Copyright - Costa v Dissociadid Ltd.and another
Intellectual Property Enterprise Court (HH Judge Hacon) Costa v DissociaDID Ltd. and another [2022] EWHC 1934 (IPEC) (22 July 2022) and [2023] EWHC 49 (IPEC) (16 Jan 2023)
Since early 2018, Chloe Wilkinson ("Miss Wilkinson") has run a YouTube channel called DissociaDID which provides information on a condition known as dissociative identity disorder or "DID". According to the NHS website:
"Someone diagnosed with DID may feel uncertain about their identity and who they are.
The main symptoms of DID are: memory gaps about everyday events and personal information
having several distinct identities."
The channel has been very successful attracting over a million subscribers and generating revenues of just under £105,000 in 2020. In Aug 2020 Ms Wilkinson set up Dissociadid Ltd. ("Dissociadid") to operate the channel.
The Dispute
The Dispute
One Sergio Mendes Costa ("Mr Costa") was a supporter of the channel. Between June and November 2020, he and Ms Wilkinson worked together to create content for the site. They created several literary works which they agreed were works of joint authorship. There was, however, one work upon which the parties could not agree. This was a disclaimer ("the Disclaimer") that Ms Wilkinson claimed to have written herself. She acknowledged that Mr Costa had suggested improvements to her work but she denied that they had collaborated on it in the way and to the extent that they had collaborated on others.
S.10 (1) of the Copyright, Designs and Patents Act 1988 defines a work of joint authorship as "a work produced by the collaboration of two or more authors in which the contribution of each author is not distinct from that of the other author or authors." S.10 (3) adds that references to the author of a work shall, except as otherwise provided, be construed in relation to a work of joint authorship as references to all the authors of the work. As the author of a work is the first owner of any copyright subsisting in it by virtue of s.11 (1) Mr Costa and Ms Wilkinson became joint owners of the copyright in the joint works. One of the consequences of such joint ownership is that neither owner may do any of the restricted acts without the licence of the other (see Powell v Head (1879) 12 Ch D 686.),
S.10 (1) of the Copyright, Designs and Patents Act 1988 defines a work of joint authorship as "a work produced by the collaboration of two or more authors in which the contribution of each author is not distinct from that of the other author or authors." S.10 (3) adds that references to the author of a work shall, except as otherwise provided, be construed in relation to a work of joint authorship as references to all the authors of the work. As the author of a work is the first owner of any copyright subsisting in it by virtue of s.11 (1) Mr Costa and Ms Wilkinson became joint owners of the copyright in the joint works. One of the consequences of such joint ownership is that neither owner may do any of the restricted acts without the licence of the other (see Powell v Head (1879) 12 Ch D 686.),
Mr Costa and Ms Wilkindon fell out in early November 2020 after Mr Costa had discovered the extent of the channel's earnings. He objected to the publication of the works of joint ownership and sued Dissociadid and Ms Wilkinson for an injunction to prevent the use of jointly produced work. He also issued takedown notices to YouTube which resulted in the removal of several of the defendants' videos from the internet. Ms Wilkinson and the company alleged in a counterclaim that Mr Costa had contracted to allow them to use those works indefinitely. Alternatively, she argued that Mr Costa was damaging their business by unlawful means by issuing those takedown notices.
Procedural History
At a case management conference on 4 Jan 2022, the learned recorder ordered the following issues to be tried:
"(1) Whether the Disclaimer was a work of joint authorship.
(2) Whether a binding contract was concluded on 16 June 2020.
(3) If there is a contract, whether it contains the implied terms alleged by Ms Wilkinson.
(4) When the bare licence granted by Ms Costa to the defendants to use the Disclaimer and Joint Works was terminated.
(5) Whether Mr Costa's instructions to YouTube to take down videos were an act of unlawful interference with the defendants' business.
(6) Whether such instructions were in breach of the contract.
(7) If the answer to either (5) or (6) is yes, the quantum of loss suffered by the defendants."
Those issues came on for trial before His Honour Judge Hacon on 21 and 22 June 2022.
At para [152] of his judgment in Costa v Dissociadid Ltd and another [2022] EWHC 1934 (IPEC) (22 July 2022) His Honour found that the defendants had infringed Mr Costa'srights by continuing to use the joint works after their bare licence had expired. He dismissed the counterclaim for breach of contract but upheld the counterclaim for causing loss by unlawful means. He also held that the copyright in the Disclaimer belonged to Ms Wilkingson alone.
