Background
Charles and Ivy Limited sells fencing products, while Charles and Ivy Top Limited owns the copyright in 20 professionally produced images of fencing elements and finishes and licenses those rights exclusively to Charles and Ivy Limited. Chelsea Supplies Ltd, a nearby competing retailer, admitted liability after a web developer acting as its agent used the images on Chelsea Supplies’ website to promote competing fencing products.
Following Chelsea Supplies’ admission and consent to judgment on liability, the Intellectual Property Enterprise Court held an inquiry to determine compensatory and additional damages. Chelsea Supplies abandoned its statutory innocent-infringement defence, while the claimants did not pursue exemplary damages. The remaining issues included Chelsea Supplies’ knowledge, the reasonable licence fee, additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988, and costs.
The court found Chelsea Supplies’ disclosure and its director’s evidence extremely unsatisfactory. Drawing adverse inferences from missing communications and witnesses, the court rejected the assertion that the images were merely temporary placeholders accidentally left online. It found it more likely that a Chelsea Supplies employee directed the developer to the claimants’ website and that the developer deliberately used the images because equivalent images were unavailable.
The Court’s Holding
The court held that Chelsea Supplies, through its employees and admitted agent, knew or had reason to believe that copyright subsisted in the images. Their knowledge was attributable to the company. The court assessed compensatory damages at £4,000, representing the reasonable fee for a non-exclusive licence covering the actual use of the 20 images for approximately nine to 12 weeks.
The infringement was flagrant for purposes of section 97(2): the developer deliberately used professionally produced images taken from a nearby competitor’s commercial website, displaying at least a “couldn’t care less” attitude to the claimants’ rights. Their use also benefited Chelsea Supplies by allowing it to launch its competing fencing pages sooner. Accounting for the short period of live use, prompt removal after notice, lack of proven additional sales or profit, and rejection of the claimants’ moral-prejudice argument, the court awarded £3,000 in additional damages.
Judgment was therefore entered for £7,000 plus interest under section 35A of the Senior Courts Act 1981. Chelsea Supplies was also ordered to pay £13,704.50 in summarily assessed liability-stage costs. The court further ruled that the claimants were entitled to their costs of the damages inquiry, with submissions on the appropriate costs order and any summary assessment to follow.
Key Takeaways
- A company may be fixed with copyright-related knowledge acquired by its employees and by an agent acting within the scope of the assigned task.
- Where lost sales or infringer profits cannot reliably be established, compensatory damages may be measured by the reasonable licence fee the parties would hypothetically have negotiated for the actual use.
- Deliberate commercial use despite reason to believe copyright subsists can justify additional damages, while prompt removal and limited proven gain may reduce the award.
Why It Matters
The judgment illustrates the evidential consequences of inadequate disclosure in an infringement inquiry. Missing communications, unexplained omissions, and failure to call witnesses with direct knowledge allowed the court to draw adverse inferences and reject Chelsea Supplies’ placeholder explanation.
It also shows that a relatively brief online infringement can produce liability beyond the notional licence fee. Additional damages may reflect flagrancy and the commercial benefit of accelerating a product launch, while substantial recoverable costs—including costs of both the liability phase and damages inquiry—may exceed the damages themselves.