Onerous practices in Public Procurement – new CCS Guidance
Wednesday 21st December 2016
The Crown Commercial Service has released its latest procurement policy note (PPN 10/16). The newly published guidance marks an attempt to reduce the number of public procurements (a.k.a. OJEU tenders or OJEU procurements) which involve onerous or inappropriate risk allocation between contracting authorities and suppliers.
PPN 10/16 comes into force with immediate effect and applies to all central government departments, their executive agencies, and non-departmental public bodies.
The PPN reiterates the importance of contracting authorities conducting public procurement and contracting activity in accordance with published guidance and best practice. In particular, it highlights the following:
1. Pre-procurement market engagement between contracting authorities and potential suppliers, as permitted by provisions included in the Public Contracts Regulations 2015, is described as ‘essential good practice’. It is envisaged that such engagement will encourage innovation and maximise value for money.
2. Contracting authorities should ensure that accurate and reliable data is made available throughout the procurement process, especially when such data relates to forecasting volumes, and managing demand and performance under the contract.
3. Contracts should be awarded based on the supplier’s ability to provide value for money over the life of the contract.
4. Proportionate mechanisms should be employed to identify and address risks inherent in the contract and contracting authorities are encouraged to discuss these risks and possible solutions with suppliers at the pre-procurement stage.
5. When establishing limits of liability in contracts, contracting authorities should use the guidance developed by the Crown Commercial Service to support their Model Services Contract and in particular, they should ensure that:
- The commercial risks of each contract are considered in detail;
- Risk management proposals are discussed with potential suppliers in the pre-procurement stage;
- Bespoke liability provisions are drafted to reflect the requirements, value and complexity of the contract, avoiding unlimited liability except where required by law; and
Deeds of Guarantee and Performance Bonds are only used where the contract is at high risk of performance or supplier failure.
6. Contracting authorities should adopt a collaborative relationship with suppliers, using established contract management tools and techniques so that any changes in contract delivery are identified early enough to be able to be resolved without creating unmanageable risk for either party.
The release of PPN 10/16 highlights the concern of suppliers that their adoption of risk in performing public contracts is disproportionate to the risk adopted by the contracting authority. Following this guidance, contracting authorities, acting in accordance with best practice, will need to consider the level of risk each party to the contract is best placed to bear and to consider the cost consequences associated with such risks, even before issuing an OJEU notice.
For further information regarding risk allocation in public contracts, or public procurement law in general, please visit our public procurement page or contact Victoria Trigwell at 0151 600 3429 or email email@example.com
Author: Victoria Trigwell
Can third party organisations bring a challenge relating to a development when they are not bidders or potential bidders?
Wednesday 5th April 2017
In the recent case of Wylde v Waverley Borough Council 2017 EWHC 466, the claimants sought judicial review of a decision by the local authority to vary a development agreement. The circumstances were on the face of it, apparently similar to those in the decision of R (on the application of Gottlieb) v Winchester City Council 2015 EWCH 231 (Admin) and yet the outcome was entirely different.
In the Waverley case, there were 5 claimants, who comprised of 2 councillors from the town council and 3 members of local civic societies. The local authority had entered into a conditional development agreement after a competitive process, which did not follow the procurement rules for a works concession contract. The local authority wanted to vary the development agreement due to the financial crisis in 2008. The local authority issued a voluntary ex ante transparency (VEAT) notice advertising its intention to vary the contract. There were no responses to the VEAT from any potential bidders and this was considered to be a significant factor by the court.
The claimants were not economic operators and had not bid for the original development. The court had to consider whether they had sufficient standing to bring a claim for judicial review. The judge applied the rationale from an earlier case and stated that the claimants could only make a claim for judicial review if they had “sufficient interest in the matter to which the application relates”. In order to show sufficiency of interest, as the claimants were not economic operators and had not bid for the contract, they had to show that if the varied contract for the development had been competitively tendered, it might have led to a different outcome that would have had a direct impact on the claimant.
