Islestarr Holdings Ltd v Aldi Stores Ltd

Factual and Procedural Background

The judgment concerns two applications: a summary judgment sought by the Plaintiff, Company A, against the Defendant, Company B, alleging copyright infringement of two artistic works, and a related application by the Plaintiff for permission to re-amend its particulars of claim. The Plaintiff claims copyright in two designs: the "Starburst Design," which decorated the lid of a makeup powder package, and the "Powder Design," embossed into the powders themselves.

Company A launched the brand, including the Filmstar Palette containing these designs, in 2013. The designs were developed jointly by Company A's employees and a design company, Company C, with intellectual property rights assigned to Company A. Over five and a half years, Company A sold approximately 12.9 million units of the Filmstar Palette. The Defendant produced two variants of a similar palette, selling approximately 20,248 units of one variant at a significantly lower price.

Company A became aware of the Defendant's first palette in July 2018 and alleged copyright infringement. Correspondence between the parties ensued, with the Defendant denying infringement but withdrawing the second palette from sale in December 2018. The Plaintiff issued a claim form alleging copyright infringement and breach of undertakings in December 2018.

The Defendant applied to transfer the claim to the Intellectual Property Enterprise Court, which was refused. Evidence was exchanged, including witness statements from both parties and the design company. Company A sought to re-amend its particulars of claim to clarify copyright ownership and incorporate a second assignment of intellectual property rights from Company C to Company A.

Legal Issues Presented

1. Whether the Plaintiff owns the copyright in the Starburst and Powder Designs.
2. Whether the Defendant's designs were indirectly derived from the Plaintiff's copyrighted works.
3. Whether the Defendant's designs reproduce a substantial part of the Plaintiff's copyrighted works.
4. Issues relating to breach of undertakings.
5. Entitlement to enhanced compensation due to alleged flagrancy and cynical breach of undertakings under section 97(2) of the Copyright Designs and Patents Act 1988.

Arguments of the Parties

Plaintiff's Arguments

• The Plaintiff asserts that the Starburst and Powder Designs are original artistic works created by its employees in conjunction with Company C, with intellectual property rights validly assigned to it.
• The Powder Design, despite being embossed on a transitory medium (the powder surface), qualifies for copyright protection as an artistic work fixed in a material form.
• The Defendant's palettes incorporate substantial parts of the Plaintiff's copyrighted designs, supported by visual comparison and evidence of the Defendant's prior access to the Plaintiff's works.
• The proposed re-amendment clarifies title and incorporates a second assignment to address criticisms of the initial assignment.
• There is no need for oral evidence or trial as the Defendant has no real prospect of successfully defending the claim.
• Secondary infringement claims have been abandoned if primary infringement is established.

Defendant's Arguments

• The Defendant denies copyright subsists in the Powder Design due to its ephemeral nature and lack of fixation.
• The Defendant challenges the originality of the designs, citing prior art and arguing that the designs incorporate generic art deco elements.
• The Defendant contends that the Plaintiff has not established clear title to the copyrights, pointing to contradictions and lack of evidence regarding assignments and joint authorship.
• The Defendant argues that the similarities in designs do not amount to copying of a substantial part and that differences negate infringement.
• The Defendant submits that the issue of flagrancy and the state of mind of its designers require oral evidence and a full trial.
• The Defendant criticizes the late filing of new evidence and the failure to identify sources of information and belief in witness statements.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first addressed preliminary issues regarding the admissibility of new evidence and permission to re-amend the particulars of claim. Despite criticisms that some evidence should have been served earlier, the court permitted the re-amendment, finding no procedural ambush given the Defendant's delay in objection.

Applying established principles of summary judgment, the court considered whether the Defendant had a realistic prospect of success. It emphasized that the court should not conduct a mini-trial but may decide clear points of law or fact where evidence is sufficient.

Regarding copyright, the court found both designs to be original artistic works fixed in a material form, rejecting the Defendant's argument that the Powder Design was ephemeral and non-protectable. The court relied on precedent establishing that fixation relates to the visual record of the design rather than the medium's permanence.

The court was satisfied that Company A owned the copyrights through valid assignments from Company C and that the designs were created by qualifying persons employed by the Plaintiff and Company C. It rejected the Defendant's contentions about joint authorship by manufacturers or others.

On originality, the court recognized the influence of generic art deco motifs but held that the Plaintiff's designs were more than mere generic ideas and were the product of intellectual creation by the authors.

In assessing infringement, the court undertook a detailed visual comparison of the Plaintiff's and Defendant's designs. It identified substantial similarities in key features that were not commonplace or unoriginal. The Defendant admitted prior access to the Plaintiff's designs, shifting the evidential burden to the Defendant to disprove copying, which it failed to do.

The court rejected the Defendant's arguments based on differences in design elements, holding that the similarities constituted copying of substantial parts of the Plaintiff's works. It further found no compelling reason, such as the need for oral evidence on flagrancy, to deny summary judgment.

The court expressed some concern about the Defendant's failure to identify sources of information in witness statements but did not find this determinative. It also found no material undermining the Plaintiff's evidence sufficient to require a trial.

Holding and Implications

The court granted summary judgment in favour of the Plaintiff. The core ruling is that the Defendant infringed the Plaintiff's copyright in both the Starburst and Powder Designs, which are original artistic works owned by the Plaintiff through valid assignments.

The direct effect is that the Plaintiff's claim succeeds on the issue of copyright infringement without the need for a trial. The court did not find any compelling reason to delay judgment or proceed to oral evidence. No new precedent was established; rather, the decision applied established legal principles to the facts before the court.