1. “Shame”, the second film from director Steve McQueen (“Hunger”). The script was written by Steve McQueen and Abi Morgan and stars Michael Fassbender and Carey Mulligan. It was shot in New York and was produced by Iain Canning and Emile Sherman (producers of “The King’s Speech”). The film is released by Momentum Pictures.

2. “Coriolanus”, the directorial debut for Ralph Fiennes. The script was written by Oscar winning writer John Logan and stars Ralph Fiennes, Gerard Butler, Vanessa Redgrave and Brian Cox. It was shot in Serbia and was produced by Colin Vaines (“My Week with Marilyn”), Julia Taylor-Stanley (“The Tempest”) and Gaby Tana (“The Duchess”). The film is released by Lions Gate UK.

3. “W.E.”, the story of Wallis and Edward with a contemporary storyline co-written and directed by Madonna. It stars Andrea Riseborough (as Wallis Simpson) and Abbie Cornish. The film was principally shot in London with shoots in New York and France and was produced by Kris Thykier (“The Debt”, “Harry Brown”). The film is released by StudioCanal.

Christos said “We are delighted to have worked closely with the producers and the production on three such diverse films over the last year. Each has had its own unique challenges when putting the package together to close the financing, production and distribution elements and it has been a pleasure to be part of their realisation”.

Sky stated: “We have received a court order requiring us to block access to this illegal website, which we did on 13th December 2011… As and when clear and legally robust evidence of copyright theft is presented, we will take appropriate action in respect to site blocking, which will include complying with court orders”.

In July the High Court ordered BT to prevent its customers accessing Newzbin2. In October, following further court hearings involving the ISP and the Motion Picture Association (MPA), the court ordered BT to use its ‘Cleanfeed’ filtering technology to “block or attempt to block” its customers’ access to Newzbin2.

TalkTalk and Virgin have said that they would only act if ordered to do so by a court. Neither TalkTalk nor Virgin has subsequently received court orders and so they have not followed Sky in preventing access to Newzbin2.

A Virgin Media spokesperson states: “As a responsible ISP, we will comply with any court order addressed to us but strongly believe such deterrents need to be accompanied by compelling legal alternatives, such as our agreement with Spotify, which give consumers access to content at the right price.”

TalkTalk states: “We are not in principle against blocking provided a court decides. We have received no such order.”

“Our mid-term report can be summed up by the schoolteacher’s favourite clichés “could do better” and “must try harder.” Many people running websites will still be thinking that implementing the law is an impossible task. But they now need to get to work. Over the last few months we’ve been speaking to and working with businesses and organisations that are getting on with it and setting the standard. My message to others is – if they can do it, why can’t you?”

Although people want a prescriptive checklist detailing exactly what they need to do to comply, the ICO believes that those actually running websites are better placed to know what will work in their specific case. Updated guidance for UK website owners sets out specific practical examples of what enforcement may entail. Key points set out in the amended cookies advice include more detail on what is meant by consent. The advice says ‘consent must involve some form of communication where an individual knowingly indicates their acceptance.’ The guidance explains that cookies used for online shopping baskets and ones that help keep user data safe are likely to be exempt from complying with the rules. However, cookies used for most other purposes including analytical, first and third party advertising, and ones that recognise when a user has returned to a website, will need to comply.

Achieving compliance in relation to third party cookies is one of the most challenging areas. The ICO is working with other European data protection authorities and the industry to assist in addressing the complexities and finding the right answers.

As before, if you would like any advice on this issue please contact jocelynwhinney@leeandthompson.com

May we take this opportunity to wish all of our clients a very happy Christmas and prosperous New Year.

The income tax relief has increased to 30% (from 20%) for investments made in EIS qualifying companies on or after 6 April 2011. The Commission accepted the UK’s representation that the previous level of relief was not sufficient to compensate for the high levels of risk and due diligence costs associated with EIS investments which are generally into new companies without track record or formal business plans.

The limit on individual investments has also increased from £500,000 to £1 million for investments made on or after 6 April 2012.

