UK Judge: Giving Hollywood Money From Newzbin2 Would Create Chilling Effects On Innovation

from the oops dept

Wed, Feb 6th 2013 1:30pm — Mike Masnick

Hollywood already succeeded in getting UK courts to force ISPs to block access to Newzbin2, a Usenet service that the industry insists could only have been used for infringement. And that led Newzbin2 to eventually shut down. But, the Hollywood studios want more. They've been trying to get money from the operator of Newzbin2, demanding any and all proceeds. But, surprisingly, that effort failed yesterday as the judge noted they had no rights to such profits and, importantly that just handing over the proceeds from a business like that might create chilling effects and stifle innovation:

On [Hollywood's] case, a copyright owner's claim would not even be limited to the infringer's profits: in principle, the entire proceeds of sale would be held on trust for the copyright owner. That might both be unfair and stultify enterprise. The proceeds of an infringement might be out of all proportion to the profits generated (e.g. because of the cost of raw materials used in the infringing product). It might not seem just for even a deliberate wrongdoer to have to pay the copyright owner the amount of his gross receipts, and an infringer need not have known that he was breaching copyright. Further, were Mr Spearman's [lawyer for the studios] submissions correct, 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. As was submitted by Miss Lambert, that could have a chilling effect on innovation and creativity.

Basically, the judge is recognizing that the entertainment industry is completely overvaluing the content, and arguing that any and all money made is 100% due to the content, and not due to any other factors. And that's ridiculous. The judge used some analogies:

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. 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.

The Motion Picture Association responded to this loss by saying that this is just "one particular point" in the case, and that it is planning to appeal. And, either way, they point out, what really matters is that Hollywood shut down Newzbin2. Yes, Hollywood killed another service that had figured out how to distribute content better than Hollywood. And, in the end, isn't that all that really matters? So long as Hollywood can keep killing services who do things better than Hollywood, the rest is just gravy.

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Filed Under: copyright, earnings, money, profits, uk
Companies: mpaa, newzbin2

21 Comments

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Anonymous Coward, 6 Feb 2013 @ 2:36pm

If the MPA did win the right to all or some of the money made from Newzbin etc. would any of the money be given to the artists and studios. I am sure that the MPA would have kept all the money for themselves without passing any of it to the artists and studios etc. that the MPA claim are being stolen from due to what they say is piracy.
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gorehound (profile), 6 Feb 2013 @ 2:36pm

It has been years since Hollywood saw a dime out of me and they can count on never seeing a dime out me for the rest of my life.
Fuck Off MAFIAA !

Perfectly happy with my huge book collection (all physical stuff) .
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PRMan, 6 Feb 2013 @ 2:45pm

Really?
"Yes, Hollywood killed another service that had figured out how to distribute content better than Hollywood."

Apparently Mike has never used Usenet groups... I'll take overpriced DVDs and Blu-Rays, thanks.
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- Liam (profile), 6 Feb 2013 @ 5:04pm
  
  Re: Really?
  Apparently PRMan has never used nzb's...
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Anonymous Coward, 6 Feb 2013 @ 2:50pm

Snorezville, Mike. Yes, the court acknowledged that copyright enforcement can have a negative effect on innovation. Duh. Lots of things, such as consumer safety laws and privacy laws, do as well. That's not remarkable in the least. The debate is around where to draw the line between the two. Perhaps one day you can actually put some skin in the game and get off the fence, and then we can talk about where that line should be drawn exactly. You would actually make an argument for what you think is best--even though you can't prove it's best. You'd be stating an opinion on the matter. I know, I know. Not your style. You prefer to just get excited because some judge noticed that there are countervailing interests. The details aren't your strong suit.
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- Rikuo (profile), 6 Feb 2013 @ 3:40pm
  
  Re:
  Perhaps you can name one single activity or action that you do that isn't related to demanding an answer to a loaded question from a guy you've more than likely never met face to face, who in the scheme of things, isn't really all that important.
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  - G Thompson (profile), 6 Feb 2013 @ 7:22pm
    
    Re: Re:
    from a guy you've more than likely never met face to face, who in the scheme of things, isn't really all that important
    
    Awww. Denying his one true love like that. You meanie you!
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- Richard (profile), 6 Feb 2013 @ 4:10pm
  
  Re:
  Duh. Lots of things, such as consumer safety laws and privacy laws, do as well.
  
  But in general those laws do not allow one private party to shut down another party's business without necessarily even winning a court case directly against that party. Those laws are enforced by disinterested state officials not by private companies.
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- That One Guy (profile), 6 Feb 2013 @ 4:27pm
  
  Right, lemme just attempt to stop this one before it starts:
  Stop feeding the trolls people. Yes he keeps going on and on with the same 'why won't you debate me!/You never answer any questions' crap, but pointing this out does nothing but waste space, time and more importantly accomplishes exactly what he wants, people focusing on him rather than the article, so STOP DOING IT!
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  - Shadow Dragon (profile), 6 Feb 2013 @ 8:09pm
    
    Re: Right, lemme just attempt to stop this one before it starts:
    I pretty much came here whack trolls,homophobic trolls gotten so predictable.Yet the trolls here gotten predictable that you can troll them easily.
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- Anonymous Coward, 6 Feb 2013 @ 4:37pm
  
  Re:
  It does not matter because their actions are doing very little to actually stop piracy. All they seem to be doing is killing file sources for legitimate users. The people pirating could care less about this. They'll move on to the next place as usual.
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  - Anonymous Coward, 7 Feb 2013 @ 7:29am
    
    Re: Re:
    They can't stop SkyNet. They can't even find it.
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- G Thompson (profile), 6 Feb 2013 @ 6:42pm
  
  Re:
  Could you of at least read the actual decision before going on and on (we have talked about this obsession before) about how Mike doesn't love you long time!
  
