Quantum Surveying the IPEC Way

When we report cases of copyright infringement, we all too often concentrate just on the arguments and evidence which lead to the outcome at trial: the winners and losers. For obvious reasons it is rarely possible to look in detail at those cases which settle, because the agreements usually bind the parties to confidentiality, and slightly less rarely do we examine the separate hearings in which quantum is assessed and awarded. There are  two possible reasons why these hearings are less commented upon: they are intrinsically less interesting as they have little bearing on the law per se (ie they tend to be very fact specific to each case therefore hard to draw inferences from), and they also tend to be less extensively reported on Bailii and in the law reports.

However for those less conversant with litigation - and this includes the growing number of litigants in person - the process(es) by which quantum is assessed can form an important element when considering whether to fight or settle. For the layman to only consider such matters as the likely damages after liability has been established, is rather too late. And from lawyer’s point of view, occasionally a costs hearing can involve a determining of which law which should be applied.

And so it was with a recent judgment from the IPEC under His Honour Judge Hacon in the matter of Absolute Lofts Ltd v Artisan Home Improvements Ltd and Anor [2015] EWHC 2608 (IPEC). The case provides both a welcome insight into the current thinking on assessing quantum in copyright cases, and the extent to which the UK law may be at variance with the EU Enforcement Directive (2004/48 EC) (pdf) brought into force by the Intellectual Property (Enforcement etc) Regulations 2006. This is the second time that Judge Hacon has published a judgment concerning an inquiry into damages - the first being Henderson v All Around The World Recordings Ltd, which was a case about unpaid royalties and performer’s rights, reported on by Eleonora here.

Returning to the current case, it is only necessary to set out the facts in the most outline of terms, because the defendant admitted liability at trial. The claimant, Absolute Lofts, is as its name suggests, a company which specialises in loft conversions. It is based and operates in London and has its own website. The owner of the company, Mr Craig Colton takes photographs of work he has completed and posts them on his company's website. There was no dispute that he owned the copyright in these images and that he had assigned the copyright to his company.

Artisan Home Improvements Limited is a company operating in the Bradford area. In around 2009, the company's owner (and second defendant) Mr Darren Ludbrook expanded his existing small building business to include the loft conversion market. He needed images of conversions for his website in order generate interest in this new area of work. Although he blamed his website designer, the court found that he either took 21 images from the website of Absolute Lofts and included them on the Artisan website, or there were reasonable grounds for believing he knew they were infringing images. The fact that potential customers of Artisan were being misled in this way was not at issue in the proceedings, although the judge took this into account when assessing Mr Ludbrook’s integrity and general approach to business.

In something of a departure from the normal structure of a court judgment, Judge Hacon first outlined in some detail the methodology chosen to calculate the quantum, before addressing the law which governs the awarding of damages. In this case, the so-called 'user principle' was followed. This principle is based on the construction by the court of a hypothetical negotiation between claimant and defendant before the act complained of, where each party would have been acting willingly and without duress to achieve the same state of affairs (ie the use of the 21 images) in a legal way. This differs from quantum based on presumed (or provable) losses suffered by the claimant, or the presumed ( or provable) profits made by the defendant arising out of the infringement.

The first thing the court looked at were the alternatives to using Mr Colton's images: Mr Ludbrook could have commissioned his own photographer, or he could have purchased licensed images from a stock agency (which is ultimately what he did, once the letter before action was received and he was obliged to take down Mr Coltan's images). Counsel for each side provided their own estimates, supported by expert testimony, of the cost of commissioning 21 similar photographs, which ranged between £9,000 (the claimant's figure) and £700 (the defendant's lowest estimate), but the court rejected this analysis on the basis that Mr Ludbrook was seen as a man "prepared to use the cheapest images he could find that looked good enough and could pass for photos of loft conversions done by Artisan" [22]. Instead, the judge took the view that the best evidence was provided by what actually happened when Mr Ludbrook was forced to find substitute images - he obtained them from a stock agency for a total of £300. This was the level of ordinary damages the court awarded.

The claimant had also sought aggravated damages under Section 97(2) of the CDPA. This subsection says a court may award additional damages having regard to all the circumstances, but in particular to the flagrancy of the infringement and any benefit accruing to the defendant by reason of the infringement. However the judge found that he needed to consider whether s 97(2) had been made redundant by the Enforcement Directive, specifically Art. 13(1). This came about because the UK Regulations which brought the Directive into force, state in Reg 3 (2) that damages may be awarded based on taking all appropriate aspects into account (this would include those factors covered in s 97(2)), or damages based royalties or fees which would have been due if the parties had agreed beforehand (the user principle outlined above). However this strict either/or approach was not to be found to be so rigid in the Directive (Art 13 1a and 1b). In the directive, the wording for the second condition is: damages “such as at least the amount of royalties or fees …” (my added emphasis). The court decided at [48] that the Directive thus allowed the national courts to consider additional damages, such as those contemplated by s 97(2), since Art 2 of the Directive permitted national differences in the means of enforcement if they were more favourable for rightholders than those provided for in the Directive. On this basis the court felt it was appropriate to award additional damages on the basis of the indirect benefits the defendant gained from the infringement, that is to say the increased business in loft conversions following the use of the images on the website. The business accounts for Artisan over the relevant period were inadequate to show the actual profits but turnover was clearly substantial (around £500,000 in 2013 for example), and it had to be assumed that this was in part due to orders won of the strength of the website. The judge awarded an extra £6,000 in damages under this head. This figure would have been the same he concluded, whether it was calculated under the Art 13(1) process, or s 97(2) CDPA.

