AIPPI 2018 - Study Question - Joint Liability for IP Infringement

AIPPI 2018 - Study Question - Joint liability for IP infringement

Study Question

Submission date: May 1, 2018

Sarah MATHESON, Reporter General

Jonathan P. OSHA and Anne Marie VERSCHUUR, Deputy Reporters General

Yusuke INUI, Ari LAAKKONEN and Ralph NACK, Assistants to the Reporter General

Joint liability for IP infringement

Responsible Reporter(s): Ralph NACK

National/Regional Group / United Kingdom
Contributors name(s) / Toby BOND, Jonny MOSS, Yohan LIYANAGE, Eibhlin VARDY, Alice STAGG, Daniel LIM, Mark RIDGEWAY, Simon JUPP, Dominic ADAIR, Richard VARY
e-Mail contact /

I. Current law and practice

Please answer all questions in Part I on the basis of your Group's current law.

1. Are there any statutory provisions which specifically apply to Joint Liability?

Yes

Please Explain

The statutory provisions relating to Joint Liability are set out below. Note that only provisions relating to civil liability are described; statutory provisions relating to criminal liability are not addressed.

Patents

There are no statutory provisions relating to Joint Liability (as opposed to Contributory Infringement) in respect of patent infringement.

Trade marks

1. UK trade marks

The acts which constitute infringement of a UK trade mark are set out in Section 10 of the Trade Marks Act 1994. Section 10 does not contain any provisions relating to Joint Liability generally, but div 10(5) includes a specific provision relating to applying trade marks to materials for labels, packaging materials or for advertising purposes, which may be considered to constitute acts of Joint Liability for trade mark infringement. Section 10(5) provides as follows:

“A person who applies a registered trade mark to material intended to be used for labelling or packaging goods, as a business paper, or for advertising goods or services, shall be treated as a party to any use of the material which infringes the registered trade mark if when he applied the mark he knew or had reason to believe that the application of the mark was not duly authorised by the proprietor or a licensee.”

1. EU trade marks (“EUTMs”)

The rights conferred by EUTMs are set out in Article 9 of Regulation 2017/1001/EU on the European Union trade mark (the “EUTM Regulation”). There is no express provision in the EUTM Regulation relating to Joint Liability. However, Article 17 of the EUTM Regulation provides that, while the effect of EUTMs are governed solely by the provisions of the EUTM Regulation, infringement of EUTMs shall be governed by the national law relating to infringement of a national trade mark in other respects, and that the EUTM Regulation does not prevent actions concerning an EUTM being brought under the laws of EU Member States. On this basis, the acts set out in div 10(5) Trade Marks Act 1994 (as described above) may also constitute infringement of an EUTM.

The acts which constitute infringement of copyright in the UK are set out in divs 16 – 26 of the Copyright, Designs and Patents Act 1988 (the “CDPA 1988”). The infringing acts set out below may be considered to be acts of Joint Liability. It is possible that some of the acts described below may themselves be considered to be acts of Contributory Indirect Infringement, but they have been included for completeness.

1. Authorising a restricted act

Section 16(2) CDPA 1988 provides that a person infringes copyright if they authorise another to do any infringing act without the licence of the copyright owner.

1. Providing means for making infringing copies

Section 24 CDPA 1988 provides that a person infringes copyright if they, without the licence of the copyright owner, make, import into the UK, possess in the course of a business, or sell or let for hire, or offer or expose for sale or hire, an article specifically designed or adapted for making copies of that work, knowing or having reason to believe that it is to be used to make infringing copies.

1. Transmitting work for making infringing copies

Section 24(2) CDPA 1988 provides that copyright in a work is infringed by a person who without the licence of the copyright owner transmits the work by means of a telecommunications system (otherwise than by communication to the public), knowing or having reason to believe that infringing copies of the work will be made by means of the reception of the transmission in the UK or elsewhere.

1. Permitting use of premises for infringing performance

Section 25(1) CDPA 1988 provides that, where the copyright in a literary, dramatic or musical work is infringed by a performance at a place of public entertainment, any person who gave permission for that place to be used for the performance is liable for the infringement unless, when he gave permission, he believed on reasonable grounds that the performance would not infringe copyright.

1. Provision of apparatus for infringing performance

Section 26 CDPA 1988 provides that, where copyright in a work is infringed by a public performance of the work, or by the playing or showing of the work in public by means of apparatus for (a) playing sound recordings, (b) showing films or (c) receiving visual images or sounds conveyed by electronic means, the following persons are liable for the infringement:

1. a person who supplied the apparatus, or any substantial part of it, if, when he supplied the apparatus or part, he knew or had reason to believe that the apparatus was likely to be so used as to infringe copyright or, in the case of apparatus whose normal use involves a public performance, playing or showing, he did not believe on reasonable grounds that it would not be so used as to infringe copyright;

2. an occupier of premises who gave permission for the apparatus to be brought onto the premises, if, when he gave permission, he knew or had reason to believe that the apparatus was likely to be so used as to infringe copyright; and

3. a person who supplied a copy of a sound recording or film used to infringe copyright, if, when he supplied it, he knew or had reason to believe that what he supplied, or a copy made directly or indirectly from it was likely to be so used as to infringe copyright.

