IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE
CIV-2017-419-0207
[2018] NZHC 2768

BETWEEN SKY NETWORK TELEVISION LIMITED

Plaintiff

AND MY BOX NZ LIMITED

First Defendant

KRISHNEIL VON ROY REDDY

Second Defendant

Hearing: 5 March 2018

Appearances: L A O'Gorman and A N Birkinshaw for the Plaintiff

J A Hazel and B Cain for the Defendants

Judgment: 25 October 2018

RESERVED JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 25 October 2018 at 4.00pm,

pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:
Buddle Findlay, Auckland
James & Wells, Auckland & Tauranga

SKY NETWORK TELEVISION LTD v MY BOX NZ LTD [2018] NZHC 2768 [25 October 2018]
The parties [3]
Sky [3]
My Box [5]

The business of My Box [6]

Sky's statement of claim [19]

The defendants' statement of defence [28]

The defendants' strike-out application [32]

Further evidence for Sky [33]

Further affidavit from Mr Reddy [51]

Application for summary judgment – legal principles [55]

Defendants' strike-out applications – legal principles [59]

Counsel's submissions [61]

Sky [61]
The defendants [73]

Discussion and conclusions on the summary judgment application [87]

Did the defendants represent that their My Box service is lawful, and that it is
lawful for users in New Zealand to use the My Box service to access, receive and
view Copyright Works? [88]

Do ss 9 and 10 of the FTA apply to misleading or deceptive statements about

whether an activity is legal? [106]

Are the operations of My Box lawful, as the defendants claim? [113]

The users of My Box units [113]

Have the defendants' activities been lawful? [153]

Has Sky shown that the defendants have no reasonably arguable defence to the
claims that their representations relating to lawfulness (whether of their own
conduct or of the conduct of My Box unit users using My Box units to receive,
access and view Sky broadcasts or programmes) were in breach of ss 9, 10, 11 or
13 of the FTA? [196]

Is Sky entitled to the remedies it seeks? [202]

Discussion and conclusions on the defendants' strike-out application [229]

Result
[1] The plaintiff (Sky) applies for summary judgment, and the defendants apply to
strike out Sky's claim. The two applications were heard together.

[2] The first defendant (My Box) imports and sells in New Zealand digital media
hub units under the "My Box" brand. The second defendant (Mr Reddy) is the founder
of My Box. Sky says that in marketing its My Box digital media hubs (the My Box
units) to consumers in New Zealand, My Box and Mr Reddy have engaged in conduct
in trade that has been misleading or deceptive, in that they have expressly represented
to consumers that the My Box service is lawful, and that it is lawful for users in
New Zealand to use the My Box service to access, receive and view certain broadcasts
or programmes in which Sky holds exclusive New Zealand rights.

The parties

Sky

[3] Sky is the largest pay-television broadcaster in New Zealand. It provides

programme content sourced from both New Zealand and overseas, through a digital
satellite network and an internet-based subscription video-on-demand platform known
as "Neon". Sky also offers a service called "FAN PASS". This is an online,
predominantly live sports content streaming service that shows live streams of Sky
Sport channels 1 to 4, pay-per-view (PPV) events, and some highlights on demand.
Subscribers to Sky's satellite broadcast have access to more than 100 channels,
depending on the package they choose.

[4] Some of Sky's content is exclusive in nature. Examples may include sports
coverage, TV shows, or films. The evidence of Mr Van der Plank, a commercial
manager with Sky, was that where a piece of content is exclusive, Sky has obtained a
licence from the owner of the copyright in that work, granting Sky the sole right to
exploit the copyright in New Zealand via a specified medium and for a specified
period of time. These exclusive rights are an important tool for Sky to attract
subscribers. If viewers are able to source content from elsewhere, they are less likely
to be willing to pay a subscription fee to Sky.
My Box

[5] My Box was incorporated on 25 October 2016, and since then it has operated
a business in New Zealand under the "My Box" name. The My Box business has been
promoted through a variety of sources, including the website at mybox.nz.com, a
Facebook page, a Twitter account, a YouTube channel, and direct marketing emails.

The business of My Box

[6] I will begin with Mr Van der Plank's description of My Box's business, and
then summarise Mr Reddy's evidence in response.

[7] Mr Van der Plank said that, in consideration for a fee, My Box supplies users
of the My Box service with a My Box unit. It is a set-top box, which is pre-loaded
with software, including a menu system and search functionality. The pre-loaded
software is capable of searching the internet, and locating video streams that
correspond with the user's menu selection or search query. That video data is then
transmitted over the internet and reproduced for viewing on a television or computer
screen, or other device linked to the My Box unit. Mr Van der Plank said that, in this
way, the My Box service enables users of the pre-loaded My Box unit to select and
stream the content over the internet, without the permission or authorisation of Sky or
other copyright holders.

[8] Mr Reddy said that the My Box units are digital media hubs – they run off the
internet (in contrast to Sky New Zealand's service, which is run off a satellite dish).
Other examples of digital media hubs are Android phones and tablets.

[9] A digital media hub (or "streaming box") is:

A device that directs multimedia content streamed from the internet to a stereo
or home theatre system. Also called a "set-top box" and an abundance of other
names, it connects to an HDI input on the A/V receiver or TV. 1

[10] A digital media hub can do more than just stream content to a television set.
Digital media hubs may also stream photos, music and videos from a user's computer

1
Definition taken from the website at pcmag.com.
to the playback system. Apple TV and Roku hubs provide access to Netflix, Hulu and
other providers, and they can stream content from computers and the home network.

[11] My Box units come pre-loaded with the open source software known as
"Kodi". Kodi has been described as: 2

a "free media player that can run on any computer, smartphone, tablet or
set-top box, allowing users to stream films and TV programmes over the
internet. … A "Kodi box" is a set-top box or HDMI stick with the Kodi media
player pre-installed on it. The software itself is not illegal, nor is it illegal to
sell devices with Kodi pre-installed on them. However, many of these Kodi
devices come pre-loaded with third party plug-ins and add-ons that allow users
to stream pirated content to their TV …".

[12] Mr Reddy said that My Box units run Android 5.1.1 and come with a DTV app
fully installed so that they can provide channel scanning, a local EPG guide (electronic
programme guide) and channel recording.

[13] Mr Reddy said that the My Box units have not been developed by either of the
defendants – they are imported from a supplier in China. Nor have the defendants
developed or customised any software on the My Box units. Specifically, they have
not created any add-ons or plug-ins, and have not created any hardware for the My Box
units. They have simply bought them from the Chinese supplier and sold them to
New Zealand consumers.

[14] Mr Reddy noted that there is an application used on My Box which searches
the web for free video streams and brings them to the My Box unit. Such applications
are free to download by anyone, locally or internationally, so that they get, for
example, UK Sky content. Mr Reddy said that neither he nor My Box developed this
application, and neither he nor My Box has any association with the company that
provides it.

[15] For consumers, purchasing a My Box unit is a one-off cost, such as a consumer
would incur for the purchase of any other streaming device (eg cell phone, laptop, or
a smart TV). Mr Reddy likened My Box's business activities in New Zealand to
companies such as Harvey Norman and Noel Leeming, who sell goods such as Apple

2
Article on the online edition of The Mirror newspaper, 22 September 2016.
TV and TIVO boxes, which are similar to the My Box unit. He said that he knows of
at least four other companies selling similar digital media hub units in New Zealand.

[16] No content shown on My Box units is hosted by the defendants or anyone else
in New Zealand, and neither of the defendants had any control over any of the content
streamed or viewed by My Box purchasers. The only New Zealand channels available
on a My Box unit are free-to-air channels such as NZ Freeview.

[17] Mr Reddy said that, as far as UK Sky or New Zealand Sky is concerned, the
only content he has seen that was available to watch on a My Box unit (and all digital
media hubs like My Box) which showed a Sky logo, was UK Sky, with English
commentary.

[18] Mr Reddy said that the defendants have never told consumers that they can get
New Zealand Sky content on a My Box unit, and they have never tried to find a way
to offer New Zealand Sky content on My Box units. He acknowledged that a large
percentage of My Box's customers may be ex-Sky users, but he denied that the
defendants have actively marketed the My Box unit to acquire Sky subscribers.
Customers were fully aware that what they were purchasing for the one-off cost was
a digital media hub, not NZ Sky. Mr Reddy denied misleading or deceiving anyone.

Sky's statement of claim

[19] In its statement of claim, Sky contends that My Box and Mr Reddy have been
acting in breach of ss 9, 10, 11 and 13 of the Fair Trading Act 1986 (the FTA), in
representing to New Zealand consumers that use of the My Box service is lawful. It
contends that the defendants' representations have been misleading or deceptive,
because it is not lawful for users of My Box to use the My Box unit to stream copyright
works without the consent of the copyright owner, as such use constitutes an
infringement of the Copyright Act 1994 (the Act).

[20] Sky says that it holds the relevant exclusive rights within New Zealand to copy
and to communicate to the public various works via pay television services, and online
via websites and Apps operated by Sky.
[21] As an example of the defendants' alleged breaches of Sky's exclusive rights,
Sky referred in its claim to video coverage of a cricket test between New Zealand and
South Africa, played on 22 February 2017 in Christchurch (the Cricket Match), which
was available (live) on My Box units. Sky says that, pursuant to a licence agreement
with New Zealand Cricket Inc, Sky had the exclusive right to communicate live
coverage of the Cricket Match to the New Zealand public, including via the internet.
New Zealand Cricket granted similar exclusive rights to broadcasters in other
countries to communicate coverage of the Cricket Match to the public in those
countries, but those broadcasters ("offshore providers") were not licenced to
communicate coverage of the Cricket Match to the public in New Zealand.

[22] Sky alleges that the defendants have enabled users of My Box units in
New Zealand to access, receive and view live coverage of the Cricket Match, as
broadcast in the United Kingdom by an offshore provider, namely Sky Sports 2. Sky
contends that, in enabling New Zealand users to access, receive, and view copyright
works (in respect of which Sky enjoys exclusive rights in New Zealand) from sources
other than Sky, and without Sky's permission or authorisation (or the authorisation of
relevant copyright holders), the defendants were guilty of copyright infringement in
the following respects:

(a) communicating of the whole or a substantial part of the copyright works

to the public in New Zealand, in breach of ss 16(f), 29 and 33 of the
Act; and/or

(b) copying, or causing to be copied, the whole or a substantial part of the

copyright works, in breach of ss 16(a), 29 and 30 of the Act; and

(c) authorising another person to do a restricted act, in breach of ss 16(1)(i),

16(1)(a), 29 and 30 of the Act.

[23] Sky says that, through the My Box website, My Box Facebook page, My Box
Twitter account, My Box YouTube page, and promotional emails and statements to the
media and the public, the defendants have wrongfully represented that the My Box
service is lawful, and users should expect to receive access to content that is broadcast
on Sky channels (including copyright works) and yet they will avoid the corresponding
subscription charges.

[24] Sky relies on the following representations, all of which are admitted by the
defendants:

(a) My Box claims that it is completely legal in its operations. The

service simply allows customers to access high-quality streams of
their own accord. The fact that the box is set up to allow customers
to find certain streams does not hold My Box accountable for what
they may find. Sky channels such as sports, movies and
entertainments are all accessible via streams My Box makes available.
The box is available at a one-off cost with no ongoing payments.

(My Box website)

(b) "From a legal perspective, what we do is completely within the law.

We advertise Sky television channels being available through our
website and social media platforms as these are available via streams
which you can find through My Box." Says [Mr Reddy].

(My Box website)

(c) "I knew that Sky would get in contact with me at some stage. What
we do is completely legal but they obviously feel that they can bully
me out as they would have done with previous businesses like mine.
I am going to stand up to them and continue to provide
New Zealanders with affordable television" says [Mr Reddy].

(My Box website)

(d) Are you tired of paying for Sky? Connect Now.

(My Box website)

(e) The value of My Box lies in how much it costs. You can own your
very own My Box for a ONE-OFF payment of $269. Why would you
pay a minimum of $80 per month for Sky?

(My Box website)

(f) Our clients often ask us if they can get the same channels as NZ Sky
on My Box, and all still for the ONE-OFF COST we offer. The
answer is: YES!!! We are not Sky NZ but everything live on Sky NZ
like your Rugby, F1 Racing, Boxing, V8s etc will run live on your
MY BOX. So, YES!!!

(My Box website, and My Box Facebook Page)

(g) There's no longer any need for SKY, Netflix or Foxtel with the service
we provide. Streaming is the future and consumers require better
 quality and more access than ever before," says [Mr] Reddy, owner of
My Box.

(My Box website)

(h) NEVER PAY FOR SKY AGAIN!!! Stream your favourite movies,
TV shows, and live SKY sporting events online without ever leaving
your home or paying another dollar again including FREEVIEW HD
on this box.

(My Box website)

(i) TIRED OF PAYING FOR SKY, NETFLIX, FOXTEL, AUSTAR OR

OTHER CABLE TV??! Get our Premium Service and Watch in HD
GUARANTEED.

(My Box website)

(j) With Sky sports and movie channels, along with several entertainment
channels and even some international channels, it can be suggested
that users will find exactly what they need…For all that My Box
offers the price is truly of the best value. A ONE-OFF payment of
$269 is all that is required and from then on the My Box belongs to
the user with no ongoing costs. To put it in perspective, that is around
three months-worth of Sky. The value is astronomical.

(My Box website)

(k) UPCOMING EVENT ON MY BOX! FOR ALL YOU RUGBY AND

CRICKET FANS! Watch for free on My Box, message us today!
BLACKCAPS Summer…Wed 22/2 10:30 New Zealand South Africa

(My Box Facebook Page)

(l) Joseph Parker Fight! Watch on Box National Live.

(My Box Facebook Page)

(m) Following on from our previous post about allegations of copyright

infringement, here's a link to a recent interview with the NZ Herald.
This article is supportive of that, as previously mentioned, we have
not and are not, breaching any copyright laws.

(My Box Facebook Page)

(n) Unfortunately, our rapid success has upset out competitors leading to
a little jealousy. The companies in question are now making false
allegations on social media. As a result of these allegations, many of
you may have also noticed an "alert" or "warning": when accessing
the FreeView channels. Please, be assured, that MyBoxNZ is 100%
legal, and we have the support of our legal team. MyBoxNZ has not,
and is not, breaking any copyright laws.

(My Box Facebook Page)

 (o) [Facebook user]: Is the sky tv NZ SKY or UK sky?

MyBoxNZ: Hi [Facebook user], we stream through our UK server

but all live NZ Sky content is available on MYBOX.

(My Box Facebook Page)

(p) ALL BLACKS VS BRITISH AND IRISH LIONS 1ST JULY!!

MY BOX NZ – TIRED OF PAYING FOR SKY, NETFLIX,
FOXTEL, AUSTAR OR OTHER CABLE TV??!!

(My Box Facebook Page)

(q) All your other basic Sky channels are on our channels …you can see
all the Sky-related stuff so all your Sky movie channels and so forth
on there. And it is also broken down into options like news, TV
shows, and things from there.

(My Box YouTube video, "My Box Demo")

(r) So you've got your Freeview, your movies, your TV shows, your
international, we've got all your Sky channels.

(My Box YouTube video, "My Box Demo")

(s) We still remain the only company in the world that took on Sky TV
publicly and legally!!