The judge noted that the variation reflected a change in the ultimate value the land should achieve once developed and the revised value had been confirmed by the authority’s professional valuers as satisfying the authority’s best consideration duty under the Local Government Act 1972 as it reflected best value for the authority at the time. The judge therefore concluded that the claimants would have difficulty in showing that a further tendering exercise for the varied contract would have resulted in a different outcome, partly due to the lack of response to the VEAT notice. The judge also held that the variation did not have a direct impact on the claimants as they did not have the status of economic operators under the procurement regime and the outcome of the development would not have been changed by the variation. On this basis, the claimants did not have legal standing to bring a judicial review claim.
In reaching its decision, the judge considered earlier cases including Winchester (referred to above), in which a local councillor brought a claim against the local authority following various variations made in 2014 to a development agreement which it was claimed resulted in a contract which was materially different in character such as to demonstrate the intention of the parties to renegotiate the essential terms of the contract to make the scheme financially viable for the developer. The High Court applied the Pressetext test to see if the variations were materially different in character from the original contract and found that the variations to the development terms altered the economic balance in favour of the developer and, had those terms been available at the time of the competitive process, other economic operators would have bid for the opportunity.
Whilst on the face of it, the facts of each of these cases appear similar, there are significant differences between them. In the case of Winchester, the council had not tendered the original opportunity for the development or the proposed variation and the variations did materially alter the nature of the development agreement. The judge noted that the failure to tender the original opportunity was a breach of the procurement rules but not one that could be remedied at the time of the claim. Also, the council did not argue the issue of whether the claimant had standing to bring the claim and the judge accepted that as a resident, a council tax payer and a city councillor, the claimant had a legitimate interest in ensuring public funds were spent wisely and secured the most appropriate development for the city through open competition.
In Waverley, the original development had been competitively tendered and it was considered that the variations to it would not have resulted in a different outcome for the claimant. Waverley highlights the use of a VEAT notice as an important tool in ensuring any challenges are brought quickly before the authority and the developer enter into binding obligations. However, the decision appears to make it more difficult to bring a challenge against a procurement by way of judicial review as it requires the claimant to show a link between the decision and how it affects them.
Author: Victoria Trigwell
Public Procurement – One hundred million reasons to get it right first time
Wednesday 5th April 2017
In our last blog we discussed the then ongoing case of Energysolutions EU Limited v the Nuclear Decommissioning Authority. This case was a textbook example of how not to evaluate a public procurement process. The Nuclear Decommissioning Authority (NDA) had followed poor practice and had been found to have manipulated its evaluation process to award the contract to a bidder who should have been disqualified for not satisfying one of the NDA’s own mandatory tender requirements.
The NDA has now admitted its procurement process was defective and has settled the Energysolutions claim in the sum of £76.6m, plus £8.5m in legal costs. A second claimant, and unsuccessful bidder, Bechtel, will receive a reported sum of £12.5m. By failing to conduct a fair, transparent and, above all, compliant public procurement process, the NDA is now facing costs of nearly £100m and will need to undertake a new time-consuming and costly procurement procedure to re-let the contract. If both cases had proceeded to trial, both the potential damages and costs the NDA would have faced could have been significantly higher than the settlement sums.
Such was the size and cost of the failure that it made it into national news. Greg Clark, Business, Energy and Industrial Strategy Secretary, also announced an independent public inquiry to look at what went wrong with the procurement process: “This was a defective procurement, with significant financial consequences, and I am determined that the reasons for it should be exposed and understood; that those responsible should properly be held to account; and that it should never happen again.”
The NDA has merely acknowledged that it underestimated the scale of the decommissioning required and, as such, the procurement process was flawed.
The NDA has announced that it will terminate the contract awarded to the successful bidder for the decommissioning work, Cavendish Flour Partnership. The contract will now end prematurely in 2019 instead of 2028. The cost of the re-procurement exercise is, as yet, unknown, however given that the first exercise was undertaken by a competitive dialogue, it is likely the re-procurement will be costly in terms of time and labour.
