International report - Pirate Bay: appeal court increases damages, but lowers jail sentences 26 Jan 11
Mannheimer Swartling - Sweden
On 26th November 2010 the Svea Court of Appeal issued its judgment in the Pirate Bay case. The judgment followed an appeal of the Stockholm District Court’s 17th April 2009 judgment.
The appeal court increased the amount of damages from just over Skr30 million to approximately Skr46 million, but reduced the prison sentences handed down to each person charged from one year to four, eight and 10 months, respectively. However, the appeal court did not assess the liability of one charged person as he did not attend the main hearing due to illness.
The Pirate Bay was launched in 2003 and thereafter became one of the best-known and largest file-sharing sites in the world. The Pirate Bay is also known for being involved in or the subject of a number of lawsuits in several different jurisdictions related to the site’s set-up and use for sharing, among other things, copyright-protected material.
The Pirate Bay is a file-sharing site based on a BitTorrent tracker. BitTorrent is a file-sharing protocol commonly used for transferring large files, as it enables the swift delivery of data. Through the Pirate Bay site, vast amounts of material such as films, television series, music and games have been shared between users, in the form of both material uploaded/downloaded with the right holders’ consent and material uploaded/downloaded without such consent.
In 2009 the Stockholm District Court found four persons behind the Pirate Bay service liable for contributory infringement in violation of the Copyright Act and ruled that they were jointly and severally liable to pay damages to the rights holders. The district court ordered damages of more than Skr30 million. In addition, the district court sentenced all four persons to one year's imprisonment (for further details please see "The Pirate Bay – district court judgment appealed").
The judgment was appealed to the Svea Court of Appeal, which issued its judgment on 26th November 2010. Due to the fact that one of the four persons charged was ill and did not attend the main hearing, the appeal court did not try his appeal or give any judgment regarding his responsibility. The appeal court will try his liability at a later time.
Appeal court's reasoning
The appeal court started by analysing the question of where the infringing acts should be deemed to have taken place geographically. The court stated, among other things, that the placement of the torrent files in the Pirate Bay’s database constituted an essential element in the principal offenders’ criminal act, and that since the servers used for the Pirate Bay service were located in Sweden, the crimes were to be considered committed in Sweden. Thus, Swedish law applied and the Swedish courts had jurisdiction.
The appeal court also reviewed the question of whether, from a criminal law perspective, the Pirate Bay service furthered the main criminal act. The appeal court held that:
- The Pirate Bay contained a service which made it easier to commit the main crime.
- The file sharing of copyright-protected works without the right holders’ consent constituted a dominating activity among the Pirate Bay users.
- No precautionary actions had been taken to prevent copyright-protected material being used through the Pirate Bay.
- The material had not even been removed after letters of warning and other measures.
As such, the risk of the Pirate Bay being used for copyright infringements weighed heavier than the interest of having Pirate Bay as a service for file sharing of legitimately published material, and meant that the persons behind Pirate Bay could not be relieved of liability. The court also stated that the persons charged had committed the assisting acts with the intent required for criminal liability.
In contrast to the district court, the Svea Court of Appeal held that it was necessary to assess individually the criminal liability of each person charged (ie, it was impossible to make a collective assessment of their criminal liability). This meant that each person was held liable only for his own actions. Further, the appeal court found that certain of the prosecutor’s allegations had not been proven or were not punishable. As a result, the appeal court reduced the fines imposed and amended the terms of imprisonment for each person charged.
In this context it could be noted that the appeal court stated that copyright infringement through file sharing has become a social problem, and has grown to such an extent that weight must be given to general preventive concerns. For this reason, the appeal court found that this type of infringement should normally be punished by imprisonment.
In regard to damages, the appeal court made its own assessment of the compensation claims made by the rights holders, taking into consideration the hypothetical licence fees, what the reasonable price per download would have been, the loss of goodwill etc. Based on the appeal court's assessment, the amount of compensation had to be increased in comparison with the district court’s assessment.
The US film companies and the record companies had to pay for their own legal costs for the appeal court proceedings, as they received less than 50% of the compensation than they had requested. As such, they were considered to be losing parties before the appeal court, meaning that the other party did not have to pay their legal costs. In contrast, the Nordic film companies were awarded compensation for their legal costs as the appeal court had granted all their requests, including the request for compensation.
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