England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY

		Royal Courts of Justice, 7 The Rolls Building, Fetter Lane, London, EC4A 1NL
		13/03/2014

THE DEPUTY JUDGE:

1. This matter was originally listed as an application for summary judgment, but the defendant has accepted that the claimant is entitled to summary judgment and it comes before me on a much narrower basis. I have been provided with a draft order which is agreed between the parties save for the issue now of how much should be ordered to be paid by way of interim payment on account of costs by the defendant. To deal with the remainder of that order first, paragraph 1 asks the court to approve a declaration that has been agreed by consent, and paragraphs 2 and 3 respectively contain an injunction and an order that there should be an inquiry as to damages or an account of profits including additional damages. Paragraph 4 provides that there is permission to apply for directions for the inquiry or account. There was at one time a difference between the parties as to the wording of paragraph 5, but that has been agreed and it now takes the usual form that the costs in question are to be assessed on the standard basis if not agreed. I hereby make those orders.
2. So far as the amount of interim payment is concerned, I hope I can do justice to the rival submissions by saying this. The heart of the submissions of Ms. Sarah Ford, who has appeared for the defendant in front of me, is that this litigation, at least the aspect that I have in front of me, has been an example of "using a sledgehammer to crack a nut". She says that (a) this is a claim against a single publican in respect of a very small number of broadcasts, seven in all, (b) only some of those broadcasts are the subject of the summary judgment application now conceded by the defendant, and (c) the subject matter of the claim is not the entirety of the broadcasts, which are broadcasts of football matches, but is limited to claims for infringement of the copyrights in logos and graphics which appear as part of the broadcasts. The nub of her submission is that the claimant can only expect to recover at the end of the day very small damages for the admitted infringements of copyright that have occurred in its logos and those graphic works. This is because they are only part of the broadcast material -- the matches are not subject to copyright protection or a copyright claim in front of me -- and it is possible, she submits, for the defendant to have obtained a licence from BSkyB for £1,230.18 plus VAT per month, which would have given him access to the entirety of BSkyB's premium sports content. That would include the Premier League content, and that of course would include the logos and the graphic works.
3. I believe both sides are inclined to accept that the starting point on an inquiry as to damages would be to begin by assessing the amounts which would be agreed as between a willing licensor and a willing licensee. Ms. Ford's submission is that the BSkyB subscription cost is a good marker as to that.
4. There is also, as I have mentioned, a claim for additional statutory damages. That also will be the subject of the inquiry. Ms. Ford's submission is that I am not in a position to assess whether there will be any additional damages awarded. Ms. Lindsay Lane, who has appeared for the claimant, has put in a detailed skeleton argument, which she reiterated in part in her oral submissions, drawing my attention to the particulars of claim where a series of factors are listed in support of the additional damages claim. They include, in sum, that the decision in another case (QC Leisure I think) concerning infringement was widely known and would have been known to the defendant before the infringing acts occurred and, furthermore, that further infringements occurred after the letter before action was sent to the defendant. It is also said there were statements on the website of the claimant which are material in that regard, and (I infer) could and should have been seen by the defendant. Those in summary are the points made in support of the claim for additional damages.
5. Ms. Ford's position is that this claim in monetary terms is not going to be worth very much. She says that the costs judge will be entitled to have regard to that and also, Ms. Ford says, to the fact that this claim could and should have been commenced in the Intellectual Property Enterprise Court and would therefore be subject to that regime. This would have greatly reduced the claimant's recoverable costs, and to the extent there are issues within the claim involving European law and competition law, which she accepts are only suitable for determination by the High Court, she submits that those could have been referred up to the High Court at some stage and that there was no need for this action to be started in the Chancery Division. She also says that the endorsement on the claim form that the claimant expects to recover more than £25,000 is simply unjustifiable.
6. Ms. Lane's submissions really are to this general effect. She developed them under three headings. On quantification she says that these rights are plainly valuable. The claim form was perfectly appropriately expressed to state that the claimant expected to recover more than £25,000. There is a reasonable basis for that because what would be required here would be a licence over two seasons, the infringements starting on 15th September 2012 and ending on 4th December 2013. There is no requirement, she submits, for the claimant to particularise its damages at this stage and nor has it done so. She does not accept that the additional statutory damages claim is unlikely to succeed.
7. Her second main point was that this claim, far from having been brought in the wrong court, is clearly in the right court. The value is more than £25,000. It is a complex claim. The issues raised in the defence and counterclaim relating to competition law and free movement of goods are - on the defendant's case, the formulation of which is in the defendant's control - inextricably entangled with the copyright issues. She points to the fact that the claim has been conducted on the defendant's side, as it has on the claimant's side, by leading and junior counsel. The defence and counterclaim is signed by both leading and junior counsel and, indeed, leading counsel appeared for the defendant on a specific disclosure application in the course of the case. Moreover, because the issues raised by the defendant involved two separate areas of law (copyright on the one hand and EU and competition law on the other hand), it was necessary for the claimant to use counsel specialising in those two different areas, and also solicitor fee earners specialising in those two different areas, and this has inevitably increased the level of the claimant's costs.
8. Ms. Lane submitted that, on the defendant's case, the two claims are plainly intertwined and particularly relate to an issue as to whether there can be a new public where there has already been a communication to people in one Member State, comparing that communication to communications to people in other Member States for the purpose of the communication to the public right. In support of that submission, she took me to paragraph 9 and paragraphs 19 onwards, and particularly paragraph 25, of the defence and counterclaim.
9. Ms. Lane submitted that if the defendant wanted to have the matter tried in the Intellectual Property Enterprise Court he could easily have raised that matter a lot earlier. She says that other (comparable) cases have either been conducted in the High Court throughout or have ended up being tried either substantially or entirely in the High Court, even if started in the Intellectual Property Enterprise Court. She referred me to three cases in this regard: QC Leisure, FAPL v Luxton and BSkyB v Duarte.
10. Ms. Lane made a series of points in section 12 of her skeleton argument about these matters. She listed five matters in section 12 and they detail the points I have just attempted to summarise:

