Copyright: Lucasfilm Ltd v Ainsworth
Every so often a case comes along that is remembered for having something to say on more than one important issue. One such case was Catnic Components Ltd. v. Hill & Smith Ltd.  R.P.C 183 which is cited not just for Lord Diplock's speech on purposive construction of patent claims but also for the so called Catnic defence to copyright infringement. Another example isOccular Sciences Ltd v Aspect Visions Care Ltd  RPC 289 which contributed to the law of confidence and design rights. The judgment of the Court of Appeal in Lucasfilm Ltd. and Others v Ainsworth and Another  EWCA Civ 1328 was such a case. The Lord Justices considered what constitutes a "sculpture" for the purposes of s.4 of the Copyright, Designs and Patents Act 1988. whether the "design document" and/or the industrial process exceptions to copyright in s.51 and s.52 of the Act could apply, equitable title to commissioned works, whether there is such a thing as "extra EU jurisdiction" whether an English court could or should enforce a foreign copyright and the circumstances in which an English court should enforce a default judgment of a foreign court.
The defendant Andrew Ainsworth had worked on the first Star Wars film in the late 1970s. His job was to make for the film set a plastic model of a storm trooper in helmet and armour from paintings and drawings of storm troopers that had been made by a Mr. McQuarrie and a clay model of one of the trooper's helmets that had been made by a Mr. Pemberton. Mr. Ainsworth carried out his commission but he went on to mass produce further copies which he marketed over the internet. He sold some US$14,500 worth of those items in the USA. The claimants, which had acquired the copyrights in Mr. McQuarrie and Mr. Pemberton's works, sued Mr. Ainsworth for infringement of its US copyrights in California. Mr. Ainsworth did not file a defence to that action or otherwise submit to the jurisdiction of the American court. In default of defence, the US court awarded the claimants US$20 million damages for copyright infringement of which US$10 million were compensatory damages. The claimants brought proceedings in England to enforce their British and American copyrights and recover the compensatory, but not the punitive, damages portion of their US damages award.
The claim came on for trial before Mr. Justice Mann and the transcript of his judgment is reported at Lucasfilm Ltd. and Others v Ainsworth and Another  EWHC 1878 (Ch.)  FSR 2. The trial judge dismissed the British copyright infringement claim on the ground that Mr. Ainsworth had a defence under s.51 and s.52 and that in any case Mr. Pemberton's helmet was not a work in which copyright could subsist. However, he held that Mr. Ainsworth had infringed the claimants' US copyrights and injuncted him from marketing or selling his models in the USA. His lordship also held that Mr. Ainsworth held such copyrights as might exists in his works anywhere in the world on trust for Lucasfilm and ordered him to assign those copyrights to them. On the other hand, he refused to enforce the damages award.
The claimants appealed the dismissal of their claims for infringement of their British copyrights and enforcement of their US judgment. Mr. Ainsworth appealed against the injunction and the order to assign his copyrights. Thus, the issues for the court were as follows:
(1) Whether Mr. Pemberton's model and Mr. Ainsworth's reproductions were sculptures for the purposes of s.4 (1) (a) of the Copyright, Designs and Patents Act?
(2) Whether s.51 of the Act afforded a defence to the British copyright infringement claim.
(3) Whether s.52 afforded a defence to such claim.
(4) Whether the courts of England and Wales were bound to hear claims for infringement of copyright in countries outside the European Union by art 2 of Regulation (EC) 44/2001 on Jurisdiction and the Recognition of Enforcement of Judgments in Civil and Commercial Matters.
(5) Whether they were to hear such claims by Mr. Justice Lloyd's dicta in Pearce v Ove Arup  2 WLR 779 or otherwise.
(7) Whether the Court should enforce the default judgment against Mr. Ainsworth.
(8) Whether Lucasfilm was beneficially entitled to the copyright in the model that Mr, Ainsworth had made for it for use in Star Wars.
What is a Sculpture for the Purposes of s.4?
The significance of this point was that if Mr. Ainsworth's reproductions had been sculptures they would thus have been artistic works. The s.51 exception discussed below does not apply to a design document for an artistic work. Accordingly, the copyrights subsisting in Mr. McQuarrie's drawings and for that matter Mr Pemberton's model would have been infringed by makingsculptures - that is to say Mr. Ainsworth's model storm troopers - from the designs contained in those drawings, paintings and model. The claimants could have prevented Mr. Ainsworth from making and selling his storm troopers for the lives of Mr. McQuarrie and Mr. Pemberton plus 70 years. If they were not sculptures, the s.51 exception would apply. The operation of s.51 had been suspended until 31 July 1999 by the transition provisions of Schedule 1 of the 1988 Act but that period had now expired.