Designs

Four types of design rights subsist in the UK: the UK registered design, the UK unregistered design right; the Community registered design; and the Community unregistered design. Statutory provisions for Joint Liability exist in respect of the UK unregistered design right only.

Section 226(3) CDPA 1988 provides that a UK unregistered design right is infringed by a person who, without the licence of the design right owner, does, or authorises another to do, anything which is the exclusive right of the design right owner.

Defences under EU E-Commerce Directive

Articles 12-14 of EU Directive 2000/31/EC (referred to as the “E-Commerce Directive”) provide for certain defences to IPR infringement for intermediary service providers where they are acting as a “mere conduit” or are performing “caching” or “hosting” activities. However, these provisions do not themselves give rise to liability for IPR infringement, but operate as defences, and so are not considered in detail here.

2. Under the case law or judicial or administrative practice in your jurisdiction, are there rules which specifically apply to Joint Liability?

Yes

Please Explain

The most commonly used rules relating to Joint Liability for IPR infringement in the UK are the rules relating to joint liability in respect of tortious acts (“joint tortfeasorship”) generally. As such, the terms ‘Joint Liability’ and ‘joint tortfeasance’ are used interchangeably in the UK Group’s response unless otherwise indicated. The case law provides that Joint Liability for IPR infringement may arise in two principal ways: first, party A will be jointly liable for IPR infringement where he procures party B to commit the infringing act by inducement, incitement or persuasion; secondly, party A will be jointly liable where parties A and B act in concert with another pursuant to a common design. In addition, Joint Liability may arise in the context of specific relationships, two notable examples being the relationships between an employee and an employer, and between an agent and a principal.

For a person to be jointly liable for procuring an infringement by inducement, incitement or persuasion, the acts of party A must have actually procured the infringement by party B. Therefore, in CBS v Amstrad [1998] AC 1013, it was held that Amstrad (which manufactured, advertised and sold audio systems which incorporated a double cassette-deck feature that offered the facility of recording from one tape-deck to the other) did not procure infringement by offering for sale a machine which may be used for lawful or unlawful copying. The purchaser of the machine would not make unlawful copies because he had been induced, incited or persuaded to do so by Amstrad, but would make unlawful copies because he chose to do so himself.

The law in relation to Joint Liability by way of common design was considered by the UK Supreme Court in Fish & Fish Limited v Sea Shepherd UK [2015] UKSC 10. The case set out a number of different formulations for the test of Joint Liability by way of common design. In one of these formulations, it was held in that case that a person “will be liable as a joint tortfeasor if (i) he has assisted the commission of the tort by another person, (ii) pursuant to a common design with that person, (iii) to do an act which is, or turns out to be, tortious”. This formulation is the one that the UK Group would endorse as best representing English law. In order to establish Joint Liability, it was held that there must be a “shared intention” that the action of the joint tortfeasor will assist the commission of tort. However, it is not necessary for the joint tortfeasor to be aware that the act of the primary tortfeasor constituted a tort (or, in the case of intellectual property, constituted infringement of the intellectual property right).

In the earlier case of Unilever v Gilette [1989] RPC 583, the Court of Appeal held that, for joint tortfeasorship, there must be a common design between the alleged joint tortfeasor and the primary infringer and that the alleged joint tortfeasor must have “acted in furtherance of that design”. In Twentieth Century Fox Film Corp v Newzbin [2010] EWHC 608 (Ch), it was held that “mere (or even knowing) assistance of facilitation of the primary infringement is not enough. The joint tortfeasor must have so involved himself in the tort as to make it his own”.

The case law acknowledges that whether there is liability as a joint tortfeasor will depend on the precise facts of each case. Some specific examples are described below.

In Fabio Perini v LPC Group [2010] EWCA, it was held that, where party A sold certain machines to party B outside of the UK (such that the sale by party A did not constitute infringement in the UK), and then party B imported the machines into the UK, where they were then installed by party A and made by party A to operate in accordance with the patented process, party A was jointly liable with party B for infringement of the patented process in the UK.

In Generics v Lundbeck [2006] EWCA 1261 it was held that there was no common design between UK importer of a pharmaceutical and the foreign supplier of that pharmaceutical, despite the foreign supplier's implicit submission to a degree of supervision and inspection by UK regulator.

In L’Oréal and eBay [2009] EWHC 1094 (Ch), it was held that eBay was not liable as a joint tortfeasor for acts of trade mark infringement through the sale of infringing products on its platform by its users, despite the fact that, in the judge’s opinion, eBay could have done more to prevent such sales from occurring.

In Unilever v Chefaro [1994] FSR 135, it was held that the mere fact that a party had overall control of the company which had committed the allegedly infringing act, in the sense that it could override the latter’s decisions by financial and voting control, was not in itself sufficient to establish joint liability.

In MCA Records Inc v Charly Records Ltd [2001] EWCA Civ 1441, it was held that company directors may be liable as joint tortfeasors for acts of IPR infringement carried out by a company of which they are directors, where their actions go beyond the exercise of their constitutional control. However, a director will not be treated as jointly liable with the company, if he merely carries out his constitutional role in the governance of the company e.g., by voting at board meetings.

