The BPI's lawsuit has been brought against Music Trading On-Line (HK) Ltd, the company behind CD WOW!, its CEO, Philip Robinson, and three other defendants including two companies based in the UK and one in the British Virgin Islands.
Robinson was previously a director of Tring, a record label which went into liquidation in 1998 following litigation for manufacturing products without the necessary licenses from the copyright owners, according to a report by MusicAlly.com.
According to the BPI's complaint, the imports from Hong Kong are illegal – again because there is no licence from the copyright owners.
The discs being sold are genuine and were released in Hong Kong with the appropriate licences for sale in Hong Kong from the copyright owners.
The complaint of the BPI is that its members and its fellow claimants are the owners or the exclusive licensees of the UK copyright in titles being sold at cd-wow.com; that the discs are being imported without their consent; and that this amounts to parallel importing.
OUT-LAW.COM spoke to Simon Baggs, a partner with Cheltenham-based law firm Wiggin & Co, who is representing the BPI. He is confident that parallel imports are forbidden by the Copyright, Designs and Patents Act (CDPA) of 1988.
Mr Baggs points to section 18 of the CDPA. It states that "the issue to the public of copies of the work is an act restricted by the copyright in every description of copyright work."
The section continues, explaining that:
"References to the issue to the public of copies of a work are to:
(a) the act of putting into circulation in the EEA copies not previously put into circulation in the EEA by or with the consent of the copyright owner...."
If this argument succeeds, i.e. if the BPI can show that CD WOW! is importing copies to the public that have not otherwise been put into circulation in the European Economic Area, primary copyright infringement is shown and CD WOW!'s business model would appear to be finished.
The Act also provides that dealing in infringing copies amounts to infringement. It states that an article is an infringing copy if it has been imported into the UK and its making in the UK would have constituted either an infringement of the copyright in a work or a breach of an exclusive licence agreement related to that work.
The BPI's argument here would be that this means that it can prohibit the sale and distribution of a CD in the UK, the making of which in the UK would have infringed copyright.
CD-WOW! is not unique in trying to exploit the so-called grey market. Last summer, the High Court ruled against Tesco in its four-year dispute against Levi's.
The supermarket was fighting for the right to sell cut-price Levi jeans imported from wholesalers in the US, Canada and Mexico - without the brand owner's consent. Tesco's defeat highlighted the need in such cases for express consent from the owner of the intellectual property rights.
A ruling in the BPI's case last week established that it is entitled to represent its members in the action. The case proceeds.
Last week's ruling is on this page of the Court Service's web site.