At para [152] of his judgment in Costa v Dissociadid Ltd and another [2022] EWHC 1934 (IPEC) (22 July 2022) His Honour found that the defendants had infringed Mr Costa'srights by continuing to use the joint works after their bare licence had expired. He dismissed the counterclaim for breach of contract but upheld the counterclaim for causing loss by unlawful means. He also held that the copyright in the Disclaimer belonged to Ms Wilkingson alone.
After the trial, there was a further hearing to determine the terms of the order. Dissociadid and Ms Wilkinson sought an injunction to compel Mr Costa to withdraw his takedown notices. Mr Costa opposed the application on the ground inter alia that the court had no jurisdiction to make the order but his legal representatives only notified the defendants the evening before the hearing and his counsel did not cite any authority or prepare fully his arguments in opposition to the injunction. The claimant's counsel subsequently abandoned the lack of jurisdiction argument. The court granted the requested injunction against Mr Costa and ordered him to pay costs pursuant to CPR 63.26 (2).
Mr Costa then applied inter alia for an order that his former counsel and solicitors should pay the costs that had been awarded against him. The learned judge considered Mr Costa's application and dismissed it on 16 Jan 2023 (see Costa v Dissociadid Ltd and another [2023] EWHC 49 (IPEC) (16 Jan 2023)).
Whether the Disclaimer was a Work of Joint Authorship
Judge Hacon decided that it was not. After referring to s.10 (1) of the 1988 Act, he considered para [31] of Lord Justice Floyd's judgment in Kogan v Martin [2020] ECDR 3, [2020] FSR 3, [2020] EMLR 4, [2019] EWCA Civ 1645:
"The four elements of joint authorship are thus (a) collaboration, (b) authorship, (c) contribution and (d) non-distinctness of contribution. Although joint authorship is ultimately a unitary concept, it is helpful for the purposes of analysis to consider each element in turn."
The learned Lord Justice continued at [53]:
"Drawing all of this together:
1. A work of joint authorship is a work produced by the collaboration of all the people who created it.
2. There will be a collaboration where those people undertake jointly to create the work with a common design as to its general outline, and where they share the labour of working it out. The first task for the court in such a case is to determine the nature of the co-operation between the putative joint authors which resulted in the creation of the work.
3. Derivative works do not qualify. Works where one of the putative authors only provides editorial corrections or critique, but where there is no wider collaboration, do not qualify. Ad hoc suggestions of phrases or ideas where there is no wider collaboration do not qualify.
4. In determining whether there is a collaboration to create a literary or artistic work it is never enough to ask 'who did the writing?'. Authors can collaborate to create a work in many different ways. For example there may be joint authorship if one person creates the plot and the other writes the words, or if either or both of these types of labour is shared.
5. Joint authors must be authors, in the sense that they must have contributed a significant amount of the skill which went into the creation of the work. Again, it is not correct to focus exclusively on who fixed the work in writing. The statutory concept of an author includes all those who created, selected or gathered together the detailed concepts or emotions which the words have fixed in writing.
6. Contributions which are not 'authorial' in the above sense do not count. What counts as an authorial contribution is acutely sensitive to the nature of the copyright work in question.
7. The question of what is enough of a contribution is to be judged by the Infopaq test, i.e. whether the putative joint author has contributed elements which expressed that person's own intellectual creation. The essence of that term is that the person in question must have exercised free and expressive choices. The more restrictive the choices the less likely it will be that they satisfy the test.
8. The contribution of a putative joint author must not be distinct.
9. There is no further requirement that the authors must have subjectively intended to create a work of joint authorship.
10. The fact that one of the authors has the final say on what goes into the work may have some relevance to whether there is a collaboration, but is not conclusive. The author with the final say must be given credit in deciding on the relative proportions of ownership, for the extra work involved in making those choices.
11. It follows that the respective shares of joint authors are not required to be equal, but can reflect, pro rata, the relative amounts of their contributions."
"Drawing all of this together:
1. A work of joint authorship is a work produced by the collaboration of all the people who created it.
2. There will be a collaboration where those people undertake jointly to create the work with a common design as to its general outline, and where they share the labour of working it out. The first task for the court in such a case is to determine the nature of the co-operation between the putative joint authors which resulted in the creation of the work.