This is a somewhat simplified version of the judgment, which interested readers are encouraged to read  for themselves in order to gain the full nuance of the deliberations.

Postscript.   Following the hand down of this judgment, counsel for Absolute Lofts returned  to the court to ask for an amendment to the award of ordinary damages (the figure of £300). Their grounds for seeeking this were that when the court had taken the Shutterstock fees as good evidence of the real world  cost of obtaining a licence for 21 similar images of loft conversions. However the full terms of the licence had been omitted from the trial bundle. The claimant had subsequently obtained these terms  and found that amongst other things they contained the following:

    “YOU [the licensee of the images] MAY NOT”:

[...]

12. Use an Image in a manner that infringes upon any third party’s

trademark or other intellectual property, or would give rise to a claim of deceptive advertising or unfair competition.
[...]
18.  Use any Image (in whole or in part) as a trademark, service mark,  logo or other indication of origin, or as part therefore, or to otherwise endorse or imply the endorsement of any goods and/or services.’
19.  Falsely represent, expressly or by way of reasonable implication, that any Image was created by you or a person other than the copyright holder(s) of that image."

Clearly Artisan's use of the licensed images was in breach of these terms and so the licence was invalid. It follows that Shutterstock would either have charged more for the actual use, or would not have permitted such use at all. Either way the figure of £300 was the wrong basis for the award.

The judge then had to decide whether he was permitted to reconsider his judgment and award of damages without the necessity a new trial or an appeal. Fortunately earlier this year Mr Justice Birss had had cause to examine much the same issue in Vringo Infrastructure Inc v ZTE (UK) Limited [2015] EWHC 214 (Pat). Birss J  concluded that where evidence was adduced after judgment had been given, the principles set out in Ladd v Marshall [1954] 1 WLR1489 might well be applied by the trial judge since he would have a better view of the facts than an appeal court.

HHJ Hacon stressed that while these principles are not decisive they are highly relevant to the current case:

“First, it must be shown that the evidence could not have been obtained without reasonable diligence for use at the trial. Secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive. Thirdly, the evidence must be such as is presumably to be believed or, in other words, it must be apparently credible, though it need not be incontrovertible.”

Counsel for Absolute Lofts argued that this was not new evidence, and therefore the first principle did not apply, but the judge disagreed. On the basis that these additional terms could have been discovered with reasonable diligence before the trial or at least before judgment, the first principle was not met and so the application must fail.

Full details of the judgment here

When claimants stand up for copyright, defendants can get sent down

Phonographic Performance Limited v Fletcher is an extempore ruling by Mr Justice Arnold, sitting in the Chancery Division, England and Wales, last Monday; being extempore it isn't available on BAILII but it was noted in brief on the subscription-only Lawtel service. It's one of those rulings that reflects on the sad end which some defendants face when they just keep carrying on infringing, ignoring every cue to stop.

In these proceedings Phonographic Performance Limited (PPL), a UK music licensing company, applied to commit Fletcher for contempt of court, following his breach of an order prohibiting him from playing sound recordings without a licence at a nightclub. Fletcher himself was the premises licence holder of a night club. Despite PPL's warning, Fletcher did not take out a licence to play music the rights to which were administered by it.  PPL then applied for judgment in default for copyright infringement, securing an injunction that ordered Fletcher not to play PPL's songs in public without a licence. At this point Fletcher agreed to pay the outstanding licence fees by monthly instalments -- but then he defaulted on payment. Subsequently allowed to make weekly instalments, he paid them late. PPL even reduced the weekly amount that Fletcher had to pay, but he still only made sporadic payments. An investigating agent for PPL then discovered that Fletcher was still playing its recordings at the nightclub, in breach of the injunction. Fletcher conceded that he was indeed in breach of the order. But what was to happen to him?

Fletcher said that he had had cancer and was suffering from anxiety and depression, and that his mother had recently died. Further, that the basis of the contempt application was solely that he had played the music in public on one single date, and that it was not a repeated and prolonged contempt. PPL was not particularly sympathetic, submitting that there had been a long history of failures by Fletcher, and that it was also entitled to damages in respect of his copyright infringement.

Arnold J granted PPL's application to commit Fletcher for contempt. In his view:

* even taking Fletcher's pleas in mitigation into account, PPL's evidence established not merely a single breach but a sorry history of failure by Fletcher -- first to obtain a licence and then to adhere to payment for the licence fee. That had to be taken into account.

* the contempt committed could only have been deliberate. Although this was a first offence and a single allegation, the threshold for imposition of a custodial sentence had been crossed, though an immediate one was not appropriate.

* Fletcher would be sentenced to 28 days' imprisonment, suspended for 12 months, on condition that he stopped infringing PPL's copyright.

* where infringement was established to the standard required to support an application to commit for breach of an injunction, there was no arguable defence to the copyright infringement claim and the court could order damages.

