Thursday, 29 November 2012

Norwich Pharmacal orders and the Scottish courts

Our last post included the scarcely contentious claim that litigation is risky, costly and time-consuming. Bad enough, then, if you have to litigate to protect or advance your own interests but what if you get embroiled in someone else’s dispute? A retailer can innocently offer for sale goods, manufactured by another, which are said to infringe someone else’s intellectual property rights. An internet service provider can host a site on which someone anonymously defames, or makes maliciously false statements about, another.  The business stuck in the middle can then find demands being made on it by both sides. Typically, one side will want information to assist in proposed court action whilst the other may have a legitimate right to have that information (for example, their name and personal details) kept private. It’s important for businesses to understand what obligations fall on someone who gets mixed up in this way. After all, it could happen to you. It can save an awful lot of management time, at least, if you already have some idea of what you should and shouldn’t do and what can, and can’t, be demanded of you.


The overarching principle in England was established in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133. Its scope was described by Lord Reid at p 175:
“... if through no fault of his own a person gets mixed up in the tortious [in Scotland, read “delictual”] acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration.”
When that situation arises, the English courts can order that, for example, the name and details of the author of a comment or tweet are handed over. In England, the applicant doesn’t need to show that the information sought will be used in subsequent court action. For example, intended disciplinary action against an employee will be sufficient (British Steel Corporation v Granada Television Ltd [1981] AC 1096, 1200 per Lord Fraser of Tullybelton). Subsequent cases have made it plain that there is a balancing exercise involved and the remedy sought must be proportionate in the circumstances (Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033, paras 36, 57). Case law has identified various factors that the courts have to take into account:
"(i)    the strength of the possible cause of action contemplated by the applicant for the order: Norwich Pharmacal at p 199F-G per Lord Cross of Chelsea, Totalise plc v The Motley Fool Ltd [2001] EMLR 750, Clift v Clarke [2011] EWHC 1164 (QB) paras 14, 38 per Sharp J;
(ii)    the strong public interest in allowing an applicant to vindicate his legal rights: British Steel at 1175C-D per Lord Wilberforce, Norwich Pharmacal at p 182C-D per Lord Morris of Borth-y-Gest, 188E-F per Viscount Dilhorne;
(iii)     whether the making of the order will deter similar wrongdoing in the future: Ashworth at para 66 per Lord Woolf CJ;
(iv)     whether the information could be obtained from another source: Norwich Pharmacal at 199F-G per Lord Cross, Totalise plc at para 27, President of the State of Equatorial Guinea v Royal Bank of Scotland International [2006] UKPC 7 at para 16 per Lord Bingham of Cornhill;
(v)     whether the respondent to the application knew or ought to have known that he was facilitating arguable wrongdoing: British Steel per Lord Fraser at 1197A-B, or was himself a joint tortfeasor, X Ltd v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1, 54 per Lord Lowry;
(vi)     whether the order might reveal the names of innocent persons as well as wrongdoers, and if so whether such innocent persons will suffer any harm as a result: Norwich Pharmacal at 176B-C per Lord Reid; Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners (No 2) [1974] AC 405, 434 per Lord Cross;
(vii)    the public interest in maintaining the confidentiality of journalistic sources, as recognised in section 10 of the Contempt of Court Act 1981 and article 10 ECHR: Ashworth at para 2 per Lord Slynn of Hadley."

But there are also other factors, of a kind or quality which make them of particular importance for the holder of the information.  They are factors which are in essence a set of competing rights, which might be asserted by the claimed wrongdoer against the holder of the information. It is these factors which prevent that person from just handing over what is sought. They include:
(i)     the degree of confidentiality of the information sought: Norwich Pharmacal at 190E-F per Viscount Dilhorne;
(ii)    the privacy rights under article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms of the individuals whose identity is to be disclosed: Totalise plc at para 28;
(iii)    the rights and freedoms under the EU data protection regime of the individuals whose identity is to be disclosed: Totalise plc v The Motley Fool Ltd at paras 18-21 per Owen J; (x) the public interest in maintaining the confidentiality of journalistic sources, as recognised in section 10 of the Contempt of Court Act 1981 and article 10 ECHR: Ashworth at para 2 per Lord Slynn of Hadley.
The foundation of the system of EU data protection is Directive 95/46/EC (the Directive). Article 1(1) states:
“In accordance with this Directive, Member States shall protect the fundamental rights and freedoms of natural persons, and in particular their right to privacy with respect to the processing of personal data.”
Article 6 directs Member States to ensure that personal data is processed fairly and lawfully. Article 13 says that there are exceptions, however:
“(1) Member States may adopt legislative measures to restrict the scope of the obligations and rights provided for in Articles 6…when such a restriction constitutes a necessary measure to safeguard …
(g) the protection … of the rights and freedoms of others”.