i) Mr. Berry made no application to have the proceedings transferred to the IPEC (or to any other track in the High court). He never even raised the point in correspondence.

ii) He made no application to transfer at the CMC, which was listed for 21 November 2013 and, indeed, consented to the directions that the claim be allocated to the multi-track, with a trial estimate of 2-3 days.

iii) Mr. Berry (through leading and junior counsel) pleaded a defence and counterclaim based on free movement and competition law.

iv) Mr. Berry resisted an application for specific disclosure made against him and was ordered to pay costs of £5,750. He was represented at this hearing by leading counsel and the costs were paid (late) on 19 November 2013. No question of proportionality relating to the legal costs of the proceedings was raised at that stage.

v) No application for transfer to the IPEC was made when FAPL issued the application for summary judgment which was listed for directions in the usual way. Mr. Berry consented to those directions.

11. Thirdly, as to the level of costs, Ms. Lane submitted that the reasons the costs are high are essentially due to the way in which the defendant has conducted the claim. Neither ownership nor subsistence of copyright were admitted, nor were the infringing acts. That required the production of a substantial body of witness statements from people dealing with the creation of the works, and the ownership, and from investigators who produced evidence that use had been made of the works which of course the claimant claims to be infringing use.
12. Then as far as the running-up of costs is concerned, Ms. Lane pointed out that the question of whether there should be summary judgment had been conceded very late in the day. All or substantially all the costs of the summary judgment application had been run up by that stage, so that the defendant should pay for those costs.
13. I hope in that way I have reasonably summarised the submissions that have been made to me. The heart of Ms. Ford's submissions, disputed by Ms. Lane, is that, while the defendant does not dispute that he should pay the claimant's reasonable costs, the costs in this case are manifestly disproportionate, or at least I cannot properly conclude that they are reasonable, and in particular that they would not be assessed at a very much lower level by the costs judge at the end of the day, in particular when the value of the financial recovery is known. Ms. Ford says that there is no licence for the claimant to proceed disproportionately, and I certainly agree with that.
14. So far as the quantification of the claim is concerned, it seems to me absolutely obvious that these rights are valuable and important rights. From the brief sight I have had of the relevant screenshots it is quite obvious that they convey useful and interesting information to viewers. Of course the defendant chose to use, without having first sought permission, broadcasts which incorporate those materials. It is not possible for me on a hearing of this sort to work out the extent to which in a hypothetical willing licensor and willing licensee negotiation the availability of a BSkyB licence would play a part either as a marker as to the level of fee that would be appropriate or by setting a ceiling on it. But Ms. Lane submits, in my judgment entirely reasonably, that even if that approach is right, the fee of £1,200 odd per month would produce something (she did this very roughly) in excess of £14,000 a year, and over two years you would get to a comparator of £28,000.
15. As to additional damages, again this is something I think which it is extremely difficult for me to appraise as to whether that is likely to come home or not. Obviously in the usual way what will happen is, when it has enough material to make an informed decision, the claimant will elect between a damages claim and an account of profits. At that stage if there was to be an account, in my view (obviously entirely provisionally), the relevant comparison would be between a pub that showed football matches and one that did not, because that is what the defendant chose to do: he showed football matches which had these copyright works shown together with them. The comparison between a pub that showed matches with logos and graphic works and one that showed matches without those works seems to me less apposite, even if broadcasts without such works would have been available to the defendant. What results that would produce on an account of profits it is impossible for me to say.
16. But I am very far from persuaded that the value of the claim will be in the measure of a few hundred pounds: in Ms. Ford's words, that it is "highly likely to be a relatively low value claim". I think that taking Ms. Ford's perhaps most realistic point of the BSkyB comparator, it seems to me even then it is likely that the £25,000 would be exceeded before one ever gets to any additional damages considerations.
17. However, much more significantly in my view than that question is the fact that it seems to me from what I have heard and seen that this litigation is part of a battle on a much wider front between publicans and the like in general and copyright owners such as the claimant in this case and BSkyB as to whether the claims of the copyright owners are untenable in light of European and competition law considerations. Ms. Ford told me that applications for permission to appeal had been made or were being contemplated in I think two of the other cases.
18. It seems to me that the importance of the rights to the parties on both sides are very high and very clear, reflected not least by the fact that both sides in this litigation have used very well known and experienced leading and junior counsel -- I can see that from the costs bills that I have -- and that all these cases are being contested, no doubt because they raise points that differ one case from the other. That I consider to be very relevant on the proportionality of this litigation and the costs incurred.
