Committal for contempt not fit for 'grey area' disputes

Lord Hoffmann started the mini-trend of dropping down a court, and now Lord Justice Patten has been at it too. The case in question (cases, actually) is (i) Alan Grisbrook v MGN Ltd, Scottish Daily Record & Sunday Mail Ltd and Syndication International Ltd; (ii) Alan Grisbrook v MGN Ltd and Syndication International Ltd [2009] EWHC 2520 (Ch), a 16 October decision of Lord Justice Patten sitting as a Chancery Division judge.

Right: back-issues such as this one have been saved and made accessible for future use through newspapers' archival sites -- but in many cases the rights of individual copyright owner have been overlooked.

This was an application by Grisbrook, a freelance photographer, to commit newspaper publisher MGN for contempt of court following the alleged breach of an undertaking contained in a consent order, with an alternative claim for sequestration of MGN's assets.

The background is that Grisbrook had provided photographs for MGN for a number of years, without a written contract, being paid when his photographs were used. MGN archived the photographs it used; any subsequent use by MGN entitled the photographer to a further fee. It was conceded that Grisbrook licensed MGN to use his photos in this way while retaining copyright in them, though there was some dispute as to how far this licence extended.

Following a dispute over unpaid licence fees, a consent order was made which (i) terminated the licence, (ii) entitled Grisbrook to the return of materials held by MGN and in which he retained the copyright and (iii) an undertaking by MGN not to infringe Grisbrook's copyright. Grisbrook conducted an agreed search of MGN's archive to locate his material and, at its conclusion, served a further copy of the consent order on MGN. Subsequently Grisbrook carried out random searches of MGN's websites, including such staples as mirrorpix.com and mydailymirror.com and discovered that a large number of his photographs were still being used. Although MGN removed his photographs from some of its websites, it refused to compromise in respect of images contained on websites which offered complete back issues of its publications.

Grisbrook was not best pleased with this and went to court, arguing that any reproduction of already-published material constituted an infringement of his copyright and was therefore a breach of the undertaking. No, said MGN: the consent order was not intended to cover the reproduction of photographs which were contained in already-published newspapers and should be construed accordingly. MGN further argued that, even if the undertaking was unlimited and included such infringements, no infringement had taken place or could take place as the licence granted by Grisbrook had to be treated as extending to the subsequent reproduction or use of published material.

Patten LJ refused the application. In his view

* The real issue between the parties was whether the operation of the back issues websites amounted to an infringement of Grisbrook's copyright in the photographs contained in those issues: did MGN's licence impliedly extend to the storage of and access to Grisbrook's photos as they appeared in the back issues?

* Since such an implied licence derogated from or relaxed the copyright owner's statutory rights, it was for MGN to justify the basis for extending the licence to cover what would otherwise be separate acts of infringement.

* The compilation of a database and its use for archival purposes might be so justified, but the exploitation of Grisbrook's photos through the back issues websites seemed to be a different kind of operation, one that was not contemplated at the time the licence was granted and could not be said to have been necessary to regulate the rights of the parties at that time. MGN's operation of the back issues websites accordingly infringed Grisbrook's copyright.

* MGN was entitled to take a different view on this difficult question, and disputes of this sort should not be resolved through committal proceedings. The dangers inherent in generally worded injunctions or undertakings not to infringe a patent or copyright had long been recognised and could often lead to a further round of litigation in order to determine whether an infringement had occurred. Nor was the infringement point which Grisbrook was arguing a point that featured in the actions which led to the consent order. A party who argues in good faith that his conduct did not amount to an infringement should not ordinarily be penalised by a fine or sequestration in the event of failure merely because an applicant had chosen to use committal proceedings rather than an ordinary claim to resolve the issue.

* Although the operation of the back numbers websites did infringe Grisbrook's copyright in his photographs, those rights could be adequately protected by a declaration to that effect.

