Knowledge or reason to believe
32.By the end of the trial it was not in dispute that if FBT owns the Copyright LTEV is liable for primary infringement by making vinyl copies of Infinite. 33.However, distribution of these vinyl albums and the Infinite CDs by Plastic Head could only have been secondary infringements pursuant to s.23 of the Copyright, Designs and Patents Act 1988 (the 1988 Act). Section 23 provides:
(a)
possesses in the course of business, (b)
sells or lets for hire, or offers or exposes for sale or hire, (c)
in the course of a business exhibits in public, or distributes, or (d)
an article which is, and which he knows or has reason to believe is, an infringing copy of the work. 34.Section 27 sets out the meaning of ‘infringing copy’. It was common ground that if I found that FBT owns the Copyright, the vinyl and CD copies of Infinite sold by Plastic Head were infringing articles. The issue argued by counsel was whether Plastic Head knew or had reason to believe that this was the case, specifically whether this was true of Mr Beatty.
The case law 35.Mr Muir Wood referred me to the judgment of Scott J in Columbia Pictures Industries Inc v Robinson [1987] 1 Ch 38. At p.67F-G Scott J said that a person who deliberately refrains from inquiry and shuts his eyes to that which is obvious, cannot be heard to say that he lacked the requisite knowledge. Mr Muir Wood submitted that in the present case Mr Beatty had shut his eyes to the obvious and that he should therefore be imputed with constructive knowledge that the vinyl albums and CDs he was dealing with were infringing copies of the sound recording of Infinite. 36.Scott J was not considering s.23 of the 1988 Act but its equivalent in the Copyright Act 1956, s.16(3). In L.A. Gear Inc v Hi-Tech Sports plc [1992] FSR 121, Morritt J noted that the words ‘has reason to believe’ were newly introduced into the 1988 Act, whereas under the 1956 Act it was necessary to prove knowledge. On the other hand, the courts had construed s.16(3) of the 1956 Act to mean that knowledge was to be attributed to a defendant from facts within his knowledge from which it would be obvious that something was an infringing copy. Counsel in L.A. Gear submitted to Morritt J that s.23 of the 1988 Act should be construed in the same way – submitting in effect that the words ‘or has reason to believe is’ in s.23 in practice added nothing. Morritt J disagreed (at 129): “I do not think that can be right. Parliament has seen fit to include these words anew and it seems to me that they must be applied in accordance with their meaning and proper construction and effect. If, so construed and applied, it reaches the same conclusion as the authorities under the 1956 Act on knowledge, so be it, but one should not, it seems to me, approach the words ‘reason to believe’ with a preconception that they in fact comprehend the same as and no more than imputed knowledge under the 1956 Act.” 37.Morritt J then encapsulated his understanding of the new words in s.23: “…it seems to me that ‘reason to believe’ must involve the concept of knowledge of facts from which a reasonable man would arrive at the relevant belief. Facts from which a reasonable man might suspect the relevant conclusion cannot be enough. Moreover, as it seems to me, the phrase does connote the allowance of a period of time to enable the reasonable man to evaluate those facts so as to convert the facts into a reasonable belief.” 38.On appeal from Morritt J’s judgment (reported also at [1992] FSR 121, beginning at 132) this passage was quoted by Nourse LJ (with whom Staughton LJ and Sir Michael Kerr agreed) (at p.138) with clear approval (at p.139). 39.Often, where ‘reason to believe’ has been in issue since L.A. Gear and this passage of Morritt J’s judgment applied, liability has turned on what happened after the defendant received notice of the claimant’s claim and what constitutes sufficient notice. That does not arise in the present case. Mr Muir Wood fairly conceded that the time which elapsed between the sending of the letter before action dated 5 December 2016 and the cessation of sales by Plastic Head on 12 January 2017 was sufficiently brief to constitute a reasonable period for Mr Beatty to evaluate FBT’s claim. 40.In ZYX Music GmbH v King [1995] FSR 566 Lightman J said that the reasonable man must be such an individual in the defendant’s position (at 578). 41.