19. Secondly, it seems to me that where a defendant takes the stance of defending a case across the board, not just relying on, for example, competition and European Union law points, but putting a claimant to proof of the subsistence and ownership of copyright and the allegedly infringing use which has occurred, the extent of it and the fact that it happened at all, then it is readily foreseeable that substantial costs will be incurred in meeting those points. In my view, the claimant, if it wants to achieve a judgment on liability, has no option but to deal with them, and it is difficult to see how a more proportionate response could be adopted than putting in the necessary evidence.
20. Ms. Ford -- and I make absolutely no criticism of her on this -- is not able to point to any parts of the witness evidence on those issues, that is, subsistence, ownership and use, which is excessive or disproportionate. That item alone from what I saw accounts for some £27,000 of costs in preparation. I do not consider, from what I have seen -- obviously I make no ruling -- that there is anything disproportionate about that.
21. Those are the matters I think that are of more significance as to the proportionality of the issues in the claim and the costs which are involved.
22. As to the question of going about it in a different way and bringing the claim in the Intellectual Property Enterprise Court, for example, it seems to me that if those points are good points they could and should have been raised by the defendant at a much earlier stage. In fact, if my understanding is right, they first surfaced in the correspondence in a letter from the defendant's solicitors dated 10th March 2014. And that letter was written in the context of the dispute that is now in front of me as to the proper level of costs in this case and the proper amount to be awarded by way of interim payment.
23. There are two possibilities. One is that neither side realised there was any argument of this sort available at all, which rather strengthens the suggestion that the claimant has not been unreasonable in proceeding as it has by bringing the claim in the High Court. The other possibility is that the defendant realised that this argument was available earlier than 10th March 2014, but for some reason decided not to raise it.
24. On either of those approaches, and I think it is the former one that actually is likely to be right, I consider there is a lot of difficulty in the argument that the claimant has gone about this in the wrong or a disproportionate way. I do not place much reliance on what was said about other cases, because it is difficult to know about the details, but the fact is other cases have, as I understand it, proceeded in the High Court. One of them Luxton did result in an interim payment order of £65,000. I have been told slightly differing things about what happened in Luxton. I do not attach a lot of weight to that, but in general terms it seems to me that Luxton, from what I have gathered, is a comparable case to this, although it apparently involved disposal of the entire claim. Ms. Ford, who was in that case, says that the costs bill was produced by the claimants in that case very late. But the fact is that Rose J on 30th January 2014 did not only grant summary judgment after a hearing but also ordered an interim payment of £65,000 within 28 days. That perhaps gives one some comfort that an order of that sort is not wildly out of the appropriate league.
25. Those are the matters to which I attach importance. I accept Ms. Ford's submission that the costs judge will be able to look at these matters, and that the costs judge could take the view that the claim should have been handled differently. The costs judge will know what the final outcome is and maybe some of the points I have made will be appropriately revisited at that stage. But at the moment it seems to me that the attack on the claimant's mode of proceeding, both by bringing the claim in the Chancery Division and incurring the sort of level of costs that have been incurred in this case broadly fails. I do not consider that the level of costs, although high, is especially surprising. I note that I have been given no information as to the defendant's costs. That is the defendant's prerogative, but it certainly has not been submitted to me, let alone made out, that the defendant's costs on their side are of a completely different order. In any event, I would expect the claimant's costs to be higher because of the need to prove subsistence, ownership and use which are matters which the defendant does not have to run up similar costs in dealing with.
26. I think the agreed principle is one that I can take from the costs disposal of Vos J (as he then was) in United Airlines Inc. v United Airways Limited [2011] EWHC 2411 (Chancery). What he said in that case, and I believe it is not in dispute between counsel, is that he had to determine not the irreducible minimum that is likely to be awarded, but a reasonable estimate of what is likely to be awarded.
27. The claimant has gone about reducing the total bill of costs in this case to take account of aspects of the litigation which are still live. The figures given in Ms. Lane's skeleton argument are that the costs relating to the summary judgment application amount to £107,710.98. The remaining costs are in the sum of £70,926.31. The claimant has taken four instances out of seven, reflecting the split between the claims in respect of which there is summary judgment and in respect of which there is not summary judgment and applied it to that figure of £70,000 odd. That produces a total claim, according to her skeleton argument, of £148,000.70. 50% of those costs would be roughly £74,000, and she asks for an interim payment of £65,000. That is, as it happens, roughly in line with the kind of percentage Vos J ordered in the United Airlines case, although Ms. Ford said that case was different, not least in that it involved large businesses and not an individual publican. The interim payment offered by the defendant through Ms. Ford was one of £10,000.
28. Doing the best I can, I consider that the sum for which the claimant has applied is an appropriate sum and I am going to make an award in the sum of £65,000 as an interim payment. I will order that sum to be paid in 28 days.

(See separate transcript for proceedings)