Antiquesportfolio.com plc v Rodney Fitch & Co Ltd
-  E.C.D.R. 5;
-  E.B.L.R. 20;
-  F.S.R. 23;
-  Masons C.L.R. 51;
- (2000) 23(11) I.P.D. 23092;
- (2000) 97(30) L.S.G. 41;
- Times, July 21, 2000.
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In June 1999, the Claimant decided to launch a business advertising and selling antiques over the Internet. During June and July 1999, the Claimant instructed the Defendant, a design consultancy company, to carry out design and branding consultancy work in connection with the proposed website, business cards, advertising literature and logos.
The materials supplied by the Defendant included a number of icons featuring images on a banner on the website, navigation buttons with logos traced and simplified from photographs, and a large drawing on the 'cover' of the Claimant's 'brochure' based on a photograph.
The Claimant commenced proceedings seeking the return of moneys paid to the Defendant under the agreement on the grounds that the material used infringed third-party copyright. The allegedly infringing material was based on photographs of antiques (furniture, works of art, glassware and the like) in the well-known “Millers Antiques Encyclopaedia”.
The third party brought no action for infringement of copyright against either the Claimant or the Defendant. However, the Claimant argued that the use of the images supplied by the Defendant would infringe the copyright of the third party in the photographs contained in the journal. The Claimant applied for summary judgment on the basis that the Defendant had no real prospect in defending the claim against it.
Neuberger J. broke the case down into a number of separate issues and gave judgment as follows.
The first issue is whether there was an implied term in the contract between the parties to the effect that the Defendant would not supply material infringing the copyright of a third party. The Defendants contended that any implied term would only be for undisturbed use of the design work supplied.
Neuberger J. preferred an implied term based on an obligation to use reasonable care and skill not to include material knowingly copied from a third party, where that material might be subject to copyright, without either obtaining a licence for the proposed use or obtaining the consent of the Claimant to include such material without a licence. In the alternative, Neuberger J. suggested that the implied obligation would consist of an implied obligation to provide the Claimant with design work that was fit for the purpose for which it was commissioned, although he thought that the result in most cases (and in this case) would be the same.
The second issue considered by the court is the extent to which a photograph of a single static item (such as a jug or a sofa) could be said to be protected by copyright.
The court proceeded in the absence of clear authority on this particular point and so looked at the established texts on the subject (Laddie, Prescott and Vittoria, 2nd edition, paragraph 3.56, Copinger and Skone James, 14th edition, paragraph 3.104 and also Nimmo on Copyright at paragraph 2.130 on the position under US Law).
Neuberger J. considered that a photograph of a three-dimensional object would require of a photographer at least some skill and effort in terms of positioning, angle, lighting, focus and so on. In the cases of the photographs in Millers Antiques Encyclopaedia, some skill had gone into exhibiting particular features, such as the colour, and details of the items. There may have been some skill in choosing the particular item as a good example of its type. Neuberger J. therefore concluded that the photographs did benefit from copyright.
The third issue considered by the court is whether the material supplied by the Defendant infringed the copyright in the photographs.
Neuberger J. looked first at the photographs reproduced on the banner, in the navigation boxes and on the website as designed and provided to the Claimant. The icons on the banner on the website contained entire, albeit small-scale, reproductions of the photographs from Millers Antiques Encyclopaedia. The degree of originality in the photograph of a single object was small (some work perhaps of selection, positioning and lighting), and clearly much or even most of the detail of the original photographs was missing in the miniature reproductions. The Defendant said that the original part of the photograph had therefore not been copied and there had not been the copying of the “whole or a substantial part”.
However, the reproduction was of the whole photograph, and the court found that the case of infringement had therefore been made out as to hold that a reproduction of the whole of a photograph, albeit on a small scale with much detail missing, would be an odd conclusion.
The court then turned to the logos on the navigation buttons. These seemed to be simplified tracings of the original photographs. It appeared that even the basic originality involved in the photographs (such as lighting, choice of object and camera angle) did not remain in the logos. Therefore, it was held that the logos on the navigation buttons did not infringe the third party's copyright.
The representation on the brochure cover at first sight appeared to be infringing as it was larger. However, there was much additional material in terms of detail, even the drawing of more clearly visible back legs of the antique in question. Neuberger J. had sufficient doubt on this matter to allow it to go to trial.
In relation to the logos and the brochure, the court found that they were supplied for publication or distribution. A more difficult question related to the icons on the website itself. The Defendant contended that these were just “dummy copy”, supplied only for the purpose of filling the space with something useful, and that it was the expectation that the Claimant would replace them with something more to its liking.