An EIS qualifying company remains limited to a maximum capitalisation of £2 million at the time of inception, and may only raise up to £2 million in any 12-month period (including investments from Corporate Venturing Schemes and Venture Capital Trusts). However, this limit is expected to be increased to £10 million with effect from April 2012 if approved by the Commission.

Many are predicting that these enhancements will lead to a mini boom in film financing in this country. However, alongside this optimism is some concern arising from the consultation instigated by the Treasury to ensure that EIS and VCT (Venture Capital Trust Schemes) was targeted at the right companies, ie smaller high-risk companies that might otherwise find it difficult to raise finance. The Government has raised concerns about investments in companies that are wound up after only a short period, have no full time staff and sub-contract the majority of its activities. One suggestion floated in the consultation was that, to qualify for the relief, the company would have to employ a minimum of four full-time staff. This would be problematic for the majority of film-related EIS and VCT schemes. The Government is expected to announce any intended action following this consultation in early December.

Please contact Nicki Parfitt (nickiparfitt@leeandthompson.com) if you would like to discuss how any of these issues affect your business.

The firm would like to congratulate Johanna von Fischer and Tessa Collingwood on another impressive star studded ceremony and evening which left many with a well deserved sore head on Monday morning.

Clients/clients’ films (or films the film group worked on) that were recognised include:

1. Best Actor – Michael Fassbender for “Shame”.

2. Best Supporting Actress – Vanessa Redgrave for “Coriolanus”.

3. Best Director – Lynne Ramsey for “We Need to Talk About Kevin”.

4. Best Screenplay – Richard Ayoade for “Submarine”.

5. The Richard Harris Award (for outstanding contribution by an actor to British Film) – Ralph Fiennes.

Lee & Thompson would also like to congratulate client StudioCanal on the success of “Tinker Tailor Soldier Spy” (Best Technical Achievement).

The creative industries view this as a landmark case that could set a precedent for the widespread blocking of illegal filesharing websites, moving the responsibility from the website to the ISP and helping to stem the flow of digital piracy in the UK. But will the blocking of Newzbin actually help to prevent online copyright infringement? The shutting down of Napster didn’t stop people sharing music online. Also, given that one pirated film doesn’t necessarily equate to one lost sale, it is questionable how much money the MPA think it’s losing as a result of blocking the site.

The application is a sequel to a successful claim for copyright infringement brought against Newzbin1. In order for the judgment to make practical sense, it is therefore useful to look at the facts of the Newzbin1 case, which are summarised here.

Newzbin1

The Newzbin1 site operated as part of an internet system called Usenet, which allows its users to upload and view messages on an electronic equivalent of public bulletin boards. Usenet predated the World Wide Web by 10 years. It evolved to support binary (i.e. non-text) content, including films. Due to their large size, binary materials require encoding in a text form and splitting into multiple parts so they can be posted as a set of individual, but related messages. Each message file must then be downloaded to appropriate archive files to assemble into a whole copy.

Newzbin1 premium members paid 30p per week to download such files. Newzbin was turning over a large amount of profit from its members (£360,000 at the end of 2009). It described itself as “the most comprehensive Usenet search that exists on the Internet today”. It indexed the content of Usenet and provided tools for searching them. The reports often included an information file in which it was common for uploaders of infringing copies of films or TV programmes to identify themselves so as to take the credit for creating the copy in question.

A crucial element of Newzbin1 was that it provided a facility for premium members to create files containing all the information required to reassemble an original binary work. By comparison, it would be an extremely long winded and onerous task for a user to retrieve such a large group of files directly from Usenet and it would take days to accomplish.

Newzbin 1 categorised binary content (Films, TV, Games) and some of the sub-categories were indicative of piracy in themselves (e.g. the CAM category referred to the use of a handheld camera or video recorder in a cinema to record a film).

The judge granted an injunction on 29 March 2010 but 2 months later the site was still operating. The eventual cessation of the site coincided with stories of the theft of the website source code. A week after the first site stopped operating, Newzbin2 started operating.

