The First Hall of the Civil Court, presided over by Madame Justice Anna Felice, on October 9, 2013, in the case “Dr David Tonna in representation of the foreign company Irdeto Access BV v Timmaz (Hi-Fi/Satellite Systems)” held, among other things, that the importation of blank smart cards could not be considered in itself as illicit and contrary to Chapter 414 of the Laws of Malta.
The facts in this case were as follows.
Dutch company Irdeto Acess BV, which operated in the sector of satellite television, was the owner of intellectual property rights which included, but not limited, to the rights of the author and other related rights relating to the protection of industrial secrets and confidential information. These included rights of know-how, copyright and trademarks which also included the following: “scrambler”, “data encrypotor”, “CA Module”, “Irdelo Loader” and “smart cards”.
Irdeto manufactured smart cards on which software was inputted which, together with other equipment, permitted access to satellite TV and pay TV. Irdeto claimed rights of author over such cards and software.
The company said that on April 27, 2001, “the firm Timmaz and/or the Comptroller of Customs imported or attempted to import into Malta and/or place in a ‘free zone’ or ‘free’ warehouse 3,000 blank gold wafer cards, popularly known as decoder cards or smart cards, 31 C1 Modules and four printed circuits, which decoder cards and smart cards were allegedly used in violation of the prohibition in article 4 of Chapter 414 of the Laws of Malta”.
These cards were imported as blanks and their only purpose was to facilitate the unauthorised removal of technical barriers which it had installed to protect its works from being copied – works which it said were protected under Chapter 415, and this in violation of its rights under article 42 (3) of Chapter 415.
Irdeto maintained that the importation of the cards and/or the placing of such cards in a free zone contravened their intellectual property rights in terms of article 4 of chapter 414. It resulted that the consignment of the cards was seized by the Comptroller of Customs in terms of Chapter 414 after an application in writing by Irdeto.
Faced with this situation, Irdeto proceeded to file legal proceedings against Timmaz and the Comptroller of Customs. Irdeto requested the court:
1) to declare and decide that defendants or any one of them violated its rights of author by importing these decoder cards in violation of Chapter 415;
2) to declare and decide that the importation into Malta of the cards, and/or their temporary importation and the retention of the cards in a free zone or free warehouse was a violation of Chapter 414;
3) to order the Comptroller of Customs to destroy the cards without any compensation at the expense of defendants or any one of them according to article 8 of Chapter 414 and to make any such provision which the court deemed to be appropriate; and
4) to provide any remedy according to the terms of Chapter 414 involving defendants or any of them.
The Comptroller of Customs in reply submitted that the legal proceedings should have been filed against the Attorney General in terms of article 181B(3) of Chapter 12.
He claimed that he was uselessly sued and that he was not a legitimate defendant in these proceedings. The task of Customs was to ensure that objects were imported into Malta according to law. He said that he acted correctly and that he should not be condemned to pay the costs.
Defendant Timmaz, on the other hand, maintained that Irdeto had to prove that it had rights as author in respect of the smart cards. There could be no violation once the cards were blank, it argued.
The court noted that Irdeto produced technology/software in the The Netherlands to transmit films and broadcasts by satellite TV against payment. Its technology was made available by smart cards and decoder cards which the user purchased against payment. Smart cards were used in satellite boxes and, as a result, the user would have access to programmes transmitted by satellite.
It also resulted that, before April 27, 2001, blank smart cards had frequently entered Malta and Customs had never found objection.
Pleas of Comptroller of Customs: the court agreed with the Comptroller of Customs. It said he acted correctly in the circumstances. The law provided remedies which could be implemented by the Comptroller without having to be included as a party in the proceedings.
In other cases where the court ordered the Comptroller to destroy the merchandise, the court never required the presence of the Comptroller in the legal proceedings. In this respect, the court found that the Comptroller had been sued unnecessarily and he was, therefore, freed from the proceedings.
Before April 27, 2001, blank smart cards had frequently entered Malta and Customs had never found objection
Pleas of Timmaz: The court noted that it was not in dispute that the cards seized by Customs were blank and that they could be used to copy the software in respect of which Irdeto had rights of author. The cards were used in the context of satellite transmissions.
Article 4 of Chapter 414 provides that “the entry into Malta, export or re-export, release for free circulation, temporary importation, placing in a free zone or free warehouse of goods found to be goods infringing an intellectual property right shall be prohibited”.
The use of the gold wafer card was more popular for purposes of satellite subscription or Pay TV. However, such cards could be used for other purposes.
The Irdeto representative also testified that it never visited Tammaz’s shop in Malta and never found anything which indicated that it carried out some illegal activity.
The court said that, in the past, smart cards of this type were freely imported into Malta. In a document issued by the EU Commission dated April 24, 2003, on the implementation of Directive 98/84 (Directive 98/84 EL of the European Parliament and of the Council of November 20, 1998) on the legal protection of services based on and consisting of conditional access, it was stated that blank smart cards or smart programmes did not qualify as illicit devices.
It followed that, once the cards could not be considered illicit, Irdeto was obliged to produce evidence that the only reason that the cards were imported to Malta was for an illicit purpose, prohibited by law, in violation of the rights of the author. The court said that no proof was brought up to the degree required by law.
For these reasons, on October 9, 2013, the First Hall of the Civil Court gave judgment by declaring that no violation of law had taken place. There was only a possibility that a violation might occur. The court said that Irdeto had not proven its allegations to the satisfaction of the court. It dismissed Irdeto’s requests and freed the Comptroller of Customs from these proceedings.
Dr Grech Orr is a partner at Ganado & Associates.