IP extraordinaire Dr Wim Alberts has kindly provided this explanation of the Mr Video decision after Afro-Ip had reported that its logic had had many an IP practitioner in a twist:
The Supreme Court of Appeal (SCA) recently gave judgment in a copyright matter involving the parallel importation of DVDs. The facts appear from the ruling of the court a quo, the Cape Provincial Division. Copyright proceedings were launched by Nu Metro, Twentieth Century Fox, Disney, Warner Bros, and Videovision - the first and last parties being South African companies. Nu Metro was an exclusive licensee. Mr Video allegedly infringed the rights of the above parties by importing and letting DVDs. Mr Video conceded the issue of infringement, but not the locus standi of Nu Metro, and the order for delivery up. The issue of genuine goods was however resurrected in the context of section 24. Section 24, which provides for orders for delivery-up, refers to an “infringing copy”. Regard was thus had to the definition of this term in the Act. It was defined, as far as cinematograph films were concerned, to be an imported article the making of which would have constituted an infringement of copyright if the article had been made in South Africa.
In the application of this provision, a material issue was the "zones" to which the purchase of the DVDs related. Mr Video obtained zone 1 DVDs, intended for the United States market, whilst South Africa is in fact a zone 2 country. Mr Video argued that the zone 1 DVDs which they have made available in South Africa, are not infringing copies of the original work in respect of which the copyright owners enjoy copyright, as the zone 1 DVDs were manufactured in the United States with the consent of the copyright owners. It was argued that the court has to proceed on the hypothesis that the zone 1 DVDs which they have made available in South Africa, were made in South Africa by the person who in fact made it. Accordingly, the zone 1 DVDs which Mr Video made available in South Africa, are genuine copies.
The court did not accept this view. It was said that one should not lose sight of the fact that the American manufacturer of the DVDs could not have enjoyed the right to manufacture them in South Africa, as its permission to manufacture was geographically limited to the zone 1 market. Nu Metro has been granted the exclusive right to produce copies of the films for the South African (zone 2) market. Accordingly, had the American manufacturer of the zone 1 DVDs manufactured them in South Africa, it would have been done outside the scope of such manufacturer’s licence and in breach of the exclusive licence to produce and distribute the films in DVD form in South Africa.
An aspect pointed out by the SCA, in relation to the order for delivery-up, was that the opposition to such an order was an indication of an intent to trade in the goods. Moreover, as the DVDs were acquired for an unlawful purpose, there is no lawful use to which they can be put in South Africa. The history of Mr Video’s conduct with regard to zone 1 DVDs also militated against any suggestion that Nu Metro and the owners of the copyright in the films would be properly protected if an order was not made.
This decision shows the need for understanding that whilst intellectual property rights are essentially territorial, conduct outside the country can still, in a sense, be adjudicated upon here. The ruling also links up with earlier decisions where the assignment of copyright to an unrelated party took place, and copyright infringement was found to exist where goods, the manufacture of which was lawful overseas, were involved. The decision is another weapon in the arsenal of copyright owners in so far as grey goods are concerned.
The Supreme Court of Appeal (SCA) recently gave judgment in a copyright matter involving the parallel importation of DVDs. The facts appear from the ruling of the court a quo, the Cape Provincial Division. Copyright proceedings were launched by Nu Metro, Twentieth Century Fox, Disney, Warner Bros, and Videovision - the first and last parties being South African companies. Nu Metro was an exclusive licensee. Mr Video allegedly infringed the rights of the above parties by importing and letting DVDs. Mr Video conceded the issue of infringement, but not the locus standi of Nu Metro, and the order for delivery up. The issue of genuine goods was however resurrected in the context of section 24. Section 24, which provides for orders for delivery-up, refers to an “infringing copy”. Regard was thus had to the definition of this term in the Act. It was defined, as far as cinematograph films were concerned, to be an imported article the making of which would have constituted an infringement of copyright if the article had been made in South Africa.
In the application of this provision, a material issue was the "zones" to which the purchase of the DVDs related. Mr Video obtained zone 1 DVDs, intended for the United States market, whilst South Africa is in fact a zone 2 country. Mr Video argued that the zone 1 DVDs which they have made available in South Africa, are not infringing copies of the original work in respect of which the copyright owners enjoy copyright, as the zone 1 DVDs were manufactured in the United States with the consent of the copyright owners. It was argued that the court has to proceed on the hypothesis that the zone 1 DVDs which they have made available in South Africa, were made in South Africa by the person who in fact made it. Accordingly, the zone 1 DVDs which Mr Video made available in South Africa, are genuine copies.
The court did not accept this view. It was said that one should not lose sight of the fact that the American manufacturer of the DVDs could not have enjoyed the right to manufacture them in South Africa, as its permission to manufacture was geographically limited to the zone 1 market. Nu Metro has been granted the exclusive right to produce copies of the films for the South African (zone 2) market. Accordingly, had the American manufacturer of the zone 1 DVDs manufactured them in South Africa, it would have been done outside the scope of such manufacturer’s licence and in breach of the exclusive licence to produce and distribute the films in DVD form in South Africa.
An aspect pointed out by the SCA, in relation to the order for delivery-up, was that the opposition to such an order was an indication of an intent to trade in the goods. Moreover, as the DVDs were acquired for an unlawful purpose, there is no lawful use to which they can be put in South Africa. The history of Mr Video’s conduct with regard to zone 1 DVDs also militated against any suggestion that Nu Metro and the owners of the copyright in the films would be properly protected if an order was not made.
This decision shows the need for understanding that whilst intellectual property rights are essentially territorial, conduct outside the country can still, in a sense, be adjudicated upon here. The ruling also links up with earlier decisions where the assignment of copyright to an unrelated party took place, and copyright infringement was found to exist where goods, the manufacture of which was lawful overseas, were involved. The decision is another weapon in the arsenal of copyright owners in so far as grey goods are concerned.
