England and Wales Patents County Court

IN THE PATENTS COUNTY COURT

		St. Dunstan's House 133-137 Fetter Lane London EC4A 1HD
		22/06/2011

His Honour Judge Birss QC :

1. This is a case management conference in an action for infringement of copyright. Mr Gareth Tilley instructed by McDaniel & Co. appears for the claimant. Mr Richard Davis instructed by Wright Hassall appears for the defendants. In the course of the hearing one of the matters to be decided was an application by the claimant to amend the Particulars of Claim. I decided to refuse the amendment with reasons to be given in writing. These are those reasons.

The existing claim

2. The claimant ("Temple Island") supplies gift and souvenir items. It contends that it is the owner of copyright which subsists in an original artistic work, namely a stylised photograph of a red Routemaster bus depicted on a greyscale image of Westminster Bridge, before the Houses of Parliament. It was created in about August/September 2005 and has been used on various items of merchandising from about late 2005, including souvenir items such as posters, mugs and key rings. Mr Tilley described the image as iconic. The work was created by the claimant's founder and managing director Mr Fielder. This work can be referred to as the "2005 Work".
3. The first defendant ("New English Teas") sells tea. The second defendant ("Mr Houghton") is the sole director of New English Teas. On one of the defendants' boxes of tea is an image of a red bus depicted on a greyscale image of Westminster Bridge, before the Houses of Parliament (the "Tea Box Image"). The claimant contended that image infringed their copyright in the First Work. That copyright claim was settled in correspondence starting from a Part 36 offer in March 2010.
4. However in October 2010 the claimant discovered that the defendants were using a second image of a red bus depicted on a greyscale image of Westminster Bridge, before the Houses of Parliament. The second image appears (at least) on a tin for tea bags. The image can be referred to as the Tea Bag Tin Image. The claimant's case is that this also infringes its copyright.
5. By December 2010 there were some outstanding disputes concerning the settlement agreement but the main dispute was about the Tea Bag Tin Image. The claimant commenced proceedings in the High Court on 15^th December 2010. The Defence was filed in January 2011 and the case was transferred to the Patents County Court afterwards.
6. Accordingly the procedural scheme in the Patents County Court in place since October 2010 applies to this case.
7. The case management conference came before me today (15^th June 2011). A key element of the CMC in the Patents County Court is to identify the issues (CPR Pt 63 r 63.23(1)). Experience with the new procedure so far has shown that conducting a review of the issues at the CMC is a useful exercise over and above dealing with the question of the orders to be made to progress the case. So it proved here.
8. In the course of reviewing the issues, it became clear that the disputes relating to the settlement agreement were self contained and capable of being safely hived off and dealt with on paper. One dispute was quantum, first as to an amount of royalty, it being fairly clear that the sum on any view will be of the order of £5,000; and second as to the cost of drawing up a licence, the rival figures being £500 and £2,000. The other dispute was as to whether or not the settlement included a term requiring New English Teas to enter into a formal licence. That depended only on analysing correspondence. So the settlement issues will be determined on paper with the parties filing written submissions on a tight timetable and page limits on the material to be filed.
9. The review of the copyright claim clarified the true scope of the dispute significantly. It quickly became clear that there is no dispute as to subsistence of copyright in the 2005 Work or to title. As regards infringement, Temple Island understood that the defendants were maintaining a case of independent design, in other words a case that even if it might be said objectively that there were substantial and relevant similarities between the Tea Bag Tin Image and the 2005 Work, nevertheless those similarities were a coincidence and not the product of copying. Copying – in other words some causal connection – is of course a crucial element of copyright infringement. A defence of independent design in a copyright case is a perfectly proper defence but it is capable of magnifying the cost and complexity of a copyright claim significantly. So here, for example, the only issue on which the claimant sought disclosure of documents was on independent design.
10. Reviewing the matter in court, a measure of clarity emerged, the upshot being that defendants deny infringement but they do not advance a case of independent design. They contend that the question of infringement can be decided objectively, considering two matters, first taking care about what exactly is original about the claimant's copyright work and second by conducting an objective comparison between the Tea Bag Tin Image and the 2005 Work. They contend that Mr Houghton's intention when he set out in February 2010 to produce a new red bus image was to avoid producing a substantial reproduction of the 2005 Work but they accept that his intention is irrelevant and accept that Mr Houghton obviously knew about the claimant's work in question.
11. Neither the earlier Tea Box image nor the Tea Bag Tin Image are identical to the 2005 Work. The case on the Tea Box Image has settled and the question is whether the Tea Bag Tin Image is substantially similar to the 2005 Work. The defendants inevitably will focus on the differences, the claimant on the similarities. So the defendants point to the fact that their image does not show (i) the arches of Westminster Bridge, (ii) the Thames, and (iii) the steps leading up to the bridge. The defendants say their image makes a feature of the road whereas the road is much less visible in the claimant's work. They say their image has no bridge-like features at all. They contend the appearance of the bus is different (the two buses are both red Routemasters but they are not the same bus), the angles of the Houses of Parliament are different, the people nearby are different and in the claimant's work there is a prominent lamppost which is a feature of the claimant's work. They also point out that the bus is in a different position in the two images. In the 2005 Work the bus is on the left of the image with Big Ben on the right whereas on the Tea Bag Tin Image the bus is more or less underneath Big Ben.
12. The claimant's position is to the contrary. The claimant relies on the basic point that the work shows a red Routemaster bus depicted on a greyscale image of Westminster Bridge, before the Houses of Parliament. Features to which the claimant has drawn attention to include (a) the composition of the photograph including the angle and all elements of the subject matter including a bus being a Routemaster heading south, and recognisable parts of the Houses of Parliament, Westminster Bridge and the Thames; (b) the manipulation of the photograph by (i) removing the sky leaving a solid white background above the skyline creating a dramatic contrast between the buildings and the sky, (ii) changing the image colour to a grey scale except for the bus and isolating and enhancing the bus.
13. Thus – to decide the question of copyright infringement of the Tea Bag Tin Image, the focus of the trial will be on an objective comparison between the 2005 Work and the Tea Bag Tin Image, in the context of an appreciation of the skill and labour which went into the 2005 Work itself. The parties agreed that this did not require disclosure in relation to independent design. Neither side suggested expert evidence would be needed in any event.
14. In accordance with the usual practice in the Patents County Court, if possible the trial date is set there and then at the CMC. The parties' representatives were in a position to agree a trial date of 28^th November 2011. The trial will easily take no more than 1 day.

