New decision on the assessment of additional damages for infringement of copyright

A recent case in the Intellectual Property Enterprise Court has helped to clarify the test for additional damages in cases involving the breach of copyright in images.

5 January 2016

A recent case in the Intellectual Property Enterprise Court has helped to clarify the test for additional damages in cases involving the breach of copyright in images. In Absolute Lofts South West London Limited v Artisan Home Improvements Limited and Another, liability for breach of copyright was admitted so the only decision for the Court was whether additional damages should be awarded on top of the usual compensatory damages. This involved deciding whether Section 97(2) of the Copyright, Design and Patents Act 1998 (the “Copyright Act”) still applies or whether it has been superseded by Article 13 of the Directive on the Enforcement of Property Rights 2004/48/EC (the “Directive”).

The Case
Absolute Lofts is a company that carries out loft conversions. Its owner sometimes took photographs of completed conversions to put on its website. Artisan was another home improvement company offering loft conversions. On its website, it used 21 of Absolute’s photographs of completed conversions. Absolute sent a letter before action to Artisan who promptly replaced the photographs with images from a stock photograph library. Absolute then raised proceedings for damages. As liability was admitted, the Court focused exclusively on the measure of damages. It looked first at compensatory damages and then additional damages. 

Compensatory Damages
The starting point for cases such as these is an assessment of what the parties would have agreed to if they had both been willing to enter into negotiations for the licensing of the copyright in the images. The Court looked at the hypothetical negotiating position of both the parties. As they operated in a different region to Artisan, the Court decided that Absolute effectively had nothing to lose from allowing Artisan to use its images and would just be seeking to get as much money as it could. Artisan, on the other hand, would seek to pay as little as possible and, importantly, had shown itself unconcerned as to whether the photographs were of a professional standard or even whether they were of lofts that Artisan had converted. It also had the option of using a stock photograph library. In these circumstances, the Court ruled that the evidence led by both sides as to what a professional photographer would have charged to take customised photographs was irrelevant. A better guide was what Artisan actually paid to use the stock library photographs that it used following the Absolute’s pre action letter. The Court accordingly awarded the sum of £300 compensatory damages.

Additional Damages
Section 97(2) of the Copyright Act allows additional damages to be awarded where the breach is flagrant or where the infringer has accrued a benefit and Article 13 of the Directive requires the court to take into account lost profits of the copyright holder, unfair profits made by the infringer and moral prejudice. 

The Court here found that Artisan’s breach had met the test for both due to the flagrancy of the breach and the contribution to Artisan’s profits that the photographs had presumably made. It decided that where there was a difference the claimant was entitled to the higher sum of damages resulting from application of the two tests but in this case the level of damages for each was £6,000. The Court therefore came to a total award to Absolute of compensatory damages of £300 and additional damages of £6,000.

The assessment of compensatory damages in this case is interesting as it shows the common sense approach that the court will take. However, the case’s main significance is in relation to additional damages. In Jodie Aysha Henderson v All Around the World Recordings Limited, the same Court had suggested that Section 97(2) rights had been rendered obsolete by Article 13 although it had not had to decide the matter conclusively. However, when faced with this case, the Court took Article 2(1) of the Directive into account which states that it is intended to provide a minimum level of protection. It follows that national legislation that is more favourable to rightholders is preserved and therefore that the rightholder is entitled to whichever measure of damages is higher. While the result in many cases will be the same, this decision shows that the Court will use Article 13 alongside Section 97(2) rather than as a replacement.