Neuberger J. found evidence going in both directions on this issue and declined to decide it at a summary stage.
The court then turned to the question of whether the Claimant was entitled to reclaim the sums paid to the Defendant. For this purpose, the Claimant had to establish either that there had been a total failure of consideration, or that the Defendant's breach went to the root of the contract, so that the Claimant could treat it as repudiated.
The court held that the Claimant failed on both counts. There was clearly some consideration provided by the Defendant - materials of value had been provided and had been used, such as the advertising material. Again, the website had been used, albeit with some modifications (not related to the infringing materials). As to repudiatory breach, the Claimant had spent some £8,000 on modifications to the website, including dealing with the alleged infringements, and it could not be said that this meant that it had suffered a repudiatory breach depriving it of “virtually the whole benefit under the contract”.
Neuberger J. found that the Defendant was entitled to its fees and expenses (albeit with some disputed elements to be decided by the Master). The judge also indicated that he would consider a substantial interim payment to be made to the Defendant.
The court also considered the Claimant's claim and the position of set-off. The Claimant's set-off was based on the Defendant having supplied some material which was in breach of the Defendant's implied obligation (see the First Issue above). The Claimant claimed as the damages for this the sum of £8,000, which was the amount of an invoice from a third party contractor.
However, this sum was not particularised and the Defendant's evidence was that the work of changing images in a website is relatively simple and inexpensive.
The judge concluded that it would be wrong to allow a set-off at this stage of the proceedings, as there was insufficient evidence for further losses suffered by the Claimant. A further factor was that the £8,000 was insufficiently particularised, and was not apparently solely attributable to the work of remedying the breaches of the Defendant.
The judge left open whether the claim for set-off might be made later, perhaps after the master had assessed the Defendant's total claim.
The court held that the Defendant was entitled to security for costs. The Claimant was in poor shape financially, and although it had been acquired by a US concern, gavel.net, the Defendant had observed that the stock market valuation of such internet companies did not always reflect the true state of a company's assets.
Litigators often observe that small claims often involve the most complex legal issues. Perhaps the seeming complexity results from the disparity between the sums involved and the amount of research and argument that can go into the legal issues.
In any event, this case is a good illustration of the principle. A claim for the remedial work of deleting potentially infringing materials from a website and marketing materials that amounted in all probability to no more than £8,000 was met with a counterclaim for some invoices of some £31,000. The scene was set for a contest involving novel points of copyright law (highly relevant in the context of e-commerce law) and complex points around total failure of consideration, repudiatory breach and equitable set-off. Most lawyers would agree that these issues are some of the most complex in any case and can give rise to intractable considerations.
Firstly, the question of implied terms in agreements for website design. Implied terms are always a vexed issue in any case, with the law relatively easy to state, but difficult to apply. While implied terms have to be reasonable ones, that is by no means the only criterion. A term will only be implied if it is necessary for business efficacy or if it passes the “officious bystander” test - although this may be two ways of saying the same thing (Watts v Lord Aldington 1999 LTR 578, 596-7, per Steyn LJ). An implied term must also be the minimum necessary in the circumstances and it must be clear (Robin Ray v Classic FM (1998) FSR 622, 641-2, per Lightman J.).
In this case, the formulation of the implied term was the subject of some debate. It is axiomatic that services must be performed with reasonable care and skill (section 13 of the Supply of Goods and Services Act 1982) but to what extent can this be the same as an absolute warranty of fitness for purpose?
In fact, the court formulated the implied term in alternative ways: (a) that the Defendant should use reasonable care not to include material knowingly copied from a third party, where that material may be subject to copyright, without getting a licence from the third party or receiving the consent of the Claimant to proceed in that way (presumably because the Claimant would obtain the requisite licences); or; (b) that the Defendant should supply design work that was fit for the purpose for which it was commissioned.
The judge was probably right to say that either formulation would lead to the same result in this case. The few cases on this show the same dilemma - it is always possible to get into the circuitous argument that if the goods/services were not fit for purpose, then reasonable care and skill could not have been used. The judge cited the cases of Samuels v Davis (1943) KB 526 and Greaves & Co (Contractors) Ltd v Baynham Meikle & Partners (1975) 1 WLR 1095, but those interested might also like to consider and compare Hawkins v Chrysler (UK) Ltd and another (1986) 38 BLR 36 and IBA v EMI Electronics Ltd and BICC Construction Ltd 11 BLR 29 (CA), (1980) 14 BLR 1 (HL) and Young & Marten Limited v McManus Childs Ltd  1 AC 454, especially at 476 - but there are many other cases that have had to consider this difficult subject.
