Court cautious to imply exclusive copyright licence into business contract

Orvec International Ltd v Linfoots Ltd [2014] EWHC 1970 (IPEC) is an 18 June 2014 ruling of Judge Hacon in the Intellectual Property Enterprise Court, England and Wales. Orvec traded in textile products which it sold to airlines; Linfoots was an advertising agency which provided advertising and marketing services to Orvec between 2002 and 2011 which included the making of photographs of products which Orvec then offered to the airlines.

Both parties agreed that Linfoots retained ownership of copyright in its photographs, if for no other reason than that there was an express term to that effect in Linfoots' standard terms and conditions, which governed their relationship, which ended in 2011.

The products shown in Linfoots' photographs were sometimes made by Orvec but in many instances were supplied to it by Intex, a business based in Hong Kong. In 2012, after the business relationship between Orvec and Intex ended, Intex started to compete with Orvec in the supply of textile products to airlines. Then, in September 2012, Intex asked Linfoots to create and supply photographs for use in its advertising. Linfoots supplied images showing the sort of products which Intex offered to airlines, some or all of which appeared on Intex's website -- among which were images to which Orvec took exception.

According to Orvec, the images on Intex's website included photographs created for Orvec and that they had been supplied by Linfoots in breach of the latter's contract with Orvec in that their agreement contained an implied term giving it a perpetual and exclusive licence under the copyright in the photographs, an implied term which Linfoots had breached. Secondly, said Orvec, the appearance of those images on Intex's website gave rise to passing off, the means to which were supplied by Linfoots.

Judge Hacon dismissed both limbs of Orvec's action.

* As to breach of contract, an implied term setting out the licence granted by Linfoots to Orvec was likely to be simple in form: the more complex the putative term, the less likely it was that the reasonable person would take it to be an implied part of the contract.

* The reality was that the only term implied into this contract was that Liinfoots granted Orvec just a non-exclusive licence under the copyright in the photographs. This licence was probably perpetual, and the hypothetical reasonable person, considering Linfoots' standard terms and conditions, would not take anything more to have been implied: there was no reason to infer that the parties must have agreed that Orvec should have the right to prevent Linfoots from copying those photographs or dealing in such copies, even where Orvec's trade mark was omitted from the copy, since many of the products shown in the photographs were generic in nature.

* If more than a non-exclusive perpetual licence was to be implied, at most it would be was exclusive only where Orvec's trade mark appeared in the photograph. This however would require consideration by the hypothetical reasonable person of a term with a more complex formulation, which meant that the term was less likely to have been implied. In any event, it had not been established that any photographs showing Orvec's trade mark were supplied by Linfoots to Intex.

The judge's approach here seems entirely appropriate. This blogger has long felt that "there must be an implied term" is the last resort of a claimant who doesn't have any stronger basis for making his case, and this is an argument which appears to fail in the vast majority of IP cases where it is pressed.