3. Derivative works do not qualify. Works where one of the putative authors only provides editorial corrections or critique, but where there is no wider collaboration, do not qualify. Ad hoc suggestions of phrases or ideas where there is no wider collaboration do not qualify.
4. In determining whether there is a collaboration to create a literary or artistic work it is never enough to ask 'who did the writing?'. Authors can collaborate to create a work in many different ways. For example there may be joint authorship if one person creates the plot and the other writes the words, or if either or both of these types of labour is shared.
5. Joint authors must be authors, in the sense that they must have contributed a significant amount of the skill which went into the creation of the work. Again, it is not correct to focus exclusively on who fixed the work in writing. The statutory concept of an author includes all those who created, selected or gathered together the detailed concepts or emotions which the words have fixed in writing.
6. Contributions which are not 'authorial' in the above sense do not count. What counts as an authorial contribution is acutely sensitive to the nature of the copyright work in question.
7. The question of what is enough of a contribution is to be judged by the Infopaq test, i.e. whether the putative joint author has contributed elements which expressed that person's own intellectual creation. The essence of that term is that the person in question must have exercised free and expressive choices. The more restrictive the choices the less likely it will be that they satisfy the test.
8. The contribution of a putative joint author must not be distinct.
9. There is no further requirement that the authors must have subjectively intended to create a work of joint authorship.
10. The fact that one of the authors has the final say on what goes into the work may have some relevance to whether there is a collaboration, but is not conclusive. The author with the final say must be given credit in deciding on the relative proportions of ownership, for the extra work involved in making those choices.
11. It follows that the respective shares of joint authors are not required to be equal, but can reflect, pro rata, the relative amounts of their contributions."
Judge Hacon directed himself at para [30] of his judgment that "the first task of the court in deciding an issue of joint authorship is to determine the nature of the co-operation between the putative joint authors," He found the test in para [33] of Lord Justice Floyd's judgment in Kogan:
"[33] A collaborative work is different from a derivative work. If an author takes as his or her starting point the work of another and decides to adapt, embellish or improve on it, the result may attract copyright, but it will not be a work of joint authorship. The second author may be entitled to copyright in the resultant work, but it will be a work of sole authorship, the originality of which could only lie in the contribution made by the second author. More pertinently, there will be cases where a person makes a contribution prior to the completion of the work being undertaken by an author, but the work will remain a work of sole authorship because the contribution was not made in the course of a collaboration pursuant to a common design. The work must be created by collaboration. Friends of the author who make suggestions otherwise than in the course of a collaboration will not become joint authors. A striking illustration is the contribution made by Ezra Pound to The Waste Land. When T.S. Eliot showed him the original draft, Pound proposed very extensive deletions and revisions, with considerable consequences for the poem as published (indeed he became its dedicatee). But neither poet ever considered it a work of joint authorship, and it has not been regarded as such in the century since it was published, even though Pound's contribution is now widely known. This is because he was acting as a friend and critic and not a collaborator in a common design. By contrast, a collaborator may become a joint author after an apparently lesser contribution than Pound's. Take, for example, Beckingham v Hodgens, where a successful claim for joint authorship was made by a session musician who contributed a distinctive four-bar riff to a pop song that had been substantially conceived before he was hired. These examples show the importance of identifying the true nature of the interaction between the parties in relation to the work, an assessment that provides the essential context for consideration of questions of authorship and contribution."
"[33] A collaborative work is different from a derivative work. If an author takes as his or her starting point the work of another and decides to adapt, embellish or improve on it, the result may attract copyright, but it will not be a work of joint authorship. The second author may be entitled to copyright in the resultant work, but it will be a work of sole authorship, the originality of which could only lie in the contribution made by the second author. More pertinently, there will be cases where a person makes a contribution prior to the completion of the work being undertaken by an author, but the work will remain a work of sole authorship because the contribution was not made in the course of a collaboration pursuant to a common design. The work must be created by collaboration. Friends of the author who make suggestions otherwise than in the course of a collaboration will not become joint authors. A striking illustration is the contribution made by Ezra Pound to The Waste Land. When T.S. Eliot showed him the original draft, Pound proposed very extensive deletions and revisions, with considerable consequences for the poem as published (indeed he became its dedicatee). But neither poet ever considered it a work of joint authorship, and it has not been regarded as such in the century since it was published, even though Pound's contribution is now widely known. This is because he was acting as a friend and critic and not a collaborator in a common design. By contrast, a collaborator may become a joint author after an apparently lesser contribution than Pound's. Take, for example, Beckingham v Hodgens, where a successful claim for joint authorship was made by a session musician who contributed a distinctive four-bar riff to a pop song that had been substantially conceived before he was hired. These examples show the importance of identifying the true nature of the interaction between the parties in relation to the work, an assessment that provides the essential context for consideration of questions of authorship and contribution."