The amendment

15. The claimant applied to amend the Particulars of Claim to add a new second artistic work to its copyright claim. The second work is another photograph created by Mr Fielder. The draft amended Particulars of Claim states that Mr Fielder created the second work in about late 2009. It also depicts a red Routemaster bus on Westminster bridge. The pleading states that it is "original or alternatively not original" and pleads that it was made available to the public in December 2009. This second work can be called the 2009 Work. The claimant then seeks to plead that the Tea Bag Tin Image reproduces the whole or a substantial part of the 2005 Work or the 2009 Work or both and thus infringes copyright in either the 2005 Work or the 2009 Work or both.
16. The point of all this is that the 2009 Work shows the bus in a different position from the 2005 Work. In the 2009 Work the bus is much closer to Big Ben. It is clear simply by inspection that the 2009 Work is related to the 2005 Work. It is the same bus, the people on the bridge are the same (albeit not all in the same spot), the same two taxis appear in both and the time on Big Ben is the same. The 2009 Work may be simply an image taken a few seconds earlier in time than the 2005 Work as the bus moved south across the bridge or it may have involved manipulation to move the elements around.
17. So it is fair to say that, objectively, although they are not the same, the position of the bus in the Tea Bag Tin Image is much closer to the position of the bus in the 2009 Work than it is to the bus in the 2005 Work. Thus the claimant wants to bring in this alternative claim for copyright infringement. They contend that it answers the point made by the defendants about the position of the bus and they seek to amend the Particulars of Claim to add this claim.
18. The defendants resist the application to amend. When the draft amended Particulars of Claim was first put to the defendants' solicitors in correspondence they pointed out that the application to amend would be opposed. On 1^st June 2011 they wrote:

"… the amended form of the Particulars does not disclose any allegation that [the 2009 Work] was in the public domain or that we copied it. If it has never been publicly available we cannot see how our client could have infringed it."