* under the Copyright, Designs and Patents Act 1988 s.97 the court could summarily assess damages and, on this basis, PPL would be awarded the outstanding sums due to it for licence fees up to the date of the contempt of court application. PPL was also awarded a further £6,000 in damages and interest, and Fletcher would have to pay the costs of PPL's application on an indemnity basis.

It's not just sad that people help themselves to other people's copyright for income-generating activities such as running night-clubs; it's close to tragic that they inflict further cost and liability upon themselves, at their own expense and to no discernible end, when all that was needed was the payment of a licence fee in the first place. It would be good to understand what causes such self-destructive impulses in the hope that a better way might be found of dealing with them.

How to calculate damages in filesharing cases?

Ehm ... not everybody may agree

This question has proved fairly controversial to address in a number of different jurisdictions. Via 1709 Blog friend Mirko Brüß (Rasch Rechtsanwälte) comes however the news that some guidance in this respect has been recently provided by the 

Bundesgerichtshof (BGH, the German Federal Court of Justice).

Here's what Mirko writes:

"To begin with, it should be noted that I am an attorney in the law firm that represented the plaintiffs in the three cases at hand.

Earlier this week the BGH dismissed the appeals of three DSL subscribers who were previously sued by major music labels EMI, Sony, Warner and Universal.

In short, the BGH confirmed that damages of EUR 200 per song are appropriate when music is communicated to the public via P2P-Filesharing. DSL subscribers were found liable as perpetrators for damages and attorneys’ fees when they did not present alternative facts that could explain why their IP was used for unlawful filesharing. They also had the burden of proof for such facts. When the filesharing was done by the subscriber’s children, they needed to prove they did not neglect their parental supervisory duties. With regards to filesharing, this means the parents need to explain the dangers of filesharing to their children and prohibit the use of such systems. Failure to do so results in full liability for damages and attorney’s fees.  

More in detail

All three cases date back to 2007, when the IP addresses of the defendants were found to be the sources of hundreds (in two cases: thousands) of MP3s made available for download (communication to the public, § 19a UrhG – German copyright code) via P2P-filesharing, using the now obsolete “Gnutella”-Network, which is technically similar to BitTorrent, because users who download files are also uploading them at the same time.

Since it is technically impossible to tell from the outside who is operating a PC that is using a certain IP-address, we approached the DSL subscribers with cease-and-desist letters and an offer for out-of-court settlement. When no agreement was found, the cases went to the district court of Cologne. The labels asked for damages of 3000 EUR (for 15 tracks, or 200 EUR per track) and for their out-of-court lawyer’s fees.

The BGH had previously decided on filesharing cases in 2010 (I ZR 121/08 “Sommer unseres Lebens”), 2012 (I ZR 74/12 “Morpheus”) and 2014 (I ZR 169/12 “BearShare”). In these cases, the BGH had ruled that when an IP is found to be the source of filesharing, this is prima facie evidence that the DSL subscriber was using the P2P client. The lower courts have ever since been very diverse when it came to what could be asked of the subscriber to counter the prima facie evidence. Positions ranged from “it is sufficient to claim that other persons had access (in general) to the subscribers internet” to “the subscriber needs to name the person who did it”.

Also, the BGH had never decided on the amount of damages that can be asked and lower courts’ decisions varied from 15 EUR per song to 300 EUR per song. Since there are thousands of cases similar to the ones at hand still pending at the lower courts, the three decisions were eagerly awaited by lawyers and the public alike.

Before the court, the defendants in our three cases used different arguments against their liability.

In the first case (I ZR 75/14), the defendant questioned the reliability of the investigations and the allocation of the IP-address to his DSL account. He claimed that neither he, nor his family had access to the internet via his account, stating the whole family was on vacation and they had cut the power for the PC and the router before leaving. The regional court of Cologne sided with the defendant and thus dismissed the case.

We appealed and the higher regional court of Cologne overturned the decision, sentencing the defendant to pay both damages and lawyers’ fees. This was after hearing the family as witnesses for the purported holiday. In short, the court did not believe the family was on vacation and all, disregarding these claims as a defensive lie.

In the second case (I ZR 19/14), the defendant also questioned the reliability of the investigations and the allocation of the IP-address to his DSL account. He argued that there was only one PC in the household and that his 17 year-old son had no access to this at all, while his wife did have access, but had very little knowledge of PCs and was not able to install any software due to lack of administrator’s rights. Both the regional court and the higher regional court of Cologne ordered the defendant pay damages and attorneys’ fees. The courts reasoned that since there was only one PC and the defendant had ruled out his wife and son as the perpetrators, it must have been him who used the filesharing network.

In the third case (I ZR 7/14), there had been a criminal investigation in which the defendant’s 14 year old daughter had admitted she was the one to use the filesharing network for downloading music. Both the regional court and the higher regional court of Cologne had sentenced the defendant to pay damages and attorney’s fees. She further appealed to the BGH, claiming that her daughter’s confession could not be used in civil proceedings, because the police had not advised her daughter that the criminal confession could be used in a civil case against her mother. Secondly, she claimed she had instructed her daughter on the illegality of uploading copyright-protected musical works and thus there was no neglect of parental supervisory duties.

