From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Tuesday, 27 May 2014

A manifestly b***ocks fairy-tale falls apart in post-NewzBin piracy fall-out

Piracy doesn’t pay, or rather it does pay millions until the rights owners catch up with you and bring the full force of English law down upon you. Twentieth Century Fox Film Corporation v Harris [2014] EWHC 1568 is a judgment of Mr Justice Barling (the president of the Competition Appeal Tribunal, when he’s not hearing IP cases), the next chapter in the Newzbin piracy saga.
Background – Newzbin and the first ever UK blocking injunction

Anyone with an interest in online copyright infringement and blocking injunctions (one of this Kat’s favourite topics) will remember Newzbin as a service which helped its paid-members download films and other protected material from the Usenet. The film industry killed it off in the original copyright infringement action in 2010 (here), but it came back as Newzbin2 forcing the industry successfully to deploy section 97A of the UK’s Copyright, Designs and Patents Act 1988 to obtain the first ever blocking injunction against ISP BT in 2011 (here).
A central character in the copyright infringement action was one Mr David Harris. Giving the fine upstanding profession a bad name, Harris was a qualified barrister who represented Newzbin on a direct access basis for most of the trial. Unknown to the trial judge and claimants, Harris had acquired the shares in Newzbin before the trial and became a director of it, creating an alter-ego, David Bahan, for those purposes. In the course of the trial he misled the court and then lied to the Bar Standards Board who disbarred him in 2012.
Through all this litigation, the claimants – basically the big film studios and members of the Motion Picture Association (MPA) – were unable to extract a single penny in compensation or costs from Newzbin. It then turned its attention to Harris and various other corporate entities allegedly used by Harris to collect monies from Newzbin members (Kthxbai Limited, The NZB Foundation, Motors for Movies Limited, HKB Operations Limited, NZBS4ALL Limited). The industry started sniffing out the money, and found a hefty sum in an account in Harris’ name linked to Newzbin2, the sequel service which Harris denied having anything to do with. Freezing orders were obtained against this and other accounts.
The present action
The film industry then pursued this action against Harris and his various corporate entities, alleging that he was a sort of Walter White (or rather Heisenberg) character behind the whole conspiracy, claiming that he conspired to injure them by lawful means including by infringement of copyright by him personally and by conspiring to defraud them by siphoning and channeling and doing all sorts of other things with his ill-gotten gains. The intention was to get a finding that he was personally liable, so the industry could go after those gains. To do that they needed to break down the web of lies and tear away a number of corporate veils Harris had put in place to protect the cash. The key goal was to tie Harris to both versions of Newzbin and put him at the centre of the whole enterprise.
Thus a key piece of evidence in this new trial were 1,119 pages of logs of internet chat sessions between Harris and a Mr Elsworth, originally a defendant who settled with the film industry and then became their witness. Harris denied the veracity of the chat logs, which if true, said the judge, showed much of Harris’s testimony to be “untruthful” and his defence – basically that he had nothing to do with any of it – to be resting “on a foundation of lies”. The logs included discussions relating to the setting up of Newzbin2, the adopting of the persona “Mr White” by Harris (a reference to Reservoir Dogs rather than Breaking Bad) and an “impolite” (to use the judge’s words) reference to the MPA. Harris said Elsworth had doctored them. The judge disagreed – they were genuine. In fact, Harris had doctored extracts from the logs which he himself had sought to rely upon.
With a finding that the chat logs were genuine, it followed that Harris was, indeed, “untruthful” and, contrary to his main defence, was behind Newzbin2 and not just Newzbin1. A shady story involving a bunch of Swedes including a man named Anders Harris had met in a pub who had taken over Newzbin and leased the service’s domain name on assurances that they would not infringe copyright was, found the judge, a “fairytale” (or, to use Harris’s words in the chat logs, “manifestly bollocks”).
Nice car, Mr Harris
Much of the judgment is devoted to unraveling the movement of vast amounts of cash around Harris’ various companies including to purchase a house and a McLaren sports car. Harris also appears to have got his younger brother, a policeman, suspended from the Force after giving him £192,000 in cash which was then discovered in the brother’s loft.
Harris relied upon Henderson v Henderson to argue that any claims against him personally should have been brought along with the original copyright infringement action against Newzbin. This failed – as Harris’s involvement had only come out at trial, the film industry couldn’t have been expected to have sued him upfront.
Harris’ liability as joint tortfeasor
Referencing MCA Records v Charly Records, the judge found Harris liable as a joint tortfeasor for the infringing acts of the original Newzbin held in the original action. He was the “mastermind”, and was a director “intending, procuring and sharing a common design” with Newzbin to commit infringement, “making it his own”, to quote both MCA Records and the court in the original action. The judge found the same in respect of Harris and Newzbin2.
Harris and his companies’ liability by way of an “unlawful means conspiracy”
The industry pleaded that Harris and his various companies participated in an unlawful means conspiracy or conspiracies to infringe copyright, defraud the industry and to remove and conceal revenue and assets so as to deny the industry the remedies granted in the original action.
This tort is defined in Kuwait Oil Tanker v Al Bader:
"A conspiracy to injure by unlawful means is actionable where the claimant proves that he has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the defendant and another person or persons to injure him by unlawful means, whether or not it is the predominant purpose of the defendant to do so…..The essence of the unlawful means conspiracy is injury to the claimant as a result of an unlawful act or acts where two or more people have combined to cause the injury. It is not necessary that every overt act is done by every conspirator, but the act must be done pursuant to the conspiracy or combination."
Clerk & Lindsell on Torts gives it four elements:
(1) a combination of two or more persons;
This was satisfied by all the Harris companies, even though he was effectively the controlling mind of all of them. Harris’s argument that if that was the case, how could he conspire with himself, was dismissed.
(2) to take action which is unlawful in itself;
The “unlawful means” were infringement of copyright and conspiracy to defraud by way of a dishonest enterprise to use the industry’s copyrights and extract and appropriate revenue from them.
(3) with the intention of causing damage to a third party,
The desire to make a lot of money from this activity was held clearly to have the intention of damaging the industry.
(4) who suffers the damage.
This one was pretty obvious – the industry had lost out by this activity.
Another win against the ‘bin, but now after the money
If you're going to defraud the film industry,
best to plan a quick getaway
As noted above, the aim of the film industry was to get a finding that Harris was personally liable, so they could then seek an account of his profits and trace them through the web of entities in which he’d stashed them. They succeeded in doing just that, and are no doubt working up the figures as you read this post.