19. Second the defendants took a point on costs, contending that they could not be compensated in costs bearing in mind the new Patents County Court regime as to costs and the costs cap.
20. In response the claimant added further language to the draft amended Particulars of Claim to plead that the 2009 Work had been made available in public in December 2009 "and so the defendants had the opportunity to copy [it]". On costs, the claimants contended that the costs of the defence, since they were incurred while the case was in the High Court, would not be caught by the £50,000 costs cap on the basis of my decision in Westwood v Knight [2011] EWPCC 11 and so the defendants could be compensated.
21. In response on 6^th June 2011 the defendants solicitors wrote:

We note that your client is still unable to properly identify as to when it alleges it made available [the 2009 Work]. We find it incredible that your client is able to alleged copying of a work when it is unable to verify that it has been made available to the public or that our client had any access to the work whatsoever. In the absence of at least a properly particularised allegation, we remain minded that the position your client is trying to adopt is bad in law.

22. On 9^th June the claimant's solicitors replied that there was no need for the work to be publicly available as copying could have occurred clandestinely and can in some cases be subconscious and indirect. Nonetheless they maintained that the 2009 Work had been made available in any case.

Principles

23. The power to amend pleadings is in CPR Part 17 rule 17.3. Before me the claimant submitted the usual principles applicable to amendments of pleadings in the High Court applied in the Patents County Court. The classic statement is the passage from the judgment of Peter Gibson LJ in Cobbold v Greenwich LBC unreported 9^th August 1999 that:

The overriding objective (of the CPR) is that the court should deal with cases justly. That includes, so far as is practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party caused by the amendment can be compensated for in costs, and the public interest in the administration of justice is not significantly harmed.

24. The defendants submitted that under the new Patents County Court regime the general rule that any amendments should be allowed on the basis that the other party can be compensated for any prejudice in costs, does not run. Mr Davis submitted that the PCC costs cap means that a party cannot necessarily be compensated in costs. He also submitted that proportionality was a factor to consider as a matter of course and contended that the party seeking to amend in circumstances like these should explain why it did not plead the facts and matters on which it relies at an earlier stage. Mr Davis drew an analogy with the approach set out in the Hearings Manual used in the Patent Office. This provides (paragraph 2.42, 3^rd bullet point) that each party is expected to do its best to put its whole case forward at the outset, and that a party who deliberately or through incompetence fails to do so can expect later requests to amend to receive less sympathetic treatment. Finally Mr Davis submitted that the court should be in a position to consider the merits of an amendment and weigh them against the negative costs consequences.
25. Whether or not to allow an amendment to a statement of case is an exercise of discretion, exercised having regard to the overriding objective to deal with cases justly. In my judgment the general approach to the consideration of amendments of statement of case in the Patents County Court is no different from the approach taken in the High Court. However the discretion in this court will be conditioned by the particular nature and circumstances of the Patents County Court procedure. In my judgment stated generally as they are, the words of Peter Gibson LJ are as applicable in the Patents County Court as elsewhere. Amendments will generally be allowed so that the real dispute between the parties can be adjudicated upon but subject to the proviso that any prejudice can be compensated for in costs and subject to the public interest in the administration of justice. Cases should be dealt with expeditiously but also fairly and that consideration tends to weigh in favour of allowing amendments.
26. However Peter Gibson LJ was manifestly not seeking to lay down guidelines applicable in a procedural regime which came into force 11 years later and there are particular elements in the Patents County Court system which bear emphasis.
27. First, the Patents County Court scheme has a costs cap. In my judgment the costs cap does not operate in an amendment case in quite the way contended for by Mr Davis. It does not mean that a party cannot be compensated in costs if an amendment is made. The costs cap regime, including its various safeguards and exceptions such as they are, is a regime for compensating a party in costs. The compensation is often likely to be less than the party would have received in the High Court but that is a different point. The costs cap is a factor which must be taken into account. In my judgment the mere existence of the cost cap system itself is unlikely to be a factor which would lead to an otherwise proper amendment being refused.
28. Second, a key feature of the Patents County Court system is to focus on proportionality. I accept Mr Davis' submission that it is a factor to consider in relation to an amendment. I also accept Mr Davis' submission (with some modification) that the court should be in a position to consider the amendment, weighing the negative costs consequences of the amendment against the benefit of allowing it. The Patents County Court procedure employs a cost-benefit test at the case management conference. This is set out in paragraph 29.2 of Practice Direction 63 and is applied in considering whether to make orders under paragraph 29.1 for further steps to be taken in the case such as disclosure, the provision of witness statements, cross-examination and written submissions at trial (see also CPR rule 63.23). Paragraph 29.2 provides that:

29.2 The court will make an order under paragraph 29.1 only -

(1) in relation to specific and identified issues; and

(2) if the court is satisfied that the benefit of the further material in terms of its value in resolving those issues appears likely to justify the cost of producing and dealing with it.