This case continues to prove a cautionary example of how not to evaluate a public procurement process. Had the NDA followed the correct procedure at the outset, it would not have had to settle these claims or be facing a costly reprocurement exercise. Prevention, or ‘getting it right first time’, would have been a great deal less expensive than the cost of paying damages, legal costs and reprocuring.
Author: Michael Winder
UK manufacturers have their say on Brexit ‘deal’ or ‘no deal’
Tuesday 28th March 2017
As the prime minister prepares to trigger Article 50 on Wednesday 29 March, the EEF, the trade body for manufacturers, has hit back at Theresa May’s claim in January that no deal would be better than a bad deal by claiming that such a result would be “unacceptable” and would be a “lose-lose” outcome for all parties both the UK and the EU.
Britain’s manufacturing industry directly employs 2.7 million people and accounts for 45% of all exports. At the moment, the EU is UK manufacturing’s biggest trading partner and if negotiations do not result in an agreement then businesses could face World Trade Organisation (“WTO”) tariffs, which range from 5% to 10%, for imports and exports from and to the continent.
However, according to Sir James Dyson the tariffs imposed by the WTO on his business have not prevented his company from achieving record financial results, which pays them on products that are manufactured in Singapore and imported into Europe. He went on to say that the tariffs were a “tiny penalty to pay” for trading with Europe but also said that he did not expect this scenario to arise because it would not be in Europe’s interests.
The point has also been addressed by David Davis, Secretary of State for Exiting the European Union, who said that the government had spent nine months since the Brexit vote preparing a plan. He went onto say that whilst coming away from negotiations was not a scenario that the government wanted or expected to see, there is a huge contingency plan in place which encompasses every department of government. It is not clear on what basis these contingency plans have been formulated as he has previously admitted that the Government had done no economic assessment of leaving the EU with no deal.
So it would seem that uncertainty continues to pervade the Brexit process. It is to be hoped that as the negotiations get underway over the coming months the path ahead becomes clearer and some of the uncertainty is removed.
Author: Matt Brown
“Please Please Me, Sony” – McCartney and Sony tussle over copyright ownership
Wednesday 1st February 2017
Paul McCartney has filed for declaratory judgment against Sony/ATV Music Publishing LLC (Sony) in an ongoing dispute regarding his historic works. The Beatles star, who was outbid by Michael Jackson for the rights to a back catalogue of some 260 Beatles songs in the 1980s, is seeking confirmation in US courts that he is entitled to Get Back his historic copyright next year.
McCartney’s application to the Manhattan court states: ‘Section 304(c) of the 1976 Copyright Act gives authors like Paul McCartney who, before January 1, 1978, assigned or otherwise transferred their copyright interests to third parties, the non-waivable right to terminate those transfers and reclaim their copyright interests.’ Under s.304(c), original copyright owners may reclaim their right by serving a termination notice between 56 and 61 years following registration of copyright.
McCartney has served numerous termination notices between 2008 and 2015. These notices refer to some of McCartney and John Lennon’s biggest hits, including A Hard Day’s Night, Let it Be and Hey Jude. McCartney is not yet attempting to reclaim his right to these songs, but is due to take control of the songs in 2018. He is seeking a court declaration that his attempted reclamation of the copyright in the songs currently owned by Sony will not breach a publishing agreement.
The complaint follows an English decision in the High Court to deny Duran Duran the right to reclaim their copyright under the same 1976 Copyright Act in December 2016. The group attempted to claw-back US copyright in a number of tracks, having granted a UK publisher (which was ultimately controlled by Sony) the US copyright in a number of hit albums recorded by the band.
Ultimately, Duran Duran became a Band on the Run after the application of English contract law prevailed in the High Court, and their claw-back failed. Representatives for Sony allegedly informed McCartney that the Duran Duran case would influence Sony’s position, and it is anticipated that the Duran Duran case will be used to challenge McCartney’s claw-back attempt.