The problem for the Court was that there is no definition of sculpture in the Act. Did the term apply only to busts, statues and other likenesses in which case it would exclude a lot of abstract works which are universally regarded as sculptures. If it had a wider meaning did it extend to prototypes? If it did extend to prototypes the distinction between copyrights and designs which Parliament had tried to settle with the 1988 Act would have been confused. There had been a number of cases on the point from common law jurisdictions around the world but these seemed to turn on their particular facts and it was very difficult to discern any consistency. At trial, Mr. Justice Mann set out the following guidelines for determining whether or not a three dimensional object was a sculpture or simply a prototype at paragraph  of his judgment:
"From those authorities, and those approaches, a number of guidance factors can be extracted. I call them guidance rather than points of principle, because that gives them the right emphasis. The judges deciding the cases have not sought to lay down hard and fast rules in an area where subjective considerations are likely to intrude, and I will not attempt to do so either. However, I do think the following points emerge from the cases or from the concepts involved:(i) Some regard has to be had to the normal use of the word.(ii) Nevertheless, the concept can be applicable to things going beyond what one would normally expect to be art in the sense of the sort of things that one would expect to find in art galleries.(iii) It is inappropriate to stray too far from what would normally be regarded as sculpture.(iv) No judgment is to be made about artistic worth.(v) Not every three dimensional representation of a concept can be regarded as a sculpture. Otherwise every three dimensional construction or fabrication would be a sculpture, and that cannot be right.(vi) It is of the essence of a sculpture that it should have, as part of its purpose, a visual appeal in the sense that it might be enjoyed for that purpose alone, whether or not it might have another purpose as well. The purpose is that of the creator. This reflects the reference to "artist's hand" in the judgment of Laddie J in Metix, with which I respectfully agree. An artist (in the realm of the visual arts) creates something because it has visual appeal which he wishes to be enjoyed as such. He may fail, but that does not matter (no judgments are to be made about artistic merit). It is the underlying purpose that is important. I think that this encapsulates the ideas set out in the reference works referred to in Wham-O and set out above (and in particular the Encyclopaedia Britannica).(vii) The fact that the object has some other use does not necessarily disqualify it from being a sculpture, but it still has to have the intrinsic quality of being intended to be enjoyed as a visual thing. Thus the model soldier in Britain might be played with, but it still, apparently, had strong purely visual appeal which might be enjoyed as such. Similarly, the Critters in Wildash had other functions, but they still had strong purely visual appeal. It explains why the Frisbee itself should be excluded from the category, along with the moulds in Metix and Davis. It would also exclude the wooden model in Wham-O and the plaster casts in Breville, and I would respectfully disagree with the conclusions reached by the judges in those cases that those things were sculptures. Those decisions, in my view, would not accord with the ordinary view of what a sculpture is, and if one asks why then I think that the answer is that the products fail this requirement and the preceding one – there is no intention that the object itself should have visual appeal for its own sake, and every intention that it be purely functional.(viii) I support this analysis with an example. A pile of bricks, temporarily on display at the Tate Modern for 2 weeks, is plainly capable of being a sculpture. The identical pile of bricks dumped at the end of my driveway for 2 weeks preparatory to a building project is equally plainly not. One asks why there is that difference, and the answer lies, in my view, in having regard to its purpose. One is created by the hand of an artist, for artistic purposes, and the other is created by a builder, for building purposes. I appreciate that this example might be criticised for building in assumptions relating to what it seeks to demonstrate, and then extracting, or justifying, a test from that, but in the heavily subjective realms of definition in the artistic field one has to start somewhere.(ix) The process of fabrication is relevant but not determinative. I do not see why a purely functional item, not intended to be at all decorative, should be treated as a sculpture simply because it is (for example) carved out of wood or stone."
Applying these guidelines the judge concluded that neither Mr. Pemberton's model nor Mr. Ainsworth's reproductions were sculptures.
