Cala Homes (South) Ltd & Ors v Alfred McAlpine Homes East Ltd

Factual and Procedural Background

This is an action for copyright infringement and inducement of breach of contract involving five plaintiffs, four of which are companies engaged in designing and building houses, collectively referred to as Company A, and one individual plaintiff employed as Design Director by Company A. The defendant, Company B, operates in the same industry. The dispute arises from alleged copying of house design drawings originally created by Company A and its associated technical draughtsmen firm, Company C, by Company B after a former senior director of Company A, who became managing director of Company B, engaged Company C to produce modified house design drawings.

Historically, Company A's group had numerous independent companies each designing houses regionally, leading to a wide variety of designs. In the late 1980s, Company A rationalised its activities by developing a standardised range of house designs, the New Standard House Range, largely developed by the individual plaintiff and Company C's employees. Company C produced most of the drawings for this range under instructions from the individual plaintiff.

Following the departure of the former senior director from Company A to Company B in 1991, Company B engaged Company C to produce house design drawings for a new site, which included modified drawings originally from Company A's New Standard House Range. Company A claims these drawings were copied without consent, infringing their copyright and inducing breach of contract.

Legal Issues Presented

1. Whether the 1985 drawings created by the individual plaintiff are subject to subsisting copyright and whether Company B's drawings and houses substantially reproduce them.
2. Whether the New Standard House Range drawings produced by Company C are works of joint authorship involving the individual plaintiff and thus owned jointly by Company A.
3. Whether Company C held the copyright in the New Standard House Range drawings on trust for Company A.
4. Whether Company B induced Company C to breach an implied contractual term of exclusivity in relation to the New Standard House Range drawings.
5. Whether Company A is entitled to additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988 for flagrant infringement.

Arguments of the Parties

Plaintiffs' Arguments

• The 1985 drawings by the individual plaintiff are original artistic works subject to copyright, and Company B's works substantially reproduce them indirectly through the New Standard House Range.
• The New Standard House Range drawings are works of joint authorship between the individual plaintiff and Company C's employees, giving Company A joint ownership of copyright.
• Alternatively, Company C holds copyright on trust for Company A, entitling Company A to sue for infringement.
• Company C was contractually obliged not to use the designs for third parties; Company B, through its managing director, induced Company C to breach this exclusivity.
• Company B's infringement was flagrant, justifying an inquiry as to additional damages under section 97(2) of the 1988 Act.

Defendant's Arguments

• The 1985 drawings lack originality as they were derived from pre-existing works; no substantial part was reproduced in Company B's drawings or buildings.
• The floor plan drawings of the New Standard House Range lack originality, though elevations are original; the individual plaintiff was not a joint author as the drawings were created solely by Company C's employees.
• Copyright in the New Standard House Range drawings belongs to Company C, who was entitled to use and license them to Company B; no trust exists in favour of Company A.
• No implied exclusivity term existed in the contract with Company C; Company B did not induce breach of contract but sought new, distinctive designs.
• The claim for additional damages lacks legal basis; the infringement was not flagrant.
• The plaintiffs must identify the exact drawings infringed; ongoing modifications to designs complicate this identification.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by assessing the originality and subsistence of copyright in the 1985 drawings. It found that the individual plaintiff applied significant skill and effort, producing designs that incorporated material alterations from prior works, thus qualifying for copyright protection. The court rejected the defendant's argument that the drawings were mere copies of antecedent works.

Regarding substantial reproduction, the court found that the defendant's drawings and constructed houses substantially reproduced the plaintiffs' 1985 drawings, establishing infringement.

On the New Standard House Range drawings, the court examined the nature of the collaboration between the individual plaintiff and Company C. Although the drawings were physically produced by Company C's employees, the individual plaintiff provided detailed instructions, exercised editorial control, and determined the design features. The court interpreted "joint authorship" under the Copyright, Designs and Patents Act 1988 as requiring collaboration with significant contribution from each author, not limited to physical execution. It held that the individual plaintiff was a joint author, indeed the major author, of the New Standard House Range drawings, making Company A a joint copyright owner.

The court rejected the defendant's narrow view that authorship depends solely on who physically drew the lines, holding that authorship includes the skill and effort in creating and selecting design features fixed in tangible form.

Given the joint ownership, the court found no necessity to imply a trust in favour of Company A over Company C's copyright. However, had joint authorship not been established, the court would have implied a contractual exclusivity term preventing Company C from using the designs for third parties and would have found that Company B induced breach of that term.

On the claim for additional damages under section 97(2) of the 1988 Act, the court held that this provision allows awarding damages for flagrant infringement regardless of the infringer's knowledge of infringement. The evidence showed that Company B, through its managing director, deliberately and blatantly copied Company A's designs, with full awareness of their origin. The court found the infringement flagrant and suitable for additional damages, directing an inquiry into quantum.

Finally, the court critically examined the conduct and report of the defendant's expert witness, concluding that the expert's partisan approach and selective presentation of evidence diminished the report's value. The court reaffirmed the role of expert witnesses as independent and unbiased providers of opinion to assist the court in discovering the truth.

Holding and Implications

The court held that:

• The 1985 drawings are original works protected by copyright, owned by the plaintiffs, and substantially reproduced by the defendant, constituting infringement.
• The New Standard House Range drawings are works of joint authorship between the individual plaintiff and Company C's employees, making Company A joint owners of the copyright, and the defendant infringed that copyright.
• There is no necessity to imply a trust over copyright in favour of the plaintiffs given joint authorship.
• The defendant flagrantly infringed the plaintiffs' copyright, justifying an inquiry into additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988.

Implications: The decision confirms that joint authorship can arise from collaboration involving detailed instructions and editorial control, not limited to physical creation of the work. It affirms the court's discretion to award additional damages for flagrant copyright infringement irrespective of the infringer's knowledge. The ruling directly affects the parties by establishing infringement and entitling the plaintiffs to damages, but does not set new precedent beyond the application of existing principles in joint authorship and copyright infringement.