It is, however, likely that McCartney will obtain a favourable declaratory judgment. UK law permits the ownership of copyright for a period of 70 years following the artist’s death, without the same claw-back rights enjoyed by US artists under the 1976 Copyright Act. So although Duran Duran may have to Live and Let Die before their copyright is freed from contract, McCartney can rely on a quirk of US copyright law to reclaim his rights.
The Beatles, as with most emerging artists in early 1960s Britain, lacked adequate legal representation. A hunger for fame can cause talent to sign contracts which they later regret. George Michael and Rita Ora provide more recent examples of artists who entered into regrettable contracts. In the Beatles’ case, it can be assumed that the group didn’t understand or appreciate the long-term ramifications of the deal they were offered.
Recent conflicts between Duran Duran and Paul McCartney with their respective copyright holders have thrown up important considerations for artists and publishers in the US and UK. Artists should ensure that they enlist legal representatives before signing any far-reaching, or potentially controversial, commercial deals. Alternately, publishers will be keen to restrict the jurisdictional scope of their agreements to prevent unforeseen attempts by artists to escape contracts.
Artists should be aware that the contracts they are offered must be reviewed by independent, legally trained professionals who will Say Say Say if a commercially burdensome provision appears, and negotiate a legally sensible alternative. It is only then that artists and their publishers should Come Together and enter into contract.
Author: Colin Bell
CJEU denies ‘definitively excluded’ bidder the right to challenge unfavourable award decision
Wednesday 1st February 2017
Under public procurement law, member states must ensure that economic operators, who have an interest in obtaining a public contract and who are at risk of harm by an alleged infringement, are afforded sufficient time for an effective review of the award decision.
A 10 day standstill period, during which the contract cannot be concluded, follows the decision to award a public contract. Concerned tenderers - those which have not been ‘definitively excluded’ - must be notified of the decision to award, and may challenge the decision during this period.
A tenderer is deemed to have been definitively excluded if it has been notified of the decision to exclude it, and this decision has been found to be lawful by an independent review body, or the review procedure is no longer available.
In a recent case, Bietergemeinschaft Technische Gebäudebetreuung GesmbH und Caverion Österreich GmbH v Universität für Bodenkultur Wien and others (Case C355/15), the tenderer had been excluded from the procurement procedure by a final decision of the contracting authority, which had been confirmed twice on appeal. It was therefore important to decide whether the tenderer had the right to challenge the award decision, as it was not technically a ‘concerned tenderer’, but did still have an interest in obtaining the contract.
The dispute arose after an Austrian university issued a call for tenders using the negotiated procedure. A consortium and another party submitted tenders before the deadline. The consortium later failed to submit an original of a bank guarantee in good time and was definitively excluded from the tendering procedure. The contract was awarded to the other party, which began to perform the services.
The consortium appealed the decision to exclude it from the process. The appeal was dismissed. It also appealed the award decision, claiming that calculations made by the other party were materially incorrect. It was held at appeal that the definitive exclusion of the consortium from the process removed its right to challenge the award decision, as 'the rights of a tenderer whose bid has been properly excluded cannot be infringed by illegalities relating to the procedure'.
The Austrian Administrative Court referred the issue to the Court of Justice of the European Union (CJEU), seeking guidance on whether a tenderer which has been definitively excluded from the procurement process, and in turn which has lost its status as a concerned tenderer, may be refused access to the review procedures of the award decision.
The CJEU held that current legislation provides for effective review of the procurement process. It allows excluded tenderers the chance to challenge the exclusion decision and, so long as that challenge has not been resolved, to challenge the award decision should the exclusion be annulled.
In this instance, the consortium’s appeal against the award decision was heard after the decision was made to definitively exclude it from the procurement process. For this reason, the review procedure was no longer available. The decision to exclude the consortium extinguished its status as a concerned tenderer.
