Think before pilfering online photos for commercial use!
In Absolute Lofts South West London v Artisan Home Improvements, the Intellectual Property Enterprise Court (Court) has clarified how the quantum of damages in cases of knowing infringement of copyright should be determined. Apart from the “user principle” laid down in Henderson, the Court examined the potential difference of quantum that word arise from the application of s.97 (2) of the Copyrights, Designs and Patents Act 1988 (CDPA) and art.13 (1) of the EU Directive 2004/48/EC (IP Enforcement Directive).
Background of the Case
Artisan Home Improvements (Artisan) was a company which provided home improvement services in and around Bradford, whereas loft conversions was offered between early 2010 and April 2015. The company bought the website design from Mr. Bhatti in September 2010, and the design contained 21 images taken from the website of Absolute Lofts South West London Limited (Absolute Lofts), a company that specialised in lofts conversion in London. Absolute Lofts discovered its photos being used and complained of the use by Artisan in May 2014. Artisan soon removed the photos and the website went live again for a while before the company went into liquidation in April 2015.
Artisan accepted the liability for infringements, but issues arose as to the quantum of damages, namely the compensatory damages under the “user principle” and additional damages pursuant to s.97 (2) of CDPA and art.13(1) of IP Enforcement Directive.
Compensatory Damages under “User Principle”
The Court referred to the “user principle” from the case of Henderson. The starting point of the assessment of the damages would be “what the parties would have agreed as willing licensor and willing licensee”, or the amount the parties would have agreed before the photos were used. In the assessment, both parties submitted to the Court different experts’ evidence as to how much it would cost to find professional photographers to take those photos. However, the Court found the amount mere speculative. The Court awarded the amount of £300 eventually based on these reasons:
- Whatever amount would be a bonus to Absolute Lofts because it suffered no loss due to the different areas the two companies were operating
- Artisan just paid £300 for the 21 new photos for replacement, and the Court thought this would have been the amount Artisan willing to pay because Artisan was simply looking for the cheapest alterative to obtain some photos
The other issue in damages is related to the additional damages that Absolute Lofts was entitled to. The two seemingly competing provisions advanced by Absolute Lofts were s.97 (2) of CDPA and art.13 (1) of IP Enforcement Directive.
The Court first examined whether s.97 (2) was made obsolete because of the IP Enforcement Directive, and held that this could not be the intent of the legislation. Hence, both provisions could be used to assess the additional damages. The difference between the two provisions is that s.97 (2) considers the flagrancy of the infringement, whereas art.13 (1) considers whether the infringement was made knowingly.
The Court first started with the assessment under art.13 (1). Even though the director of Artisan denied any knowledge of the infringement, the Court held the otherwise because of his commercial dishonesty as shown by his willingness to use other’s photos to promote his own services. What’s more, the Court affirmed that knowledge could be inferred by complete indifference towards the sources of the photos, if not knowledge in the full sense.
Then the Court moved on to consider the two alternatives under the provision, namely unfair profits retained by the defendant, or the amount of royalties if there were a licence. The Court rejected the argument from the defendant that awarding the amount of royalties, which was the damages under “User Principle”, would preclude the award of damages based on unfair profit, and held that unfair profits could be taken into effect regardless of the alternative relied on. Eventually, the Court came up with the amount of £6,000 as the unfair profit gained by Artisan.
Finally, the Court agreed that the infringement was flagrant, but the amount would be the same under the assessment with s.97 (2). Hence, Artisan was required to pay a total of £6,300 to Absolute Lofts.
Besides re-affirming the “user principle” in the assessment of damages, the case has clarified the application of s.97 (2) of CDPA and art.13 (1) of IP Enforcement Directive. It is clear from the case that knowledge or indifference of the infringers would be sufficient as knowledge in order to evoke art.13 (1). Even though the Court did not make a clear line between flagrance under s.97(2) and knowledge under art.13(1), there may not be a need to distinguish the two practically because it’s hard to argue that an infringer with flagrance has no knowledge about the infringement or vice versa.
It is also obvious from the case that alleged infringers could not avail themselves of the defence that they did not do the act of infringement directly. Hence, whenever a company employs a design company for website design, the company must exercise reasonable care to ensure that the photos or other media in the website are obtained with the permission of the original owners.
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