay claim to profits derived from the illegal distribution of their content.

The court’s refusal to let studios access the money was their first set-back in a legal process that stretches back to March 2010, when they won a ruling that ordered the torrent-indexing website Newzbin2 to remove links to pirated material. A year after that initial case, a second legal decision demanded that British ISPs British Telecom and Sky block access to the site altogether. Together, both cases led to the end of Newzbin2, with the owners of the site complaining that with so much traffic blocked, it became impossible to cover the costs of operation.

In its heyday, Newzbin2 was reported to have around 700,000 users, with one studio executive complaining that “several hundreds of millions of pounds a year” were lost because the site provided easy access to illegally obtained material.

In his ruling, Justice Guy Richard Newey argued Newzbin2 was not necessary liable for the lost profits, likening the site to a landowner upon whose land bootleg DVDs were being sold. “Suppose, say, that a market trader sells infringing DVDs, among other goods, from a stall he has set up on someone else’s land without consent,” Newey wrote. “The owner of the land could not, as I see it, make any proprietary claim to the proceeds of the trading or even the profit from it. There is no evident reason why the owner of the copyright in the DVDs should be in a better position in this respect.”

Newey referred to earlier legal cases in the United Kingdom and Australia for precedent in his decision, ultimately concluding that “it seems to me clear that a copyright owner does not have a proprietary claim to the profits of an infringement of copyright” and noting that if “a person might be deterred from pursuing an activity if he perceived there to be even a small risk that the activity would involve a breach of copyright or other intellectual property rights … that could have a chilling effect on innovation and creativity.”

In response to the ruling, a spokesman for the Motion Picture Association released a statement claiming that action had to be taken against Newzbin2 and the money it made from authorized use of others’ creative works. “We made it clear that we would take further action against the individuals in the hope that the site would close and welcome the fact that this has finally happened,” the statement read. “Intellectual property is a property right that creates value and stimulates investment and growth. Recognition and protection of this right underpins innovation.”

Complaining that Newey’s ruling “does not take the specific facts of this case into account,” the Motion Picture Association plans to seek an appeal against this decision.