3 January 2017

ATTHERACES Limited loses its shirt in bet on court

I only started reading the ATTHERACES & Anor v Ladbrokes & Ors case because it was held out as a passing off and ‘conspiracy’ case and generally, I am only interested in intellectual property cases (which passing off would fall into). On reviewing the case more closely, it hadn’t even got as far as being initiated, as this was an action for pre-action disclosure under the court procedural rules (CPR Part 31.16(3)). I therefore became intrigued and read on.

‘They are racing now….’

The purpose behind ATTHERACES’ pre-action strike was (so it was alleged) to enable them to have documents which would identify more precisely the scope of the claim (by which I assume they mean the Particulars of Claim) they intended to make. 

The dispute concerned the exploitation of live audio visual broadcast coverage of horse races and live on-course data from racecourses around the UK: visual coverage of on-course data is sold, or licensed to interested parties generating revenue.  This, essentially, is controlled by ‘The Racing Partnership’, a company which has a number of shareholders, including the parent company of one of the applicants, and a shareholder in ATTHERACES, along with Sky plc.

The visual coverage is broadcast by Sky (or an associated company with it) through ATTHERACES, and it can be subscribed to upon payment of a licence fee to ATTHERACES.  This coverage is then made available to licensed betting offices which are all operated by the likes of Ladbrokes, Coral and BetFred.  At the relevant time (i.e. from the beginning of this year) neither Ladbrokes, Coral nor BetFred had a licence for the coverage. However, it transpired that, notwithstanding this, these companies (the ‘Respondents’) provided commentaries of races taking place at racecourses controlled by The Racing Partnership.  The commentaries were stated by ATTHERACES to be ‘off-tube’, in other words, by a commentator who watched television pictures of the event but was not necessarily present at the race him or herself.

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

Arising out of this lack of knowledge of how these ‘off-tube’ commentaries were created, and thus the source of the visual material, the applicants launched proceedings under section 33 Senior Courts Act 1981 and Part 31.16 of the CPR.  In order to do so, a witness statement from the Chief Operating Officer was filed and served. In response, the COO of Ladbrokes/Coral Group provided a witness statement, admitting to the production of off-tube commentaries but denying that they infringed any intellectual property rights or could otherwise be prevented. The Ladbrokes/Coral COO confirmed that they used the Sky ATTHERACES live coverage with freelance broadcasters providing the commentary. In fact, the use of the Sky ATTHERACES coverage for the purposes of off-tube commentaries was in breach of the terms of the subscription agreement, and following a letter from Sky to Ladbrokes/Coral, the latter ceased using that TV coverage.

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

Horses for Courses

Perhaps the key decision the judge made was to consider the basis of the application of the information that was before him (i.e. that comprised in the witness statements), rather than on the pre-action communications, which had been prolonged.  Part of the reason for doing so can be noted from his comments about the formulation of the Applicants’ claim.  As the judge noted, as against Ladbrokes and Coral, the case was originally said to be based on breach of contract; copyright infringement; inducing or procuring a breach of contract; and/or conspiracy.  At the hearing, this has been reduced to conspiracy, the loss suffered by the Applicants (in the judge’s eyes) being ‘nebulous’. This is because they would have to have purchased commentary from Sky, which would then mean there would be some ‘trickle down’ in terms of fees for the Applicants.  As for BetFred, this was reduced to conspiracy in passing off, and similar criticisms were levelled here also.  As the judge pointed out, the evidence having been provided, the Applicants were faced with a choice: they could either take stock, and decide whether, and if so, what, pre-action disclosure might be needed in the light of that evidence, at some later date; or they could persist in an application whose essential basis changed.

From what followed, the judge considered the basis had changed and they had therefore suffered the consequences as a result. It is, however, the judge’s consideration of CPR Part 31.16. The basic test is that if proceedings are to be issued, then both the Applicant and the Respondent have to be likely to be parties to those proceedings. This is interpreted as meaning they ‘might well be’ parties, which would appear to be a low threshold to cross. In the present case, some but not all of the parties were likely to be the ones in any subsequent proceedings

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

It is this lack of precision, and limiting to what was strictly necessary, that effectively killed the Applicants’ pre-action disclosure application. Indeed, because they were unable (or unwilling) to formulate the scope of the claim against the Respondents (albeit that they claimed they were unable to do so without the documents) and identify more clearly the cause of action, the classes of documents sought were too widely drawn, in the judge’s view.  Any request for pre-action disclosure was, in the judge’s words: ‘…like the curate’s egg, good in parts.’  The judge was equally not satisfied that the approach taken by the Applicants would have meant that he would have permitted them to go back to the drawing board and refine the scope further. Given his viewpoint that the evidence provided sufficiently for the claims to be formulated with greater precision, he did not feel that any permission to refine the categories was appropriate.

However, CPR Part 31.16 has both a jurisdictional and a discretionary element to it, as the court will permit pre-action disclosure only where there is a real prospect that this is fair to the parties if litigation is commenced, or assist the parties avoiding litigation or saving costs in any event.  The discretionary element is that the court has to consider whether it would be desirable having considered all the facts.  The judge then laid out the ‘three touchstones’, namely that pre-action disclosure:

  1. disposes fairly of the anticipated proceedings;
  2. assists the dispute to be resolved without proceedings;
  3. saves costs.

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

The Odds Favour the Bookies

In this case, my sympathies lie with the Applicants for pre-action disclosure. It is clear from the evidence from the bookies’ COOs all said that something untoward occurred and they had to ‘fess up to what they were doing.  However, as with all things, there is a balance to be had.  Clearly, the judge felt that ATTHERACES’ legal advisers could have done more to formulate an appropriate claim.  Alternatively, they could have taken a view, decided they had achieved all their aims and, having marked the bookies’ card, waited until they slipped up again and then hit them harder. But then, it is always easier for the armchair commentators to make such sensible sounding suggestions when presented with all the facts and well-reasoned judgments. The message, though, is clear:  bringing an application for pre-action disclosure may well achieve all the aims that you need, but if you are to go further, the decision of identifying the categories of documents, and complying with the ‘three touchstones’ are essential for a successful outcome.