(My Box Email dated 8 July 2017)

[25] Sky says that the defendants' misrepresentations were intended to enable, and
have enabled, users of the My Box service to avoid paying subscription charges for
relevant content, including Sky's copyright works, thereby causing loss or damage to
Sky. It pleads that 95% of My Box customers are ex-Sky subscribers, and that, as at
29 June 2017, the defendants claimed to have sold 10,000 My Box units. On the basis
of the sales figures claimed in the defendants' promotional materials, Sky calculates
that each My Box user has thus avoided paying a minimum of $80.00 per month by
way of subscription charges to Sky, and that Sky has therefore suffered damage of at
least $1,444,000 as at 14 July 2017, and ongoing loss thereafter of at least $570,000
per month.

[26] Sky asks for a declaration under the FTA that the defendants' representations
as to the lawfulness of the Sky Box service are misleading and /or deceptive. It also
seeks an injunction under s 41 of the FTA, restraining the defendants from offering,
promoting or supplying the My Box service, My Box units or any equivalent of such
service and/or pre-loaded media box. It seeks a further injunction restraining the
defendants from representing in any way, directly or indirectly, that the My Box
service, the My Box units, or any equivalent service or pre-loaded media box is lawful
and/or that the use of such does not breach the Copyright Act 1994 or any other
relevant legal obligations.

[27] Sky also asks for damages, an enquiry into further damages, interest and costs.

The defendants' statement of defence

[28] The defendants deny Sky's alleged rights, and plead that the alleged "copyright
works" have not been pleaded with sufficient particularity.

[29] They admit that they sell the My Box units in New Zealand to members of the
public, and that, among other things, the My Box units enable users to view video
content via the internet. However, they deny Sky's allegation that they have enabled
customers to stream video content without paying fees to the owners and/or licensees
of the copyright in the relevant video content.

[30] They admit that the My Box units are pre-loaded with software, including a
menu system and search functionality. They say they have no knowledge of the
Cricket Match. They admit that My Box was acting in trade, but deny that Mr Reddy
was acting in trade. They admit that they have represented that the My Box units are
lawful, but they deny that they have represented that it is lawful for users of the
My Box units in New Zealand to use the units to access, receive and view copyright
works.

[31] They admit that on 29 June 2017 My Box Australia/New Zealand posted on its
Facebook page that it had sold almost 10,000 My Box units.

The defendants' strike-out application

[32] The defendants contend that Sky's cause of action is untenable as a matter of
law. They say that for Sky's cause of action to succeed there would first have to be a
finding of infringement of copyright by the defendants under the Act. However Sky
has not pleaded infringement of copyright as a first and separate cause of action against
the defendants.

Further evidence for Sky

[33] In addition to the Cricket Match, Mr Van der Plank gave evidence relating to
the live streaming of an All Blacks v South Africa rugby test played in New Zealand
on 16 September 2017 (the Rugby Test).

[34] He produced a copy of a direct marketing email from the My Box website
advertising the Rugby Test in the following terms:

All Black v South Africa 16th Sept LIVE!!

SKY SPORTS ACTION ON YOUR MYBOX FREE!!

Watch our All Blacks versus South Africa 7.35pm on SkySports Action,
Free And Live in HD on My Box!!

[35] Mr Van der Plank obtained a My Box unit, and on 16 September 2017 he
connected the My Box unit to a television set at Sky's offices. He said that, using the
My Box unit, he was easily able to locate and view live coverage of the Rugby Test.
He took a screen shot of the coverage, which appeared to show that it had been sourced
from the French cable-television company Canal Plus (a Canal Plus logo appeared in
the corner of the screen).

[36] Mr Van der Plank said that, under a written agreement dated 12 June 2015
between the New Zealand Rugby Union and the National Rugby Unions of Australia,
South Africa and Argentina (the SANZAAR Unions) – the SANZAAR agreement –
each union severally granted Sky the exclusive right to access grounds for the purpose
of (amongst other things) producing or having produced (for New Zealand
distribution) and distributing in New Zealand audio-visual coverage of certain rugby
matches. Mr Van der Plank said that Sky's exclusive New Zealand rights under the
SANZAAR agreement extended to both live and delayed coverage of matches covered
by the agreement, and to all forms of electronic distribution, including television and
the internet (including video streaming and "on demand" delivery). He said that the
effect of the SANZAAR agreement is that Sky owns the New Zealand copyright in all
recordings, broadcasts and transmissions of matches covered by the agreement,
including communication works, films and sound recordings.

[37] Mr Van der Plank said that the Rugby Test was a match covered by the
SANZAAR agreement, in respect of which Sky held exclusive rights.

[38] In his evidence in reply, Mr Van der Plank rejected what he described as
Mr Reddy's attempts to draw analogies between My Box units and other devices such
as Apple TV and TIVO boxes. He said that the significant point of difference was that
My Box units are pre-loaded with software that enables users to locate and view video
content, including copyright works, without permission from the owners or exclusive
licensees of the relevant copyrights.

[39] Mr Van der Plank said that he was aware from his own experience that the
My Box units come pre-loaded not only with Kodi but also with third party plug-ins.
He referred to the My Box Demo video available on the My Box website. The video
shows a live demonstration of how the My Box unit works, with the My Box unit
programmed with a plug-in called "Exodus". Mr Van der Plank said that he was aware
from his anti-piracy work for Sky that Exodus is a frequently used add-on that enables
users to locate and view pirated content. Indeed, Exodus is listed on Kodi's own
website (at kodi.tv) as a "banned" add-on. The Kodi website states:

The basic rule of thumb for what is not allowed, is that if the Add-on is offering
something for free that you would normally expect to pay for by any other
means, then it'll most likely be using pirate feeds.

[40] Mr Van der Plank also noted that statements made on the My Box website
appear to show that Mr Reddy himself programmed the My Box units. He referred to
the following post on the "Blog" section of the website:

[Mr Reddy] programmes these boxes to stream high-quality channels for the
user's choice through their My Box and on to their device.

[41] Mr Van der Plank referred to an article posted on the 4 August 2017 edition of
the Stuff.co.nz website, in which Mr Reddy was quoted as saying that Sky did not
have a case against the defendants:
 … because the programmes streamed to [the My Box units] come from
overseas and weren't owned or created by My Box although [Mr Reddy]
acknowledged [the My Box units] did make those streams easy to find.

[42] Mr Van der Plank also refuted Mr Reddy's contention that he has never made
representations to the public that Sky content is available via My Box. He referred to
the following statement posted on My Box's website:

Sky channels such as sports, movies and entertainments are all accessible via
the streams My Box makes available.

[43] Mr Van der Plank referred to what he described to as consistent representations

to the public that content that is available on My Box is available for free, or at less
cost than via Sky. Among the representations was a statement in a My Box blogpost
dated 28 August 2017, in which Mr Reddy said:

… "We openly challenge Sky, and we stand by our product", explains

[Mr Reddy] …

If you are interested from making the change from Sky TV like the 34,000
people have in the last year, be sure to check out My Box and their stall on the
ground floor of Chartwell Shopping Centre next week.

[44] Other blogposts from the My Box website described My Box as the box and
streaming device that allows you to view all the latest sports, series and movies for the
same quality of Sky TV at a one-off affordable cost. And on the My Box website at
the time Mr Van der Plank affirmed his affidavit, there was a statement that the value
of My Box lay in how much it cost. "You can own your very own My Box for a
ONE-OFF payment of $269. Why would you pay a minimum of $80 per month for
Sky?"

[45] Mr Van der Plank noted Mr Reddy's acknowledgment in his affidavit that "Sky
UK" content is available via the My Box units. He noted also that the defendants have
actively promoted access to Sky UK channels on the My Box website, including "Sky
sporting events", through the use of the My Box units. He produced a screen shot of
the My Box website showing the statement:
 MY BOX ADVANCE SERIES – NEVER PAY FOR SKY AGAIN!!!

Stream your favourite movies, TV shows and live SKY sporting events
online without ever leaving your home or paying another dollar again
including FREEVIEW HD on this box.

[46] There were two other affidavits filed by Sky in reply. First, Mr Crummy of
New Zealand Cricket deposed to the existence of a written licence agreement with Sky
dated 26 October 2015. He said that the specific terms of the agreement were highly
commercially sensitive and confidential, and he did not produce the agreement itself.
However he confirmed that, under the agreement, New Zealand Cricket granted Sky
the exclusive right in New Zealand to (among other things) transmit and/or authorise
or otherwise cause to be transmitted audio-visual footage of certain cricket matches,
via television and digital media (including the internet, internet protocol television,
and other non-television methods of distributing audio-visual content, either live,
time-shifted, or delayed). He said that this exclusive right extended to the transmission
in New Zealand of live coverage of the Cricket Match.

[47] Mr Crummy said that New Zealand Cricket granted similar exclusive rights to
broadcasters in other countries ("offshore providers") to transmit footage of the same
matches to the public in those countries. Neither the offshore providers nor the
defendants in this proceeding were licenced by New Zealand Cricket to communicate
the match to the public in New Zealand.

[48] The third reply affidavit was from Mr Keith Binnie, general counsel for the
New Zealand Rugby Union Incorporated. Mr Binnie confirmed the existence of the
SANZAAR agreement. Again, the SANZAAR agreement was said to be highly
commercially sensitive, and it was not produced in evidence. However, Mr Binnie
confirmed that, under the SANZAAR agreement, the SANZAAR Unions each
severally granted Sky the exclusive right to access grounds for the purpose of (amongst
other things) producing or having produced, for New Zealand distribution, and
distributing in New Zealand, audio-visual coverage of the matches.

[49] Mr Binnie said that Sky's exclusive New Zealand rights extended to both live
and delayed coverage of rugby matches organised by SANZAAR, and all forms of
electronic distribution, including television and the internet (including video streaming
and "on demand" delivery). He said that Sky owned the New Zealand copyright in all
recordings, broadcasts and transmissions of the matches, including communication
works, films and sound recordings (whether those recordings, broadcasts and
transmissions were produced by Sky or by an equivalent overseas rightsholder).

[50] Mr Binnie said that those exclusive rights and ownership of copyrights
extended to the audio-visual coverage of the Rugby Test. Sky was the only entity –
whether in New Zealand or overseas – granted the right by SANZAAR to
communicate the audio-visual coverage of the Rugby Test on a live basis to the public
in New Zealand.

Further affidavit from Mr Reddy

[51] Mr Reddy provided a further affidavit, responding to new matter in Sky's reply
affidavits. He agreed that the My Box units come pre-loaded with apps that enable
users to view content. However, he said that My Box does not install those apps –
they come with the My Box units when My Box buys them. He denied that My Box
or he installed the Exodus add-on to the My Box units. The only thing My Box has
done is add some computer code to provide a simplified interface. Mr Reddy
emphasised that the applications on My Box units are publicly available to download
by anyone, free of charge. My Box does not own Kodi or any applications or software
for users to view video content. Those applications all originate from unrelated third
parties.

[52] Mr Reddy said there was nothing he or My Box could do if a user chose to
install software on a media hub such as a My Box unit that enabled them to view
pirated content or the like: the user could do the same thing on a computer or
smartphone, and the manufacturer or retailer could not be blamed if that occurred. He
said that users of My Box units are just as able to install and delete software from
My Box units as people can do with smartphones, tablets and computers.

[53] Mr Reddy referred to statements made by him which had appeared on various
websites. He said that "although we do not believe we have done anything wrong we
have removed the statements about which Sky has made complaint (and will not make
any such statements again, until this matter is resolved)."
[54] In respect of the Rugby Test, Mr Reddy noted that it appeared that Mr Van der
Plank had not been watching content broadcast by Sky UK, but content broadcast by
Canal Plus. He said that he had no idea what if any relationship existed between Canal
Plus and Sky NZ.

Application for summary judgment – legal principles

[55] Rule 12.2 of the High Court Rules materially provides:

12.2 Judgment when there is no defence or when no cause of action can

succeed

(1) The court may give judgment against a defendant if the plaintiff
satisfies the court that the defendant has no defence to a cause of
action in the statement of claim or to a particular part of any such
cause of action.

[56] The proper approach to be taken to such applications was considered by the
Court of Appeal in Krukziener v Hanover Finance Ltd, where the Court said: 3

... The question on a summary judgment application is whether the defendant

has no defence to the claim; that is, that there is no real question to be tried:
Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left
without any real doubt or uncertainty. The onus is on the plaintiff, but where
its evidence is sufficient to show there is no defence, the defendant will have
to respond if the application is to be defeated: MacLean v Stewart (1997) 11
PRNZ 66 (CA). The Court will not normally resolve material conflicts of
evidence or assess the credibility of deponents. But it need not accept
uncritically evidence that is inherently lacking in credibility, as for example
where the evidence is inconsistent with undisputed contemporary documents
or other statements by the same deponent, or is inherently improbable: Eng
Mee Young v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court's
assessment of the evidence is a matter of judgment. The Court may take a
robust and realistic approach where the facts warrant it: Bilbie Dymock Corp
Ltd v Patel (1987) 1 PRNZ 84 (CA).

[57] The Supreme Court has held fairly recently that the fact that the Court may be
required to determine questions of law does not preclude summary judgment. In
Zurich Australian Insurance Ltd v Cognition Education Ltd, the Court said: 4

3
Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26].
4
Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR
383 (footnotes omitted).
 ... in other situations falling within the broad test (that is, the "no arguable
defence" test applied on summary judgment), there will be what can properly
be described as "disputes" even though they are ultimately capable of being
determined by a summary process.

[37] To explain, it has been well established in New Zealand since

Pemberton v Chappell that a Court can properly determine questions of law
on a summary judgment application … The Court of Appeal has accepted that
such a determination may be made even though the question of law is difficult
and requires argument (including reference to authority). In International Ore
& Fertilizer Corp v East Coast Fertiliser Co Ltd, a case under the old bill writ
procedure, Cooke P, by analogy with the summary judgment procedure which
had just been introduced in New Zealand, said that where the facts were
adequately ascertained and the Court could be confident that the point at issue
turned on pure questions of law or interpretation, it should be prepared "to
determine, on adequate argument, even difficult legal questions". Similarly, in
Jowada Holdings Ltd v Cullen Investments Ltd, McGrath J, delivering the
judgment of the Court of Appeal, said that a court should be prepared to grant
summary judgment "even if legal arguments must be ruled on to reach the
decision".

[58] In some cases the Court may consider that further investigation of the factual
matrix is necessary, and in those cases summary judgment will be refused. 5

Defendants' strike-out applications – legal principles

[59] Rule 15.1 of the High Court Rules provides that the Court may strike out all or
part of a pleading if it discloses no reasonably arguable cause of action, or case
appropriate to the nature of a pleading, or is likely to cause prejudice or delay.

[60] The following principles have been established by the Supreme Court: 6

(1) the jurisdiction to strike out a cause of action is one which is exercised
rarely and only where the cause of action is clearly untenable (i.e. has
no prospect of success);

(2) a strike-out application proceeds on the basis that the facts pleaded
against the applicant are true;

5
See for example Trustees Executors Ltd v QBE Insurance (International) Ltd [2010] NZCA 608
and Commercial Metals Ltd v Wright [2015] NZCA 450.
6
Couch v Attorney-General [2008] NZSC 45, [2008], 3 NZLR 725.
 (3) the Court should be particularly slow to strike out a claim in any
developing area of the law, particularly where a duty of care is alleged
in a new situation;

(4) developments in negligence need to be based on proved rather than

hypothetical facts; and

(5) if a pleading may be saved by amendment, that amendment should be

allowed. 7

Counsel's submissions

Sky

[61] Ms O'Gorman emphasised that Sky's claim is not a claim for copyright
infringement per se, but a claim for misleading or deceptive representations under the
FTA (or representations that were likely to mislead or deceive). She submitted that
the success of the claim will depend upon whether or not the Court is satisfied that the
representations by the defendants that it is lawful to use the My Box service to access
and view copyright works (whether in the past or in the future) were likely to mislead
or deceive.