Newzbin2

Newzbin 2 is substantially the same as Newzbin1 and is operated by unidentified individuals acting under pseudonyms who appear to have made various plans to avoid enforcement by the MPA. The servers hosting the site are not located in the UK but are currently in Sweden. The domain name is registered to a company in the Seychelles. The recipient of payments made to the Newzbin2 site is a company whose sole director and shareholder was the same sole director and shareholder of Newzbin1. He denies any involvement in the operation of Newzbin2.

The MPA provided evidence showing that it is hard to find any content on Newzbin2 which is not protected by copyright. For example, 94.3% of the Movies related to commercially available content, 99% of the TV programmes and 93% of Books.

The legal bit

UK Copyright legislation (s97A CDPA) enables the High Court to grant injunctions against ISPs “where that service provider has actual knowledge of another person using their service to infringe copyright”. The judge found that BT had ‘actual knowledge’ of other persons (i.e. the users and operators of Newzbin2) using its (internet access) service to infringe copyright. This was due to the finding that the vast majority of content on the site was likely to be copyright protected and present without the requisite consent of the rights holders and further, that a substantial number of BT subscribers were members of Newzbin2 and likely to use it to receive infringing copies.

Rights holders will be pleased to hear that is not essential to prove actual knowledge of a specific infringement of a specific copyright work by a specific individual. However, the more information the ISP has about the infringing activity, the better. This case will have implications for the interpretation of other legislation which relies on the ‘actual knowledge’ test. For instance, it may be easier for claimants to demonstrate that website operators have actual knowledge and therefore lose the hosting defence in Article 19 of the E Commerce Regulations 2002.

The judge rejected BT’s argument that Newzbin2′s users and operators were not “using its service” to infringe copyright. BT provided its users with internet access, thereby making it possible for Newzbin2’s users to transmit unauthorised material between users and third parties and infringe copyright. Newzbin2 was authorising and jointly liable for the infringements and was using BT’s service to infringe. Similarly, Newzbin2 was also communicating works to the public and using BT’s service to commit that infringement.
The blocking system

To comply with the order, BT is filtering traffic using the Cleanfeed technology it had previously installed to prevent access to child pornography sites. Cleanfeed disrupts access by its subscribers to URLs listed on the Internet Watch Foundation (IWF) list. The IWF provides a UK internet hotline for people to report online child sexual abuse content securely and confidentially. The IWF list of URLs containing images of child abuse is produced and updated twice daily. The URLs may be for whole domains, but more commonly are for specific pages. The list is supplied in encrypted form to most ISPs, who then implement automated measures to prevent, or at least disrupt, access to the URLs.

Problems in practice

There is an argument that using Cleanfeed to block Newzbin2 will lead to more efforts by people to bypass it, with obvious devastating effects given that Cleanfeed was originally designed to combat child abuse.
Smaller ISPs that resell BT’s wholesale connectivity are not subject to the court order (which only calls for BT Retail customers to be blocked from visiting Newzbin2). Customers wishing to circumvent the block could therefore simply move to a small provider for access.

People may also be able to circumvent BT’s filtering of Newzbin2 using VPNs, proxies or the encrypted client that Newzbin2 released shortly after the UK court’s judgment. Although site staff aren’t revealing how the stand-alone software client works, some basic network packet analysis shows that it defeats BT’s Cleanfeed censorship system by using a handful of techniques (including encryption).

The MPA’s goal continues to be to secure greater cooperation from all ISPs in tackling pirate sites that are focused on wholesale copyright infringement and making significant money in the process but if they concentrate only on the big ISPs, the rights industry’s problems will keep recurring and are here to stay.
Opening the floodgates?

The MPA had always planned to involve the other UK ISPs and, true to its intentions, within 2 weeks of the order on BT to start blocking, the MPA has begun the process by sending letters to Virgin Media and TalkTalk. The MPA has also asked BT to extend the block to The Pirate Bay, a Swedish BitTorrent tracker that is also sometimes used for copyright infringement. BT’s predictable response was that the rights-holders would have to get another court order.

It is likely that obviously pirate sites will become regular targets of this type of blocking injunction. However, such applications will be timely and costly. Demonstrating that infringement is being committed by the website can be difficult to establish, especially against websites which have more legitimate uses than Newzbin.