EUR200 per song, to be more precise

The decisions

On June 11^th, the BGH dismissed the defendant’s appeals in all three cases and upheld the lower court’s rulings. All three defendants were sentenced to pay 3000 EUR of damages (200 EUR per song) and the out-of-court attorney’s fees of the major labels. With regards to the cases #1 and #2, the BGH followed the higher regional court of Cologne that the defendant did not present (and prove) facts that could explain why someone else other than the DSL subscriber could be the infringer. In both cases, the defendants themselves had rather ruled out that someone from their family had access to the internet at the time of the offence.

In the third case, the BGH found that the higher regional court was allowed to use the defendant’s daughter’s confession. The police did not have to explain to her the possible consequences of her confession for civil proceedings. Also, the daughter was heard as a witness by the regional court of Cologne, where she confirmed her confession. The BGH then decided the defendant had neglected her parental supervisory duties, because she failed to prove she had properly instructed her daughter about the dangers of filesharing.

Having found that all three defendants liable for the infringements, the BGH confirmed the rulings of the higher regional court of Cologne, granting the plaintiffs damages of EUR 200 for each of the 15 songs that were communicated to the public. The damages were estimated by the court using the licence analogy method. The higher regional court began its calculation at 50 cent per song, and further estimated that it was realistic to anticipate 400 downloads to be made from the plaintiffs PCs, thus totaling EUR 200 per song. This is in line with earlier judgments by the higher regional courts of Frankfurt and Hamburg.

We believe these judgments will make it easier for copyright owners to enforce their rights. Some of the lower courts made it easy for defendants to get away with stories that would shift the burden of proof to the plaintiffs when the latter actually had no means to prove what happened within the walls of the defendants’ homes. According to these recent rulings, when defendants claim they “didn’t do it”, they will have to present a credible alternative explanation for why their internet connection was the source of illegal uploading. A vacation that never actually happened is no such alternative. The BGH also put an end to a lengthy disagreement between various lower courts on how to calculate damages in filesharing cases."

Cheap at the price? Ukraine Supreme Court upholds Lily Allen infringement claim

The Ukrainian Supreme Commercial Court has recently ruled in favour of Ukrainian record company Comp Music Publishing in its copyright dispute against Astelit, one of the largest Ukrainian mobile telephone network operators, which trades under the life:) trade mark. Comp Music Publishing sought compensation for infringement of copyright owned by its client, the multinational music recording and publishing company EMI Music Publishing.

Between February and March 2010, life:) conducted an advertising campaign in which it ran a total of 4,369 broadcasts of a commercial, on 20 Ukrainian TV channels, that contained a musical composition based on the British recording artist Lily Allen’s 2009 hit single F*** You, authored by Lily Allen and American producer and songwriter Greg Kurstin.

In response to the copyright infringement allegation. Astelit claimed that the music was produced by its contractor, Shootgroup, which had employed the composer Vitaliy Rozinko, who only used part of the disputed song in his remix. In proceedings before the Kiev Commercial Court against Astelit, Shootgroup and Rozinko, Comp maintained that it had the exclusive rights to the song in Ukraine, under an agreement with EMI, demanding  21,000 euro (US$ 23,000) in damages. After two years of litigation, the Supreme Commercial Court of Ukraine has recently upheld the claim and awarded the damages sought.

Source: Olga Goncharova, "Lily Allen Song Basis Of Copyright Infringement Battle In Ukraine", in a Petosevic news item based on the Ukrainian newspaper Ekonomichna Pravda and the State Register of Court Decisions.

You can read the full judgment in Ukrainian (assuming that you can read Ukrainian) here

This blogger notes that the damages paid out by Astelit worked out at 4.81 euros per broadcast. A bargain?

How to heal a Broken-Heart … under the Enforcement Directive

Dorothea Thompson

For a select few, the recent damages assessment in Henderson v All Around The World Recordings may provide an excuse to reminisce about the ‘glory’ of late-noughties Bassline music. For everyone else, it provides the first guidance on the interpretation of the Enforcement Directive and implementing UK Regulations, with particular regard to the notion of ‘unfair profits’ and ‘moral prejudice’, as 1709 Blog friend and music loving trainee solicitor Dorothea Thompson (Bray & Krais) explains in her guest contribution.

According to Dorothea, “this case confirmed that inquiry as to damages and account of profits remain available as alternatives only, and ‘additional damages’ for infringement of performance rights under the Copyright, Designs and Patents Act 1988 (CDPA) are now effectively redundant.”

Here’s what Dorothea writes in more detail:

“Background

The song Heartbroken was recorded by Jodie Henderson (aka Jodie Aysha) and Tafazwa Tawonezvi (aka T2) in 2005. In 2007 Mr Tawonezvi re-mixed the track to produce a Bassline version and signed a record deal with 2NV Records Ltd (2NV). 2NV then signed a deal with All Around the World Recordings Ltd (AATW) to release Heartbroken (for those readers with an enquiring/nostalgic mind, the song in its released version can be found here). 2NV offered Ms Henderson £1,500 for her performance, but she refused. She then entered into a publishing contract with Sony ATV.

In November 2007 AATW released Heartbroken. It was a big hit, reaching No.2 in the singles charts, staying there for 5 weeks, and remaining in the Top 40 for 46 weeks.

To date Ms Henderson had received no performance royalties for AATW's release, nor been paid for her participation in the video or the use of her name.