The Court of Appeal endorsed the judge's approach. After analysing previous cases on the point the Lord Justices concluded at paragraph :
"it is not possible or wise to attempt to devise a comprehensive or exclusive definition of "sculpture" sufficient to determine the issue in any given case. Although this may be close to adopting the elephant test of knowing one when you see one, it is almost inevitable in this field. We therefore consider that the judge was right to adopt the multi-factorial approach which he did."
They also found that the judge had applied his guidelines correctly and upheld his finding. In doing so, the Lords Justices had to distinguish the case before them from Britain v Hanks (1902) 86 LT 765 where Mr. Justice Wright had held that a collection of model soldiers were artistic works. They did so on the basis that the model soldiers in Britain v Hanks were collectors' items whereas Mr. Ainsworth's models were but toys.
The S.51 Exception
S.51 (1) of the Act provides that
"[i]t is not an infringement of any copyright in a design document or model recording or embodying a design for anything other than an artistic work or a typeface to make an article to the design or to copy an article made to the design." "Design" is defined as "the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of an article, other than surface decoration" and "design document" as "any record of a design, whether in the form of a drawing, a written description, a photograph, data stored in a computer or otherwise."
The purpose of this section is to prevent overlap between copyright and design right. There is a corresponding provision for design right in s.236 of the Act:
"Where copyright subsists in a work which consists of or includes a design in which design right subsists, it is not an infringement of design right in the design to do anything which is an infringement of the copyright in that work."
Having decided that the model stormtroopers were not sculptures and hence not artistic works it followed that the s.51 exception did apply and that it afforded a defence to copyright infringement for Mr. Ainsworth.
The S.52 Exception
S.52 applies "where an artistic work has been exploited, by or with the licence of the copyright owner, by (a) making by an industrial process articles falling to be treated for the purposes of this part as copies of the work, and (b) marketing such articles, in the United Kingdom or elsewhere." The exception is contained in sub-section (2) which provides:
"After the end of the period of 25 years from the end of the calendar year in which such articles are first marketed, the work may be copied by making articles of any description, or doing anything for the purpose of making articles of any description, and anything may be done in relation to articles so made, without infringing copyright in the work."
Sub-section (4) allows the Secretary of State to make rules defining "industrial process". The Secretary of State has exercised his power under s.52 (4) by making The Copyright (Industrial Process and Excluded Articles)(No. 2) Order 1989 (SI 1989 No 1070). Art. 2 (a) of that Order provides that an article is made by an industrial process if it is one of more than 50 articles all of which fall to be treated as copies of an artistic work. Art 3 (1) (a) of the Order excepts from the exception "works of sculpture". Again, having already determined that Mr. Ainsworth's storm troopers are not sculptures it followed that the s.52 exception also applied.
The upshot was that Mr. Ainsworth had a complete defence to the claim for copyright infringement by virtue of both s.52 as well as s.51 of the Copyright, Designs and Patents Act 1988.
Whether the English Courts were bound to entertain Claims for Infringement of Foreign Copyrights by Reg 44/2001
There was no dispute that Mr. Ainsworth had infringed Lucasfilms' US copyrights from the UK by placing advertisements for his products in US publications, operating a website in the USA and sending his products to American customers. Default judgment for infringement of those copyrights had been entered against him in California but Mr. Ainsworth was here.
Art 2 (1) of Regulation (EC) 44/2001 enables persons domiciled in an EU member state to be sued in the courts of that member state subject to the other provisions of that regulation. In C-281/02 Owusu v Jackson and Others  ILPr 25,  ECR I-553,  2 All ER (Comm) 577,  EUECJ C-302/02,  QB 801,  EUECJ C-281/02,  1 CMLR 43,  1 Lloyd's Rep 452,  1 CLC 246, Case C-302/02,  2 WLR 942,  ECR I-1383, the Court of Justice of the European Union seemed to suggest that the courts of EU member states were bound to entertain claims against their nationals even where a jurisdiction outside the EU would be more appropriate. Scathingly, Lord Justice Jacob referred to that as "extra EU jurisdiction" or "universal international jurisdiction".
