Intellectual property law

CA 5097/11 Telran Communications (1986) LTD v. Charlton Ltd.- A worldwide precedent ruling in intellectual property law issued by the Israeli Supreme Court – holding that enabling viewers to circumvent copyright protected foreign transmissions of content that a domestic distributor had acquired copyrights to, is neither in direct or indirect violation of Israeli Copyright law nor does it contribute to an infringement by another.
 

Brief summary of the case-

 During the summer of 2006  the 18th FIFA World Cup [hereinafter: soccer tournament] was held in Germany, FIFA is the owner of the rights to the games of tournament worldwide, and sells local transmission rights to one or several domestic distributors in every country around the world for a fee.
 

In Israel Charlton Ltd. had acquired the license for exclusive rights to broadcasting the soccer tournament in the territory of the state of Israel. However, Charlton soon found out that another company called TUBE was also publicly broadcasting the soccer tournament, after TUBE was asked for clarifications by Charlton, the former had informed Charlton that it had purchased a subscription from a third company Telran Communications Ltd. in essence the subscription entails Telran providing to TUBE, for a fee, a decryption card that allows the owner of the card to then decrypt foreign satellite transmissions (in this case: South African and Jordanian) of the soccer tournament.
 

Charlton proceeded to file a lawsuit against Telran, for infringement of Charlton's copyrights, in the court of first instance (District Court). Charlton's argument was twofold: firstly, the distribution of the decryption cards is a direct violation of Charlton's copyrights, since the foreign transmissions themselves were purposefully encrypted to prevent violation, a purpose which Telran subverted by allowing for the broadcast to be decrypted. Secondly, and alternatively, Telran was responsible in contributing to an infringement by another, under this legal argument- the direct violation of Chalrton's copyrights is by the foreign broadcasting companies- however Telran by virtue of selling the decryption cards aided and contributed to this infringement.[1]
 

The District Court in an opinion issued by judge Pilpel ruled that in the case of Telran, unlike a private consumer who purchases a satellite dish to pick foreign transmissions, a company that enables its subscribers to view the same transmissions is engaged in commercial distribution. Telran therefore, ruled judge Piplpel was distributing decryption cards for a commercial purpose, knowing all the while that the license for broadcasting the soccer tournament belonged to Charlton. Thus, the District Court ruled Terlan actively contributed to the violation of the copyrights owned by Charlton. Telran then appealed to the Israeli Supreme Court.
 

In the opinion written by Justice Zilbertal, the Supreme Court overruled and reversed the decision of the District Court, holding that:
 

First, that direct violation of copyrights, according to the Israeli copyright law, requires that there be an actual transmission or distribution- i.e. that there be a transmission of audio, video or both. Therefore, the court must decide whether the decryption card sold by Telran was transmitting or distributing the broadcast of the soccer tournament.[2] Justice Zilbertal clarified that Telran was indeed distributing a decryption card, but that the card itself was neither the means of transmission nor distribution of the broadcast of the soccer tournament, rather it only enabled the reception of the foreign transmissions of said tournament. Therefore, Telran was not directly violating Charlton's license and copyrights.
 

Second, that indirect violation, according to the Israeli copyright law, requires firstly that there be a direct violation by another (third party) of copyrights; secondly, that the use that is being done with that copy is for purposes that are explicitly prohibited under the Israeli Copyright Law; thirdly, that the user/consumer knows or should have known that the copyrights of said intellectual property belong to another. In reviewing the first condition, Justice Zilbertal opined that the third party in this case, the foreign broadcasters were transmitting an encrypted broadcast of the soccer tournament, and encryption whose purpose was to prevent unpermitted viewing of their broadcast. Therefore, the court ruled that transmission of an encrypted broadcast in Israel, which are un-viewable absent a decoder, are tantamount to them not being transmitted to Israel at all.[3] It follows that without the fulfillment of the first condition, neither the viewers nor Telran, the middleman providing the decryption cards, are responsible for indirect infringement.
 

Third, that contribution to an infringement by another that is relevant to various middleman, according to the Israeli Copyright Law requires firstly an infringement of copyrights by another; secondly, that the middleman is aware of the actual and specific violation that she is committing; finally, that this violation provides a significant and substantial contribution to the infringement. Once again, Justice Zilbertal rules that since the first condition is not fulfilled and there is no infringement by another, then there is no infringement that a middleman can contribute to.[4]
 

Further thoughts on the case-

1. Israel is not a party to the World Intellectual Property Organization Copyright Treaty (1996), nor does it have domestic laws, including the relatively new Israeli Copyright law of 2007 that prevent what would be considered circumvention of technological measures that control access to copyrighted material. This was directly criticized by Justice Zilbertal in para 24 in the Supreme Court's opinion.
    
2. Justice Zilbertal in this case also altered the status of what were previously ruled to be defenses to copyright infringement, (by the Supreme Court in the Hebrew university and Premier League cases, holding that while “permitted use” is a procedural defense against infringement, this use is substantively harmful and therefore does not preclude a finding of contribution [by the middleman] to an infringement by a another), are not to be viewed as defenses but rather as permitted activities, activities that are within the scope of “users' positive substantive rights” and not merely a procedural defense argument. This point is further illustrated by Justice Zilbertal's interpretation of the chapter in the Copyright Law that is titled “permitted uses and activities” as such they delineate the activities that must not be regarded as violating acts.  

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[1] Telran was also sued in this case for unjust enrichment, a claim that was rendered moot by the district court that found Telran liable for infringement, this claim was then remanded by the Supreme Court, for further review, back to the district court following the supreme court's  opinion.

[2] Para 16 to justice Zilbertal's judgment.

[3] Para 19 to justice Zilbertal's judgment.

[4] Para 30 to justice Zilbertal's judgement.