This decision has been criticised for creating uncertainty in the appeal process. Whilst a tenderer has the right to challenge its exclusion from a tender process and a separate right to challenge the award decision, if as in this case, the decision regarding the tenderer’s exclusion is determined first, this extinguishes its right to challenge the award decision.
Author: Victoria Trigwell
Showing Your Hand in Public Procurement: Disclosing Evaluation Methods
Monday 23rd January 2017
At the end of last year, the European Court of Justice (ECJ) provided guidance on the responsibility of contracting authorities to disclose elements of their procurement process when evaluating tenders.
The question the ECJ reviewed was: Is a contracting authority always required to inform potential tenderers of the method of evaluation used when evaluating a public procurement contract? Such a question is of interest to tenderers as it is the method of evaluation of tenders which could be the difference between success and failure in an OJEU procurement.
The ECJ confirmed the position that contracting authorities must disclose the award criteria, sub-criteria and weightings in their contract notice and tender documents. This allows tenderers to ensure that they prepare a competitive tender.
The ECJ concluded contracting authorities were not required to disclose the method of evaluation used to evaluate tenders. That said, the ECJ also noted that the method of evaluation must not have the effect of:
a) changing the award criteria; or
b) altering the weighting of the criteria.
The ECJ reiterated the guiding principles regarding award and evaluation:
1. Award criteria weightings must be specified;
2. The relative weightings cannot be changed throughout the procurement procedure, but must be clearly defined from the beginning of the procedure, thus enabling tenderers to establish objectively the actual importance given to an award criterion relative to another by the contracting authority;
3. Weightings may be expressed by providing a range;
4. Any weighting range must have an appropriate maximum spread;
5. A demonstrable reason must be given if weighting is not possible;
6. If weighting is not possible, criteria are to be arranged in descending order of importance;
7. All tenderers are to be reasonably informed of the criteria and arrangements employed to identify the most economically advantageous tender;
8. Economic operators are to be treated in an equal and non-discriminatory way;
9. The contracting authority must act transparently and equally towards tenderers;
10. From the outset there must be a clear definition of the subject matter of the contract and the criteria governing the award;
11. A contracting authority cannot apply previously undisclosed sub-criteria;
12. A contracting authority must interpret the award criteria in the same way throughout the procedure; and
13. A contracting authority may not apply weighting rules which it has not previously brought to the attention of tenderers.
The ECJ goes some way to avoid imposing an unreasonable burden on, and ensures that a degree of privacy remains in the decision making process of, contracting authorities. Tenderers can also rest assured that a restriction on the use of evaluation methods means contracting authorities cannot unscrupulously use them to subvert their award criteria.
Critics may suggest that the case is a backwards step in the adoption of a completely transparent and fair procurement process; however the sensible use by contracting authorities of award criteria, in line with the guiding principles, will ensure the continued fair and impartial award of public contracts.
Author: Michael Winder
Public Procurement Law – A new exemption to the Regulations?
Thursday 19th January 2017
Does the recent ruling in the case of Remondis GmbH & amp Co KG Region Nord v Region Hannover and others (Case C-51/15) open a third way for contracting authorities to organise the delivery of public services without being subject to the EU public procurement rules?
The case concerned the transfer by the Region of Hannover of waste treatment tasks which were its responsibility, to another public body, which was a special purpose association (SPA) that had been created by local authorities for the purposes of waste management. The referring court asked whether such a transfer constituted a public contract, and if it was, whether it could fall outside the scope of EU public procurement law either by the ‘in-house’ (Teckal) exception or the ‘cooperation’ (Hamburg Waste) exception.
German law allows for public authorities to create SPAs to carry out duties conferred on the relevant authority. When formed, the public authority transfers the rights and powers to perform the duty to the SPA. Such transfer can include an obligation on the public authorities to pay contributions to the SPA where other sources of revenue are not sufficient to cover its financial needs. However, the SPA at the subject of this case was generating substantial revenue, both from the tasks formerly carried out by the conferring public authorities and also, from tasks performed for other third parties. This prompted Remondis to make the initial application for review.
