A recent English case illustrates that claims for infringement of copyright can be broad.

The Plaintiff's Business

The plaintiff established a playground-painting business and Magical Marking Limited (“Magical”) was incorporated to operate the business. The plaintiff created a portfolio of games and freehand coloured sketches which were used to develop more formal designs. The business was heavily dependent on computers. The design and design-related work was undertaken on networked Apple Macintosh computers linked to a server. The correspondence, administration, accounts and other business-related activities were carried out on networked PC workstations linked to a server.

The Plaintiff's Copyrights

Magical owned the copyright in the designs created for painting onto playgrounds, the instruction sheets for preparation and installation of designs, training and assessment materials used in relation to its staff, pricing models and progress charts.

Sean Holly

The plaintiff met Sean Holly, who was skilled in business development matters. Mr. Holly was eventually granted a 25% shareholder interest in the business and became a director. Mr. Holly was not an employee and continued to provide business development services.

The Dispute

A dispute arose between the plaintiff and Mr. Holly which could not be resolved. The parties were attempting to negotiate a buyout, but Mr. Holly was dissatisfied with the pace of the valuation process. Mr. Holly was excluded from Magical's premises. In response, Mr. Holly, his lawyer, two security staff and an IT consultant (the “Consultant”) carried out a raid of Magical's premises in which they made a complete copy of Magical's electronic business records, removed its latest backup tape and disabled the computer system by inserting new passwords which were not provided to Magical's staff.

The Proceedings

Magical and the plaintiff brought proceedings against Mr. Holly and the Consultant, among others, for breach of copyright and other claims. Eventually Mr. Holly defaulted and did not defend the proceedings, leaving the claim against the Consultant. At the trial, the plaintiff was able to show that the Consultant had in fact reproduced Magical's electronic business records. This by itself was an infringement of Magical's copyright, since it had the sole right to reproduce those records.

The Defence

To avoid liability, the Consultant claimed his acts were carried out in accordance with Mr. Holly's instructions and within Mr. Holly's actual or ostensible authority as a director of Magical and as such was not liable, even if Mr. Holly had ulterior motives of which the Consultant was not aware. The Trial Judge concluded that the raid was undertaken in pursuit of Mr. Holly's personal interest because he was dissatisfied at the pace at which the valuation was proceeding. Magical made no representation that Mr. Holly had any authority to engage the Consultant's services and any statements made by Mr. Holly related to his personal dispute. In addition, the abnormal circumstances should have put the Consultant on enquiry caused the Consultant to enquire as to whether the transaction would bind Magical.

As a result, the Consultant was found responsible for copyright infringement, since he actually created the infringing copies. The Court allowed the Consultant's claim for indemnity against Mr. Holly since Mr. Holly had undoubtedly warranted that he had the power to legitimately instruct the Consultant to do the work and the warranty was breached.

Comment

Liability for direct infringement of copyright includes individuals who physically carry out the infringing activities as well as those who authorize such activities