In the UK, the Data Protection Act 1998 implemented the Directive and at s35, which provides:
“(1) Personal data are exempt from the non-disclosure provisions where the disclosure is required by or under any enactment, by any rule of law or by the order of a court.
(2) Personal data are exempt from the non-disclosure provisions where the disclosure is necessary-
(a) for the purpose of or in connection with, any legal proceedings (including prospective legal proceedings), or
(b) for the purpose of obtaining legal advice,
or is otherwise necessary for the purposes of establishing, exercising or defending legal rights.”

The Charter of Fundamental Rights of the European Union provides at Article 8:
 “1. Everyone has the right to the protection of personal data concerning him or her;”

Article 52(1) says:
 “Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.”

All of this was considered by the Supreme Court in the case of Rugby Football Union v Consolidated Information Services Ltd (formerly Viagogo Ltd) [2012] UKSC 55 .The RFU is owns Twickenham Stadium and sells tickets for rugby matches held there. The terms of sale prohibit selling or advertising a ticket for more than its face value. The Viagogo website was used to advertise thousands of tickets with a face value of £20 to £55 at up to £1,300 with Viagogo getting a percentage. The RFU raised action against Viagogo for a Norwich Pharmacal order for disclosure of the identity of those who had advertised for sale or sold those tickets. Viagogo argued that in weighing the various factors involved the court could not take into account the RFU's objective of deterring others from wrongfully selling or buying tickets for international rugby matches at Twickenham. The Supreme Court rejected this argument and granted the order. It agreed:
“… that the position of the Intended Defendants can be summarised as follows. It is likely that most of the Intended Defendants are ordinary consumers, many of whom may be on low incomes and without ready access to legal advice, particularly specialised legal advice of the kind required for a claim of this nature. The grant of the order sought will invade their privacy and impinge upon their data protection rights. Furthermore, it will expose them to receiving letters of claim and may expose them to proceedings for infringement in circumstances where they may not be guilty of infringement, where the subject matter of the claim may cause them embarrassment, where a proper defence to the claim would require specialised legal advice that they may not be able to afford and where they may not consider it cost-effective for them to defend the claim even if they are innocent.”
However, focussing on those rights:
“[would] not lead to the conclusion that the individuals who will be affected by the grant of the order will have been unfairly or oppressively treated. On the contrary, all that will be revealed is the identity of those who have, apparently, engaged in the sale and purchase of tickets in stark breach of the terms on which those tickets have been supplied by the RFU. The entirely worthy motive of the RFU in seeking to maintain the price of tickets at a reasonable level not only promotes the sport of rugby, it is in the interests of all those members of the public who wish to avail of the chance to attend international matches. The only possible outcome of the weighing exercise in this case, in my view, is in favour of the grant of the order sought.

The particular circumstances affecting the individual whose personal data will be revealed on foot of a Norwich Pharmacal order will always call for close consideration and these may, in some limited instances, displace the interests of the applicant for the disclosure of the information even where there is no immediately feasible alternative way in which the necessary information can be obtained. But, in the present case, the impact that can reasonably be apprehended on the individuals whose personal data are sought is simply not of the type that could possibly offset the interests of the RFU in obtaining that information. I would therefore dismiss the appeal.”

The issue had arisen in the earlier case of Golden Eye (International) Ltd v Telefonica UK Ltd [2012] EWHC 723. The defenders were an internet service provider. Golden Eye and the other pursuers held copyright in a number of pornographic films which, they believed, had been copied by peer-to-peer file-sharing by 9,000 or so of the defenders’ customers. Golden Eye wanted an order that the defenders be ordered to produce details of the users so that they could write demanding £700 from each, of which they would get between 25% and 37.5%. The sums involved (and no doubt the subject matter) made it unlikely that any particular person would go to the time and cost of opposing the application so Consumer Focus was appointed to represent their interests. The court summarised the applicant’s position as follows:

“The Claimants’ rights
118. The Claimants’ position can be summarised as follows. They are owners of copyrights which have been infringed on a substantial scale by individuals who have been engaged in … file sharing. The only way in which they can ascertain the identity of those individuals and seek compensation for past infringements is by (i) obtaining disclosure of the names and addresses of the Intended Defendants, (ii) writing letters of claim to the Intended Defendants seeking voluntary settlements and (iii) where it is cost-effective to do so, bringing proceedings for infringement [our emphasis]”.