Harris is clearly a bad guy, and a very good illustration of the reality of piracy. Here was a man doing everything he could to make money out of copyright infringement, willing to fabricate evidence (as the judge found) to try and get away with it. There was no Robin Hood motivation here to give away free content, he was a liar who knew exactly what he was doing and hoped he would get away with it. Merpel’s just coughed up a fur ball in disgust, she thinks Harris deserves everything he gets.


Anonymous said...

Would this splenic author be the same Darren Meale who has 20th Century Fox as a client?!? Shurely some mistake? I suppose Merpel must know who gives her Kitkat.

As other's have said: "I wonder how much money 20th C Fox will actually ever recover?"

Jeremy said...

To anonymous: does it matter whether this is the same Darren Meale or not? If any given Darren (or Tom, Dick or Harry for that matter), faced with the same set of facts, would have inevitably reached the same conclusion, I think it would be churlish to accuse this particular Darren of being more than necessarily splenetic.

Anonymous said...

Shurely shome mishtake? Shouldn't shurely be shpelled Sherly?

Anonymous said...

Prof Jeremy
My point was while the facts here are indeed awful and any right thinking person would be appalled by Harris, the author has failed to declare his interest. He is pretending to write objective commentary while earning money from one of the Claimants.

Many people might, had Meale mentioned 20C Fox was a client of his, wondered if he was sucking up to them. Meale rightly rips Harris for a lack of integrity but then himself fails to say "in the interests of transparency I should declare 20C Fox to be a client of mine". His furious ranting might then be seen in an enlightening context.

Not churlishness: Pot, Kettle, Black.

Anonymous said...

I'm afraid I agree with the other anonymice. I've nothing against people writing an account of a case in which they were involved, as long as they declare it. In this case there is no indication of the author's involvement and this seems wrong - and I'm disappointed in Jeremy, too, for digging his claws in.

Copyright infringement is after all an emotive issue - see all the debates about whether the term "theft" is accurate or not - and the post does go in for a lot of vilification, howevermuch justified.

Jeremy said...

Anonymous of 22:20 -- Sorry to have disappointed you. I wasn't digging my claws in: my only point was as to whether it was the same Darren Meale or not. I wasn't aware that Darren had 20th Century Fox as a client since the firm named as acting for Fox and all the other claimants in the Newzbin cases is Wiggin LLP which, so far as I know, Darren has never worked for. From his Simmons & Simmons page I now see that he is doing some brand name advisory work for 20th Century Fox -- rather a different area from that of the Newzbin saga.

I agree that it's best practice for all Kats (and other IP bloggers) to declare any personal involvement or interest and I think you'll find that we have a pretty good record on that score.

To be on the safe side, I shall be reminding all Kats of best practice in my next Katmail to them.

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