Applying that test, Judge Hacon found that there had been no collaboration. Ms Wilkinson was the sole author of the Disclaimer. Mr Costa did no more than make a suggestion to Ms Wilkinson to improve her work. His suggestion consisted of the addition of words that are commonplace in a disclaimer.
Whether a Binding Contract was concluded on 16 June 2020
The learned judge found that there had been no contract between Mr Costa and Ms Wilkinson because Mr Costa had received no consideration for his promise to work with her.
If there was a Contract, whether it contained the Implied Terms alleged by Ms Wilkinson
Judge Hacon held that such a contract would not have contained the alleged implied terms. He said at para [68] of his judgment:
"In my view, on 16 June 2020 it was not contemplated by Mr Costa or Ms Wilkinson that Mr Costa would provide content for the DissociaDID channel. His advice, feedback, proposals and research would be given. Some of that advice would concern the writing contained in Ms Wilkinson's content. I do not believe that at that stage they considered the joint creation of works in the form which they later took, works that were incorporated into videos, posted online or, in the case of the Social Media Works, used in online chats. At that stage it was expected that Ms Wilkinson would review Mr Costa's advice and feedback, accepting or rejecting it as she saw fit. It only later became apparent that it would be useful to incorporate some of his written work into content created by her such that Mr Costa became a joint author."
He added at [70] that there had been no need for Mr Costa to grant a licence to allow Ms Wilkinson to follow his advice or to use his research in the form contemplated on 16 June 2020.
His Honour noted at [71] that there was no dispute that Mr Costa had licensed Dissociadid and Ms Wilkinson to use the jointly produced works and disclaimer. The question was when it came to an end. He held at [72] that such a licence was a bare licence by conduct which would be revoked at any time. Referring to Mellor v Watkins (1873-74) LR 9 QB 400, at 405-6, he added that such revocation would take effect upon clear notice of revocation and after a reasonable period.
The judge held that the following factors were relevant at para [83]:
"(1) The effect on the defendants' business if the notice period were too short. Ms Wilkinson said in cross-examination that there would have been a loss of trust among those viewing her channel if her videos had all been suddenly taken down. I accept that evidence.
(2) The time it would have taken Ms Wilkinson to avoid a loss of trust. The parties would have had in mind the time within which Ms Wilkinson could reasonably have recreated videos and other material, removing any Joint Work, and then have replaced the new material for that containing a Joint Work.
(3) To the extent that Joint Works could have been removed without material being taken down, they would have had in mind the time in which this could reasonably have been accomplished.
(4) The damage that would be suffered by Mr Costa while the Joint Works remained publicly accessible on the channel. The smaller the damage to him, the more relaxed Mr Costa would have been regarding the notice period.
(5) Mr Costa was not going to exploit the Joint Works himself and could not do so because Ms Wilkinson remained joint owner of the copyrights in them. He therefore had no reason to press Ms Wilkinson for a short notice period so that he could use the Joint Works himself."
"(1) The effect on the defendants' business if the notice period were too short. Ms Wilkinson said in cross-examination that there would have been a loss of trust among those viewing her channel if her videos had all been suddenly taken down. I accept that evidence.
(2) The time it would have taken Ms Wilkinson to avoid a loss of trust. The parties would have had in mind the time within which Ms Wilkinson could reasonably have recreated videos and other material, removing any Joint Work, and then have replaced the new material for that containing a Joint Work.
(3) To the extent that Joint Works could have been removed without material being taken down, they would have had in mind the time in which this could reasonably have been accomplished.
(4) The damage that would be suffered by Mr Costa while the Joint Works remained publicly accessible on the channel. The smaller the damage to him, the more relaxed Mr Costa would have been regarding the notice period.
