By Jacqueline Clover and Helena Marttila-Bridge

On 5 February 2013, the English High Court handed down a judgment in Twentieth Century Fox Film Corp & Ors v Harris & Ors [2013] EWHC 159 (Ch), according to which copyright owners have no proprietary rights to the money derived from infringement of their copyright.

The case involved an indexing website, Newzbin2, which made available to its users infringing copies of films and TV shows.  The claimants, who were owners or exclusive licensees of the copyright in those works, started copyright infringement proceedings against Newzbin2’s operator and companies alleged to have links to the website.  The claimants asked the High Court to grant proprietary injunctions over the proceeds that the defendants had derived from the copyright infringement.  The injunctions would have prevented the defendants from dealing in or disposing of the proceeds.

The High Court refused to grant the injunctions on the basis that the copyright owners did not have proprietary rights to the “fruits” of copyright infringement.  The Court noted that textbooks and previous case law made no reference to the availability of proprietary relief for breach of copyright and explained that, in principle, the relief sought by the claimants would not be limited to the profits made from the infringing activity but would encompass the amount of the defendants’ gross receipts derived from making the copyright works available in breach of copyright.  The Court concluded that the grant of such a relief would likely deter a person from pursuing a course of action if she or he thought that there was even the slightest chance that the activity would involve copyright infringement, which, in turn, could have a “chilling” effect on innovation.

The Court also explained that an extension of proprietary rights here would sit uncomfortably with traditional concepts: “The fruits of an infringement of copyright cannot, as it seems to me, be equated with the stolen coins. While the owner of the coins will have lost title to the coins at law, the copyright owner will have retained title throughout both equity and law. A copyright infringer is more akin to a trespasser rather than to the thief of the coins.”

This is the first case in modern history in which an English court has expressly answered the question of whether a copyright owner is entitled to the proceeds of copyright infringement.  Since the case was not about damages or other forms of relief, it does not impact the remedies currently available to rights holders for copyright infringement.  Instead, the case clarifies that, while copyright owners and exclusive licensees whose rights have been infringed will often be entitled to claim for an account of profits as a form of compensation, rights holders cannot claim ownership of the whole proceeds of copyright infringement.

According to press, the claimants now intend to appeal the case to the English Court of Appeal.