The referring court referred four aspects, which it considered characterised the arrangement:
- The tasks carried out by the SPA were ‘services’ within the meaning of Directive 2004/18;
- The transfer was effected for consideration;
- The SPA carried out other activities beyond those within the remit of the original public authorities; and
- The transfer did not fall within the ‘in-house’ (Teckal) or ‘cooperation’ (Hamburg Waste) exemptions.
The ECJ noted that case law had previously determined that agreements which transfer powers between public authorities and do not provide for remuneration for contractual performance, are deemed to be an internal reorganisation and therefore are not public contracts.
The ECJ found that the arrangement did give rise to a genuine transfer of powers and to the Region of Hannover relinquishing its own responsibilities in relation to the relevant services. Whilst waste services were a ‘service’ within the scope of Directive 2004/18, the arrangement as a whole, concerned the genuine transfer of power to perform a public service task and was not confined just to the performance of a service. The fact that activities beyond the task and duties of the original authorities were being performed was not relevant. Whilst the authorities could be required to contribute financially to the SPA if it could not generate sufficient revenue to meet its financial needs, this was considered to more akin to a subsidiary or a form of guarantee and could not be construed as remuneration for services. The ECJ concluded that the SPA had financial and full autonomy in the performance of the tasks. It therefore found that the conditions for the existence of a public contract were not met.
This case provides for a very different kind of solution to that which has previously been explored by public authorities using the ‘in-house’ and ‘cooperation’ exemptions. If you would like to explore the options that may be available to you, or to discuss public procurement law in general, please do not hesitate to contact Victoria Trigwell on 0151 600 3429 or email firstname.lastname@example.org.
Author: Victoria Trigwell
The 12 Days of Procurement
Tuesday 13th December 2016
First, the partridge in a pear tree. In a further attempt to simplify the selection process and to assist small and medium enterprises, the UK government introduced the mandatory Supplier Questionnaire (SQ), which standardises prequalification questions and aims to reduce the administrative burden on SMEs when tendering for public contracts. Mmmm. No partridges nor pear trees. I told you it was strained. We’ll just move on to number two, shall we?
Cases such as Woods v Milton Keynes and Energy Solutions EU Limited v The Nuclear Decommissioning Authority demonstrate that the courts are willing to look into how a contracting authority has evaluated tenders to see if there have been breaches of the equality and transparency duties but also to see if there are manifest errors in the scoring of tenders.
Changes introduced by settlement agreements designed to address issues with a contractual relationship can breach the limitations of substantial modifications to contracts under the Public Contracts Regulations 2015 (i.e. the old Pressetext rules) and lead to a challenge in the courts.
Despite point 3, the Supreme Court has endorsed contracting authorities’ rights to include the ability to expand the contractual duties of a supplier so long as the ability is clear from the start, and is not used to circumvent the regulations (Edenred v HM Treasury).
We learned that mitigation strategies may allow more flexibility for contracting authorities to swap procurement routes in certain limited circumstances.
The Nuclear Decommissioning Authority (NDA) led the way in showing exactly what not to do in the evaluation of tenders; examples of such bad practise included not providing evaluators with sufficient time or knowledge to properly evaluate bids, encouraging evaluators to apply scoring criteria unevenly and discouraging and shredding contemporaneous notes, decisions or scores made during the evaluation.
The query ‘does Part 4 of the Regulations actually have any teeth?’ was partially answered when the case of Judetul Neant confirmed that ERDF funding can be clawed back or withheld if the contracting authority fails to comply with domestic public procurement law.
The UK courts showed that the declaration of ineffectiveness remedy also has teeth in the UK when it was deployed for the first time in the mainland UK in the case of Lightway (Contractors) Limited v Inverclyde Council.