As noted above, employees may be liable as joint tortfeasor for acts of IPR infringement carried out by their employers (see Birlea Furniture Ltd v Platinum Enterprise [2018] EWHC 26 (IPEC)). Where an employee is included in an action as a joint tortfeasor and found liable in respect of any damage suffered by the rights holder, the employee would be entitled to make a claim against their employer for a contribution towards their liability (Civil Liability (Contribution) Act 1978, div 1).

In addition to rules relating to joint tortfeasorship, English law also recognises that Joint Liability may arise based on the following common law principles:

An employer may be vicariously liable for acts of IPR infringement carried out by an employee. For the employer to be liable the IPR infringement must have been carried out by the employee "in the course of their employment". This will be the case where the IPR infringement is considered to be "so closely connected with [the employee's] employment that it would be fair and just to hold the employers vicariously liable" (Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215 and Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366).

A party may be liable with another by virtue of participation in a conspiracy to injure the claimant by unlawful means. Liability for an unlawful conspiracy of this nature requires (1) a combination of two or more persons, (2) to take action which is unlawful in itself, (3) with the intention of causing damage to a third party, (4) who suffers the damage (Kuwait Oil Tanker v Al Bader [2002] 2 All ER (Comm)). The English courts have recognised IPR infringement as one possible category of unlawful means on which an allegation of such a conspiracy can be based (20CF v Harris [2014] EWHC 1568).

3. In the following hypotheticals, would party A be liable for Joint Infringement with party X? In each case, please explain why or why not.

3.a. X sells handbags in a shop which is a small stall located in a shopping mall owned by A. The handbags infringe the registered design of Z. A knows that X (and other tenants) sells infringing goods.

Please Explain

No. The letting of retail space to party X is not in itself sufficient for party A to be liable for Joint Infringement, notwithstanding party A's knowledge that party X and other tenants sell infringing goods. Some further act pursuant to a common design with party X would be required.

While A is not jointly liable with X, it may be possible for Z to obtain injunctive relief against A to prevent such infringement occurring, on the basis that A is an intermediary whose services are used by X to infringe an intellectual property right. See Cartier International AG v British Sky Broadcasting Ltd [2016] EWCA Civ 658 at [65], applying the Court of Justice’s guidance in L'Oreal SA v eBay International AG, C-324/09. While Cartier related to online infringement, it is anticipated that the English courts would apply similar reasoning in the context of a physical marketplace following the CJEU’s judgment in Tommy Hilfiger Licensing LLC v Delta Center, C-494/15.

3.b. X sells handbags in an online shop which is hosted by a large market place platform owned by A. The handbags infringe the registered design of Z. A knows that X (and other web shop operators hosted by A's market place platform) sells infringing goods via their respective outline shops.

Please Explain

No. The English courts have held that (1) an operator of an online market place is under no legal duty to prevent IPR infringement; and (2) facilitation of infringement with knowledge and an intention to profit is not in itself enough to render that operator jointly liable (L’Oréal v eBay [2009] EWHC 1094 (Ch) at [360]-[382]). To incur Joint Liability party A would need to have taken some further action pursuant to a common design with party X. Twentieth Century Fox Film Corp v Newzbin Ltd [2010] EWHC 608 (Ch) provides an example of circumstances in which an English court has found a common design in the context of online infringement (see [103]-[112]). The defences under Arts 12-14 of the E-Commerce Directive (2000/31/EC) may however provide the platform owner with a defence (see the answer to Question 1 above).

Notwithstanding that A is not jointly liable for X’s infringement it may be possible for Z to obtain injunctive relief against A to prevent such infringement occurring, on the basis that A is an intermediary whose services are used by X to infringe an intellectual property right (see the answer to Question 3(b) above).

3.c. X sells handbags in an online shop. The handbags infringe the registered design of Z. A designed the online advertising campaign for X’s shop and books online advertising resources for X on websites and in in search engines. A knows that X sells infringing goods.

Yes

Please Explain

Yes. Party A and party X have entered into a common design to promote the infringing goods to potential customers. Party X will infringe party Z's registered design if the online advertising targets potential customers in the UK. Party A will be jointly liable with party X if it can be demonstrated that their common design related to the promotion of the infringing goods to potential customers in the UK (see for example Glaxo Wellcome UK Limited v Sandoz Limited [2017] EWCA Civ 227 at [17]-[34]).

3.d. For each of the hypotheticals in (a) to (c) above, does it make a difference if A merely suspects that X sells infringing goods? If yes, what is the level of "suspicion" required, and how is it demonstrated?

3.d.i. Hypothetical A

Please Explain

No. The position set out above is not affected by party A's knowledge as to whether the goods are infringing or not. Joint Liability by way of common design can arise irrespective of whether the joint tortfeasor is aware that acts which will be carried out pursuant to the common design constitute a tort (Lord Mustill, Unilever v Gilette [1989] RPC 583).

3.d.ii. Hypothetical B

Please Explain