[62] There is no reason why a representation directed to a matter of law cannot

qualify as misleading or deceptive conduct under s 9 of the FTA 8 (although the
defendants' representations in this case were not "pure" statements of law in the
traditional sense – they did not purport to be legal advice, or refer to legal issues or
uncertainties, but simply and unequivocally presented My Box as legitimate and
legal). Ms O'Gorman submitted that such representations were untrue, as the use of
My Box involves unlawful and infringing "communication to the public" by the
defendants as vendors, and encourages unlawful and infringing "copying" by
purchasers, in breach of the Act.

7
Kupenga v Registrar-General of Lands HC Auckland A1523/84, 4 February 1986.
8
Referring to Fonterra Co-Operative Group Ltd v McIntyre & Williamson Partnership [2016]
NZCA 538, H G Beale (ed) Chitty on Contracts (32nd ed, Sweet & Maxwell, London, 2015) at
[7.016], and Inn Leisure Industries Pty Ltd v D F McCloy Ltd (No 1) (1991) 28 FCR 151 (FCA)
at 167.
[63] For any given programme Sky broadcasts, numerous copyright works are
likely to be involved, and an action under the Act for copyright infringement would
require the copyright owner and Sky (to the extent it may be an exclusive licensee of
the copyright works) to be parties to the proceeding. 9 This claim has been brought
under the FTA because Sky says that the misleading nature of the defendants' conduct
in promoting the My Box units transcends the issues that would arise in respect of any
particular copyright work. The representations relied upon by Sky concern all of the
content broadcast by it, both to date and into the future, whatever the content might
be.

[64] The legal question under s 9 of the FTA is whether or not the defendants'
conduct objectively had or has the capacity to mislead or deceive a hypothetical
reasonable person. 10 It is not necessary to prove that anyone was actually misled or
deceived. 11 Whether or not access to Sky's exclusive content was achieved via the
My Box Service in any particular instance is not a necessary element of the FTA claim.

[65] Nothing in the Act precludes Sky from suing under the FTA on what it
considers were misrepresentations by the defendants about the legality of the My Box
Service. A misrepresentation is actionable under the FTA without the need for a
separate claim under the Act, so long as the claim is consistent with, and does not
undermine, the policies of the copyright regime. 12 Ms O'Gorman also noted that
s 225(1)(a) of the Act provides that nothing in that Act affects any right or privilege of
any person under any other enactment.

[66] Ms O'Gorman submitted that it is not reasonably arguable for the defendants
that their My Box service is legal. She submitted that My Box has been guilty of
communicating copyright works to the public without the consent of the copyright
owners, in breach of ss 16(1)(f), 29 and 33 of the Act. Secondly, the use of the My Box
units involves unauthorised copying of copyright works, in breach of s 16(1)(a), 29
and 30 of the Act. Thirdly, the defendants have authorised other persons to do

9
Copyright Act 1994, s 124. There is an exception under s 124(3) for claims for interim relief.
10
Referring to Red Eagle Corp v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].
11
At [28].
12
Referring to World TV Ltd v Best TV Ltd (2005) 11 TCLR 247 at 54, Ortmann v United States of
America [2017] NZHC 189 at [106], and Intellectual Property Law, Lexis Nexis,
para [COP225.2].
restricted acts, in breach of ss 16(1)(i) and 29 of the Act, or they have procured
breaches of copyright by users of the My Box units, and are jointly and severally liable
with the infringers on that account (or for participating in a common design to
infringe 13).

[67] On the issue of alleged unlawful communication of copyright works to the

public, Ms O'Gorman relied on the decision of the Court of Justice of the European
Union (the CJEU) in Stichting Brein v Wullems 14 for the proposition that the sale of a
multimedia player with pre-installed add-ons that enables users to access copyright
content via streaming websites amounts to a "communication to the public" for the
purposes of the European Copyright Directive (the Copyright Directive). 15 The
relevant provisions of the Copyright Directive, including in particular Article 3, are
materially the same as the relevant provisions of the Act which are concerned with
communications to the public.

[68] The defendants have no reasonable argument that the use of the My Box units
does not entail unlawful copying. Under s 2 of the Act, copying, in relation to any
description of work, is defined as "reproducing, recording or storing the work in any
material form (including any digital format), in any medium, and by any means. And
in Munwha Broadcasting Corp v Young International 2009 Ltd, the High Court
accepted that "reproducing" in "any material form" occurs when content is streamed
to a viewer and when the viewer watches a streamed broadcast. 16

[69] Ms O'Gorman also relied on the decision of the High Court of England and
Wales in Football Association Premier League Ltd v British Telecommunications Plc.
In that case, the High Court found that, in the course of streaming copyright works,
users who access a stream cause their computer, mobile device, or set-top box to create
copies of the works in the memories of those devices. 17

13
Referring to Heinz Watties Ltd v Spantech Pty Ltd (2006) 8 NZBLC 101, 679; (2005) 11 TCLR
591 (CA) at [29], [30] and [35].
14
Stichting Brein v Wullems European Court of Justice C-527/15, EU:C:2017:300, 26 April 2017.
15
At [42].
16
Munwha Broadcasting Corp v Young International 2009 Ltd HC Auckland CIV-2010-404-203,
17 December 2010, at [68].
17
Football Association Premier League Ltd v British Telecommunications Plc [2017] EWHC 480
(Ch); [2017] ECC 17, at [31].
[70] To the extent that consumers infringe copyright in that way, the defendants
must also be severally liable, for procuring such infringements or participating in a
common design to infringe, or authorising copyright infringements (in contravention
of s 16(1)(i) and s 29 of the Act). In any event, they have been misleading consumers
and the wider public about the legality of the My Box units and the related My Box
service, and have made very targeted efforts to attract subscribers away from Sky to
My Box.

[71] On Mr Reddy's liability, Ms O'Gorman submitted that there is no reason why

an employee or director cannot be liable under s 9 of the FTA for misleading or
deceptive conduct. 18

[72] The declaration and injunction sought are appropriate, as is the award of
damages and enquiry into damages under r 16.2 of the High Court Rules.

The defendants

[73] Mr Hazel noted that Sky's claim under the FTA focuses on what the defendants
have said about the My Box units, rather than on what the defendants have done
(imported and sold the My Box units). Sky has also focused on what the My Box units
are, and what they, or the software in them, can do.

[74] Mr Hazel framed the issue for determination in the following terms:

In representing to consumers that My Box is not in breach of copyright laws

in enabling users of My Box units to access, receive and view [Sky's]
"Copyright Works", are the defendants in breach of ss 9, 10, 11 and 13 of the
FTA?

[75] Mr Hazel submitted that the issue is not clear cut for a number of reasons.

[76] First, at the times the representations were made, there was no New Zealand
case that had established that pre-loaded media boxes of the kind marketed by My Box
were clearly illegal under the Act. In the absence of such clear authority, there was
nothing to render the alleged misrepresentations "untrue". Sky itself admits that its

18
Referring to Body Corporate 202254 v Taylor [2008] NZCA 317, [2009] 2 NZLR 17 at [77].
claim relates to a very new and developing area of law in New Zealand, and such
claims are unsuitable for determination on a summary judgment application.

[77] Mr Hazel submitted that Sky's pleadings are not sufficiently clear and cogent.
For example, the only particularised claim of misleading or deceptive conduct refers
to s 9 of the FTA. Claims under ss 10, 11 and 13 of the FTA are not discretely pleaded,
with supporting particulars. The pleading is also deficient in that Sky has not
identified the copyright works it relies upon, pleaded infringement of copyright as a
separate cause of action against the defendants, or sought any finding of copyright
infringement (or a declaration of infringement). Sky does not plead how the
defendants, in marketing the My Box units, have allegedly jointly or severally
communicated, copied or authorised the copying of the alleged copyright works.

[78] Mr Hazel then pointed to various alleged deficiencies in Sky's evidence. First,
there is no proof of any copyright work capable of forming a foundation for its
infringement claims. There is no evidence of the date on which any copyright work is
said to have been created, nor any evidence that the copyright work relied on in respect
of the Cricket Match was made in New Zealand. Copies of the licence agreements
between Sky and New Zealand Cricket Inc and New Zealand Rugby Union
Incorporated have not been produced. Evidence given by Mr Van der Plank in his
reply affidavit relating to the Rugby Match was not strictly evidence in reply, and
should not be admitted.

[79] Further evidence is also needed on how the My Box units work, and how the
defendants, in marketing and selling the My Box units, are said to have communicated,
copied, or authorised any infringing acts under the Act. Further, if liability is found,
in considering whether an injunction against the sale of My Box units is appropriate,
there will need to be evidence directed to the question of whether it is inevitable that
My Box units will be used solely to watch allegedly infringing content, or whether a
more appropriate remedy would be an order that the software which enables the
alleged infringing activity be removed from the My Box units. Those are all questions
more appropriate for trial than determination on a summary judgment application.
[80] There is insufficient proof that Mr Reddy has been acting in trade. It is
My Box, not Mr Reddy, who imports and sells the My Box units. Further, neither
defendant provides any services – they are merely sellers of digital media hubs which
are capable of a variety of legitimate functions.

[81] Mr Hazel noted that the overseas decisions on which Ms O'Gorman placed
primary reliance, including Stichting Brein, were all cases on copyright infringement,
and not cases on fair trading practices. Further, not all of the decisions concerned
infringement of copyright by the use of digital media hubs/streaming devices. And
the case cited by Ms O'Gorman which seems closest to this case on the facts, Bell
Canada v 1326030 Ontario Inc dba iTVBox.net, was not a decision made following a
trial. Further, the decisions do not appear to have decided whether it is streaming
devices per se, or the software on those devices, which infringes. The cases referred
to by Sky highlight why the case is not appropriate for summary judgment.

[82] Mr Hazel challenged Sky's standing to sue, noting that Sky could not have been
an exclusive licensee. In relation to the Cricket Match, Sky was clearly only one of a
number of licensees. If Sky would not have standing to sue for copyright infringement
(as an exclusive licensee), it should not be allowed to achieve the same result through
"the backdoor" by way of claim under the FTA.

[83] Turning to the relief sought, Sky cannot be entitled to the injunction and the
amount of damages claimed. Sky has provided no evidence supporting its alleged
losses. There is no evidence to establish what percentage of My Box users were Sky
subscribers and cancelled their subscriptions prior to or on purchasing a My Box unit,
and no evidence of how many My Box users were not subscribers and would never
have subscribed to Sky. And the relief claimed must correlate with the alleged
contravening conduct, namely the making of allegedly misleading or deceptive
representations. It is not sufficient for the relief claimed to correlate with the ancillary
effects of the contravening conduct. 19

[84] Generally, Mr Hazel submitted that Sky's pleading is so deficient that it needs
to re-plead its claim. It is no longer relying on the single instance of alleged

19
Citing Sale 33 Ltd v MD Designer International Ltd [2015] NZHC 3029 at [26].
infringement of copyright identified in its statement of claim (relating to the Cricket
Match). Sky's pleadings do not reflect the case it now seeks to represent.

[85] Mr Hazel submitted that it is reasonably arguable for the defendants that the
representations were not in breach of the FTA, because they reflected the undecided
position of New Zealand copyright law at the times they were made. My Box is not a
law firm, and Mr Reddy is not a lawyer. They could not reasonably be expected to
have been up to date with Court decisions in New Zealand, let alone international
Court decisions, in a legal area which Sky admits is new and developing in
New Zealand.

[86] I record that Mr Hazel did not invoke or rely on any of the acts permitted in
relation to copyright works that are set out in Part 3 of the Act.

Discussion and conclusions on the summary judgment application

[87] It will be convenient to deal with the summary judgment application first: if it
succeeds, it must follow that the strike-out application fails.

Did the defendants represent that their My Box service is lawful, and that it is lawful
for users in New Zealand to use the My Box service to access, receive and view
Copyright Works?

[88] I am satisfied they did (or more accurately in the context of a summary
judgment application, that it is not reasonably arguable for the defendants that they
did not).

[89] The expression "Copyright Works" was defined in the statement of claim to
mean "various works" in respect of which Sky "holds the relevant exclusive rights
within New Zealand". Those "exclusive rights" were said to be the rights to copy the
works and communicate them to the public via pay television services and online
websites and apps operated by Sky.

[90] Mr Hazel was critical of the vagueness of the expression "Copyright Works"
as defined by Sky in its statement of claim, but I think the meaning is clear enough.
Sky is talking about all works it may copy or broadcast or communicate to the public
in New Zealand, either as copyright owner or as the holder of licences granted by the
relevant copyright owners, being licences that give Sky exclusive copying and
communication rights in New Zealand.

[91] First, there can be no doubt that My Box and Mr Reddy have represented that
My Box's own operations (including, in addition to selling the My Box units, the
provision of the instruction manual, the provision of the YouTube "demo" video on
how to set up and use the My Box units, and the provision of some level of after-sales
support — to that extent the provision of a "service" in addition to the supply of a
product) are lawful. That is abundantly clear from many of the pleaded representations
that are reproduced at [24] of this judgment (eg "My Box claims that it is completely
legal in its operations" (at [24](a) above), and "from a legal perspective, what we do
is completely within the law" (at [24](b) above)).

[92] The representation reproduced at [24](b) of this judgment was made by

Mr Reddy personally, and Mr Reddy went on to make it clear that buyers of My Box
units would be able to use their My Box units to access all Sky television channels –
that could be done, using the My Box units, through streams from the My Box website
and/or from social media platforms that could be found through My Box.

[93] My Box and Mr Reddy actively promoted the fact that all or nearly all of the
Sky channels, including broadcasts of live sports events, could be accessed through a
My Box unit (see the representations reproduced at [24] of this judgment). That was
clearly a major selling point for My Box – a My Box purchaser could get the Sky
channels for a one-off charge of $269.

[94] The "My Box Demo" video published on YouTube took the consumer through
the various steps required to operate a My Box unit. Once the user had connected his
or her My Box to the internet, the transcript read:

Everything that you need is programmed onto the My Box TV KODI app.
You do have other features here like Netflix and YouTube but everything
we've programmed stays on KODI. So you go onto My Box TV, press OK.

[95] The YouTube demo noted that most people My Box was selling to were
interested in the sports channels. It said that if you click on "sports" it has all your
Sky sports channels, 1, 2, 3, 4, 5 pretty much everything else you can think of in the
sport area will be in sports.

[96] The YouTube demo advised that "all your other basic Sky channels are on the
channels (including Animal Planet, Cartoon Network, History)". The demo also
referred to a useful search feature, and showed the viewer how to type in search terms
to see Sky-related stuff, including Sky movie channels.

[97] The demo video also advised consumers that a "movies and TV shows" feature
had been added. If a user went into "movies" he or she would have the option of
selecting a year, "most voted", and many other categories to find the movies he or she
was looking for. The demonstrator showed how a movie currently playing in the
cinemas could be accessed through the My Box unit, and said that My Box had been
able to find movies from the 1950's all the way up to recent releases.