Owusu was a personal injuries case. The claimant, who was domiciled in England, had rented holiday accommodation in Jamaica from the first defendant who was also domiciled in this country. The first defendant relied on Jamaican contractors to maintain the property. While at the accommodation the claimant sustained serious injuries. Alleging breach of contract by the first defendant and negligence against all the others the claimant sued the Jamaican as well as the English defendants in the Sheffield District Registry. The defendants applied for a stay of the proceedings on the grounds that England was not the appropriate forum. The learned deputy judge who heard the application considered he was bound by art 2 of the Brussels Convention to refuse the application. On appeal, the Court of Appeal referred the following questions to the Court of Justice under what is now art 267 of the Treaty on the Functioning of the European Union:
"1. Is it inconsistent with the Brussels Convention where a claimant contends that jurisdiction is founded on Article 2, for a court of a Contracting State to exercise a discretionary power, available under its national law, to decline to hear proceedings brought against a person domiciled in that State in favour of the courts of a non-Contracting State:
(a) if the jurisdiction of no other Contracting State under the 1968 Convention is in issue;(b) if the proceedings have no connecting factors to any other Contracting State?2. If the answer to question 1(a) or (b) is yes, is it inconsistent in all circumstances or only in some and if so which?"
The Court replied:
"The Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, as amended by the Convention of 9 October 1978 on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland, by the Convention of 25 October 1982 on the Accession of the Hellenic Republic and by the Convention of 26 May 1989 on the Accession of the Kingdom of Spain and the Portuguese Republic, precludes a court of a Contracting State from declining the jurisdiction conferred on it by Article 2 of that convention on the ground that a court of a non-Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State."
Relying on that decision, Lucasfilm contended that
"Owusu decided that, for the EU, the courts of the Member State of the defendant's domicile have, and must exercise, subject-matter jurisdiction over any claim in any civil or commercial matter brought against the defendant unless it is one of the excluded matters provided for in Art. 1 of the Regulation. It makes no difference that the claim is in respect of acts done by the defendant in a place far far away from the EU. Or that the acts, if done by the defendant in his Member State of domicile, are lawful by the law of that State. Or that the courts of the country where the defendant actually did the allegedly wrongful act also have personal jurisdiction over him, with the obvious consequences for forum shopping that implies. Or that the dispute concerned has no intra-Member State or effect. Or that there is no EU interest requiring or making it convenient that the Member State concerned should have jurisdiction. If correct, the rule is rigid, admitting of no exception. We will call the postulated subject-matter jurisdiction the "extra EU jurisdiction". It could also be called "universal international jurisdiction".
The Court of Appeal had no difficulty in rejecting this bold proposition. First, Regulation 44/2001 was ancillary to art 65 of the Treaty of Rome (as it then was) which provided for "judicial co-operation in civil matters having cross-border implications." There was nothing in that article to indicate an intention to create an extra EU jurisdiction. Nor was there evidence of any such intention in Reg. 44/2001 itself. Secondly, Owusu was concerned with in personam jurisdiction and not jurisdiction in rem. The Court of Justice held that the rule of forum non conveniens had been displaced where a court has personal jurisdiction over a defendant by his presence in England and Wales but it did not address the question that arises where the court has no in rem or subject matter jurisdiction. Thirdly, the notion that the courts of the member states had "extra EU jurisdiction" in rem was inconsistent with the Court of Justice's decision in C-4/03 GAT v LUK  ECR I-6509,  FSR 45,  ILPr 34 where the court held that a German court had no jurisdiction to determine the validity of a French patent. Fourthly, the notion was also inconsistent with Voda v Cordis  476 F.3d 887, the leading American authority on extra-territoriality. Finally, the Court of Appeal's analysis coincided with that of Mr Justice Colman in Konkola Copper Mines Plc v Coromin  EWHC 898 (Comm),  Lloyds Reps 555.
Pearce v Ove Arup
In Pearce v Ove Arup Ltd  2 WLR 779 Mr. Justice Lloyd observed at page 789 that as a result of the Brussels Convention:
"an English court will not be able to refuse to adjudicate on an action, if brought here against an English domiciled defendant, based on the infringement of the French law of privacy, or an artist's droit de suite, or some other legal right under the law of another contracting state to which English law has no equivalent."
(see my contemporaneous case note). This was of course only obiter dicta because the judge struck out the claim on the ground that there was no real prospect of success though the action was later restored by the Court of Appeal. In Lucasfilm the Lords Justices made clear that their extra-territorial jurisdiction was conferred by the Brussels Convention and applied only to the member states of the European Union. It was thus irrelevant to the issues before them in Lucasfilm, namely whether an English court should entertain claims for infringement of copyright in countries outside the EU.