Breach of performance rights

Back in February 2013, in the Patents County Court (as it then was) HH Judge Birss QC found that Ms Henderson had consented to the recording of her vocal, but not any future exploitation. Objectively, there were no grounds for AATW to infer consent, as they knew Ms Henderson had not signed with 2NV. 2NV had not obtained consent which could be passed on to AATW, and Ms Henderson had no contractual right to royalties.

AATW had "gone ahead at risk" in the knowledge that Ms Henderson had not signed a contract. AATW had thereby infringed the singer's rights by making copies of her performance and issuing those copies to the public without her consent, contrary to sections 182A and 182B CDPA.

Fair enough, but:
can you at least claim damages?

Assessment of damages

Ms Henderson elected for an inquiry as to damages. Aside from loss of royalties, assessed under the standard ‘user-principle’ (royalties that would have been paid had there been a licence negotiated between willing licensor and willing licensee), Ms Henderson sought damages under the Enforcement Directive and additional damages under the CDPA.

Enforcement Directive

It was not disputed that Ms Henderson was entitled to rely on reg. 3 of the 2006 Regulations, implementing art. 13(1) of the Directive, which applies where the infringer knowingly, or with reasonable grounds to know, engages in infringing activity. However, Ms Henderson argued that reg. 3 allowed a claim for both damages and defendant's profits, and required the court to consider both and make an award in relation to both as appropriate.

Judge Hacon reiterated that as a matter of English law, inquiry as to damages and account of profits are only available as alternatives. In intellectual property proceedings a claimant is free to choose between them but may not have the benefit of both.

Under art. 13(2) in respect of unknowing infringement, it is clear that there is a choice between inquiry as to damages or account of profits. Where knowledge is proved, art.13(1)(a) requires the court to take into account relevant aspects of the actual prejudice suffered, including both lost profits and unfair profits. However, the overall task is to order damages appropriate to the actual prejudice suffered, and this is usually profit lost (possibly plus expenses). Recital 26 of the Directive confirms the aim is not to impose punitive damages but to achieve objectively assessed compensation.

‘Unfair profits’

Judge Hacon considered that art. 13(1) did not mean that the court must always take into account profit made by the defendant from his knowing infringement. Instead, if the claimant would not receive adequate compensation for actual prejudice suffered where damages were assessed as lost profits, moral prejudice and expenses, or account of profits, there was flexibility to award an additional sum related to profit that the defendant has generated through the knowing infringement.

He referred to the example of a defendant making no direct financial profit from the infringement, but his business expanded in volume and/or in reputation on the back of loss-leader infringements.

What about 'moral prejudice'?

‘Moral prejudice’

Damage for 'moral prejudice' is rooted in continental civil law, but there is little guidance to a single meaning according to EU law. Judge Hacon held that art.13(1)(a) entitles recovery for three of the categories of non-economic loss on which Ms Henderson relied: mental distress, injury to feelings and humiliation.

He considered that the moral prejudice contemplated by this provision was confined to prejudice arising in limited circumstances, particularly where a claimant had suffered little or no financial loss and would otherwise either be left with no compensation, or the compensation would not be proportionate to the overall damage suffered.

For example, if a defendant were to infringe the copyright in photographs disclosing private grief by publishing them on the internet (which, unfortunately, seems like an entirely plausible situation these days), that might generate no profit for the defendant and no financial loss for the copyright owner, but the emotional stress caused might be acute. In such circumstances, the court could award compensation for moral prejudice, previously unavailable in England to copyright owners.

Additional damages under the CDPA

Section 191J(2) CDPA provides that in an claim for infringement of performer’s rights, the court may award additional damages, having regard in particular to the flagrancy of the infringement.
Judge Hacon held that art. 13 (with reg. 3(3)) now provides a lower hurdle - of knowing infringement.  Consequently, s. 191J(2) has effectively become redundant.

***

In conclusion, Ms Henderson was awarded damages according to the 'user principle' of £30,000 and a further £5,000 pursuant to art.13(1)(a) of the Enforcement Directive, making a total of £35,000. This might not seem like an enormous result for her, some 7 years after the infringement, but the case has provided welcome clarification on the assessment of damages post-Enforcement Directive.”

Le Corbusier Heirs Score Win over Getty Images in France

 Charles-Édouard Jeanneret-Gris (
better known as Le Corbusier)

As I have noted before on this blog, photography occupies a rather unique place in copyright law inasmuch it is (or at least can be) a creative work protected by copyright as well as a vehicle for infringing the copyright of others.  It is this latter aspect that was on display in a recent ruling by the Paris Court of Appeals involving furniture co-created by famed archictect Le Corbusier and images thereof available for licensing on Getty Images' database.

Upon learning of photographs on Getty Images's voluminous image database that reproduced the furniture, the plaintiffs (holders of the moral and economic rights to the works) brought suit for infringement of copyright in the pieces of furniture.

After a detailed analysis of each photograph, the Court concluded that in certain pictures, the original furniture was indeed reproduced in a non-fortuitous manner (clearly identifiable in particular in their original aspects, central position in the foreground).  This is an application of well established principles in French law under which reproduction of protected subject-matter in photography escapes liability provided it is incidental, fortuitous or accessory to some principal object.  The Cour de cassation has held that this "exemption" is a limitation not an exception and survived the French transposition of the InfoSoc Directive's (closed) list of possible exceptions (see here).