[98] In summary, the YouTube demo said that a user could access Freeview, movies,
TV shows, international, and "all your Sky channels".

[99] The advertising on the My Box website that is reproduced at [24](h) nicely
illustrated the sales pitch:

(h) NEVER PAY FOR SKY AGAIN!!! Stream your favourite movies,
TV shows, and live SKY sporting events online without ever leaving
your home or paying another dollar again including FREEVIEW HD
on this box.

[100] The point about this sort of advertising, read with the defendants' statements to
the effect that the My Box business is 100 per cent lawful, is that a significant number
of My Box customers would inevitably understand that it was also perfectly lawful for
them to access the Sky channels, including the live sports events, using their My Box
units. Indeed, My Box and Mr Reddy went out of their way to reassure prospective
customers on the legality issue – see, for example, the statement posted on the My Box
Facebook page: 20

Please be assured, that [My Box] is 100% legal, and we have the support of
our legal team. [My Box] has not, and is not, breaking any copyright laws.

20
Reproduced at [24](n) of this judgment.
[101] The obvious implication of these statements was that, as My Box itself was
doing nothing illegal, purchasers of My Box units could be assured that it was
perfectly lawful for them to use their My Box units to access, receive and view
anything they could watch on a Sky TV channel.

[102] It is clear from the evidence that Mr Reddy has been the "face" of My Box, and
that he was the driving force behind its establishment. He was described in the
evidence variously as the "founder" and "owner" of My Box, and in media statements
he appears to have identified My Box with himself (for example, in an infonews.co.nz
article published on 3 March 2018, produced by Ms O'Gorman without objection at
the hearing, Mr Reddy was quoted as saying: "I'm a small company who is trying to
make TV affordable"). A number of My Box's promotional statements have been
expressly attributed to Mr Reddy, and I have no doubt that he would have approved
the various statements made on the My Box website, the My Box Facebook page, in
the YouTube "demo" video, and in the instruction manual. At the very least, Sky's
evidence of Mr Reddy's personal involvement in making the statements relied upon
by it was sufficient to call for some response by Mr Reddy if he was not involved. But
he did not give evidence disclaiming responsibility for the statements.

[103] In Gilmour v Decision Makers (Waikato) Ltd, Woolford J referred to the

decision of the Court of Appeal in Body Corporate 202254, 21 before stating: 22

Taylor makes it clear that an employee may be personally liable under [the
FTA] for statements they make in the course of employment and no
assumption of responsibility is required. Gloken Holdings Ltd v The CDE
Company Ltd [(HC) Hamilton, CP28195, 24 June 1997] is also authority for
the proposition that where a person is the manager or director and where the
breach of [the FTA] is theirs, they can be considered the "alter ego" of a
company and will be personally liable.

[104] In those circumstances, I accept Ms O'Gorman's submission, based on Body

Corporate 202254 v Taylor, and Gilmour, that both Mr Reddy and My Box are
responsible under s 9 of the FTA for anything in the statements relied upon by Sky that
were misleading or deceptive, or likely to mislead or deceive.

21
Body Corporate 202254 v Taylor, above n 18.
22
Gilmour v Decision Makers (Waikato) Ltd [2012] NZHC 298 at [87].
[105] For those reasons, the answer to the question posed by this subheading is "yes".

Do ss 9 and 10 of the FTA apply to misleading or deceptive statements about whether

an activity is legal?

[106] Sections 9 and 10 of the FTA provide:

9 Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or

deceptive or is likely to mislead or deceive.

10 Misleading conduct in relation to goods

No person shall, in trade, engage in conduct that is liable to mislead

the public as to the nature, manufacturing process, characteristics,
suitability for a purpose, or quantity of goods.

[107] As Ms O'Gorman noted in her submissions, the traditional view of the Courts
was that a "pure" statement of law cannot amount to a misrepresentation. However I
accept her submission, based on Fonterra Co-Operative Group Ltd v McIntyre &
Williamson Partnership, that the law has evolved substantially, and it is now more
accurate to say that a statement of law will amount to a misrepresentation unless, in
the circumstances, it would reasonably have appeared that the statement was put
forward as nothing more than an opinion on which it would not be reasonable to rely. 23

[108] The learned authors of Chitty submit that the distinction between statements of
law and statements of fact is no longer maintainable, and that even an incorrect
statement of an abstract proposition of law may amount to a misrepresentation unless
it is apparent that all that is being offered is an opinion without implication that the
speaker has reasonable grounds for that opinion. The learned authors submit that the
underlying principle is that even a statement as to the law may be a misrepresentation
if it was reasonable, in all the circumstances, for the representee to rely on it. 24 I agree
with that view.

[109] In this case, purchasers of My Box units would be spending a relatively modest
sum (a one-off payment of $269), and I do not think it would be reasonable to expect

23
Fonterra Co-Operative Group Ltd v McIntyre and Williamson Partnership [2016] NZCA 538 at
[175], referring to Chitty on Contracts, above n 8.
24
Chitty on Contracts, above n 8, at [7.016].
that many of them would obtain their own legal advice. Against that background, the
advice proffered by My Box through its website and Facebook page was unequivocal
and clearly intended to be relied upon.

[110] Statements that the activities of My Box are "completely legal", and "Please,
be assured, that [My Box] is 100% legal, and we have the support of our legal team.
[My Box] has not, and is not, breaking any copyright laws", were more than mere
abstract propositions of law. Prospective purchasers of My Box units were quite
clearly intended to rely on them. Further, the statement that "we have the support of
our legal team" quite clearly implied that My Box had reasonable grounds for the
opinion as to legality it asserted. Indeed, the references to "100%" legal, and having
the support of "our legal team", went further, implying that this was not an area where
legal minds might reasonably differ. The prospective purchaser was being "assured"
that there were no doubts over the legality of My Box's operations (and impliedly no
doubt over the lawfulness of consumers using their My Box units to access, receive,
and view any Sky channel they chose, that being a use expressly promoted by My Box
and Mr Reddy).

[111] Mr Hazel submitted that the law of New Zealand on relevant aspects of the Act
was and is uncertain, and that the defendants, not being lawyers, cannot be taken to
have been guaranteeing that it would not preclude My Box unit users from accessing
Sky content they would not otherwise have been able to access without paying a
subscription or other fee to Sky. But that submission is inconsistent with the use of
expressions like "100% legal", and "completely legal", in the advertising, especially
when those statements were said to have had "the support of our legal team".

[112] For those reasons, I conclude that the representations that I have found were
made by My Box and Mr Reddy (relating to the lawfulness of the My Box Service and
the lawfulness of the use of a My Box unit to access, receive and view "Copyright
Works"), were such as to render them both liable under ss 9 and 10 of the FTA, if and
to the extent the statements were misleading or deceptive, or were likely to mislead or
deceive (s 9), or were liable to mislead the public (s 10).
Are the operations of My Box lawful, as the defendants claim?

The users of My Box units

[113] I address first the issue of whether it is lawful for purchasers or other users of
My Box units to use the My Box units to access and view live broadcasts of sports
events broadcast by Sky, in respect of which Sky has exclusive New Zealand rights. I
start with the Cricket Match, because it was referred to in Sky's statement of claim and
in Mr Van der Plank's first affidavit, and it serves to illustrate the broader question of
the legality of users of My Box units accessing and viewing the live broadcasts.

[114] First, My Box and Mr Reddy advertised the Cricket Match, and clearly
encouraged users of My Box units to view the Cricket Match. 25

[115] Mr Van der Plank's evidence was that Sky had obtained a My Box unit, along
with its instructions manual. His evidence was that on 22 February 2017 Sky's lawyers
used the My Box unit to view a live stream of the Cricket Match. A "Sky Sports 2" (a
Sky UK channel) watermark was displayed on the top right hand corner of the screen.

[116] At the same time, Sky was broadcasting the Cricket Match on Sky's Sky Sport
channel, pursuant to its licence agreement dated 26 October 2015 with New Zealand
Cricket. Under that licence agreement, Sky was given the exclusive right in
New Zealand to transmit and/or authorise or otherwise cause to be transmitted
audio-visual footage programming featuring certain cricket matches, including the
Cricket Match. Sky's licence from New Zealand Cricket extended to television and
digital media, including the internet, IPTV (internet protocol television), and any other
non-television methods for distributing audio-visual content, whether live or delayed.
Mr Van der Plank's evidence was that New Zealand Cricket granted similar exclusive
rights to broadcasters in other countries to communicate match coverage to the public
in those countries. These overseas broadcasters ("offshore providers") were not
licensed to communicate match coverage to the public in New Zealand.

25
My Box Facebook page, reproduced at paragraph [24](k) of this judgment.
[117] In his affidavit in opposition, Mr Reddy took the point that Sky had not
disclosed its licensing arrangements with Sky UK. Mr Reddy said that he still did not
know the basis on which Sky could claim that My Box was breaching Sky's rights.

[118] Sky then provided an affidavit from Mr Crummy, of New Zealand Cricket,
essentially corroborating Mr Van der Plank's evidence about Sky's exclusive right to
broadcast the Cricket Match to a New Zealand audience. Mr Crummy confirmed that
New Zealand Cricket had given similar rights to offshore providers to transmit footage
of the same matches to the public in their countries. He confirmed that no offshore
provider, nor the defendants, had been licensed by New Zealand Cricket to
communicate the Cricket Match to the public in New Zealand.

[119] In a memorandum dated 2 October 2017, counsel for Sky advised that the
actions described by Mr Van der Plank with regard to accessing coverage of the
Cricket Match using a My Box unit, were undertaken by a law clerk employed by
Sky's solicitors. Initially, the defendants raised issues about the absence of any
evidence from the law clerk, and the propriety of Sky's solicitors continuing to act if
evidence from one of their employees would be required. But it is clear from the
defendants' own advertising that My Box users could access live coverage of the
Cricket Match, and in the end neither of those objections was pursued by the
defendants. Mr Hazel advised at the hearing that I could read the memorandum about
what the law clerk did and treat it as the equivalent of evidence for the purposes of the
summary judgment and strike-out applications. He did not pursue an objection to the
evidence on the grounds of hearsay.

[120] Mr Hazel was critical of the fact that Sky did not produce a copy of its
exclusive agreement with New Zealand Cricket, 26 and I agree that the precise nature
of Sky's rights (and those of New Zealand Cricket) is not entirely clear (for example,
as to whether Sky, as the broadcaster, remained the owner of copyright in the broadcast
of the Cricket Match, or whether that right had been assigned to New Zealand Cricket).
If Sky was only a licensee, and not the owner of the copyright in the broadcast, I accept
that the evidence shows that Sky would not have been an exclusive licensee (the

26
The agreement was said to be commercially sensitive.
offshore providers were also licensees, in their particular territories), and as a
non-exclusive licensee Sky would have had no standing to sue in a claim based on
copyright infringement. 27

[121] But I do not think that lack of clarity affects Sky's summary judgment
application. First, Sky is not suing for copyright infringement. Secondly, it is clear
from the evidence that (i) the broadcast of the Cricket Match constituted an original
copyright work under the Act, being a "communication work" as defined in s 2 of the
Act; (ii) someone, whether it was Sky or New Zealand Cricket, was the owner of the
copyright in that original copyright work; (iii) that "someone" did not authorise the
defendants or anyone other than Sky to communicate the work to the New Zealand
public; 28 and (iv) that "someone" did not authorise users of My Box units to reproduce
the broadcast in order to view it.

[122] I consider first the copyright status of the broadcast of the Cricket Match under
the Act. "Communication Work" is defined in s 2 of the Act to mean:

… A transmission of sounds, visual images, or other information, and includes

a broadcast or a cable programme.

(Emphasis added)

[123] The starting point on ownership of copyright, is that the person who is the
"author" of a work is the first owner of any copyright in that work. 29 The "author" of
a copyright work is the person who creates it, and in the case of a communication
work, that is the person who "makes the communication work". 30 The third step is to
determine who has "made" the communication work. That is dealt with by s 3 of the
Act, which provides:

3 Associated definitions for communication works

(1) References in this Act to a person making a communication work

are—

27
Under s 120(1) of the Copyright Act 1994, an infringement of copyright is actionable by the
copyright owner. The right to sue is also available to an exclusive licensee (except as against the
copyright owner) under s 123, but no similar right of action is available to a non-exclusive
licensee.
28
The defendants did not claim to have any such authorisation.
29
Copyright Act 1994, s 21(1).
30
Sections 5(1) and (2)(c).
 (a) to the person transmitting the communication work or making
it available by means of a communication technology, if that
person has responsibility to any extent for its contents; and

(b) any person who provides the contents of the work and who
makes with the person communicating the work the
arrangements necessary for its communication.

(2) For the purposes of this Act, in the case of communicating a work by
satellite transmission,—

(a) the place from which the work is communicated is the place
from which the signals carrying the work are transmitted to
the satellite; and

(b) the person communicating the work is the person who

transmits those signals to the satellite.

[124] On the face of it, it appears that Sky was probably the "maker" of the particular
communication work which constituted the broadcast of the Cricket Match, as the
person who transmitted the work (or made it available), and as a person who had some
responsibility for its contents (for example, selecting camera shots or angles). To the
extent the broadcast was communicated by satellite, I presume Sky would also have
transmitted the signals to the satellite. But for the purposes of this judgment I do not
think that detail matters. The point that is critical to the claim under the FTA is that
someone owned the copyright in the broadcast (and in any films, sound recordings, or
artistic works such as logos that were broadcast as part of the live coverage), and that
someone (or some people to the extent that a number of copyright owners may have
been concerned) clearly did not authorise My Box, Mr Reddy, or any of the individual
users of My Box units to do any acts with respect to the copyright works that are
exclusively reserved to the copyright owner by s 16 of the Act.

[125] The evidence sufficiently establishes that Sky UK covered the Cricket Match
live on its Sky 2 channel, and on the evidence of Mr Van der Plank and Mr Crummy,
Sky UK could only have done that as an offshore provider, with exclusive rights
limited to the United Kingdom (or possibly the United Kingdom plus other parts of
the world, but not including New Zealand). To provide the live coverage, Sky UK
must have taken live feed from Sky, 31 and re-broadcast to its own UK audience, in

31
Mr Van der Plank referred in his evidence to New Zealand Cricket authorising Sky and various
offshore providers to communicate (in their respective territories) "the Match Coverage". It was
accordance with its exclusive rights in that territory given to it by whoever owned (or
had the right to license) the relevant copyrights. Sky UK's rights could not have
extended to a New Zealand audience, as that would have defeated the New Zealand
exclusivity to which Sky was entitled (whether as the copyright owner of the broadcast
or under its licence agreement with New Zealand Cricket). On the same basis, Sky
(UK), or any other offshore provider, could not have had the licence to stream the
broadcast to a New Zealand audience. That too would have defeated the exclusive
New Zealand rights enjoyed by Sky.

[126] The fact that offshore providers such as Sky (UK) had no entitlement to stream
the broadcast (or re-broadcast) of the Cricket Match to New Zealand viewers means
that New Zealand users of My Box units had no right to access and view the streamed
broadcast on their My Box units. That is because the accessing and viewing of the
live coverage of the Cricket Match must have involved unlawful "copying" under the
Copyright Act. I set out below my route to that conclusion.