(5) Mr Costa was not going to exploit the Joint Works himself and could not do so because Ms Wilkinson remained joint owner of the copyrights in them. He therefore had no reason to press Ms Wilkinson for a short notice period so that he could use the Joint Works himself."
He concluded at [88] that the parties would have agreed to an 8-month period of notice terminating on 23 July 2021.
The learned judge referred to the following paragraphs of Lord Hoffmann's speech in OBG Limited v Allan [2007] UKHL 21 for the ingredients of the tort of causing loss by unlawful means or, as it is sometimes called, interference with a trade or business by unlawful means.
"[47] The essence of the tort therefore appears to be (a) a wrongful interference with the actions of a third party in which the claimant has an economic interest and (b) an intention thereby to cause loss to the claimant. …
…
[49] In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. …
…
[51] Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant."
Judge Hacon discerned from that speech the following elements:
"(1) Acts by the defendant against a third party in which the claimant has an economic interest,
(2) which are actionable in law by the third party (to include acts which are not actionable solely because the third party has suffered no loss),
(3) where such acts affect the freedom of the third party to deal with the claimant,
(4) and where there is an intention on the part of the defendant thereby to cause loss to the claimant."
"(1) Acts by the defendant against a third party in which the claimant has an economic interest,
(2) which are actionable in law by the third party (to include acts which are not actionable solely because the third party has suffered no loss),
(3) where such acts affect the freedom of the third party to deal with the claimant,
(4) and where there is an intention on the part of the defendant thereby to cause loss to the claimant."
With regard to the third element, the judge noted that the Supreme Court had endorsed the following paragraphs of Lord Hoffmann's speech in OBG Ltd. in Secretary of State for Health v Servier Laboratories Ltd [2021] UKSC 24:
"[52] Thus in RCA Corpn v Pollard [1983] Ch 135 the plaintiff had the exclusive right to exploit records made by Elvis Presley. The defendant was selling bootleg records made at Elvis Presley concerts without his consent. This was an infringement of section 1 of the Dramatic and Musical Performers' Protection Act 1958, which made bootlegging a criminal offence and, being enacted for the protection of performers, would have given Elvis Presley a cause of action: see Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173, 187. The Court of Appeal held that the infringement of the Act did not give RCA a cause of action. The defendant was not interfering with the liberty of the Presley estate to perform the exclusive recording contract which, as Oliver LJ noted, at p 149, was 'no more than an undertaking that he will not give consent to a recording by anybody else'. Nor did it prevent the Presley estate from doing any other act affecting the plaintiffs. The bootlegger's conduct, said Oliver LJ, at p 153: 'merely potentially reduces the profits which [the plaintiffs] make as the result of the performance by Mr Presley's executors of their contractual obligations.'
…
[54] Likewise in Isaac Oren v Red Box Toy Factory Ltd [1999] FSR 785, one of the claimants was the exclusive licensee of a registered design. The defendant sold articles alleged to infringe the design right. The registered owner had a statutory right to sue for infringement. But the question was whether the licensee could sue. In the case of some intellectual property rights, an exclusive licensee has a statutory right of action: see, for example, section 67(1) of the Patents Act 1977. But the exclusive licensee of a registered design has no such right. So the licensee claimed that the defendant was intentionally causing him loss by the unlawful means of infringing the rights of the registered owner. Jacob J rejected the claim on the principle of RCA Corpn v Pollard. The defendant was doing nothing which affected the relations between the owner and licensee. The exclusive licence meant that the licensee was entitled to exploit the design and that the owner contracted not to authorise anyone else to do so. As Jacob J said, at p 798, para 33: 'It is true that the exploitation of the licence may not have been so successful commercially by reason of the infringement, but the contractual relations and their performance remain completely unaffected.'"
Lord Hoffmann discussed the fourth element at para [62] of his speech:
"Finally, there is the question of intention. In the Lumley v Gye tort, there must be an intention to procure a breach of contract. In the unlawful means tort, there must be an intention to cause loss. The ends which must have been intended are different. South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239 shows that one may intend to procure a breach of contract without intending to cause loss. Likewise, one may intend to cause loss without intending to procure a breach of contract. But the concept of intention is in both cases the same. In both cases it is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one's actions."
"Finally, there is the question of intention. In the Lumley v Gye tort, there must be an intention to procure a breach of contract. In the unlawful means tort, there must be an intention to cause loss. The ends which must have been intended are different. South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239 shows that one may intend to procure a breach of contract without intending to cause loss. Likewise, one may intend to cause loss without intending to procure a breach of contract. But the concept of intention is in both cases the same. In both cases it is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one's actions."
