The Supreme Court this week gave a much anticipated judgment in the case of Lucasfilm Limited v Ainsworth (2011) which was concerned with the claims for infringement of both English and US copyright.

Brief facts

Lucasfilm made the first Star Wars film which was released in the USA in 1977 and has claimed ownership of the intellectual property rights in various artefacts made for use in the film. The most prominent of these was the Imperial Stormtrooper helmet. The film’s storyline and characters were conceived by Mr George Lucas and his concept for the Imperial Stormtroopers was given expression in drawings and paintings by an artist, Mr McQuarrie, by a modelmaker and then by the defendant Mr Ainsworth (a freelance scenic artist and prop maker) who made 50 vacuum moulded helmets for use in the film. All this took place in England. Lucasfilm built up a successful business licensing the making and marketing of models of the Stormtroopers and their equipment. However in 2004 Mr Ainsworth used his original tools to make versions of the Stormtrooper’s helmet and armour and sold them to the public both in England and in the USA (including sales and orders over the internet). He generated something between US$8,000 and US$30,000 worth of US sales.

Lucasfilm sued Mr Ainsworth and his company in California and obtained judgment there for US$20 million ($10 million of which was triple damages under US legislation). That judgment went unenforced because Mr Ainsworth and his company had no assets in the USA. The English court refused to enforce the US judgment in England. Lucasfilm also brought proceedings in England for infringement of copyright in this country and for breach of copyright under US law.  

Supreme Court decision

The Supreme Court decided:  

  1. Mr Ainsworth and his company had a defence to the breach of English copyright under Section 51 of the Copyright Design and Patents Act 1988. Under s51 it is not an infringement of copyright in a design document to make an article to the design unless the design is for an “artistic work”. The court rejected Lucasfilm’s argument that the design for the helmet was a “sculpture” and so an artistic work. So Mr Ainsworth had a defence under English law to the claim based on infringement of copyright in the McQuarrie graphics.
  2. However the claim for breach of US copyright was justiciable in this country and that Mr Ainsworth and his company had infringed Lucasfilm’s US copyright. The Supreme Court overturned the finding of the Court of Appeal and held that, where an English court has jurisdiction “in personam” over a defendant, the defendant can be sued in England for foreign copyright infringement.

Mr Ainsworth may continue to make his Stormtrooper helmets in this country without liability to Lucasfilm but he cannot export his merchandise to the USA.  

The Court of Appeal had commented on the dangers of “forum shopping” when it refused to allow the claim for US copyright infringement. However this did not deter the Supreme Court which took the view that the modern judicial “trend” supports the enforcement of foreign intellectual property rights – at least in copyright cases where issues of registration or validity of rights are not concerned.  

The court did not give a view as to whether an action for infringement of a foreign patent could be justiciable in this country.

Considerations for insurers

The English court’s doors may now be open to claims for copyright infringement in other parts of the world generally. Whether in fact this decision leads to a significant increase in infringement actions brought by foreign claimants in the English court remains to be seen.

However, Insurers may wish to bear this in mind when considering the territorial limits and the scope of the exclusions in their policies. For example, wording which provides only that claims made or pending within or to enforce a judgment given in a US or other foreign court are excluded would not be sufficient to exclude indemnity for awards of the English court based on an infringement of the foreign law. Wording which goes further to exclude indemnity for liability arising out of acts done or business transacted in the US or elsewhere may be effective to exclude liability although, where (as in Mr Ainsworth’s case) sales are made over the Internet, the position may very much depend on the facts in issue.