[127] Section 16 of the Act sets out a number of things with respect to a copyright
work that the copyright owner has the exclusive right to do. Under s 16, the copyright
owner has, among other rights, the exclusive right to copy the work, to communicate
it to the public, and to authorise any other person to do either of those things. 32

[128] "Copying" is defined in s 2 of the Act to include, in relation to any description

of copyright work (ie including a communication work), the following:

… Reproducing, recording, or storing the work in any material form

(including any digital format, in any medium and by any means).

[129] Under s 29(1) of the Act, copyright in a work is infringed by a person who,
other than pursuant to a copyright licence, does any "restricted act". Copying a
copyright work is a restricted act in relation to every description of copyright work,
including a communication work. 33 Similarly, communicating a copyright work to the

not suggested in the evidence that New Zealand Cricket authorised different broadcasters to attend
the Cricket Match and provide different broadcasts.
32
Copyright Right Act 1994, s 16(1)(a) (as to copying), (f) (as to communicating the work to the
public), and (i) (as to authorising another person to do either of those things).
33
Section 33.
public is a restricted act in relation to every description of copyright work, including
a communication work. 34

[130] The Act does contain a provision permitting the "transient" reproduction of a
copyright work. Section 43A of the Act provides:

43A Transient reproduction of work

A reproduction of a work does not infringe copyright in the work if

the reproduction—

(a) is transient or incidental; and

(b) is an integral and essential part of a technological process

for—

(i) making or receiving a communication that does not

infringe copyright; or

(ii) enabling the lawful use of, or lawful dealing in, the
work; and

(c) has no independent economic significance.

[131] It is clear that when a broadcast is streamed to a media hub, or set-top box such
as the My Box units, the process involves reproducing the video data constituting the
broadcast. That is acknowledged by the defendants in this case, and it has been noted
in a number of the authorities, including the judgment of Potter J in Munwha
Broadcasting Corp v Young International 2009 Ltd. 35 That was a case in which the
defendant received certain broadcasts in Korea, and then (without the consent of the
Korean copyright owners) sent the broadcast to its New Zealand customers via the
internet. The defendant used a device in Korea to receive and digitise the broadcasts
in that country, and its customers in New Zealand had a receiving device that enabled
them to view the contents on their television sets. As in this case, the broadcasts could
be viewed in real time. Potter J accepted evidence that "reproducing" in "any material
form" in terms of the definition of copying occurred: 36

34
Section 33.
35
Munwha Broadcasting Corp v Young International 2009 Ltd HC Auckland CIV-2010-404-00203,
17 December 2010.
36
At [68] and [69].
 • upon the reproduction or copying of the work on a television monitor
at the point in time when the viewer watched the broadcast on his or
her domestic television set in New Zealand; and

• when the device on the viewer's television set received and converted
the digitised signal into a viewable form. Her Honour noted that, while
that reproduction and retention of data may be transient, it nevertheless
constituted copying in terms of the definition of copying in s 2.

[132] The fact that copying is involved in the course of streaming copyright works
was also noted by Arnold J in Football Association Premier League Ltd v British
Communications Plc, where His Honour said: 37

In the course of streaming the Works, users who access a stream cause their
computer, mobile device or set-top box to create copies of the Works in the
memory of those devices. In some cases, a substantial part of a Work may be
copied in a single frame (for example a logo). In the case of films of matches,
copying a substantial part is very likely to occur if users stream footage of any
appreciable segment of a match … .

[133] While there was no evidence given in this case describing the precise nature of
the copying which occurs when a My Box unit receives a digitised broadcast or movie
or other copyright work over the internet, that is not a barrier to Sky's claims. The
defendants accepted that such copying (reproduction) occurs, when they admitted in
their statement of defence the following allegations in Sky's statement of claim:

11. …

(b) The pre-loaded software [on the My Box unit] searches the
internet and locates free video streams … that correspond
with the user's menu selection or search query. That video
data is then transmitted over the internet and reproduced for
viewing on a television or computer screen or other device
linked to the My Box unit. [Emphasis added]

[134] Inevitably, the copying in most if not all cases would involve the reproduction
of a substantial part of the relevant copyright work or works, 38 as the whole point of

37
Football Association Premier League Ltd v British Communications Plc [2017] EWHC 480 (Ch),
[2017] ECC 17 at [31].
38
A requirement of infringement under s 29(2)(a) of the Act.
the receipt and accessing of a given stream is to enable the My Box unit user to view
a particular broadcast or programme he or she has specifically chosen.

[135] The "transient reproduction" right in s 43A was held not to apply in Munwha,
and I am satisfied that it does not apply here either. It may be that the copying that
occurs when a viewer accesses a broadcast or movie on his or her My Box unit can be
described as "transient or incidental", but it is clear that receiving the broadcast of the
Cricket Match did not qualify as the receipt of "a communication that does not infringe
copyright", and the reproduction of the broadcast at the point of viewing in
New Zealand was not an integral and essential part of a technological process for
enabling the "lawful" use of the communication work. Only the owner of copyright
in the broadcast could authorise, or license, the re-broadcasting, or "on-streaming" of
the broadcast, and if licences were given by the copyright owner in this case to
re-broadcast or "on-stream" on a territorial basis, the licensee (being an offshore
provider) could have had no right or entitlement to communicate the work beyond its
licensed territory, or to authorise the further communication of the work to the public
in some other territory by someone else. The reproduction (copying) of the
communication work by My Box unit users in New Zealand could not have been a
"lawful use" of the communication work in those circumstances.

[136] I do not think the recent decision of the Court of Appeal in Ortmann v United
States of America 39 alters the view I have expressed above on copyright infringement
by copying. The Court noted that reproduction of a copyright protected work in any
material form amounts to primary infringement unless authorised by the copyright
owner, 40 and went on to note: 41

… digital copyright works are identifiable, can be possessed exclusively and

are capable of transmission. Those qualities are at the heart of what copyright
protects. (Emphasis added).

[137] The Court further noted that the "means by which copying occurred was not of
critical concern, so long as there had been copying". 42

39
Ortmann v United States of America [2015] NZCA 233.
40
At [146].
41
At [148].
42
At [150].
[138] I add that there is no evidence that Sky UK has acted in breach of any licence
it may have held as an offshore provider. The greater likelihood is that, as occurred in
Munwha, the Sky 2 live broadcast in the UK has been received in the UK (whether by
My Box or by some "pirate" source) and contemporaneously streamed to the My Box
users in New Zealand.

[139] Mr Van der Plank gave evidence in his reply affidavit about the ability of
My Box users to access the Rugby Test through their My Box units. Mr Hazel
objected to this evidence, not on the grounds of hearsay (Mr Van der Plank accessed
the Rugby Test himself using a My Box unit), but on the basis that the evidence was
not strictly in reply, and nor was it updating evidence intended to correct a defect or
confirm or supplement with greater particulars a state of affairs which existed and
which had been referred to in Mr Van der Plank's earlier affidavit. Mr Hazel referred
in support to the judgment of Master Gendall in Garnham v Commissioner of Inland
Revenue. 43

[140] I do not accept Mr Hazel's submissions on the admissibility issue. First,

Mr Reddy had stated in his evidence in opposition:

23. We have never stated that consumers can get Sky NZ content on a
My Box unit.

24. We have not tried to find a way to offer NZ Sky content on My Box
units.

[141] I think Sky was entitled to reply to that evidence, including by the production
of further evidence showing that My Box had apparently "found a way" to offer
New Zealand Sky content (the original broadcast of the Rugby Test) on its My Box
units. Secondly, the Rugby Test did not occur until after Mr Van der Plank swore his
first affidavit, so the evidence about it could not have been produced earlier. Thirdly,
Mr Reddy did take the opportunity to file a further affidavit, which was not objected
to by Sky. Fourthly, it is not at all clear to me that Garnham supports Mr Hazel's
objection. It is not clear that the challenged evidence in that case was tendered in reply
— rather, it seems to have been updating evidence tendered after the close of pleadings
date (and presumably well after completion of the earlier round of evidence, including

43
Garnham v Commissioner of Inland Revenue HC Wellington CIV-2001-485-811, 23 March 2004.
any reply affidavits). For those reasons I do not accept Mr Hazel's objection, and I
will treat the reply evidence relating to the Rugby Test as admissible.

[142] I take the same approach to the Rugby Test as I do to the Cricket Match, or
indeed to any broadcast of a live sporting or other event made by Sky, in respect of
which copying or other restricted copyright acts have not been authorised by Sky as
the broadcaster, and/or by the owners of any other copyrights in the broadcast or in
works which may be "embedded" in the broadcast. To the extent that access to such
live broadcasts is only available to those who have paid a subscription or fee, the clear
implication is that anyone who has not paid the subscription or fee has no licence to
reproduce the copyright works. I am satisfied that there will be a copyright
infringement (by copying) each time a user of a My Box unit accesses and views one
of Sky's (copyright-protected) live broadcasts.

[143] I accept Ms O'Gorman's submission that (at least to the extent the unlawfulness
relied on by Sky involves copyright infringement by My Box users, by unauthorised
copying of copyright works) this is not a copyright infringement case, but effectively
an unfair trading claim, built on misleading statements made by the defendants about
the legality of the use of the My Box units. A business competitor is entitled to take
action where an infringement of the FTA has occurred, both for its own benefit and in
the wider interests of the public. 44

[144] In those circumstances I also accept Ms O'Gorman's submission that there was
no need for Sky to plead and prove, in its case based on copyright infringement by
users of My box units, the existence or breach of any particular copyright. The critical
points relevant to the FTA analysis of this part of Sky's argument are:

(a) someone (probably different people for different copyright works)

owns copyright in the majority of programmes available on Sky
channels;

44
Luxotica Retail New Zealand Ltd v Specsavers New Zealand Ltd [2012] NZCA 357 at [39], citing
Taylor Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 (CA) at 39.
 (b) (except in respect of any free-to-air works) those copyright owners
have not authorised users of My Box units to reproduce (copy) the
copyright works when they access broadcasts or programmes using
their My Box units; and

(c) the copying of the works that occurs when a user accesses and views a
broadcast, movie, or other copyright work on his or her My Box unit,
without any licence from the copyright owner, must therefore constitute
the unauthorised performance of a "restricted act", resulting in the user
infringing the rights of the owner or owners of the copyright or
copyrights in the broadcast, movie, or other copyright work (whoever
the copyright owners might be).

[145] Had this been a straightforward copyright infringement claim I may have
accepted Mr Hazel's submission that Sky's summary judgment application could not
succeed. Such matters as the failure to identify and prove the existence and/or
ownership of copyright in specific original works, specific breaches of the copyrights
in those works, and (of particular importance) Sky's standing to sue (to the extent it
has not shown it is the copyright owner or an exclusive licensee), might have been
fatal to Sky's application. But this is not a copyright infringement case, at least to the
extent Sky is saying that using a My Box unit to view much of the material advertised
by My Box will necessarily involve copyright infringement by the user, and that the
advertising has been misleading or deceptive in conveying a contrary impression. The
authorities on which Mr Hazel relied, including Henkel KGAA v Holdfast
New Zealand Ltd, 45 directed to the need for precise pleadings and evidence in a
copyright infringement case, do not in my view assist the defendants on this part of
the case. The mischief here lies in what the defendants have represented to the
New Zealand public about the legality of their use of the My Box units, and in
particular the implications that if they use their My Box units to stream live sporting
and other events that would previously have been accessible only through Sky, they
will be doing so lawfully, and not exposing themselves to liability to the owners of
relevant copyrights (whoever those copyright owners might be).

45
Henkel KGAA v Holdfast New Zealand Ltd [2006] NZSC 102; [2007] 1 NZLR 577.
[146] I do not think it avails the defendants that the law of copyright in this area
might not have been perfectly clear when the defendants engaged in the misleading or
deceptive advertising. Their statements did not draw attention to any doubt about the
law, or to the risk that consumers would be potentially exposed to copyright
infringement claims by affected copyright owners – users and potential users of
My Box units were assured in unequivocal terms that My Box's operations were 100%
legal, and that clearly implied that the use of My Box units to view live sport and other
copyright-protected programmes broadcast by Sky was also "100% legal".

[147] I have focused in this part of my judgment primarily on the defendants'

statements with regard to a user's ability to lawfully access New Zealand Sky channels,
because Sky's claim is concerned with that access. I add that the defendants'
representations in their advertisements that a consumer can stream "any film", located
through the Kodi software in the My Box, must also raise issues of a likelihood of
misleading or deception under the FTA. In any situation where the film was not free
to air, and the copying required to view the film through a My Box unit was
accordingly not authorised by the copyright owner (at least without payment of the
appropriate subscription or fee), it seems likely that a My Box user would have to
access pirate copies of movies, and thus infringe the copyrights in the film by unlawful
copying.

[148] I conclude for all those reasons that Sky has shown that the defendants do not
have any reasonably arguable defence on this part of the case — it was and is not
lawful for consumers to use My Box units to receive, access and view through their
My Box units programmes or coverage that Sky broadcasts or otherwise
communicates to the public in New Zealand under its exclusive rights in this country
without paying the appropriate subscriptions or other fees to Sky.

[149] Mr Hazel submitted that the case is not suitable for summary judgment,
because the issues are not clear-cut, and the case relates to a developing area of law in
New Zealand which would be better addressed with the benefit of all of the evidence
which will be available at trial. He notes that the overseas decisions on which Sky
relies are all copyright infringement cases, not cases under consumer protection
legislation such as the FTA. He also notes that one of the cases 46 was not decided after
trial but only on an interlocutory injunction application.

[150] I do not consider those arguments assist the defendants on this part of the case.
First, there is no doubt about the representations made by the defendants — they are
admitted (save as to the question of responsibility for the statements as between the
defendants, a matter on which I have concluded the defendants do not have a
reasonable argument — both were responsible). Secondly, I do not think there can be
any reasonable argument that someone owns the copyright(s) in the majority of the
relevant sports events, movies or TV shows available on Sky that My Box unit users
could only otherwise obtain by paying a Sky subscription, and that "someone" has not
authorised the copying that must occur when a My Box unit user streams that content
to his or her My Box unit.

[151] I think all of those matters are clear enough on the evidence presently before
the Court.

[152] I turn now to consider Sky's application based on alleged unlawfulness of the
defendants' activities.

Have the defendants' activities been lawful?

[153] Sky says that, in its selling and marketing of the My Box units, the defendants
were themselves unlawfully infringing copyright by communicating copyright works
to the public (or authorising My Box unit users to do so).

[154] Under s 16(1)(f) of the Act, it is the owner of the copyright in a relevant work
who has the exclusive right to communicate the work to the public. Communicating
a work to the public is a restricted act in relation to every description of copyright
work, 47 and anyone who does any restricted act other than pursuant to a copyright
licence from the copyright owner, infringes the copyright. 48

46
Bell Canada v 1326030 Ontario Inc dba ITVBox.net 2016 FC 61.
47
Copyright Act 1994, s 33.
48
Section 29(1).
[155] Under s 29(2), references in the Act to the doing of a restricted act are to the
doing of that act in relation to the work as a whole or any substantial part of it, and
whether "directly or indirectly".

[156] In this case, Sky relies primarily on the 2017 decision of the Court of Justice
of the European Union (the CJEU) in Stichting Brein v Wullems. 49 The case arose
from a request for a preliminary ruling by the District Court of the Central Netherlands.

[157] Mr Wullems was using a number of internet sites to sell various models of
multimedia player (a device, similar to the My Box units, which acts as a medium
between a source of visual and/or sound data and a television screen).