Section 4 of the Copyright Designs and Patents Act 1988 includes within the definition of artistic works “a graphic work, photograph, sculpture or collage, irrespective of artistic quality”. It is axiomatic in copyright that the required level of originality is low, and so many ordinary items fall within the ambit of copyright protection.
It might therefore seem strange even to question why photographs, even of a relatively ordinary nature, should not benefit from copyright protection. After all, if mundane and functional texts can be “literary works”, why not ordinary photographs?
The judge seemed prepared to accept that considerable time and effort involving a high degree of skill on the part of the photographer could go into the photograph of a static object. Even the briefest consideration of the advertising industry will demonstrate this. Vast amounts of time can be involved in the photographing of ordinary items of merchandise, and much skill will go into the positioning, lighting, background and subsequent printing.
There is no direct authority on the question of the copyright protection of photographs of three-dimensional objects such as in this case. The judge accepted that some skill went into exhibiting particular qualities of the objects, such as the colour of certain items, or features of other objects, such as the glaze on pottery and in nearly all cases the photographs demonstrated the details of the particular object concerned. A further relevant factor was that the photographer chose the particular object as a model of its type.
For these reasons, the judge found that copyright did exist in the photographs. However, looking at the matter the other way, it means that if a minimum standard of care and skill is not used with photographs of three-dimensional objects, then copyright will not result. In the digital age, when so many photographs are taken, almost casually, this threatens to deprive many photographs of copyright protection. For example, many estate agents take photographs of the properties on their books, but they are not trained photographers, and in many cases the resulting photographs are not “good” photographs - little thought has gone into the positioning, lighting or other aspects of a “good” photograph. Are these photographs therefore without protection - such that other estate agents can take and use them?
Think of the fortuitous photograph of a blazing Concorde about to crash: there was no skill in taking this shot. Is copyright to be denied because of this, or is copyright granted just because of the photographer’s luck in being there at the time?
This is undoubtedly an important decision and one whose ramifications will have to be worked through. For the moment, it is not sufficient to assume that all photographs benefit from copyright. The apparent insistence by the judge on at least some skill and judgment on the part of the photographer therefore might be opening up a stricter test for photographs than has existed for literary works.
The final point of interest here is whether a small-scale copy of the photographs would infringe as a copy of the whole or a substantial part. The point of interest here, which is relevant to websites in general, is that the small copies were so small that the buttons and icons had lost all the detail which was the “original” (in copyright terms) part of the photographs which merited copyright protection.
The decision here is pragmatic and finds that it was an infringement. After all, as Neuberger J. pointed out, it would be strange if copyright existed in the whole photograph and a reproduction of the whole photograph did not infringe.
Curiously, perhaps, the reproduction in very simple line drawing form of other photographs to form miniature logos did not infringe. The judge thought that the copyright protected the photographer's work of origination. Therefore, if a further artist were to copy by arranging items in a still-life picture in the same way as the original photographer had done, then this might be infringement. However, the infringement had to be in some way of the original element of the photographer's work. In this case, the logos were not in any sense a copy of the original photograph, little that was original (lighting, focusing, angle) was carried through into a simple line drawing.
Maybe this aspect of the decision is surprising. What if a line drawing were made by directly tracing from the photograph? This is surely more than inspiration, it is a direct copy. It will be a question of fact in each case, but if enough of the detail is carried into the line drawing, then a tracing would surely fall to be treated differently.
There is really a lot in this case, and while the judgment is not, as befits the value at stake, long on case-law, it is perhaps worth emphasising one more point made in the judgment.
Many people assume that where there is a counterclaim there must automatically be a set-off. This is not so. The Court of Appeal in Esso Petroleum Co Ltd v Milton  1 WLR 938 recently re-stated the law of equitable set-off. Simon Brown LJ said (at page 950):
"For equitable set-off to apply it must therefore be established first, that the counterclaim is at least closely connected with the same transaction as that giving rise to the claim; and, second, that the relationship between the respective claims is such that it would be manifestly unjust to allow one to be in force without regard to the other.”
In this case the evidence was lacking from the Claimant that the £8,000 it had spent was spent wholly on work of replacing the infringing works the Defendant had supplied. For that reason, the judge did not allow set-off at that stage. While this was a decision on the facts, it is a useful reminder that set-off is not allowed in every case and it is necessary to have the evidence to show the aspect of unfairness described by Simon Brown LJ in Esso.