Factual and Procedural Background
These proceedings concern a dispute over the quantum of damages owed to the Plaintiff ("Company A") for copyright infringement relating to 21 photographs. The Plaintiff owns the copyrights, having received a written assignment from the original photographer, who is also the owner of Company A. Company A operates loft conversion services in the London area and uses photographs of completed work on its website, sometimes enhanced through editing software.
The First Defendant ("Company B") is a home improvement service provider based in Bradford, with the Second Defendant ("Appellant") as its sole director and shareholder. Company B expanded into loft conversions in 2009 and began trading under that name in January 2010. The Appellant engaged a website designer who incorporated images on Company B's website, some of which were copied from Company A's website without authorization.
After receiving a letter before action in May 2014 regarding the unauthorized use of the photographs, Company B removed the infringing images and replaced them with licensed stock photos. Company B continued trading until it went into liquidation in April 2015. Company B admits liability for copyright infringement, and the issues for determination are the amount of compensatory damages under the user principle and whether additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988 ("the 1988 Act") or under Article 13(1) of Directive 2004/48/EC ("the Enforcement Directive") are payable.
Legal Issues Presented
- What is the appropriate quantum of compensatory damages due to the Plaintiff under the user principle for copyright infringement?
- Is the Plaintiff entitled to additional damages pursuant to section 97(2) of the 1988 Act, and if so, in what amount?
- Failing entitlement under section 97(2), is the Plaintiff entitled to damages under Article 13(1) of the Enforcement Directive, and how should such damages be assessed?
- Does section 97(2) of the 1988 Act remain applicable following the implementation of the Enforcement Directive, or has it been superseded?
Arguments of the Parties
Plaintiff's Arguments
- The Plaintiff contends that damages should be assessed under the user principle, reflecting what a willing licensor and licensee would have agreed immediately before the infringement.
- The Plaintiff seeks additional damages under section 97(2) of the 1988 Act, relying on the Defendant’s knowledge and flagrant disregard of copyright, supported by authority that a 'couldn't care less' attitude suffices for additional damages.
- Alternatively, the Plaintiff claims damages under Article 13(1) of the Enforcement Directive, including compensation for unfair profits made by the Defendant.
- The Plaintiff argues that the infringement was flagrant and that the Defendant had knowledge or reasonable grounds to know of the infringement, thus engaging both section 97(2) and Article 13(1).
Defendant's Arguments
- The Defendant claims that the website designer was responsible for sourcing the images and that he was unaware of their infringing nature.
- The Defendant asserts that he trusted the website designer to obtain images legitimately and did not inquire into their origin.
- The Defendant disputes knowledge of infringement and denies responsibility for the inclusion of photographs taken after the website launch.
- The Defendant emphasizes the cost of commissioning professional photographs was overestimated by the Plaintiff and argues a lower figure is appropriate for damages under the user principle.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Jodie Aysha Henderson v All Around The World Recordings Limited [2014] EWHC 3087 (IPEC) |
Explanation of the user principle in assessing damages for copyright infringement. |
Used as foundational authority for assessing compensatory damages under the user principle. |
| Force India Formula One Team Limited v 1 Malaysia Racing Team Sdn Bhd [2012] EWHC 616 (Ch); [2012] RPC 29 |
Guidance on the user principle and assessing damages in intellectual property cases. |
Referenced to support the legal framework for damage calculation. |
| 32Red OKC v WHG (International) Limited [2013] EWHC 815 (Ch) |
Further explanation of the user principle and valuation of damages. |
Supported the approach to hypothetical negotiations between willing parties. |
| Nottinghamshire Healthcare NHS Trust v News Group Newspapers Ltd [2002] R.P.C. 49 |
Knowledge required for additional damages under s.97(2) of the 1988 Act; a 'couldn't care less' attitude suffices. |
Applied to determine that the Defendant’s attitude engaged entitlement to additional damages. |
| Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2004] UKHL 46; [2005] RPC 9 |
Interpretation of statutory provisions and consistency with EU regulations. |
Used to interpret the relationship between national law and EU implementing regulations. |
| General Tire and Rubber Company v Firestone Tyre and Rubber Company Limited [1976] R.P.C. 197 |
Distinction between punitive and compensatory damages in English law. |
Referenced to contrast English law principles with the Enforcement Directive’s approach. |
| Livingstone v Rawyards Coal Co. (1880) 5 App. Cas. 25 |
Principle that compensatory damages aim to restore the claimant to the position before the wrong. |
Used to explain the English law approach to damages and its difference from the Directive’s standard. |
| Gerber Garment Technology Inc v Lectra Systems Ltd [1997] R.P.C. 443 |
Limitations on recoverable damages in English law based on foreseeability and causation. |
Referenced to illustrate the scope of compensatory damages under English law. |
Court's Reasoning and Analysis
The court began by establishing that copyright subsists in the photographs and that the Plaintiff owns the copyrights through assignment. The Defendant admitted infringement and joint liability. The court applied the user principle to assess compensatory damages, focusing on what a willing licensor and licensee would have agreed immediately before the infringement.
The court rejected detailed expert evidence on the cost of professional photography as unrealistic, given the Defendant’s known attitude to using the cheapest images that appeared adequate. The Defendant had replaced the infringing images with licensed stock photos at a cost of £300, which the court accepted as a reliable proxy for the hypothetical licence fee.
Regarding additional damages, the court found the Defendant’s knowledge or at least reasonable grounds to know of the infringement, based on evidence of the Defendant’s conduct, dishonesty, and failure to explain the presence of photographs taken after the website launch. The Defendant’s attitude was found to be indifferent to the infringement.
The court considered whether section 97(2) of the 1988 Act remains applicable post-Enforcement Directive. It concluded that section 97(2) and Article 13(1) of the Directive coexist, allowing claimants to rely on either provision to obtain additional damages, whichever is more favorable.
Under Article 13(1), damages must be effective, proportionate, and dissuasive. The court found that the Defendant made unfair profits from the infringement by misrepresenting the origin of the loft conversions, which contributed to the Defendant’s business profits. The Plaintiff suffered prejudice in a broader sense, being deprived of a share of those unfair profits.
The court assessed additional damages at £6,000 under both section 97(2) and Article 13(1), noting that these awards are not cumulative but alternative.
Holding and Implications
The court awarded compensatory damages of £300 under the user principle to the Plaintiff. Additionally, the court awarded further damages of £6,000 to the Plaintiff, either under section 97(2) of the 1988 Act or Article 13(1) of the Enforcement Directive, reflecting the Defendant’s knowing and flagrant infringement and the unfair profits made.
The additional damages award serves both compensatory and dissuasive functions. The ruling clarifies that section 97(2) remains applicable alongside the Enforcement Directive provisions, permitting claimants to elect the more advantageous remedy. No new precedent beyond the application of existing principles and harmonization with EU law was established. The decision directly affects the parties by quantifying the damages payable for copyright infringement in this context.