[158] Mr Wullems installed an open source software on his multimedia players,

which made it possible to play files through a user-friendly interface via structured
menus, and integrated into it, without alteration, add-ons available on the internet,
created by third parties. The add-ons contained links which, when activated by the
remote control of the multimedia player, connected to streaming websites operated by
third parties, some of which gave access to digital content with the authorisation of
the copyright holders, whilst others gave access to such content without their consent.
The function of the add-ons was to retrieve the desired content from streaming
websites and make it start playing, with a simple click, on the multimedia player
connected to a television screen.

[159] Mr Wullems advertised his multimedia player, stating that it made it possible
to watch on a television screen, freely and easily, audio visual material available on
the internet without the consent of the copyright holders.

[160] Stichting Brein is a Netherlands foundation concerned with the protection of

the interests of copyright holders. It contended that, in marketing and selling his
multimedia player, Mr Wullems made a "communication to the public" in breach of
Articles 3 and 5 of the European Copyright Directive (the Directive), 50 as transposed
into the Netherlands law.

49
Stichting Brein v Wullems, above n 14.
50
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the
harmonisation of certain aspects of copyright and related rights in the information society.
[161] Article 3 of the Directive is entitled "Right of communication to the public of
works and right of making available to the public other subject-matter". Article 3(1)
states:

1. Member States shall provide authors with the exclusive right to

authorise or prohibit any communication to the public of their works,
by wire or wireless means, including the making available to the
public of their works in such a way that members of the public may
access them from a place and at a time individually chosen by them.

[162] Among the questions referred to the CJEU by the Central Netherlands District
Court were the following:

(1) Must Article 3(1) of [the Directive] be interpreted as meaning that

there is "a communication to the public" within the meaning of that
provision, when someone sells a product (multimedia player) in which
he has installed add-ons containing hyperlinks to websites to which
copyright-protected works, such as films, series and live broadcasts
are made directly accessible, without the authorisation of the right
holders?

(2) Does it make any difference.

– whether the add-ons containing hyperlinks to websites on which

copyright-protected works are made directly accessible without the
authorisation of the right holders are freely available and can also be
installed in the multimedia player by the users themselves?

[163] The CJEU noted that Article 3(1) does not define the concept of
"communication to the public". The Article's meaning accordingly had to be
determined in the light of the objectives pursued by the Directive, and the context in
which the provision was to be interpreted. The CJEU noted that one of the objects of
the Directive is to establish a high level of protection for authors, allowing them to
obtain an appropriate award for the use of their works, including on the occasions of
communication to the public. The CJEU considered that it followed that
"communication to the public" had to be interpreted broadly.

[164] The CJEU further noted that the concept of "communication to the public"
involves first an "act of communication" of the work, and secondly the communication
of that work to a "public". It considered that there was an act of communication by
someone in the position of Mr Wullems, when he intervened, in full knowledge of the
consequences of his action, to give access to a protected work to his customers, in
circumstances where, in the absence of that intervention, his customers would not, in
principle, be able to enjoy the broadcast work. On the concept of a "public", it noted
that the concept refers to an indeterminate number of potential viewers, but implies a
fairly large number of people. It referred to a settled line of caselaw that established
that, to be categorised as a "communication to the public", a protected work must be
communicated using specific technical means, different from those previously used,
or failing that, to a "new public"; that is to say, to a public that was not already taken
into account by the copyright holders when they authorised the initial communication
of their work to the public.

[165] The CJEU repeated its view stated in earlier cases that the profit-making nature
of a communication, within the meaning of Article 3(1), is not irrelevant. It considered
that the case before it did not concern the mere provision of physical facilities for
enabling or making a communication (one of the arguments the defendants mounted
in this case). Mr Wullems' intervention enabled a direct link to be established between
websites broadcasting counterfeit works and purchasers of the multimedia player,
without which the purchasers would find it difficult to benefit from those protected
works. This was quite different from the mere provision of physical facilities. The
streaming websites at issue were not readily identifiable by the public, and the majority
of them changed frequently. The provision of Mr Wullems' multimedia player
enabled, in view of the add-ons pre-installed on it, access via structured menus to links
that those add-ons which (when activated by the remote control of the multimedia
player) offered its users direct access to protected works, without the consent of the
copyright holders. The CJEU concluded that was an act of communication within the
meaning of Article 3(1). 51

[166] The CJEU also concluded that Mr Wullems' activities would involve the
communication of protected copyright works to a "new public" – ie a public not taken
into account by the copyright holders when they authorised the initial communication;

51
Stichting Brein v Wullems, above n 14, at [41] and [42].
every act of communication of a work to the public must be authorised by the
copyright holder. 52

[167] The CJEU set out its conclusions on the points with which I am presently
concerned, as follows:

50 In the present case, it is common ground that the sale of the

[multimedia player] was made in full knowledge of the fact that the
add-ons containing hyperlinks pre-installed on that player gave access
to works published illegally on the internet. … the advertising of that
multimedia player specifically stated that it made it possible, in
particular, to watch on a television screen, freely and easily,
audiovisual material available on the internet without the consent of
the copyright holders.

51 In addition, it cannot be disputed that the multimedia player is

supplied with a view to making a profit, the price for the multimedia
player being paid in particular to obtain direct access to protected
works available on streaming websites without the consent of the
copyright holders. … the main attraction of such a multimedia player
for potential purchasers lies precisely in the fact that add-ons are
pre-installed on it which enable users to gain access to sites on which
copyright-protected films are made available without the consent of
the copyright holders.

52 Therefore, it is necessary to hold that the sale of such a multimedia

player constitutes a 'communication to the public', within the meaning
of Article 3(1) of Directive 2001/29.

53 In the light of the foregoing considerations, the answer to the first and
second questions referred is that the concept of 'communication to the
public', within the meaning of Article 3(1) of Directive 2001/29, must
be interpreted as covering the sale of a multimedia player, such as that
at issue in the main proceedings, on which there are pre-installed
add-ons, available on the internet, containing hyperlinks to
websites — that are freely accessible to the public — on which
copyright-protected films are made available without the consent of
the copyright holders.

[168] Ms O'Gorman also referred to the judgment of Arnold J in Football

Association Premier League Ltd v British Communications Plc, in support of her
argument that the defendants' activities have constituted communications to the
public. 53 The claimant (FAPL) owned the copyright in films comprising television
footage of all Premier League matches, and in artistic works which appeared within
that footage. The defendants were the six main retail internet service providers (ISPs)

52
At [47].
53
Football Association Premier League Ltd v British Communications Plc, above n 36.
in the UK, and they were licenced to transmit the footage to consumers who purchased
subscriptions to watch it. However, streaming servers were making live footage
available to a large number of consumers who were connecting directly to the servers
via set-top boxes and mobile devices rather than paying for subscriptions. FAPL
sought an injunction against the defendants under the Copyright, Designs and Patents
Act 1988 (UK), which implemented relevant parts of the Directive. The injunction
sought would require the defendants to take measures to block, or at least impede,
access by their customers to streaming servers which delivered infringing live streams
of Premier League footage to UK consumers.

[169] Arnold J considered that operators of the servers which stream the FAPL
broadcasts did communicate those works to the public. First, His Honour considered
that the streaming involved an act of communication by electronic transmission to
each user who accessed a streaming server during a relevant match period. Secondly,
the operators of the servers committed that act of communication because they
intervened deliberately, and in full knowledge of the consequences of their actions, to
give access to the Works in circumstances where the users would not in principle be
able to enjoy the Works without that intervention. Thirdly, the works were capable of
being viewed by an indeterminate number of potential viewers, and were in fact
viewed by a large number of people. Fourthly, insofar as the streams were taken from
a source which was originally delivered by cable or satellite broadcast, streaming was
a different technical means which required separate authorisation from the rightholder.
FAPL had not authorised any of the operators of the target servers, and nor had Sky
(UK) or BT. Fifthly, the class of persons to whom the works were communicated was
a "new public", not already taken into account by FAPL (or Sky (UK) or BT) when
they authorised the initial communication to the public of their works in the form of
broadcasts and specific transmissions to authorised users of paid streaming services.
Streaming of the broadcasters' transmissions would naturally be prohibited by their
terms of use, and would require circumvention of the measures used to protect content
delivered via these means (for example, conditional access, encryption, and user
names and passwords), which together restrict access to paying customers. Generally
speaking, the operators of the servers were not merely linking to freely available
sources of Premier League footage. Even if in some cases they did, the evidence
indicated that they did so for profit, frequently in the form of advertising revenue, and
thus were to be presumed to have the requisite knowledge for the communication to
be to a new public.

[170] As noted above, 54 the position in New Zealand is that communicating a

copyright work to the public is a right that is reserved to the copyright owner by s 16
of the Act. Communicating the work to the public is a "restricted act" under s 33 of
the Act, and if the whole or a substantial part of the work is communicated, without
the licence of the copyright holder, and whether "directly or indirectly", the
communication will be an infringement of copyright. 55

[171] Those provisions must be read with the definition of "communicate" in s 2 of

the Act, which reads:

communicate means to transmit or make available by means of a

communication technology, including by means of a telecommunications
system or electronic retrieval system, and communication has a
corresponding meaning

[172] As with Article 3(1) of the Directive, it will be seen that communicating a
copyright work under the Act involves the concept of making the work "available".
Under the Act, this must be "by means of a communication technology, including by
means of a telecommunications system or electronic retrieval system".
"Telecommunications system" is in turn defined in s 2 of the Act as a "system for
conveying visual images, sounds, or other information by electronic means". The Act
does not contain a definition of "electronic retrieval system".

[173] In Munwha, it was not disputed that the TV system used to rebroadcast the
Korean broadcasts to New Zealand involved "communicating" the broadcasts to
Young's New Zealand customers. The issue there was whether the relevant
communications were "to the public", and thus constituted copyright infringements
under ss 16(1)(f), 33, and 29 of the Act. The defendants submitted they were not,
arguing that the "one-to-one" communication they facilitated was not a
communication "to the public", and was therefore not a restricted act under s 16(1)(f).

54
[154] of this judgment.
55
Copyright Act 1994, s 29(1) and (2).
They said their system simply offered their New Zealand customers a more convenient
way of receiving the Korean cable feed.

[174] The plaintiffs contended that because the relevant works (broadcasts) were
intended for "reception by members of the public" 56 (because the broadcast in Korea
was intended for anyone who wished to receive it, on payment of a licence fee in the
case of paid television broadcasts), it did not matter whether the communication of the
broadcast in New Zealand was to "the public" or to a single person. The relevance of
the words "to the public" in s 16(1)(f) was only to the nature of the copyright work
itself, namely a communication work which was intended for reception by members
of the public. The copyright work was (by its very nature) a work intended for
reception by members of the public, and the restrictive acts in relation to it were
engaged.

[175] Potter J found the plaintiffs' arguments persuasive, although not without
difficulty. Her Honour said: 57

[104] The competing contentions of the parties raise difficult issues of

statutory interpretation. However, I find the plaintiffs' submissions on the
interpretation of the relevant provisions of the Act to be persuasive, though
not without difficulty. If s 16(1)(f) were interpreted to exclude from the
restricted act of communicating, any and all communications which are
one-to-one (and arguably one-to-more-than-one, short of "to the public"
generally), the property right of the copyright owner under s 14 could be
rendered nugatory or at least seriously compromised and undermined. I do
not consider this can be the intent and purpose of the legislation.

[176] Her Honour did not have to finally determine the question whether a
"one-to-one" communication of a broadcast protected by copyright was caught under
s 16(1)(f) as a "communication to the public", and she expressly refrained from so
doing. 58 Also, the defendants' activities in Munwha appear to have been an essential
part of the "re-broadcasts", or communication of the Korean broadcasts to
New Zealand viewers. The case did not appear to have raised directly the argument
run for the defendants in this case, namely that all that they have done is provide a

56
An element of the definition of "communication work" in s 2 of the Act.
57
Munwha Broadcasting Corp v Young International 2009 Ltd, above n 34.
58
At [106].
"media hub" (a product which in itself is perfectly lawful), and they cannot be held
responsible if their customers elect to use the media hub for unlawful activities.

[177] In the end, it seems to me that the legal questions on the "communication to
the public" issue are whether the defendants have, indirectly, "made available" to
purchasers of My Box units, by means of a telecommunications system or an
electronic retrieval system, communication works or other original copyright works,
without the licence of the copyright owners. If they have, there will be a question of
whether that indirect "making available" has been to a "public" in New Zealand,
sufficient to breach the copyright owners' exclusive rights under s 16(1)(f).

[178] First, it seems to me that the My Box units, preloaded with the Kodi software
and any "add-ons", must constitute an "electronic retrieval system" for the purposes
of the definition of "communicate" in the Act. The expression "electronic retrieval
system" appears to be the counterpart of a "telecommunications system", which means
a system for conveying visual images, sounds or other information by electronic
means. Logically, the apparatus for receiving the visual images, sounds or other
information conveyed by electronic means would be described as an "electronic
retrieval system", and I think that is the meaning that was intended here. In my view
it is clear that the preloaded My Box units do operate as "electronic retrieval systems"
in that sense. The question, then, is whether, in its selling and marketing of the
My Box units, My Box has been, directly or indirectly, "making available"
communication works or other original copyright works, without the licence of the
copyright owners, to a relevant "public" in New Zealand.

[179] In both Stichting Brein and Football Association Premier League Ltd the
Courts considered that there would be a relevant "communication" when a person
intervenes, in full knowledge of the consequences of his or her action, to give access
to a protected work to his or her customers, in circumstances where, in the absence of
the intervention, the customers would not, in principle, be able to enjoy the broadcast
work. 59

59
See paragraphs [154] and [159] of this judgment.
[180] In this case, I consider it is clear, and beyond reasonable argument for the
defendants, that My Box has deliberately intervened, with full knowledge of the
consequences of its actions, to give its users access to protected copyright works which
they would not otherwise be able to readily access. The My Box instruction manual,
which set out three steps for the operation of the My Box unit, instructed the user (as
the third and last step) to "select KODI", and the evidence is clear that the Kodi
software is capable of searching the internet and locating video streams that
correspond with the user's menu selection or search query. The advertising
representations set out at paragraph [24] of this judgment make it clear that the
defendants were telling their users and prospective users that they could use their
My Box units to get "everything live on Sky NZ", and that they could "stream their
favourite movies, TV shows and live SKY sporting events online". 60

[181] The evidence, and in particular the YouTube demo video, makes it clear that
My Box was marketing a product with full search functions, so that a user of a My Box
unit could easily type in search terms for different categories of broadcast or
programme, and readily be taken to a website from which the product sought would
be streamed. It does not matter that the defendants may not have personally installed
the Kodi software or the add-ons which have enabled users of My Box units to access
Sky broadcasts or programmes that would otherwise not have been available to them.
Nor does it matter that that software or those add-ons might be freely available on the
internet. I accept Ms O'Gorman's submission that the situation is no different in
relevant respects from the multimedia players marketed by Mr Wullems in Stichting
Brein — the software installed on the My Box units has made it possible to play files
through a user-friendly interface via structured menus, and the function of the added
software made available by My Box has enabled the user to retrieve the desired
content from streaming websites and make it start playing, with a simple click, on the
My Box unit connected to a television screen.