29. As stated there the cost-benefit test is specific to the question of whether further material will be admitted but in my judgment the cost-benefit analysis can and should be applied more widely in the Patents County Court. It is a key aspect of the court's function to deal with cases in a proportionate manner.
30. In fact a cost-benefit test is not unique to the Patents County Court in any event. CPR Part 1 rule 1.4 (2) (h) specifically provides that active case management includes considering whether the likely benefits of taking a particular step justify the cost of taking it. That part of the CPR is stated in a completely general way and accordingly in my judgment, in a proper case, it is a factor the court can take into account on considering an application to amend as on any other.
31. To ignore the cost-benefit test at this stage in the PCC would lead to the potentially absurd result that an amendment which failed the test would be allowed but no order under paragraph 29.1 of the Practice Direction would be made because dealing with the point would fail the test. It makes more sense to apply the principle directly.
32. In my judgment the costs cap and the cost-benefit test as applied in the PCC go hand in hand. One reason the costs are capped is because the kinds of case for which the PCC procedure is designed are the less costly, less complex and less valuable cases. The procedure is intended to be more streamlined, faster and more actively managed that High Court litigation. If one party risks being put to substantial costs by a step taken by the other party, the actual costs spent may well not be recovered because they will be above the cap. So the costs-benefit test plays a role in cutting back on costly and complex steps in litigation in order to save costs. If a step which failed the costs benefit test was permitted, it is likely to lead to the other party not being adequately compensated in costs.
33. Every application to amend statements of case involves a balance between allowing the amendment and a consideration of the prejudice the amendment may cause. That is what Peter Gibson LJ is referring to in the passage I have quoted above. When considering an application to amend the statements of case in the Patents County Court in a regime with capped costs, that balancing exercise will include an assessment of whether the likely benefit of the amendment appears likely to justify the cost of taking and dealing with it.