The 2006 statute that effected the transposition did include an exception for the press with regard to the reproduction of certain works (e.g. buildings, statues) for news purposes (Section L.122-5, par.9 of the Intellectual Property Code - see here) but this was not applicable in this case.

As regards the issue of damages, the Court was unmoved by Getty's argument that there was no evidence that licensing of the pictures at issue had any adverse effect on sales of the actual furniture that was reproduced in the pictures.  Applying principles in effect in france since the 2007 transposition of the IPR Enforcement Directive, the Court looked to Getty's profits and awarded the sum of €1,800 per infringing photograph, in light of inter alia the quantity of images in the database and their exposure thereon (it pointed out that Getty itself claimed that its image database contained over 80,000,000 images) as well as Getty's bad faith (it had continued to offer the images for licensing despite an initial judgment in the plaintiffs' favour).

Getty's argument to the effect that there was no violation of Le Corbusier's right of attribution (paternity right) because his fame ensured that the public would be able to identify him despite his name not being cited was rejected out of hand by the Court.

The decision is Fondation Le Corbusier v. Getty Images (Paris Court of Appeals, Pole 5, 2nd chamber June 13, 2014)

Getting to grips with reality: when copyright claims grow out of proportion

Victor Lilley v Euromoney Institutional Investor plc and Metal Bulletin plc; Victor Lilley v Chartered Institute of Management Accountants; Victor Lilley v Aspermont UK Ltd [2014] EWHC 2364 (Ch) is actually a trilogy of actions on which Mr Justice Birss ruled in the Chancery Division, England and Wales, last week. In all three he was required to determine issues in relation to damages claims made by Lilley against against three publishers for copyright infringement.

Back in the 1990s, Victor Lilley wrote articles for various publications, for which he was paid a fee. Some time after their publication in traditional print format, copies of these articles appeared on the internet, without his permission. Lilley maintained that making his articles available on the internet infringed his copyright.  However, he claimed some extraordinary sums of damages: £27 million from Aspermont, £117 million from Euromoney and £450 million from CIMA. The claims were heard together.

Lilley applied for Birss J to recuse himself on various grounds, one of which was that he had executed what Lilley described as "yet another arbitrary, oppressive and unconstitutional action by servants of the government and the Court".  Lilley also sought an adjournment in respect of his claims against CIMA and Aspermont and for an order compelling Euromoney to answer a request for further information. In response, CIMA and Aspermont applied for Lilley's claims to be struck out on the ground that his claim for damages was "ludicrous".

In these proceedings Birss J had to determine (i) whether he should have recused himself due to apparent bias; (ii) whether the claims against CIMA and Aspermont should be adjourned on the basis that Lilley could not deal with all the claims together; (iii) whether to strike out Lilley's claims against them; (iv) whether the damages claim was indeed ludicrous; (v) whether Euromoney should be compelled to provide further information and (vi) whether a civil restraint order (CRO) should be made against Lilley.

Mr Justice Birss held as follows:

Recusal

Lilley had objected to the listing arrangements. However, the way his objections were dealt with would not lead a fair minded and informed observer to conclude that there was any real possibility that the judge making those directions was biased against him. What's more, the fact that judges reached the same or similar conclusions to questions they themselves had decided in an earlier case would not lead the fair minded and informed observer to think that a judge in that case was or would be biased.

By far the most proportionate, cost-effective and fair way to resolve the various issues arising in such closely related cases was to hear the applications together. It was important that the parties were on an equal footing, but Lilley's difficulties in preparing for the hearing were of his own making.

Striking out of Lilley's claims

Most of Lilley's claims against CIMA had already been struck out on the basis of the Limitation Act 1980. He had also been given the opportunity to provide further information in relation to any infringing acts on which he intended to rely which had taken place within the limitation period, but had not done so. Accordingly the rest of his claim against CIMA would be struck out.  His claim against Aspermont would not however be struck out; most of it was caught by the limitation period, just as happened with CIMA, but he still had a chance to provide particulars of alleged infringements falling within the limitation period.  The fact that his pleading was far too long, unclear and argumentative was not of itself a ground for strike out at this stage,

Calculation of damages

Lilley's damages would be calculated on an objective, willing licensor/willing licensee basis, at a sum which properly compensated Lilley for the infringements. This figure would be compensatory, not punitive in nature, looking at actual, commercially realistic rates for the appearance of articles on the internet.

The fair thing to do was to give Lilley one last chance to advance a proper case and set out a realistic claim relating to the quantum of damages.

Request for information

Lilley's request for further information was 22 pages long, argumentative and unclear, and Euromoney had gone to considerable lengths and cost to explain its position to him. Since requiring the company to set out yet further explanation of its position would achieve nothing, the request would be refused.

The CRO

Lilley's recusal application had been dismissed as totally without merit, as had his applications for adjournment and his request for further information. The very least that the court could do in such circumstances was to make a limited CRO.

In deciding whether a litigant had persistently issued claims or made applications which were totally without merit for the purposes of an extended CRO, the court should consider his conduct as a whole, so far as it could. All aspects of the litigant's conduct could be relevant, and not just his conduct in the proceedings in question.  Since Lilley had shown an irrational refusal to take no for an answer on numerous occasions, there were ample grounds for concluding that he had persistently issued claims or made applications which were totally without merit. An extended CRO would be made in each of the three cases before the court. This has the effect that, for two years, Lilley would be restrained from issuing claims or making applications in the High Court and the County Court without first obtaining permission.