[182] There can be no doubt that the defendants knew that in selling and marketing
the My Box units as they did, they would be providing access for their customers to
protected copyright works, including Sky broadcasts of live sporting and other events,

60
Above at [24](f) and (h).
in circumstances where, in the absence of that intervention, My Box's customers
would not be able to easily access and enjoy those works. I consider the situation is
no different in that respect from that in Stichting Brein, and that what My Box has
been doing has been far more than the mere provision of physical facilities (a "media
hub"). The structured menus which have clearly been made available through the
add-ons supplied with the My Box units have made available to users programmes
which they would otherwise find it difficult (if not impossible) to find.

[183] The CJEU in Stichting Brein considered that a defendant's profit-motive will
also be relevant to whether or not there has been a "communication". In this case, the
profit-making nature of My Box's activities is clear.

[184] I think the requirement of communicating to "the public" in this case is also
clearly met, regardless of whether "the public" is required to consist of more than a
single person for the purposes of s 16(1)(f) of the Act (the issue raised but not finally
determined by Potter J in Munwha). My Box's activities have made available
protected works to a new public (users of My Box units in New Zealand), being a
public not taken into account by relevant copyright holders when they authorised the
initial communications of their works.

[185] At least on the issue of liability, as opposed to remedies, I cannot accept

Mr Hazel's submissions based on alleged deficiencies in Sky's pleading and proof of
its case, including his submission that there is an absence of sufficient pleading and
proof of the existence and ownership of relevant copyrights, infringement of those
copyrights, and clear evidence showing that Sky has standing to sue. I have addressed
those submissions above in respect of Sky's arguments based on unlawful copying by
My Box unit users, and I think the same answers follow here. Sky is not suing for
copyright infringement, so it is not immediately concerned with the particular standing
requirements of the Act. For the same reason, detailed pleadings of the precise
copyright works relied upon, and the precise detail of the alleged infringements, was
not necessary. Sky's case is that, regardless of who might be the owners of the relevant
copyrights, My Box's activities must inevitably involve substantial copyright
infringements and, to the extent the defendants have led the public to believe
otherwise, they have acted in a way which has been misleading or deceptive, or likely
to mislead or deceive, or liable to mislead, contrary to the FTA.

[186] I accept that the question of when there is a "communication to the public" may
pose some new or novel (at least in New Zealand) legal issues, but there is no reason
why the Court cannot, in an appropriate case, decide such questions on a summary
judgment application. In this case, I think there is ample evidence that My Box has
deliberately intervened to make available to its customers protected copyright works
that they would not otherwise be able to readily access, including the broadcasts and
programmes Sky has defined as "the Copyright Works", and that in so doing it has
communicated protected copyright works to the public. In my view the decision of
the CJEU in Stichting Brein is applicable in New Zealand, and I think it clearly applies
on the facts of this case. 61

[187] In coming to that view, I note that the CJEU referred to one of the objects of
the Directive as establishing a high level of protection for authors, allowing them to
obtain an appropriate award for the use of their works, including on the occasions of
the communication to the public. That object seems to me to be no different from the
concern expressed by Potter J in Munwha, where Her Honour said:

[104] … If s 16(1)(f) were interpreted to exclude from the restricted act of

communicating, any and all communications which are one-two-one (and
arguably one-two-more-than-one, short of "to the public" generally), the
property right of the copyright owner under s 14 could be rendered nugatory
or at least seriously compromised and undermined. I do not consider this can
be the intent and purpose of the legislation.

[188] So in this case, I do not think it could have been the intent or purpose of the
Act that My Box's sales and marketing of the My Box units, as established by the
evidence produced on this application, have not constituted the communication to the
public of a substantial number of copyright works, in breach of the copyright owners'
rights under s 16(1)(f).

61
I note that in Sky Network Television Ltd v Pullan & Campbell [2018] NZDC 12918, a recent
District Court decision dealing with similar facts and legal issues, Judge MacAskill applied the
reasoning of the CJEU in Stichting Brein and found the sale of the defendant's Kodi box, with
pre-installed add-ons that enable access to copyrighted content, constituted a "communication to
the public".
[189] Mr Hazel next submits that, particularly on this part of its case, Sky is making
direct copyright infringement allegations against My Box, and is thereby attempting
to achieve under the FTA "through the back door" relief that it would not be entitled
to obtain under the Act. The authorities, include World TV Ltd v Best TV Ltd, 62 require
that the fair trading legislation must be construed so as to conform with and not
override the legislative copyright code. Both measures must receive due effect.

[190] I acknowledge the force of that submission as far as it goes. But I do not think
it could be the case that a company, faced with plainly incorrect advertising by a
competitor that the competitor's commercial activities do not infringe third party
copyrights, should not be able to avail itself of consumer protection legislation such
as the FTA simply because proof of its case under the FTA would also require proof
of infringement of the third party's copyright by the competitor, and the company did
not have standing to sue under the Act because it was neither owner nor exclusive
licensee of the relevant copyright. On the facts of a particular case, a company in that
position might be able to plead and prove the specific third party copyright, but in
other cases, and I think this is such a case, evidence of wholesale, widespread
copyright infringement by the competitor, being an inevitable consequence of the
competitor's commercial activities, should not have to be specifically pleaded and
proved. The ultimate issue in such a case will be whether the competitor's statements
as to the lawfulness of its activities have or have not been misleading or deceptive,
and in some cases it will be obvious on the evidence that they have, without the need
for pleadings and proof of the kind that would be required for a copyright infringement
action. In my view this is such a case.

[191] However, I accept that that does not necessarily mean that remedies for such
breaches of the FTA will be the same as the remedies available to a copyright owner
under the Act.

[192] Having considered the evidence and submissions, I conclude that Sky has
sufficiently shown that the defendants have no reasonable argument on this part of the
case — on the authority of Stichting Brein and Football Association Premier League

62
World TV Ltd v Best TV Ltd, above n 12.
Ltd, My Box has been making available (at least indirectly) to the public, by means of
an electronic retrieval system, what have clearly been a substantial number of
protected copyright works, without licences from the relevant copyright owners. In
those circumstances, My Box's actions must have constituted copyright infringement,
actionable at the suit of relevant copyright owners or exclusive licensees, by
communicating works to the public in breach of the owners' exclusive rights under
s 16(1)(f) of the Act.

[193] In those circumstances, there is no need for me to consider Sky's other

arguments of breach or unlawful conduct by the defendants, whether by way of
authorising another person to infringe copyright, procuring or participating in a
common design to infringe copyright, conspiracy, or otherwise.

[194] Finally, on this part of the case I record that Ms O'Gorman did not invoke or
rely on s 228 of the Act (which on its face might appear to have some relevance to
Sky's claims). Section 228 provides:

228 Rights and remedies in respect of apparatus, etc, for unauthorised

reception of transmissions

(1) A person who—

(a) makes charges for the reception of programmes included in a

communication work provided from a place in New Zealand;
or

(b) sends encrypted transmissions of any other description from

a place in New Zealand—

is entitled to the rights and remedies in subsections (2) and (3).

(2) A person to whom subsection (1) applies—

(a) has the same rights and remedies against a person referred to
in subsection (3) as a copyright owner has in respect of an
infringement of copyright; and

(b) has the same rights under section 122 or section 132 in
relation to any apparatus or device (of the kind referred to in
subsection (3)(a)) as a copyright owner has in relation to an
infringing copy.
 (3) The person referred to in subsection (2) is a person who—

(a) makes, imports, sells, or lets for hire any apparatus or device
designed or adapted to enable or assist persons to receive the
programmes or other transmissions when they are not entitled
to do so; or

(b) publishes any information that is calculated to enable or assist

persons to receive the programmes or other transmissions
when they are not entitled to do so.

(4) In section 121(1) as it applies to proceedings for infringement of the

rights conferred by this section, the reference to the defendant not
knowing or having reason to believe that copyright existed in the work
shall be construed as a reference to not knowing or having reason to
believe that the acts complained of infringed the rights conferred by
this section.

(5) Section 134 applies, with all necessary modifications, in relation to

the disposal of anything delivered up under subsection (2)(b).

[195] In the absence of any pleading or argument from counsel on the effect of s 228
I do no more than note its existence, and that it does not appear to cut across or affect
the findings I have made as to the lawfulness of the conduct of the defendants relating
to their promotion and sale of the My Box units.

Has Sky shown that the defendants have no reasonably arguable defence to the claims
that their representations relating to lawfulness (whether of their own conduct or of
the conduct of My Box unit users using My Box units to receive, access and view Sky
broadcasts or programmes) were in breach of ss 9, 10, 11 or 13 of the FTA?

[196] Under s 9 of the FTA, the question is whether or not the defendants' conduct
objectively had the capacity to mislead or deceive the hypothetical reasonable
person. 63 The likelihood that somebody will be misled or deceived by the conduct in
question must be a real risk (more than a mere possibility), although it is not necessary
to prove that anyone actually was misled or deceived. Proof of intention to mislead is
not required. 64

[197] I have no doubt that the representations as to lawfulness made by the

defendants, assessed objectively, did have the capacity to mislead or deceive a
hypothetical reasonable person. There was a real risk (more than a mere possibility)

63
Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].
64
Luxotica Retail New Zealand Ltd v Specsavers New Zealand Ltd [2012] NZCA 357 at [39].
that persons reading or hearing the relevant representations would be misled or
deceived into believing that their own use of the My Box units to receive, access and
view broadcasts or programmes that they would only otherwise be readily able to view
by paying a subscription or fee to Sky, would be lawful, and would not expose them
to the risk of copyright infringement claims.

[198] The answer to this question, then, is "yes", insofar as the claims are based on
s 9 of the FTA.

[199] Mr Hazel was critical of Sky's failure to plead specific particulars of the alleged
breaches under s 10, but Sky was not required to plead matters of law, and it seems to
me that my findings of fact on Sky's claim under s 9 of the FTA must also be sufficient
to establish liability under s 10. The representations that it was lawful for users of
My Box units in New Zealand to receive, access and view the Sky broadcasts or
programmes described by Sky as the "Copyright Works" must also have been "liable
to mislead the public" as to the suitability of the My Box units for that purpose,
contrary to s 10 of the FTA.

[200] It is not so clear that the defendants' conduct contravened ss 11 and 13 of the
FTA, which were also relied upon by Sky. Section 11 relates to misleading conduct in
the provision of services, and here I am primarily concerned with the supply of goods,
and statements by the supplier as to the suitability of the goods for a particular purpose.
Section 13 relates to the making of false representations in trade, in connection with
the supply or possible supply of goods or services, or with the promotion of the supply
of goods or services. Section 13(e) does make unlawful a false or misleading
representation in trade that goods or services have particular "… uses or benefits", but
subparagraph (e) does not refer to the concept of "suitability for purpose" (as s 10
does). In the circumstances of this case, where I am concerned with the legality of the
relevant use (rather than the possibility of such use), ss 9 and 10 seem to me to be the
appropriate sections of the FTA.

[201] For those reasons I am not satisfied that Sky has shown that the defendants
have no reasonably arguable defence to the claims based on alleged contravention of
ss 11 and 13 of the FTA.
Is Sky entitled to the remedies it seeks?

[202] The relief sought by Sky is as follows:

(1) a declaration that the defendants' representations to that effect are

misleading and/or deceptive and therefore in breach of ss 9, 10, 11
and/or 13 of the Fair Trading Act 1986;

(2) an injunction, pursuant to s 41 of the Fair Trading Act 1986, to restrain

the defendants, their servants, contractors, agents, distributors, related
companies (being any companies that are majority owned or controlled
by either of the defendants), employees or otherwise whomsoever from:

(a) offering, promoting or supplying (whether directly or indirectly)

the My Box Service, the My Box units, and any equivalent of
such service and/or pre-loaded media box; and

(b) representing in any way, in any medium, directly or indirectly

that the My Box service, the My Box units, or any equivalent
service or pre-loaded media box, is lawful and/or that the use of
such does not breach the Copyright Act 1994 or any other
relevant legal obligations;

(3) judgment in the sum of $1,444,000, plus $570,000 per month from
14 July 2017 to the date of judgment;

(4) an inquiry into further damages in respect of the defendants' infringing

conduct (to the extent that the sales of My Box units and avoided Sky
subscriptions have been higher than those calculated in the particulars
in paragraph 18);

(5) interest on those sums;

(6) costs.

[203] Looking first at the claim to a declaration, I take the words "to that effect" in
subpara (a) of the prayer for relief to be a reference back to paragraph 16 of the
statement of claim, in which Sky pleads that, by their conduct, the defendants have
expressly represented that the My Box Service is lawful, and that it is lawful for users
in New Zealand to use the My Box Service to access receive and view the "Copyright
Works".

[204] The FTA does not expressly provide for relief by way of a declaration, and
some of the authorities raise the issue as to whether jurisdiction exists to make a
declaration under the FTA. However, declarations have been made in a number of
cases, including Commerce Commission v ANZ Bank New Zealand Ltd, where
Venning J made a declaration that the defendant's conduct breached s 9 of the FTA in
certain stated respects. 65

[205] The same Judge had earlier come to the same conclusion as to the availability
of declaratory relief on claims under the FTA, in Commerce Commission v Sweetline
Distributors Ltd. 66 And in OTR International Ltd v Tyres Direct Ltd 67 Lang J
considered on the facts of the case that declaratory relief was available to the plaintiff,
notwithstanding that the FTA was primarily designed to deal with public wrongs rather
than private injury.

[206] On the other hand, it is clear that the granting of declaratory relief remains
discretionary, and declaratory relief will not be granted in circumstances where it
would serve no useful purpose. See for example ABB Ltd v NZ Insulators Ltd, 68 where
Courtney J felt no need to grant declaratory relief in circumstances where the fact of
the defendant's breach of the FTA would be apparent from the judgment, past losses
could be compensated by damages, and future infringements would be prevented by
injunctive relief. In those circumstances declaratory relief would serve no useful
purpose.

[207] I accept that jurisdiction to make a declaratory order will exist in an appropriate
case under the FTA, but I do not consider any useful purpose will be served by making
a declaration in this case. As in ABB Ltd v NZ Insulators Ltd, the fact of the defendants'
breaches of the FTA will be apparent from this judgment, any past losses can be
compensated in due course by an appropriate award of damages, and future
infringements will be prevented by the injunction I will make restraining the making
of further misleading or deceptive statements of the kind which have been the subject
of Sky's claim. I therefore decline to make the declaration sought.

[208] I turn now to Sky's claim for an injunction under s 41 of the FTA. That section
materially provides:

65
Commerce Commission v ANZ Bank New Zealand Ltd [2015] NZHC 1168.
66
Commerce Commission v Sweetline Distributors Ltd (2000) 6 NZBLC 103,030.
67
OTR International Ltd v Tyres Direct Ltd HC Auckland, CIV-2008-404-001378, 9 October 2008.
68
ABB Ltd v NZ Insulators Ltd (2007) 11 TCLR 978.
41 Injunctions may be granted by court for contravention of Part 1,
Part 2, Part 3, and Part 4

(1) The court may, on the application of the Commission or any other
person, grant an injunction restraining a person from engaging in
conduct that constitutes or would constitute any of the following—

(a) a contravention of any of the provisions of Parts 1 to 4:

(b) any attempt to contravene such a provision:

(c) aiding, abetting, counselling, or procuring any other person to

contravene such a provision:

(d) inducing, or attempting to induce, any other person, whether

by threats, promises or otherwise, to contravene such a
provision:

(e) being in any way directly or indirectly, knowingly concerned

in, or party to, the contravention by any other person of such
a provision:

(f) conspiring with any other person to contravene such a

provision.

(2) The court may at any time rescind or vary an injunction granted under
this section.