Apply principles to facts of this case

34. In order to assess this application to amend it is necessary to consider what the consequences would be of allowing the claimant to add in the claim in relation to the 2009 Work. The defendants have made it clear that they will deny copyright subsists in the 2009 Work. At this stage it is safe to say that that is not a fanciful point. The 2009 Work may or may not be entitled to its own copyright. Even the claimant pleads that the 2009 Work "is original or alternatively not original". Evidence will be required.
35. Moreover the defendants deny having had access to the 2009 Work in any event. They accept Mr Houghton knew of the 2005 Work; the whole point is that given the accusation that the Tea Box Image infringed copyright in the 2005 Work, for the Tea Bag Tin Image Mr Houghton was trying to produce an image sufficiently different from the 2005 Work to avoid infringing. As stated above his intention is irrelevant to the objective question of whether the Tea Bag Tin Image infringes. However denying access to the 2009 Work means that the defendants wish to run a defence of independent design, vis a vis the 2009 Work. It would require disclosure from the defendants, much more evidence at trial and no doubt much more cross-examination. In addition to the evidence from the defendants denying sight of the 2009 Work, evidence from the claimant will be needed to establish the 2009 Work had been published before February 2010 when the defendants created the Tea Bag Tin Image. The dates are close and despite the requirement in the Patents County Court to plead all facts and arguments, no detailed case has been pleaded by the claimant to establish access by the defendants to the 2009 Work.
36. Thus in order to get to a position in which the 2009 Work can help the claimant at all and before conducting any kind of comparison between the 2009 Work and the Tea Bag Tin Image, a substantial jungle of points needs to be hacked through. In general in copyright the claimant seeks to draw an inference of copying (i.e. causation) from proof of access and the similarities. But that usual approach for the 2009 Work is more problematic. The image the claimant has been exploiting since 2005 is the 2005 Work. That was the basis of the first (now settled) copyright claim and the defendants admitted Mr Houghton had seen it in the Defence filed in January, before the amendment application was mooted. Thus it was clear that Mr Houghton was aware of the 2005 Work when the second Tea Bag Tin Image was created. That is why the defendants did not put forward a case of independent design. It would be fanciful for the claimant to suggest that in fact, all along, the defendants have been copying the 2009 Work and not the 2005 Work and no such suggestion is made. So even if one reaches a conclusion in the evidence that when Mr Houghton set out to create the Tea Bag Tin Image, he actually had access to the 2009 Work, he is very likely to have had the 2005 Work as well, complicating any question of derivation even further.
37. It is important to maintain a sense of perceptive in relation to this issue. The claimant's motive in raising the 2009 Work is clearly concerned and only concerned with a narrow point about the position of the bus. In the 2005 Work the bus is more or less under the Central Tower of the Palace of Westminster. In the Tea Box Image the bus is it a location towards the right, closer to but not under Big Ben. In the Tea Bag Tin Image the bus is closer still to Big Ben. The location of the bus in the 2009 Work is close to but not the same as the location in the Tea Bag Tin Image. No bus is in the same place in any of the photographs and the location of the bus is only one of the elements which will fall to be considered.
38. The bus in the Tea Box Image has already moved to the left as compared to the 2005 Work. The bus in the Tea Bag Tin Image is just a bit further to the left. So why should one assume that the idea of locating the bus as in the Tea Bag Tin Image has been derived from another different Work of the claimants, when it is just as likely to be the product of seeking to move the bus sideways.
39. The 2009 Work is not just an alternative way of putting the existing case, it is a wholly new allegation which raises a number of complexities and difficulties. In copyright a causal link between the claimant's work and the defendant's work is critical. Just because a causal link from one work is admitted does not mean a causal link must be found from another work.
40. In my judgment the chance that adding the 2009 Work into the case will make the difference from the claimant's point of view between success and failure is low. Temple Island will either win on the 2005 Work or, if they lose on the 2005 Work it will be in such a way that the 2009 Work will not help. If Temple Island win the action on the 2005 Work it is quite likely that the case on the 2009 Work will, almost necessarily, fail and could even lead to an adverse costs award against the Claimant on the issue. If Temple Island lose on the 2005 Work it will be because the Tea Bag Tin Image has been found not to be sufficiently similar to the 2005 Work as a whole and such a conclusion is likely (but I accept not necessarily) to apply to the 2009 Work as well. The 2009 Work case may simply fail in any event either on the basis that no copyright subsists or no access is established. It is undeniable that the 2009 Work would give Temple Island a chance of winning the case even if its primary case failed, but the incremental chance it will do so is low.
41. Allowing the amendment will transform a very simple case which can be decided on an objective comparison and at reasonable cost to both parties, into something substantially more involved and more complex. In relative terms the work involved to bring this case to a conclusion and the cost will be increased substantially. In my judgment the case without the amendment is being approached by both sides in sensible manner proportionate to the issues at stake. Including the amendment will add substantially to the cost and complexity of the case but without a corresponding benefit to the resolution of the dispute which is in any way proportionate to that cost or complexity.
42. Sometimes in litigation a party seeks to amend to add in a new point which would be a killer blow. Such an amendment would be likely to satisfy a cost-benefit test. This amendment is nowhere near being a killer blow. In my judgment its impact on the existing proceedings in terms of the additional cost and complexity does not outweigh the benefit to be associated with it.
43. I will not take into account the fact that it is not clear why the amendment was not made earlier. In my judgment considerations of that kind can be a relevant factor in the exercise of the discretion under r 17.3 but it is not necessary to consider it in this case.
44. I also recognise that if the claimant had pleaded this point from the outset, this application would simply not have arisen. That is true but it is not what has happened. Moreover even if the point had been pleaded at the outset, the cost - benefit test would still have been applicable to considering whether to permit any further evidence or disclosure on the issue.
45. The claimant submitted that the fact that the defence had been filed while the case was in the High Court meant that the defendants could recover the full £6125 allocation for the Defence stage in the PCC costs scale on top of recovering its costs of the Defence incurred in the High Court and so could be compensated in costs. In my judgment that is not correct. If the relevant costs scale stage took place in the High Court then the cost of that stage will be dealt with as High Court costs (see e.g. my judgment in Westwood v Knight [2011] EWPCC 11 paragraph 38). Stages which straddle the High Court and the PCC will be dealt with as they arise but recovery of the full amount for a given stage, if the PCC scale is applicable, is likely only to be possible if the whole of that stage was conducted in the PCC. That is not the case here on any view.
46. Considering the matter overall I bear in mind that amendments will generally be allowed, subject to balancing them against the likely prejudice, in order that the real dispute between the parties can be adjudicated. In my judgment the real dispute between these parties is the claim that the Tea Bag Tin Image infringes the copyright in the 2005 Work. This amendment does not satisfy a cost-benefit analysis. That is a sufficient reason to refuse the amendment and I will dismiss the application.