The reason for the added emphasis will become clear because all of this is as a matter of the laws of England. Regular readers will know that Scottish and English law are two quite distinct systems. The UK government, in its “Explanatory Notes” to the Justice and Security Bill, noted:
“..a Norwich Pharmacal order is a remedy developed by the courts in England and Wales, under their inherent jurisdiction, with an equivalent jurisdiction in Northern Ireland. There is no equivalent jurisdiction in Scotland.”

In Scotland, there is a specific statutory remedy in the context of the infringement ofintellectual property rights provided by The Intellectual Property (Enforcement, etc.) Regulations 2006, regulation 4  of which provides:

“Order in Scotland for disclosure of information
4.(1) This regulation applies to proceedings in Scotland concerning an infringement of an intellectual property right.
(2) The pursuer may apply to the court for an order that information regarding the origin and distribution networks of goods or services which infringe an intellectual property right shall be disclosed to him by the relevant person.
(3) The court may only order the information to be disclosed where it considers it just and proportionate having regard to the rights and privileges of the relevant person and others; such an order may be subject to such conditions as the court thinks fit.
(4) The relevant person is—
(a)the alleged infringer,
(b)any person who—
(i)was found in possession of the infringing goods on a commercial scale,
(ii)was found to be using the infringing services on a commercial scale, or
(iii)was found to be providing services on a commercial scale, which are used in activities which infringe an intellectual property right, or
(c)any person who has been identified by a person specified in sub-paragraph (b) as being involved in—
(i)the production, manufacture or distribution of the infringing goods, or
(ii)the provision of the infringing services.
(5) For the purposes of paragraph (3), the court may order the disclosure of any of the following types of information—
(a)the names and addresses of—
(i)each producer, manufacturer, distributor or supplier of the infringing goods or services;
(ii)any person who previously possessed the infringing goods; and
(iii)the intended wholesaler and retailer of the infringing goods or services; and
(b)information relating to—
(i)the quantities of infringing goods or the amount of infringing services provided, produced, manufactured, delivered, received or ordered; and
(ii)the price paid for the infringing goods or infringing services in question.
(6) Nothing in this regulation affects—
(a)any right of the pursuer to receive information under any other enactment (including an enactment comprised in, or an instrument made under, an Act of the Scottish Parliament) or rule of law; and
(b)any other power of the court.
(7) For the purposes of this regulation and regulation 5, “court” means the Court of Session or the sheriff.”

In other contexts, the closest remedy is that provided by s1 of the Administration of Justice (Scotland) Act 1972 which provides:
“1 Extended powers of courts to order inspection of documents and other property, etc.
 (1A)Without prejudice to the existing powers of the Court of Session and of the sheriff court, those courts shall have power, subject to subsection (4) of this section, to order any person to disclose such information as he has as to the identity of any persons who appear to the court to be persons who—
(a)might be witnesses in any existing civil proceedings before that court or in civil proceedings which are likely to be brought; or
(b)might be defenders in any civil proceedings which appear to the court to be likely to be brought.
(2)Notwithstanding any rule of law or practice to the contrary, the court may exercise the powers mentioned in subsection (1) of this section—
(a)where proceedings have been commenced, on the application, at any time after such commencement, of a party to or minuter in the proceedings, or any other person who appears to the court to have an interest to be joined as such party or minuter;
(b)where proceedings have not been commenced, on the application at any time of a person who appears to the court to be likely to be a party to or minuter in proceedings which are likely to be brought; 
unless there is special reason why the application should not be granted.”
The difference in this country then, is that the court will only order production if it is convinced that proceedings are “likely to be brought”. We think that that distinction could be a very important one. It will not be enough to persuade a court that there are prima facie, or even overwhelmingly powerful, arguments that there are grounds for action. The test is quite clear: will the applicant actually raise court proceedings? One of the reasons it might not, of course, is that the sums involved are too small to justify action in light of the very restricted expenses that can be recovered in Scotland in terms of the small claims rules. An applicant under the 1972 Act who wants simply to write to an alleged wrongdoer to persuade him or her (though we’d venture that in the Golden Eye cases you’d be talking “him” more often than not) ought to get short shrift from the courts in this country if they are not persuaded that he is likely actually to raise court proceedings.

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