(3) Where an application is made to the court under this section for the
grant of an injunction restraining a person from engaging in conduct
of a particular kind the court may,—

(a) if it is satisfied that the person has engaged in conduct of that

kind, grant an injunction restraining the person from engaging
in conduct of that kind; or

(b) if in the opinion of the court it is desirable to do so, grant an

interim injunction restraining the person from engaging in
conduct of that kind,—

whether or not it appears to the court that the person intends to engage
again, or to continue to engage, in conduct of that kind.

(4) Where an application is made to the court under this section for the
grant of an injunction restraining a person from engaging in conduct
of a particular kind, the court may,—

(a) if it appears to the court that, in the event that an injunction is

not granted, it is likely that the person will engage in conduct
of that kind, grant an injunction restraining the person from
engaging in conduct of that kind; or

(b) if in the opinion of the court it is desirable to do so, grant an

interim injunction restraining the person from engaging in
conduct of that kind,—
 whether or not the person has previously engaged in conduct of that
kind and whether or not there is an imminent danger of substantial
damage to any person if the first-mentioned person engages in
conduct of that kind.

[209] I address first Sky's application for an injunction restraining the defendants
(and their servants, agents etc) from making representations as to the legality of the
use of the My Box unit (or any equivalent service or pre-loaded media box). I consider
it is entitled to an injunction in respect of the representations, substantially in the terms
sought.

[210] First, I think it is inevitable that if an injunction is not granted (whether now or
at trial) there is likely to be a continuation of the representations which I have found
to be misleading or deceptive, or likely to mislead or deceive (or liable to mislead
under s 10). My Box's business model (at least in New Zealand) appears to have been
substantially dependent on attracting customers from Sky on the assurance that they
would be able to access Sky programmes for only the one-off cost of acquiring a
My Box unit, and in advancing that business model the defendants have conveyed an
implied assurance to prospective purchasers that they would not be liable for any
further payments (including by way of liability to third party copyright owners for
copyright infringement).

[211] Secondly, I accept that there is likely to be ongoing damage to Sky if an

injunction is not made and further representations of the kind that I have found to be
misleading or deceptive (or likely or liable to mislead or deceive) are made by or on
behalf of the defendants.

[212] It might be asked whether an injunction to restrain the making of further

representations relating to lawfulness is appropriate in circumstances where the
defendants have undertaken not to further publish such statements. But that
undertaking was only to have effect pending the determination of this proceeding.

[213] I am accordingly satisfied that it is appropriate to grant a final injunction

restraining the making of any further representations, substantially in the terms sought
by Sky, namely an injunction restraining the defendants, their servants, contractors,
agents, distributors, related companies (being any companies that are majority owned
or controlled by either of the defendants) employees or otherwise whomsoever from:
representing in any way, in any medium, directly or indirectly, that the use of the
My Box units (or any equivalent media box that is pre-loaded with Kodi or other
equivalent software or add-ons) to permit a user to receive, access and view through
that My Box unit or other media box programmes or coverage that Sky broadcasts or
otherwise communicates to the public in New Zealand under its exclusive rights in
this country (access to which would only otherwise be lawfully available to the user
of a My Box unit or equivalent pre-loaded media box on payment of a subscription or
fee to Sky), is lawful and/or does not breach the Copyright Act 1994.

[214] I will hear from the parties by memoranda on the precise terms of the injunction
to be granted, but that is the substance of the injunctive relief to which I consider Sky
is entitled in respect of the defendants' representations relating to the lawfulness of the
use of the My Box unit.

[215] Turning to the injunction Sky seeks relating to the actual promotion, offering
and supply of My Box units (or equivalent pre-loaded media boxes), I am not satisfied
that the defendants have no reasonably arguable defence to this part of the claimed
relief.

[216] Ms O'Gorman effectively submitted that the offering and sale of the pre-loaded
media boxes is just a part of the overall misleading or deceptive conduct in which the
defendants have engaged, but I note that the claim is based on particular pleaded
"conduct", and that conduct is defined in paragraph 14 of the statement of claim as
representations made through the My Box website, the My Box Facebook page,
Twitter, YouTube and promotional emails (relating to the lawfulness of the use of the
My Box units). The conduct as so defined does not include the actual sale of the
My Box units.
[217] Mr Hazel submitted, relying on the decision of Thomas J in Sale 33 Ltd v
MD Designer International Ltd,69 that the relief sought here does not correlate with
the allegedly contravening conduct under the FTA. In that case, Thomas J said: 70

… the jurisdiction of s 41 includes the ability for the Court to grant an

injunction to ameliorate the effects of any such misleading conduct. In this
regard, [counsel] referred to, but was unable to cite from, Gault on
Commercial Law. Having read the commentary on s 41, I am not satisfied
such an approach would be correct given the wording of s 41 which says that
there must be conduct which constitutes a contravention of any provision of
Parts 1 to 5. Section 41 therefore cannot be interpreted that broadly; the
granting of an injunction must specifically correlate with the contravening
conduct under the FTA rather than the ancillary effects of it.

(Footnotes omitted.)

[218] I think this must be at least arguable for the defendants — if the defendants'
conduct were "shorn" of all misleading or deceptive statements (express or implied)
that it was lawful for users of My Box units to receive, access and view the Sky content
described in the representations, would the mere offering and sale of the My Box units,
pre-loaded or not, have conveyed some "stand-alone" misrepresentation to the
purchaser about the lawfulness of the use of the product? Maybe, but I suspect a lot
could depend on the circumstances of the sale. In those circumstances, I do not think
it is beyond reasonable argument for the defendants that this part of the relief sought
does not specifically correlate with the alleged contravening conduct, and accordingly
cannot be the subject of an injunction under s 41.

[219] I would also have had some concerns on this part of the claim for relief with
the possibility of impermissible "overlap" between the provisions of the FTA and the
provisions of the Act. In Stichting Brein the CJEU held that the sale of the media
player in question did (or would) amount to an unauthorised "communication to the
public", and I have concluded that there is no reason that decision should not apply in
New Zealand to the concept of communicating to the public by indirectly "making
[the copyright works] available". An injunction is one of the remedies available for
copyright infringement in New Zealand, 71 but only certain parties have the right to sue
to enforce copyright under the Act (broadly, copyright owner and an exclusive

69
Sale 33 Ltd v MD Designer International Ltd, above n 19.
70
At [26].
71
Copyright Act 1994, s 121(2).
licensee). Sky is not necessarily one of the parties who would be entitled to sue under
the Act (at least in respect of all of the works with which its claim is concerned).

[220] Would granting an injunction that would have the effect of restraining the
defendants from committing a specific copyright infringement (acts of communication
to the public), not cut across the specific limitation in the Act reserving the right to
make such a claim to the copyright owner or exclusive licensee? I do not have to
decide that point because I am satisfied that Mr Hazel's submission based on the
Sale 33 case is sufficiently arguable. However, the "overlap" point does provide
further reason for me to decline to enter summary judgment for the injunction Sky
seeks at paragraph 2(a) (as reproduced at [202] of this judgment). 72

[221] Sky's next claim is for damages in the sum of $1,444,000, plus $570,000 per
month from 14 July 2017 to the date of judgment. The claim is substantially based on
public statements made by the defendants about their sales. The calculation, set out at
paragraph 18 of the statement of claim, is as follows:

18. The conduct referred to in paragraph 14 above is intended to enable,

and has enabled, users of the My Box Service to avoid paying
subscription charges for relevant Content, including SKY's Copyright
Works, thereby causing loss or damage to SKY.

Particulars

(a) 95% of My Box customers are ex-SKY subscribers …

(b) Disclosed My Box customer numbers are:

(i) As at 3 November 2016, the defendants had sold 500

My Box Units ...

(ii) As at 17 May 2017, the defendants had sold 7,500

My Box Units ...

(iii) As at 29 June 2017, the defendants had sold 10,000

My Box Units ...

72
I note that in his recent judgment in Sky Network Television Ltd v Pullan & Campbell, above n 61,
Judge MacAskill was prepared to grant an injunction in terms that would restrain the sale of the
media players that were in issue, although His Honour expressed reservations about the form of
the injunction sought. But it does not appear that argument was advanced for the defendants in
that case to the effect that the relief sought must correlate with the pleadings and the alleged
contravention of the FTA (which in this case relate to the representations made by the defendants).
Also, it appears that the judgment may have been issued following a trial (as opposed to the
situation here, where the defendants only had to show a reasonably arguable defence).
 (c) Each such subscriber has thereby avoided paying a minimum
of $80 per month of subscription charges to SKY ...

(d) The plaintiff has therefore suffered damage of at least

$1,444,000 as at 14 July 2017, and ongoing damage of at least
$570,000 per month.

Minimum based on 95% at

Date Units Days $80 monthly subscription
3-Nov-16 500 195 $247,000
17-May-17 7,500 43 $817,000
29-Jun-17 10,000 15 $380,000
14-Jul-17 $1,444,000

[222] As noted above, the "conduct" alleged in paragraph 14 of the statement of

claim consisted of the pleaded representations made on the My Box website, the
My Box Facebook page and elsewhere.

[223] Mr Hazel again submitted that there was insufficient correlation between the
particular contraventions of the FTA relied upon by Sky and the damages sought. He
submitted that there was no evidence to establish the percentage of My Box users who
were Sky subscribers and cancelled their Sky subscriptions immediately prior to or on
purchasing a My Box unit, and no evidence of how many My Box users would have
subscribed to Sky but for the My Box units. Nor was there any evidence of how many
My Box users were not subscribers and would never have subscribed to Sky.

[224] I think there is force in those submissions. Any damages must be causally
linked to the misrepresentations that constitute the misleading or deceptive conduct
relied upon by a plaintiff, 73 and the relevant misrepresentation in this case was that it
was lawful for My Box users to receive, access and view Sky content they could not
otherwise have received, accessed or viewed without paying a subscription or other
fee to Sky. The damages assessment must be concerned with loss caused or
contributed to by that misrepresentation, and I think it is likely to involve consideration
of questions such as how many My Box unit purchasers were influenced in their
decisions to buy a My Box unit by the defendants' statements about the lawfulness of
their prospective use of the product.

73
Goldsboro v Walker [1993] 1 NZLR 394 at 401.
[225] A further point is that My Box was also operating in Australia. Mr Hazel
advised me from the bar (without objection from Ms O'Gorman) that most of the 7,500
sales as at 17 May 2017 were sales made in Australia. Whether or not that is so does
not matter for present purposes, as it is sufficiently clear on the evidence that there
would have been some Australian sales, and it is not clear how sales in Australia could
have caused Sky's loss. It was of course for Sky to show that the defendants have no
arguable defence on the quantum of the damages claimed, and in my view the evidence
falls far short of proving the $1,444,000 plus $570,000 per month that Sky has
claimed.

[226] I would have considered entering judgment for Sky on liability under r 12.3 of
the High Court Rules 2016, with the quantum of any damages to go to trial in the usual
way, but r 12.3 does not appear to permit that course: under the rule, summary
judgment can only be entered on the issue of liability where the party applying satisfies
the Court that the only issue to be tried is one about the amount claimed. In this case,
there are other issues to be determined, including the claim for an injunction in the
form reproduced at subpara 2(a) of paragraph [202] of this judgment.

[227] Sky next sought an inquiry into further damages (to the extent that the sales of
My Box units and avoided Sky subscriptions have been higher than those calculated
in the particulars in paragraph 18 of its claim). An inquiry may be ordered under the
FTA in an appropriate case — see BMW New Zealand Ltd v Pepi Holdings Ltd.74
However, it will be apparent from what I have said that it is by no means clear that
Sky's damages claim will or might exceed the amount it has claimed for damages;
indeed, if the majority of the My Box sales have been in Australia it would seem that
that could not be the case. So to that extent the claim for an inquiry appears to be
premature. But more fundamentally, it seems to me that Sky will need to amend its
claim, to plead damages that are more clearly linked to the contravening conduct on
which it relies. Consideration of any order for an inquiry, including in particular the
exact subject matter of the inquiry, is in my view better left until such an amended
pleading has been filed and served. I note in that regard that an inquiry may be sought
by interlocutory application, and it will be for Sky to consider whether such an

74
BMW New Zealand Ltd v Pepi Holdings Ltd HC Christchurch CP16/94; CP78/94, 5 September
1996; (1996) 7 TCLR 357.
application may be appropriate at some time before trial or whether this part of the
relief sought is to be left for trial. I reserve leave to Sky to make any such interlocutory
application if it considers it appropriate to do so. In the meantime, it would be
premature to enter summary judgment for an inquiry, and I decline to do so.

[228] No question of interest can arise until there is some quantified loss to which
Sky has been found to be entitled. I will address the issue of costs at the end of this
judgment.

Discussion and conclusions on the defendants' strike-out application

[229] It will be apparent from my findings above that I consider there is no basis on
which Sky's claim could be struck out — on the contrary, Sky has shown that it is
entitled to summary judgment on its claim, at least on the issues of liability under the
FTA and an injunction in respect of the relevant representations. The strike-out
application will be dismissed accordingly.

Result

1. Sky is entitled to a final injunction, to be substantially in the following terms:

restraining the defendants, their servants, contractors, agents,

distributors, related companies (being any companies that are
majority owned or controlled by either of the defendants),
employees or otherwise whomsoever from:

representing in any way, in any medium, directly or indirectly,

that the use of the My Box units (or any equivalent media box
that is pre-loaded with Kodi or other equivalent software or
add-ons) to permit a user to receive, access and view through
that My Box unit or other media box programmes or coverage
that Sky broadcasts or otherwise communicates to the public in
New Zealand under its exclusive rights in this country (access
to which would only otherwise be lawfully available to the user
of a My Box unit or equivalent pre-loaded media box on
 payment of a subscription or fee to Sky), is lawful and/or does
not breach the Copyright Act 1994.

Sky may submit a memorandum addressing the precise terms and

wording of that injunction within 10 working days of the date of this
judgment. Any reply memorandum by the defendants is to be filed and
served within 10 working days after service of Sky's memorandum on
them.

2. Leave is reserved to Sky to make a further interlocutory application for an

inquiry into damages if it considers it appropriate to do so. Subject to that,
Sky's application for summary judgment on its other claims is dismissed.

3. The defendants' application for an order striking out Sky's claim is dismissed.

4. The Registrar is to allocate a conference for the first practicable date after
1 February 2019, to address matters relating to the future conduct of the
proceeding, including discovery, any amendments to pleadings, the disposal of
any interlocutory applications, the setting of a close of pleadings date, and the
allocation of a trial date.

5. Sky has succeeded on the principal issue of liability for the alleged breaches of
the FTA, and it is entitled to costs. On the defendants' strike-out application,
Sky is awarded costs on a 2B basis, with disbursements as fixed by the
Registrar. On the summary judgment application, Sky has succeeded in
establishing liability for breach, but the defendants have had some success on
the extent of the relief to which Sky was entitled on a summary judgment
application. Also, there was necessarily some element of overlap in the
arguments on the parties' respective applications. I think some additional
award to Sky on its summary judgment application is appropriate, but not
100 per cent of costs calculated on a 2B basis. I think the justice of the case
will be met by an additional award of costs to Sky on its summary judgment
application, of 50 per cent of costs calculated on a 2B basis, together with
disbursements as fixed by the Registrar. Leave is reserved to apply by
memorandum if there is any issue or difficulty over the calculation of costs
calculated on that basis.

Associate Judge Smith