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Losing bet

10 April 2017 by Paul Harris

Intellectual property: Losing bet - read more

Racing channel falls at first fence

I started reading the Attheraces & Anor v Ladbrokes & Ors case because it was held to be a passing off and ‘conspiracy’ case. On reviewing the case more closely, it had not even got as far as being initiated, as this was an action for pre-action disclosure under the court procedural rules (CPR Part 31.16(3)).

The alleged purpose behind Attheraces’ pre-action strike was to obtain documents which would identify more precisely the scope, or particulars, of the claim they intended to make.

Live broadcasts

The dispute concerned the exploitation of live audiovisual broadcast coverage of horse races and live on-course data from racecourses around the UK.

Visual coverage of on-course data is sold or licensed to interested parties, generating revenue. This, essentially, is controlled by The Racing Partnership, a company with a number of shareholders, including the parent company of one of the applicants, and a shareholder in Attheraces, along with Sky.

“Visual coverage of on-course data is sold or licensed to interested parties, generating revenue”

The visual coverage is broadcast by Sky (or a company associated with it) through Attheraces, and it can be subscribed to upon payment of a licence fee to Attheraces. This coverage is then made available to licensed betting offices which are all operated by the likes of Ladbrokes Coral and Betfred.

At the beginning of this year, neither Ladbrokes Coral nor Betfred had a licence for the coverage. However, it transpired that, notwithstanding this, these companies (the respondents) provided commentaries of races taking place at racecourses controlled by The Racing Partnership. The commentaries were stated by Attheraces to be ‘off-tube’, in other words, by a commentator who watched television pictures of the event, but who was not necessarily present at the racecourse.

Accordingly, by obtaining documents which identified who the commentators were, as well as how they were able to make the commentaries, the applicants would be able to identify the appropriate cause of action, and the particulars necessary to support it.

Witness admissions

Arising out of this lack of knowledge of how these off-tube commentaries were created, the applicants launched proceedings under section 33 of the Senior Courts Act 1981 and Part 31.16 of the CPR. In order to do so, a witness statement from the COO was filed and served.

“The use of the Sky Attheraces coverage for the purposes of off-tube commentaries was in breach of the terms of the subscription agreement”

In response, the COO of Ladbrokes Coral Group provided a witness statement, admitting to the production of off-tube commentaries but denying they infringed any intellectual property rights or could otherwise be prevented.

The Ladbrokes Coral COO confirmed that his company used the Sky Attheraces live coverage with freelance broadcasters providing the commentary. In fact, the use of the Sky Attheraces coverage for the purposes of off-tube commentaries was in breach of the terms of the subscription agreement, and following a letter from Sky to Ladbrokes Coral, the latter ceased using that TV coverage.

For the Betfred Group, its COO also provided a witness statement, and although admitting to providing sound commentary for one day only, stated that his company in fact provided ‘synthesised commentary’ for the remaining occasions. This part of the witness statement and case the judge kept confidential. However, it was disclosed to the applicants.

Horses for courses

Perhaps the key decision the judge made was to consider the basis of the application of the information that was before him (that is, that comprised in the witness statements), rather than on the pre-action communications, which had been prolonged.

Part of the reason for doing so can be noted from his comments about the formulation of the applicants’ claim. The judge noted, as against Ladbrokes Coral, the case was originally said to be based on breach of contract; copyright infringement; inducing or procuring a breach of contract; and/or conspiracy.

At the hearing, this was reduced to conspiracy – the loss suffered by the applicants, in the judge’s eyes, being ‘nebulous’. This is because they would have to have purchased commentary from Sky, which would then mean there would be some ‘trickle down’ of fees for the applicants. As for Betfred, this was reduced to conspiracy in passing off, and similar criticisms were levelled here also.

The evidence having been provided, the applicants were faced with a choice: they could either take stock, and decide whether, and what, pre-action disclosure might be needed in the light of that evidence, at some later date, or they could persist in an application whose essential basis changed.

From what followed, the judge considered the basis had changed and they had therefore suffered the consequences as a result. It is, however, the judge’s consideration of CPR Part 31.16. The test is that if proceedings are to be issued, then both the applicant and the respondent have to be likely to be parties to those proceedings.

This is interpreted as meaning they ‘might well be’ parties, which would appear to be a low threshold to cross. In the present case, some but not all, of the parties were likely to be the ones in any subsequent proceedings.

Wish lists not permitted

In terms of what documents needed to be provided, this is on the standard basis – namely that the documents must be in the possession of the party; relevant to an issue in the proceedings; and that it is proportionate that they should be disclosed. However, where pre-action disclosure is sought, then the categories of documents need to be limited to what is strictly necessary. Wish lists are not permitted.

It is this lack of precision, and limiting to what was strictly necessary, that effectively killed the applicants’ pre-action disclosure application. Indeed, because they were unable to formulate the scope of the claim against the respondents – albeit that they claimed they were unable to do so without the documents – and identify more clearly the cause of action, in the judge’s view, the classes of documents sought were too widely drawn. Any request for pre-action disclosure was, to use the judge’s words: ‘like the curate’s egg, good in parts’.

The judge was equally not satisfied that the approach taken by the applicants meant that he would have permitted them to go back to the drawing board and refine the scope further. Given his viewpoint that the evidence provided sufficiently for the claims to be formulated with greater precision, he did not feel that any permission to refine the categories was appropriate.

“My sympathies lie with the applicants for pre-action disclosure. In their evidence all the bookies’ COOs said that something untoward occurred”

However, CPR Part 31.16 has both a jurisdictional and a discretionary element to it, as the court will permit pre-action disclosure only where there is a real prospect that this is fair to the parties if litigation is commenced, or assist the parties avoiding litigation or saving costs in any event.

The discretionary element is that the court has to consider whether it would be desirable having considered all the facts. The judge then laid out the ‘three touchstones’, namely that pre-action disclosure:

  • Disposes fairly of the anticipated proceedings
  • Assists the dispute to be resolved without proceedings
  • Saves costs.

In the judge’s view, the applicants failed in respect of all of these ‘touchstones’.

The odds favour the bookies

My sympathies lie with the applicants for pre-action disclosure. In their evidence all the bookies’ COOs said that something untoward occurred. However, as with all things, there is a balance to be had. Clearly, the judge felt that Attheraces’ legal advisers could have done more to formulate an appropriate claim.

Alternatively, they could have decided they had achieved all their aims and, having marked the bookies’ card, waited until they slipped up again and then hit them harder. But then, it is always easier for the armchair commentators to make such sensible sounding suggestions when presented with all the facts and well-reasoned judgments.

The message, though, is clear: bringing an application for pre-action disclosure may well achieve all the aims that you need, but if you are to go further, the decision of identifying the categories of documents, and complying with the ‘three touchstones’, are essential for a successful outcome.

Paul Harris is a Partner at Venner Shipley Legal Limited

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