Virgin Media has said it would block Newzbin2 if ordered to do so by a judge but strongly believes that such deterrents need to be accompanied by compelling legal alternatives, such as their agreement with Spotify, which gives consumers access to content at the right price. This reflects the Hargreaves Review of UK IP law which states that punishment for so-called pirates has to be balanced with easy access to legal online content, if online copyright infringement is to fall. The film industry is still tied to physical media, with complex licensing issues meaning that services such as LoveFilm can’t offer the expansive film catelogues that people demand. DRM-free music is available from services such as iTunes and Amazon and games are widely available online but the downloading and streaming services for films currently fall behind. It is essential that the film industry catches up in order to start profiting in the online world.

For more information on this case please contact Jocelyn Whinney at jocelynwhinney@leeandthompson.com

Background on cookies

Cookies are small files of letters and numbers downloaded onto a device when the user accesses certain websites, allowing websites to recognise a user’s device. Cookies enable a website to log you in automatically, or remember preferences from a previous visit. Cookies are fundamental to all web experiences using mobile, social networks and e-commerce; online shopping with all its savings and conveniences wouldn’t be possible without them.

Cookies drive the largest industry on the web – advertising; the biggest player being Google. Cookies track websites you visit and enable advertisers to serve up content and adverts influenced by the things you look at, click on and buy and it is this so-called ‘Behavioural Advertising’ that bothers privacy groups.

Examples of (arguably) non-intrusive use of cookies

Examples of legitimate use of cookies include the monitoring of sites you visit by large banner ad networks in order to sell the advertising opportunities on your web browser to the highest bidder; tracking your children’s web use to market products to them via your home PC; and use by police and government departments to gather data on web users for non-commercial reasons

Examples of (arguably) intrusive use of cookies

Behavioural Advertising is an example of illegitimate use of cookies. One low cost airline allegedly used cookies to manipulate the prices quoted for fares – a visitor reported returning to its website the day after an initial visit, to see a price hike in the fare they had previously looked at. After clearing out the cookies from the browser, the price dropped back to the initial level.

The old law

The previous rule on using cookies to store information was that you had to tell people how you use cookies, and tell them how they could ‘opt out’ if they objected (usually done by putting the information and an ‘opt out’ in the privacy policy).

The new law – the consent rule

On 26 May 2011 the law changed. The Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 came into play, implementing in the UK the EU ‘Cookie Directive’ (2009/136/EC amending Dir 2002/58/EC) concerning the protection of data and privacy on the web and other forms of electronic communication. Essentially, cookies can now only be placed on machines where the user/subscriber has given their informed consent. The Information Commissioner has given websites a year before enforcement, so by 26 May 2012, website owners need to know how they are going to deal with the new law in order to avoid one of the penalties, which include a £500,000 civil monetary penalty; audit (without consent of the ISP if necessary); a £1,000 fixed monetary penalty; and a third party information notice.

The relevant part of the Directive is:

‘Member States shall ensure that the storing of information, or the gaining of access to information already stored, in the terminal equipment of a subscriber or user is only allowed on condition that the subscriber or user concerned has given his or her consent, having been provided with clear and comprehensive information, in accordance with Directive 95/46/EC, inter alia, about the purposes of the processing. This shall not prevent any technical storage or access for the sole purpose of carrying out the transmission of a communication over an electronic communications network, or as strictly necessary in order for the provider of an information society service explicitly requested by the subscriber or user to provide the service.’

This means that before someone can store or retrieve any information from a computer, mobile phone or other device, the user must give informed consent to do so.

The intention is to increase the end user’s privacy and prevent organisations obtaining information about you without you knowing about it and using it in ways to diminish your consumer rights (as in the low-cost airline example above) or breach trading standards.

Exception to the consent rule

The only exception is if what you are doing is ‘strictly necessary’ for a service requested by the user. This exception is a narrow one but might apply to a cookie you use to ensure that when a user of your site has chosen the goods they wish to buy and clicks the ‘add to basket’ or ‘proceed to checkout’ button, your site ‘remembers’ what they chose on a previous page.