Cases like this are always sad.  A claimant who knows or believes that his copyright has been infringed will often be ablaze with anger and resentment, especially when it appears that the infringer is well-resourced and has profited from the infringement.  However, it is important to retain a sense of proportion and that is what Birss J has done.

US Post Office to Pay $685,000 in Damages

Gaylord's sculpture entitled The Column

The US Post Office has been ordered to pay a historic $685,000 to Frank Gaylord after it issued a stamp that infringed copyright in Gaylord’s war memorial statues.  

In 1990 Vermont-based sculptor, Frank Gaylord, was selected to create a memorial to veterans of the Korean War. The resulting monument is made up of 19 life size, stainless steel, statues of Korean War soldiers, and is situated in Washington D.C’s West Potomac Park.

The US Post Office stamp

In 2002 the US Post Office issued a stamp to commemorate the 50th anniversary of the Korean War. The stamp features a photograph of Gaylord’s statues in winter, surrounded by snow. The Post Office offered Gaylord no compensation, causing Gaylord to file a copyright suit in 2008.

 

The Federal Court of Claims initially held the re-use was a non-infringing, fair use. In particular, the court believed the Post Office’s use was transformative and unlikely to harm Gaylord’s market. The finding of fair use was reversed in 2010.

Frank Gaylord. Photo: Glenn Russell

The Federal Circuit Court of Appeals believed the use was not transformative as both works served the same purpose i.e. the commemoration of veterans. The decision was remanded to the Federal Court of Claims to determine the appropriate damage level.

On Friday, the court awarded the 88 year old Gaylord nearly $685,000. Previously the highest compensation the Post Office has paid an artist was $5000. The Post Office says it “respectfully disagrees” with the decision and is considering whether to appeal. For Westlaw users the judgement is number 5290438.

Tenenbaum damages upheld

The latest stage in the Joel Tenenbaum saga has resulted in another court loss for the self confessed file sharer after a federal appeals court upheld the award of damages of $675,000 previously made by a jury. 

Tenenbaum was accused of illegally downloading 31 songs from a file-sharing Web site and distributing them, and was sued by the Recording Industry Association of america (RIAA) on behalf of the major record labels in the USA. US District Court Judge Rya W. Zobel rejected Tenenbaum's request for a new jury trial, saying jurors had appropriately considered the evidence of Tenenbaum's actions -- downloading and distributing files for two years despite warnings -- and the harm to the plaintiffs and noted that the penalty is at the low end of the range for wilful infringement and below the limit for even non wilful infringement, and thus was not excessive. Although having been previously refused a Supreme Court hearing, Tenenbaum's attorney Charles Nesson said that he plans a further appeal. 

More at CNet and E-Commerce and background on the 1709 here and here 

Image: freefoto.com (Ian Britton)

Assessment of damages: the need to keep a sense of proportion

The Magic Seeder Co Ltd v Hamble Distribution Ltd [2012] EWPCC 9 is an interesting and extremely short copyright damages decision of Judge Colin Birss QC in the Patents County Court, England and Wales, handed down on 29 February 2012.

The two parties both sold products which were used for planting seeds. Magic Seeder alleged that Hamble infringed the copyright in its product packaging. At trial the exact number of infringing sales was uncertain: Magic Seeder claimed that 620 of those sales had caused it to lose sales, in respect of which it claimed lost profits. Magic Seeder also claimed a notional royalty of £100 for the remaining infringing sales.

Magic Seeder submitted that there was one specific instance in which Hamble caused it to lose sales, since Hamble made a total of 192 infringing sales to a customer with whom Magic Seeder had hoped to secure a contract. According to Magic Seeder, its estimate of 620 lost sales was realistic because that figure comprised the 192 identified infringing sales, plus a further 428 sales which equated to 18 per cent of Hamble's remaining sales. Hamble argued that it was selling its products to a different market to Magic Seeder's, with the result that it would not have caused it to lose sales. What's more, said Hamble, there was a contradiction between Magic Seeder's figures of 428 and 620 for lost sales.

How did Judge Birss sort out this jumble of confusing figures and contrary assertions? He took the following approach.

First, he affirmed that the court's exercise in assessing damages had to be kept in proportion,bearing in mind the modest sums that were at stake in this litigation. Given the information about Hamble's sales, it was inherently likely that its infringement had caused Magic Seeder to lose sales; there was no reason not to accept that at least a sale of 192 units was lost.

Secondly he rejected the contention that there was any contradiction between the figures of 428 and 620: the explanation for the difference was that Magic Seeder said it could prove a loss of 192 sales, and an estimate of a further 428 lost sales was reasonable, giving a total of 620.

Thirdly, the fact that there was no contradiction between the two figures did not mean the court was obliged to accept the 620 estimate. That estimate was too high and was based on a flawed calculation, even though this could not be appreciated until after Magic Seeder had seen Hamble's actual figures. A figure of 500 lost sales represented a fair and reasonable estimate.

Fourthly, taking the same rate as Magic Seeder had originally claimed for 620 lost sales, the court would use that rate when assessing the quantum of damages payable for lost profits in respect of those 500 infringing sales. On this basis Magic Seeder was entitled to lost profits of £1,750.

