Who: Absolute Lofts South West London Ltd; Artisan Home Improvements Ltd & Darren Mark Ludbrook
Where: High Court of Justice, Chancery Division: Intellectual Property Enterprise Court
When: 14 September 2015
Law stated as at: 5 October 2015
What happened
The case
The case concerned the quantum of damages to be awarded for infringement of copyright under the ‘User Principle’ (for ordinary compensatory damages), and whether additional damages were due under either or both of:
(1) Article 13(1)(a) of Directive 2004/48/EC (the “Enforcement Directive“), and
(2) s. 97(2) Copyright, Designs and Patents Act 1998 (the “CDPA“).
The facts
The Defendants Artisan Home Improvements Limited (“Artisan“) and the director and sole shareholder, Mr Ludbrook operated a home improvements business in Bradford. The Claimant Absolute Lofts South West London Ltd (“Absolute“) operates a loft conversion business in London.
Artisan posted 21 photographs of loft conversions on its website. The photographs were not Artisan’s but came from Absolute’s website without Absolute’s permission. Following a letter before action from Absolute, Artisan removed the infringing images and replaced them with licensed images. Mr Ludbrook admitted to copyright infringement and accepted joint liability with Artisan.
It was left to the court to assess damages.
User Principle
The court assessed what the parties would have agreed to pay for the images as willing licensor and licensee. The court held that £300 was the appropriate amount, being the amount Artisan paid for the replacement licensed images.
Enforcement Directive
Absolute claimed further damages for unfair profits. Under Article 13, the court shall award damages appropriate to ‘the actual prejudice suffered’, and either:
(a) take account of all appropriate aspects, including, inter alia, unfair profits; or
(b) award a lump sum of at least the amount of royalties or fees which would have been payable.
The court held that Artisan’s profits were ‘particularly unfair’ as they arose from misrepresentation that the work done by Absolute was in fact Artisan’s. The court acknowledged that Absolute was not entitled to compensatory damages in the strict sense (i.e. putting the claimant in the position they would have been had they not suffered the wrong, which is limited to loss which was foreseeable, caused by the wrong, and not excluded from recovery) as Absolute had not lost profits as a result of Artisan’s infringement.
Instead the account for unfair profits was awarded so as to compensate for the ‘actual prejudice suffered’, and to be ‘dissuasive’, pursuant to Article 3(2) Enforcement Directive.
On this basis the court awarded the further sum of £6,000.
CPDA
The court considered whether implementation of Article 13 of the Enforcement Directive had rendered s.97(2) CPDA redundant; Hacon J had indicated this may be the case in Henderson ([2014] EWHC 3087 (IPEC)). Having considered the background, scope and in particular Article 2(1) of the Enforcement Directive, the court concluded that it was not redundant and both provisions could therefore be relied upon.
Under s.97(2), the court may award ‘such additional damages as justice may require’ having regard to the ‘flagrancy’ of the infringement, and, ‘any benefit’ accrued by the defendant.
The court found that the breach was ‘flagrant‘ and afforded a benefit to Artisan in the form of unfair profits. Whilst the route for estimating the quantum was different, the court arrived at the same sum of £6,000. Absolute was therefore entitled to recover further damages under either the Enforcement Directive or the CPDA, in addition to the sum payable under the User Principle.
Why this matters:
This is the first decision to consider the interplay between the Enforcement Directive and damages provisions of the CDPA. The court held that, whilst the Enforcement Directive is intended to harmonise IP protection and enforcement across Member States, it is not intended to override national law which may be more favourable to a claimant (provided that said national law is consistent with the provisions of the Directive).
As such, where a claimant would be entitled to recover additional damages under national law, in an amount equal to or greater than that recoverable under the Enforcement Directive, it will not be prevented from doing so.
Rights holders may therefore rely on either the CPDA or the Enforcement Directive; whichever would yield a greater award in damages. Hacon J cautioned however, that damages assessed by reference to unfair profits under each head were unlikely to be much different.
Postscript
In an interesting turn of events, after the judgment was handed down on 14 September, Absolute then applied for the decision to be reconsidered due to the fact that a page had been missing from their trial bundle.
The relevant page was an extract from the licence for images that Artisan acquired following Absolute’s letter before action. Absolute argued that Artisan had been in breach of the terms of the licence. It followed, therefore, that the £300 licence fee payable by Artisan was not an accurate representation of what it would have cost to obtain images it could lawfully use on its website. As such, Absolute submitted that the £300 award for compensatory damages handed down by Hacon J should be reconsidered.
In refusing this request, Hacon J relied on the test set out in Ladd v Marshall, together with consideration of the overriding objective.
Having done this, the court held that Absolute could not overcome the first part of the test, namely that ‘it could not have been obtained without reasonable diligence for use at the trial’. Further the Judge noted that only where the fresh evidence casts ‘a bright and truly compelling new light’ would it be ‘enough to tilt the exercise of the court’s discretion’.