The IPKat is greatly relieved at the court's finding on implied licences, since he give the same unwelcome advice to a periodical publisher that was planning to do much the same thing some 15 years ago, who responded that "it must be lawful because other publishers are doing it too". He also agrees that, where infringement is a 'grey area' in which plausible arguments can be raised by each party, contempt proceedings should not be used as a weapon. Merpel says, is it my imagination or are the courts consistently soft on infringing defendants in IP committal proceedings?

Contempt of court in parallel trade proceedings

Another chapter in the tale of Honda v Neesam , bits of which have been reported by the IPKat(here and here ). The defendants in that case imported Honda bikes from Australia, which were sold in the UK. Ultimately it was found that Honda's trade mark rights were exhausted since Honda's consent to their sale in the EEA could be implied. The existence of that consent depended on Honda's expectations, as conveyed to the exporter from Australia, as to where the bikes were to be sold on leaving Australia. Honda's witness, Mr Hinton, originally claimed in his witness statement:

"From time to time, without having any continuous contact, Honda Australia deals with Lime Exports ("Lime"). Lime fulfils a useful role in servicing the Pacific Islands (e.g. Fiji, New Caledonia and Vanuatu) which Honda Australia does not have the capacity or desire to service. This is the only reason Honda Australia deals with Lime. Honda Australia advises Lime verbally that it is only allowed to sell to the Pacific Islands. By so advising Lime Honda Australia tries to ensure that product supplied to Lime finishes in the Pacific Islands. . . . Honda Australia does not authorise those to whom it sells to export, except to the Pacific Islands as mentioned above."

This implied a lack of consent to sale outside the Pacific Islands. However, documents that came to light in the course of the proceedings made it clear that the statement was untrue. The defendant's solicitors wrote to Hinton, pointing out that it was contempt of court to include in a witness statement verified by a statement of truth a statement that is false and that the witness does not honestly believe to be true. Hinton then made a second statement, admitting that what he had said in the first statement was untrue, but pointing out that his intention was not to mislead the court, but rather to protect Honda Australia's reputation in the eyes of the wider Honda group.

At trial, the defendant attempted to bring a private action for contempt of court against Mr Hinton. This was refused by Sir Andrew Parke, who held that it would be disproportionate for contempt proceedings to be brought since Hinton had already had a stressful experience, the expense would be great and the public interest of promoting the integrity of the legal system wouldn't necessarily be served.

Yesterday the Court of Appeal allowed an appeal on this point, and held that contempt proceedings could be brought. The contempt was serious since, if the falsity of the statement hadn't been uncovered, the defendant would be been liable to pay Honda hundreds of thousands of pounds in damages. The fact that the witness had had a difficult time in cross-examination was not relevant, nor was the fact that he had shown remorse for his lies (though this might be relevant to the sentence). The judge had been wrong to conclude that a contempt action in these circumstances wouldn't promote the integrity of the legal system. Instead it would be 'likely to have a salutary effect in bringing home to those who are involved in claims of this kind, of which there are many, the importance of honesty in making witness statements and the significance of the statement of truth'. The fact that the proceedings would be costly was relevant, but was given too much weight in the light of the seriousness of the contempt at issue. In any event, it would be the applicant for contempt proceedings who bore the cost, and not the public purse. There was also a question-mark over whether it was worth bringing proceedings at this stage since Mr Hinton had returned to Australia, and so was outside the reach of British contempt action unless he returned to England or appointed someone to accept service on his behalf, but this wasn't fatal since refusing the action on those grounds would send out the message that foreign witnesses wouldn't need to maintain the same standards of honesty as those in the UK.

The IPKat finds this decision hard to fault. Witnesses should know that it's wrong to lie in the witness box, or in a witness statement. Although the trial judge may have felt sympathy for the witness, Mr Hinton brought it on himself. Granted, he was trying to protect the reputation of his business, but this was at the expense of someone else's business, and their liability to pay a huge sum in damages. It's always going to be difficult to imply consent in parallel importation cases - at least this decision should make it clear that those who provide false evidence that suggests that there was no consent will feel the full force of the law.