  For the short version the whole decision was based on the question [at 1] "whether a copyright owner has a proprietary claim to money derived from infringement of the copyright".
  
  The conclusion reached by Justice Newey was [at 29] "Despite Mr Spearman's persuasive advocacy, it seems to me clear that a copyright owner does not have a proprietary claim to the fruits of an infringement of copyright. I shall not, therefore, grant proprietary injunctions. [emphasis added]"
  
  Simple wasn't it. And it wasn't about countervailing interests it was about some organisation claiming rights on something they have no authority to claim on EVER! This is not the USA where statutory damages for harm that is unknown, de minimus, and a legal fiction are allowed.
  
  In fact if granted the proprietary claim could of been more analogous to theft than what Mr Spearman alleges is theft. Since the title of the ownership of the fruits of labour would of been removed from one and given to another.
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- Anonymous Coward, 6 Feb 2013 @ 11:18pm
  
  Re:
  Congratulations. You missed the point by so far that new universes have spawned from your argument.
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- Dave, 7 Feb 2013 @ 1:53pm
  
  Re:
  Oh dear. Looks like OOTB in disguise has crawled out of the woodwork yet again. Thought it was too quiet around these parts.
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Anonymous Coward, 6 Feb 2013 @ 2:54pm

'So long as Hollywood can keep killing services who do things better than Hollywood, the rest is just gravy.'

ought to add that as long as governments, bought politicians and law enforcement keep helping them to do this and stay in the pre-digital technology age, nothing will change, either"! never come across such a powerful but so short sighted bunch of idiots in my life!!
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Anonymous Coward, 6 Feb 2013 @ 4:24pm

Let's have a list of copyright enforcement initiatives that have enriched artists' wallets:

- RIAA suing kids, grandmothers, dead people, etc: NOPE
- RIAA getting settlement money from the above: NOPE
- Education campaigns like Don't Copy That Floppy and Home Taping is Killing Music: NOPE
- Suing filehosting services: NOPE
- Bringing down Megaupload: NOPE
- IFPI suing The Pirate Bay: NOPE

Can we, at this point, dispense with the pretense that it was all about recouping artist losses and lost sales? Because if anything, the RIAA is doing a bloody horrible job of it...
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- Rikuo (profile), 6 Feb 2013 @ 4:36pm
  
  Re:
  You left out Limewire, the labels are infamous for originally saying that the $105 million that Limewire had to pay was going right back into more anti-piracy campaigns and not into artist's pockets. They had to be shamed publicly before they grudgingly threw some of it to the artists.
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Duke (profile), 6 Feb 2013 @ 6:05pm

Some interesting gems in the judgment
I wish there was a way of finding out when these sorts of rulings are happening... but it's a really interesting judgment.

It seems that the MPAA were trying to create an entire new remedy for copyright infringement; a property right over anything obtained through the infringement, not just the traditional damages for losses caused by the infringement itself.

For me the really interesting part is around [16], where the judge discusses the "copyright infringement = theft" argument (which was pretty much all the MPAA had to go on, and even that was a stretch). But the judge makes it fairly clear this isn't the case:

A copyright infringer is more akin to a trespasser rather than to the thief of the coins.
and he takes that analogy further. While not particularly definitive, it's a good starting point for arguing that it isn't like theft.

The studios are right, though; they still won the main case, and are still entitled to their damages (the money from Newzbin2) - it's merely that they don't have a property right over absolutely everything Newzbin2 made, just a normal "debt" over any actual losses.

I really hope Richard Spearman QC (a top media barrister, who has been responsible for quite a few of these cases) isn't able to convince the Court of Appeal this judge was wrong...
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G Thompson (profile), 6 Feb 2013 @ 7:13pm

For all those wondering Miss Jane Lambert (the Barrister for the First and Second Defendants) has written a very nice and clear blog post about this judgement and what it is all about and not about.

The main emphasis drawn by Miss Lambert from the judgement is:
"The point that seems to have persuaded the judge on this occasion is that infringement is a bit like trespass. Someone who parks a van on your drive or commits some other trespass is not actually claiming title to your property. At least, not unless he does it long enough and persistently enough to gain adverse possession. You can put up a fence, seek an injunction or damages from the county court but a trespasser is not your constructive trustee. Similarly, the remedy against a pirate or counterfeiter is damages or an account of profits but not the entire proceeds of the infringement. The nearest that the law ever came to that were the old conversion damages under s.18 of the Copyright Act 1956 which has now been repealed." [emphasis added]
Personally I think the best bit is
'Essentially, the law says to the fiduciary: "Oy-oy sonny! 'Ands orf. That don't belong to you Sunshine even if it is in your name. So don't even dream of trousering it or you could end up as a guest of 'er Majesty, Gawd bless 'er."'
and you read that in Sir Michael Cain's voice didn't you ;)
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btrussell (profile), 6 Feb 2013 @ 7:58pm

"They've been trying to get money from the operator of Newzbin2, demanding any and all proceeds."

They have been manipulating governments for so long, they think they are the government and are just looking for asset forfeiture.
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