Finally, the judge agreed that a fair royalty for those of Hamble's infringing sales which had not caused Magic Seeder to lose any sales was £100, just as Magic Seeder had originally sought. This was clearly a round number and, since it was not sensitive to the actual number of products which Hamble sold, the exact sales figure for infringing products did not matter.

PRS win big, even if for little money

News reaches us of a decision by Mr Kevin Prosser QC sitting as a Deputy Judge of the Chancery Division on the case of PRS Ltd v Alexander Burns and Williams Burn [2012] EWHC 221 (Ch) in an action against father and son defendants to restrain them from infringing PRS’s copyright in musical works by performing music in public and damages. It’s an interesting read and Prosser QC is somewhat critical of the role of Alexander Burns, the father, an acting solicitor in the running of the Remix Bar in Woking; the Judge was less than impressed with Mr Burns as a witness and went further saying “I wish to make a further, important, comment about Mr Burns. He had a very lax attitude towards the legal obligations which he and William owed to PRS”. Burn’s DJ son William’s activities were not without criticism with the judge saying “I was not impressed by his recollection of events. He was not at all concerned about performing music at Remix Bar in public without a licence from PRS (although I accept that he was relying on his father to advise him on this) and he failed to make or keep a proper written record of usage”. But in particular its a very interesting use of Section 97 of the Copyright Designs & Patents Act 1988 in awarding damages.

The actual sums of money involved are quite small and having found "flagrant infringement" Prosser QC used PRS's figures (in default of any figures from the defendants) to assess damages saying he “would encourage the parties to adopt a broad brush approach on this issue, in order to avoid further costs being incurred. On that basis, I consider that, leaving aside additional damages, they should agree that the balance of unpaid royalties amounts to £2,000, and that damages are payable amounting to £3,000, making £5,000 in total, plus interest” .

Prosser QC then went to assess "such additional damages as the justice of the case may require" pursuant to Section 97 of the CDPA 1988 saying “In my view, Mr Burns is guilty of flagrant infringement; he believed that the 2006 licence had been terminated but he did nothing to stop PRS’ copyright being infringed. Moreover, as an experienced solicitor, his lax and uncooperative attitude as mentioned [at paragraph 18] above was totally unacceptable, and it has put PRS to a great deal of time and trouble as well as expense. For these reasons I consider that the justice of the case requires that he should pay additional damages. If my broad brush approach, mentioned above, is followed by the parties, then I consider that they should agree to additional damages of three times the standard damages, that is £9,000. However, I do not consider that the justice of the case requires the court to award additional damages against William, because I consider that he was understandably relying on his father”.

No injunction was granted as the lease on the Remix Bar had been surrendered by the Burns.

The case isn't on BAILII as yet, but Lexisweb have the case report here

The cost of a Hendrix covermount

On 20 September 2006 the Sunday Times was distributed with a covermount CD of Jimi Hendrix’s legendary last UK concert at the Albert Hall in 1969. Experience Hendrix (Hendrix’s family’s company) and The Last Experience (the company of Jerry Goldstein, who recorded the concert) successfully asserted title to the band’s performance rights and the copyright in the recordings of the concert in a summary judgment in 2008. The question Sir William Blackburne has decided today is what damages Times Newspapers should pay.

Blackburne J was clear the defendant did have reasonable grounds to know that it was infringing as Experience Hendrix had challenged them prior to publication, though the paper was not recklessly indifferent to the problem – so damages would not be increased by reference to flagrancy or ‘moral prejudice’. Article 13 of the Enforcement Directive (2004/48/EC) sets out different damages regimes depending on the defendant’s knowledge, though it seems unclear that this altered the judge’s calculations.

At the time of the covermount the claimants were themselves intending to release a film of the concert plus accompanying DVD, CD and merchandising. Following the covermount this project was put on hold because (1) the claimants wanted a declaratory judgment that they owned the rights because (a) the rights dispute could scare off their project’s commercial sponsors and (b) the Sunday Times’s ultimate licensor, Charly, could go and do more damage elsewhere and (2) the covermount had spoiled the market for the claimants’ products. The judge was not convinced by the defendant’s arguments that (i) the problem with Charly existed irrespective of the covermount and (ii) the defendants could not be blamed for the effects of the claimants’ decision to suspend their project if that had been misjudged.

The judge held that:

1. If there had been no covermount the claimant’s project could have been launched in July 2007 though given the lack of urgency about the project September was more likely.
2. The delay caused to the claimants by the covermount distribution was one year. The claimants obtained declaratory relief in February 2008 and the spoiling of the market by the covermount was also no obstacle by February 2008 (if indeed the market had been spoiled at all).
3. The claimants could expect to be compensated in relation to the effect on their normal exploitation of the rights (was the claimant in the business of selling copies or licensing rights?). Here the claimants were planning to release a film etc, so those losses should be assessed.
4. The damages could cover economic loss outside the UK in as much as it stemmed from the infringement of UK copyright.
5. Quantum: difficult as the claimants have not yet gone ahead with their project. It was uncertain whether they would make any less money because their project had been delayed.
6. The covermount deprived the defendants of $5.8 million for 12 months.
7. The loss the defendants incurred by having the receipt of this sum delayed would be US base rate + 1% on $5.8 million over one year. That was considerably less than the sum the claimants were looking for.