The case of Faraday v West Berkshire Council clarified once and for all that if carefully drafted, development agreements can sit outside of the ambit of public procurement law.
The Crown Commercial Service reminded everyone that the Regulations allow and encourage contracting authorities to consider environmental, social and ethical considerations, a far cry from the dark days of 2006 when it was unclear whether such matters could be considered.
Because it’s so bad it merits a second mention, further examples of bad practise by the Nuclear Decommissioning Authority include (1) not permitting notes to be made during dialogue meetings, so months later solutions that were encouraged during dialogue were then marked down during evaluation, and (2) most importantly of all, breaching its own tendering rules and allowing a bidder to carry on (and win) the process even though that bidder had failed to meet one of the NDA’s mandatory pass/fail criteria.
- And for all of the political upset the referendum on the 23rd June caused, it has been widely considered that due to both domestic and international reasons, Brexit (in whatever form it happens) will be very unlikely to have any material effect on the application or the content of UK public procurement law for the foreseeable future, albeit we note that one prominent QC is arguing passionately to use the opportunity to improve access to remedies for bidders. Therefore, while public procurement appears to be low on the government’s priority list and is under no immediate pressure to change in a post-Brexit world, watch this space…
Author: Michael Winder
Last orders for illegal broadcasting by pubs?
Wednesday 9th November 2016
If you were to take a walk through town, you would be guaranteed to find a pub which broadcasts subscription sports services. But at a time when a commercial subscription to Sky averages £1,500 per month, it comes as little surprise that some pubs are cutting corners when it comes to their sports coverage.
Simon Hopkins and Leon Passlow - already serving prison terms for conspiracy to defraud in accordance with s.12 Criminal Justice Act 1987 - have been ordered to pay back the £992,947.60 they earned whilst undertaking a 2015 subscription scam. The pair were found guilty of fraudulently obtaining Sky and other subscription cards and selling them to commercial establishments at a cut price, making them hundreds of thousands of pounds in the process. Failure to make payment within three months will trigger an additional seven year prison term. Read the Surrey Police article here.
The FA and Sky have historically pursued pubs which fraudulently broadcast Premier League football with unrelenting vigour. The outcome of this case comes as no surprise at a time when copyright infringement is easier than ever for those who wish to dishonestly access subscription content. Detective Sergeant Chris Rambour of the Surrey Police Economic Crime Unit claimed: ‘Seeking a confiscation order following a conviction is a lengthy, complex process’, but recent moves towards stronger protection of Sky and BT copyright suggests that this may not be the last confiscation order to be handed down to criminals who profit from their dishonesty.
One such move to protect Sky and BT came earlier this year, with a minor but significant change to copyright law. Previously, s.72 of the Copyright Design and Patents Act 1988 (CDPA) permitted businesses such as pubs, which don’t charge an entry fee, to show ‘broadcasts and any film contained in the broadcast’ without the permission of the copyright owner. Certain permission was still necessary for original artistic works within the broadcast or film, but holders of unauthorised subscription cards could darken the on-screen branding during a sports event and silence the sound of the broadcast, in an attempt to rely on the s.72 CDPA copyright ‘loophole’.
Inclusion of, and confusion over the word ‘film’ in s.72 CDPA made successful civil and criminal proceedings against unauthorised copyright users much more challenging. The recent change to the CDPA, in removing the word ‘film’, has made it easier for those public establishments which infringe copyright to be held to account, and signals a concerted effort by government to crack down on illegal broadcasters.
This recent case, alongside changes to the substantive law, serves as evidence that the infringement of copyright in relation to illegal broadcasting is of great interest to both private broadcasters and public bodies. It demonstrates that a zero-tolerance approach will be employed against any establishment which attempts to breach or avoid intellectual property law when broadcasting sporting events. Pubs or other businesses wishing to broadcast premier league football can no longer take the risks associated with illegal broadcasting, and must now obtain subscriptions through the proper channels to avoid both civil and criminal liability.
Author: Adrian Horne