A year in review: what businesses can learn from 2019’s UK copyright judgments
January 2020 | SPECIAL REPORT: INTELLECTUAL PROPERTY
Financier Worldwide Magazine
January 2020 Issue
These are challenging times for many businesses, but in a climate of economic uncertainty a healthy portfolio of intellectual property (IP) rights becomes even more important than usual. IP rights can help a business stand out in a crowded marketplace by establishing strong branding, preventing competitors copying key product lines and generating revenue from exploitation within the business itself or out-licensing.
This article focuses on one of the core IP rights: copyright. Copyright protects a broad variety of business assets, including websites, marketing materials and software, as well as emails, reports and other documents created within the business more routinely. Copyright prevents others, including competitors, from copying protected works and using those copies for their own commercial benefit. Copyright arises automatically when the work is created; there is no registration requirement and so no fees or renewals. Copyright in works created by employees in the course of their employment is automatically owned by the employer.
This article reviews a selection of the key copyright decisions of the English courts over the last year and pulls out some of the practical takeaways for businesses around copyright as an asset.
In Happy Camper Productions v. BBC, a comedy script written by one of the claimant’s directors was rejected by a producer who then went on to produce a drama for the BBC which the claimant alleged copied the ideas in, and content of, its script. The claimant applied for an injunction to restrain the BBC from broadcasting its drama. The application failed. Discrepancies in the evidence around when the producer had received the claimant’s script cast doubt on whether the BBC’s writers ever had an opportunity to copy it. It was also unlikely that the claimant owned the copyright in the script. The author was not an employee of the claimant and had never assigned the copyright to the claimant. The judge was also unhappy that Happy Camper had known about the BBC drama for six months but had waited until the ‘last minute’ to apply for the injunction.
This case is a useful reminder of the importance of being able to evidence ownership of copyright when seeking to enforce it. An audit trail should be kept, including dates, drafts and the names of the personnel involved, when key copyright works are being created in the business. Authors who are not employees, for example independent website developers or more commonly in small and medium sized enterprises (SMEs), business owners without formal employee status, must expressly assign to the business the copyright in what they create. Businesses which fail to do this will be severely restricted in how they are able to use works in the future. For example, it may be very difficult to make changes to the website or exploit business assets. It is also important to act quickly when there is suspicion of copyright infringement and an injunction is needed. Companies should seek legal advice without delay or a court may limit the remedies available.
If a business finds itself on the wrong side of a copyright infringement action, then a swift response may also be beneficial in limiting the damages payable. In Reformation Publishing Company Ltd v. Cruiseco, the defendant marketed its 1980s music themed cruises using a publicity clip, which was produced for them by an external advertising agency, ANA, and which included extracts from two well-known hits by the pop group Spandau Ballet. The clip was distributed to travel agents and uploaded to a file-sharing website. Reformation, as the owner of copyright in the music and lyrics of the two songs, contacted Cruiseco who immediately removed the clip and instructed the travel agents to end all use. The clip was in use for five days in all. The judge held that Reformation was entitled to damages for the copyright infringement, which were assessed by reference to a notional licence fee. Crucially, the judge decided that Reformation was entitled only to the licence fee for the period of the actual infringement and not for the full duration of the licence that Reformation and Cruiseco would have negotiated had ANA, on Cruiseco’s behalf, initially approached Reformation for permission, which would likely have resulted in a yearlong licence.
The takeaway from this case is to react quickly on receipt of an allegation of copyright infringement in order to minimise the damages payable. Sadly for Cruiseco, it was ordered to pay additional damages to reflect ANA’s reckless attitude to copyright clearance issues. The message to businesses is always to carry out due diligence on new suppliers.
Can the knowledge of a director impact on a company’s liability for secondary copyright infringement (dealing in infringing copies of a protected work)? In FBT Productions v. Let Them Eat Vinyl, the court was satisfied on the facts that the managing director of Plastic Head, a company selling unauthorised copies of Eminem’s first album ‘Infinite’, neither knew nor had reason to believe that the copies were infringing copies. This was largely due to the prudent and reasonable steps he had taken to check that appropriate licences were in place permitting the sales; they were not actually in place, but the checks he had carried out were decisive in the state of mind attributed to him by the court. He had, for example, liaised with the Mechanical Copyright Protection Society and reasonably believed that the copies had originally been manufactured under licence from FBT, the copyright owner. Also, once notified of FBT’s rights, he had withdrawn the copies from sale quickly. Directors and other business ‘guiding minds’ should note the impact of good faith clearance checks, and acting quickly on receipt of a claim, on minimising corporate liability.
A thorn in the side for brand-heavy businesses is lookalike products. In Islestarr Holdings v. Aldi Stores, the claimant owners of the ‘Charlotte Tilbury’ brand alleged that Aldi had infringed copyright in its ‘Filmstar’ make-up palettes by copying the art deco design on the lid and the design embossed into the powders in the palette. Aldi argued that copyright did not subsist either in the powder design, because it would disappear when the powder was used, or the lid design, because it was not original. The question of whether a work must be permanent to attract copyright protection has vexed the IP world for some time. The judge in this case held that the design in the powers was protected by copyright, despite it being rubbed away when the powders were used. The powders were simply a three-dimensional reproduction of the copyright-protected two-dimensional drawings of the design. He also held that the lid design was original. Although the claimant’s employees had been inspired by existing art deco designs, they had not slavishly copied them. Ultimately, the lid design was the result of the intellectual creation and independent skill and effort of those employees.
This case confirms that transient works, for example a wedding cake or the presentation of food on a plate, both of which will be eaten, fall within the scope of copyright, particularly where the work reproduces an earlier 2D drawing, so named and dated drawings should always be retained. Employee designers should be given training to understand the difference between inspiration and copying. This may not be an easy line to draw in practice and so businesses should maintain ongoing dialogue with their legal advisers prior to a product launch.
One of the challenges facing businesses in recent years has been the regulatory impact of the General Data Protection Regulation (GDPR). In Mircom International v. Virgin Media, the court was asked to consider how the GDPR impacts on the availability of ‘Norwich Pharmacal’ orders. These orders require data controllers, such as internet service providers (ISPs), to hand over personal data to rights holders that identifies IP infringers, for example the IP addresses of individuals downloading pirated films. The court dealt with the question swiftly, holding that the GDPR would have no impact. Although the IP addresses were personal data, the rights holders would merely be data recipients, not data controllers, and so not subject to the more onerous GDPR obligations on controllers. This case is good news for rights holders as it confirms that the GDPR should not be an obstacle to obtaining information about infringers to allow for the enforcement of IP rights.
While Kogan v. Martin was a rather unseemly battle over whether Ms Kogan and Mr Martin had jointly authored a screenplay, it did allow the Court of Appeal to give some very helpful guidance around how to assess whether a copyright work has been jointly authored. Most strikingly, the court highlighted that the author is not merely the person who ‘holds the pen’, but that a person who provides background authorial contributions, such as ideas, themes and so on, may be a joint author. To avoid similar disputes, businesses should contractually agree at the outset of a project who is to own the copyright in the resulting work or, perhaps more importantly, how the commercial spoils from exploitation of the work are to be divided.
Because of its broad scope, long duration and automatic existence without the need for registration, copyright is a valuable business asset. As part of good IP portfolio management, businesses should work with their legal advisers to carry out audits identifying what they own copyright in, and where there may be gaps in copyright protection that need to be filled.
Iain Connor is a partner at Pinsent Masons LLP. He can be contacted on +44 (0)20 7418 8260 or by email: iain.connor@pinsentmasons.com.
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Iain Connor
Pinsent Masons LLP