Extra-Territorial Jurisdiction outside the EU
Finding no binding authority on the point, the Court of Appeal found that they were able to consider the issue de novo. The Court ruled at paragraph  that claims for infringement of copyrights of countries outside the EU were not justiciable. The Lord Justices' reasons were as follows:
(1) For nearly 120 years it has been settled that an English court will entertain proceedings for a tort abroad only if the wrongdoing is also actionable in England (see British South Africa Co. v Companhia de Mocambique  AC 602). That rule has been abolished by art 2 of Reg 44/2001 in respect of wrongdoing in other EU member states but it still applies to alleged wrongdoing outside the EU.
(2) Enforcement of non-EU copyrights would involve a clash of IP policies of different countries. Lucasfilm was a case in point. Was it right to restrain a UK national in England from acts that were quite lawful in England just because those acts would have been unlawful if they had been done within the territory of a foreign state?
(3) Any restraint would amount to an interference in a foreign country in that it would preempt the decision of the foreign court.
(4) It would encourage forum shopping and with it satellite litigation such as anti-suit injunctions and applications for declarations of non-infringement.
(5) As the Court of Appeals for the Federal Circuit observed in Voda, governments could have provided for extra-territorial jurisdiction in the IP conventions but have chosen not to do so.
(6) Their judgment was in line with that of the Federal Circuit in Voda.
For all these reasons the Court allowed Mr. Ainsworth's appeal against Mr. Justice Mann's injunction against infringing Lucasfilm's American copyrights and discharged that injunction.
Enforcement of the Default Judgment
It has long been settled that a foreign judgment can be enforced against a defendant in England only if the defendant places him or herself within the jurisdiction of the foreign court. The question for the Court was whether Mr. Ainsworth had done that. He was not physically present within the USA. He had never consented to the jurisdiction of its courts by contract or otherwise. All he had done was to sell his goods there. It has long been recognized in England that merely selling goods in another country does not amount to presence in that country. Indeed, sending a sales representative to a foreign country does not amount to "presence". Recognizing that "the internet and its uses takes us into a new world" the Court considered whether the internet or a website makes a qualitative difference requiring different rules on jurisdiction and decided that it did not. Accordingly, the Court concluded that Mr. Ainsworth had never been within the jurisdiction of the US courts and refused to enforce the default judgment.
Copyright in Mr. Ainsworth's Model
This was the only issue upon which Lucasfilm succeeded. The trial judge considered at paragraph  of his judgment the circumstances in which Mr. Ainsworth's work had been commissioned and his contribution to the project as a whole. Applying the officious bystander test he concluded that the parties would have intended Lucasfilm to acquire such copyrights as might subsist in Mr. Ainsworth's work. The Court approved Mr. Justice Mann's reasoning and dismissed Mr. Ainsworth's appeal against the order to assign his copyrights to Lucasfilm. There was, of course, no British copyright as Mr Ainsworth's model was not a sculpture.
Although the Court of Appeal did not think that the internet required any special rules on jurisdiction, the everyday reality is that it has increased the frequency of collisions between different legal systems. This seems to have occurred or at least been recognized earlier in the USA where the courts have developed rules for dealing with such collisions. In Zippo Mfr. Co, v Zippo Dot Com Inc.952 F Supp. 1119 (W.D. Pa), for instance, Judge McLaughlin drew a distinction between active and passive websites. Active websites are those through which a trader does business whereas passive sites are those through which he or she gives information. An active website brings a trader within the jurisdiction of a court whereas a passive site does not. This is a sensible distinction and one that companies seem to be able to live with as they often provide different sites for different markets with different terms and conditions to take account of different consumer protection laws, language and business practices. The Court of Appeal did not discuss the American cases on the internet and jurisdiction which is perhaps strange in that they would have provided an answer to several of the issues before the court in Lucasfilm, particularly as the court did discuss and apply Voda. This may have been because EU law provides a regulatory framework for e-commerce and distance selling but it is more likely to be because this is the first time the Court of Appeal has had to consider these questions and it occurred neither to the Lord Justices nor to counsel to consider the American cases.
This case has now gone to the Supreme Court and I have today discussed the decision in a further case note "Lucasfilm v Ainsworth: The Supreme Court's First IP Appeal" Very broadly, the Supreme Court affirmed the Court of Appeal's reasoning with two qualifications but allowed the appeal on the justicialbility of a US copyright infringement claim. If you want to discuss any aspect of this case with me, call me on 0800 862 0055 or use my contact form.
1 Aug 2011