March 09, 2012 | Peter Bradwell

Speculative invoicing 2: Golden Eye in court

This morning I was in court to see Golden Eye seek a Norwich Pharmacal Order (NPO) against Telefonica UK (known to you and I as O2). They want the details of some 9,000 of Telefonica's customers, so that they can write to them and ask them to pay £700 or face further action. Computer Active have a write up of this morning's hearing here

The rights involved are for adult films. it was amusing to see the judge being presented with a pair of Ben Dover branded underpants. This case is ultimately about the rules that allow rights holders, or those claiming to act on their behalf, to get the details of Internet subscribers so that they can pursue civil action. This procedure was used in the past few years in a way that led to lots of often innocent people face intimidating letters that overstated the case against them and which demanded £500, with threats of legal action to follow.

That kind of behaviour is much less about copyright enforcement than a means for those undertaking such schemes to make lots of money very easily. The ACS:Law case told us that something needs tightening up. Hence the scrutiny afforded to what Golden Eye are doing. 

In court this morning, Guy Tritton represented Consumer Focus, who were there representing the interests of those whose details Golden Eye are looking to get hold of. Mr Tritton raised a number of concerns:

1. The court can't be sure of the evidence that Golden Eye have. The problems associated with connecting IP addresses with account holders mean that the process used by those seeking an NPO must be as robust and clear as possible. In this case, there are concerns about which system has been used, and if it meets such standards. Longer term, there is a need for benchmarked standards to which applicants for a Norwich Pharmacal Order must adhere to. As noted yesterday, the outcome of this particular point will have real relevance for how the Digital Economy Act works.

2. Problems with Golden Eye's role. There was some disagreement about whether Golden Eye can legitimately pursue this action - the copyright owners need to be party to the legal action, and the dispute is whether that is the case here. Furthermore Mr Tritton raised concern about the split of the profits from this speculative invoicing campaign; Golden Eye would receive 75% of the returns. Similar concerns about Golden Eye's role have been raised before.

3. The amount being requested. Individuals alleged to have infringed would be asked to pay £700. This is far and above the likely actual damages. Jonathan Cohen, representing Golden Eye, claimed that all those involved had, through the nature of the peer-to-peer site they were using, also been uploading. But the judge questioned how they could be sure of the scale of each individual's actions. They couldn't, was the answer. So the £700 figure could be seen as amounting to little more than an arbitrary figure, Mr Tritton claimed, and one that was way above actual damage. 

4. Other problems with the draft letter. Mr Tritton argued that the letter does not spell out to recipients that just because an IP address has been assoicated with an act, it does not mean the identified subscriber has infringed copyright or authorised others to infringe.

Perhaps most worrying was the claim in the letter that Golden Eye could apply to the ISP to get the subscriber to disconnect from the internet. The legal basis for this was challenged in court and it is worrying that Golden Eye uses the threat of disconnection to pressure subscribers into paying £700.

We've repeatedly been told that we're crying wolf and exaggerating for suggesting that the Digital Economy Act will lead to disconnection. It's interesting to see that exact threat being used by a rights holder in this forum.

Mr Cohen suggested that disconnection 'must have been the aspiration of policy makers' when writing the Act. Maybe, but those policy makers keep telling us that disconnection is not on the cards. Mr Cohen didn't accept the suggestion that this clause should be dropped. They're making threats that don't tally with what policy makers say about the technical sanctions that may be available under the Act. Golden Eye or the policy makers are wrong. If it's the former, then credence is added to the suggestion that the letters are designed to extract money through intimidating threats that don't ultimately withstand scrutiny. 

Some maths helped explain things - £700 times 9,000 equals a lot of money. £6,300,000, in fact.

The question is whether this is primarily a money making scheme, and if there is some injustice in the way that Golden Eye are taking this case on. For me, the whiff that this is a money making scheme with more than a passing similarity to ACS:Law didn't dissipate this morning.

Golden Eye have a week to respond to the expert evidence submitted by Consumer Focus. It will probably be a week after that that we see a judgment. It's possible that the judge will refuse the application on the evidence grounds, or set out conditions on future Norwich Pharmacal Orders and on the letters that organisations like Golden Eye can send out to alleged infringers. 

So Consumer Focus' intervention in this case could help make sure that Norwich Pharmacal Orders are not used for money making schemes. This case could push up the standards of evidence required in the application for a Norwich Pharmacal Order, and help nail down what a fair letter to alleged infringers looks like. That should have a material benefit for the many thousands of people who may otherwise have received confusing and intimidating letters, demands for money, and consequence distress. So it will be a significant judgment, and an important intervention.