This exception needs to be interpreted narrowly because use of the phrase ‘strictly necessary’ means its application has to be limited to a small range of activities and because your use of the cookie must be related to the service requested by the user. The relevant recital in the Directive refers to services ‘explicitly requested’ by the user. ‘Explicitly’ narrows the exception which will not apply, for example, just because you decide your website is more attractive if it remembers users’ preferences or if it uses a cookie to collect statistical information about the use of your website.

Problems with application of Directive

Cookies are blunt instruments so although browsers have settings and controls to enable you to remove or alert you to the presence of cookies, you either have to let your privacy go, or suffer a broken web experience.

If taken at face value, the result of the new cookie law could mean an awful web experience. A useful illustration can be found at this link: http://www.davidnaylor.co.uk/eu-cookies-directive-interactive-guide-to-25th-may-and-what-it-means-for-you.html

Implementation throughout the EU has been difficult due to different regulations governing gambling, lotteries, skill-based gaming, marketing and prize promotions, meaning users from different countries may have different experiences on the same websites.

Some suggest that the EU legislation hands a huge advantage to websites based in the US and elsewhere who will carry on as normal. However, others suggest it is the location of the user, not the website, which determines whether the law applies.

Taking action to comply

Given that the Information Commissioner is going to start using his enforcement powers on 26 May 2012, it is advisable for website owners to start thinking about what you need to do to ensure compliance. The steps outlined here are may provide a helpful structure.

Firstly, check what type of cookies and similar technologies you use and how you use them. This can be done by either a comprehensive audit of the website or a simple checking of what data files are placed on user terminals and why.

Secondly, assess how intrusive your use of cookies is. This will involve a sliding scale ranging from privacy neutral cookies which, for example, help keep user information safe, to more intrusive cookies which, for example, create detailed profiles of user’s browsing activity. Focus your efforts on achieving compliance at the more intrusive end of the scale.

Thirdly, decide what solution to obtain consent will be best in your circumstances. The Directive suggests that user’s browser settings are a possible means to get user consent. If the user visits your website, you can identify that their browser is set up to allow cookies A, B and C but not cookie D and as a result you can assume that in setting A, B and C you have the user’s consent to do so. You would not set cookie D. However, at present, most browser settings are not sophisticated enough to allow you to assume that the user has given their consent to allow your website to set a cookie. Also, not all site visits are through a browser – the website may have been accessed using an application on their mobile. So for now consent must be gained some other way. The government is working with the major browser manufacturers to establish which browser level solutions will be available and when.

You need to obtain consent before a cookie is set for the first time – you will not need to do so again for the same person each time you use the same cookie (for the same purpose). There are several ways of obtaining user consent. Pop ups and similar techniques potentially spoil the user’s website experience but if designed well enough could be a useful way of informing users and gaining consent. Terms and conditions can be used to make users aware of the changes specifically relating to cookies, followed by a positive indication that users understand and agree to the changes (most commonly obtained by a tick box). Some cookies are deployed when a user makes a choice about how the site works for them. A settings-led consent could be gained as part of that process, so whenever a user selects a certain feature of the site, you tell the user you can remember certain settings they have chosen, for example, size of text, colour scheme, personalised greetings, language. Similarly, when a user chooses to use a feature, such as watching a video clip, consent could be sought to set a cookie at the point at which the user is taking some action to tell the webpage what they want to happen – either opening a link, clicking a button or agreeing to the functionality being ‘switched on’.

Websites will often collect information about how people access and use the website and although this is not done at the request of the user, you still need consent. You should consider how you explain your policies and perhaps include a list of cookies used with a description of how they work to ensure informed choice for users. A possible solution might be to place some text in the footer or header of the web page which is highlighted or turns into a scrolling piece of text when you want to set a cookie on a user’s device, prompting the user to read further information.

If your website displays content from a third party then that third party may write their own cookies onto your user’s devices. Obtaining consent is complex and everyone should ensure they are doing everything they can to get the right information to users for informed consent.

For more information on the above please contact Jocelyn Whinney at jocelynwhinney@leeandthompson.com