As Judge Hacon noted at para [109] of his judgment, the first element was satisfied in that the takedown notices were to YouTube, a third party in which the defendants had an economic interest in that it hosted the channel through which Dissociadid ran its business. The issue was whether those notices were actionable in law by YouTube. The defendants argued that they were in that YouTube could have sued for deceit. His Honour referred to para [77] of Lord Justice Jackson's judgment in Eco3 Capital Limited v Ludsin Overseas Ltd [2013] EWCA Civ 413 for the ingredients of the tort of deceit:
"… What the cases show is that the tort of deceit contains four ingredients, namely:
i) The defendant makes a false representation to the claimant.
ii) The defendant knows that the representation is false, alternatively he is reckless as to whether it is true or false.
iii) The defendant intends that the claimant should act in reliance on it.
iv) The claimant does act in reliance on the representation and in consequence suffers loss.
Ingredient (i) describes what the defendant does. Ingredients (ii) and (iii) describe the defendant's state of mind. Ingredient (iv) describes what the claimant does."
"… What the cases show is that the tort of deceit contains four ingredients, namely:
i) The defendant makes a false representation to the claimant.
ii) The defendant knows that the representation is false, alternatively he is reckless as to whether it is true or false.
iii) The defendant intends that the claimant should act in reliance on it.
iv) The claimant does act in reliance on the representation and in consequence suffers loss.
Ingredient (i) describes what the defendant does. Ingredients (ii) and (iii) describe the defendant's state of mind. Ingredient (iv) describes what the claimant does."
In the takedown notices, Mr Costa asserted that he was an owner of the copyrights in the Disclaimer. The learned judge had found that he was not. It followed that that statement was false. Mr Costa did not know that that statement was false until trial. However, he also made another statement that turned out not to be true in that he alleged that certain videos contained the Disclaimer when in fact they did not. That satisfied the second ingredient. The judge found that Mr Costa intended YouTube to continue to rely on his representation that the defendants were using the Disclaimer without his permission after he must have known that was no longer the case. As for the fourth ingredient, it was clear that YouTube had relied on Mr Costa's representation. It followed that YouTube would have had an action for deceit.
Returning to his analysis of the OBG and Servier appeals, Judge Hacon considered the third element, namely whether Mr Costa's representation affected YouTube's freedom to deal with Dissociadid and Ms Wilkinson. His Honour held at [136] that Mr Costa's representation as to the continuing use of the Disclaimer without his permission influenced YouTube's belief that Mr Costa's rights were being infringed. It followed that the representation affected YouTube's freedom to host the relevant videos.
Returning to his analysis of the OBG and Servier appeals, Judge Hacon considered the third element, namely whether Mr Costa's representation affected YouTube's freedom to deal with Dissociadid and Ms Wilkinson. His Honour held at [136] that Mr Costa's representation as to the continuing use of the Disclaimer without his permission influenced YouTube's belief that Mr Costa's rights were being infringed. It followed that the representation affected YouTube's freedom to host the relevant videos.
As for the fourth element, namely whether there was an intention on the part of Mr Costa thereby to cause loss to the defendants, the learned judge had no doubt that Mr Costa intended all his representations, including that concerning the defendants' continuing use of the Disclaimer, to cause YouTube to take action. Mr Costa had argued that he acted as he did to safeguard his intellectual property and to protect the public from what he believed to be harmful content. His Honour was not persuaded. He said at [147]:
"I have found that Mr Costa intended that his takedown requests based on the Disclaimer should result in the defendants' videos being taken down even though he knew that the Disclaimer was only contained in the descriptions. I think that the only fair inference I can draw is that Mr Costa did this, achieved in part by his false representation that the defendants were using the Disclaimer, because he wanted to cause harm to the defendants, harm generated by videos vanishing in large numbers from the channel. The fourth element of the tort is satisfied. The counterclaim succeeds."
Whether the Takedown Instructions were in Breach of the Contract
"I have found that Mr Costa intended that his takedown requests based on the Disclaimer should result in the defendants' videos being taken down even though he knew that the Disclaimer was only contained in the descriptions. I think that the only fair inference I can draw is that Mr Costa did this, achieved in part by his false representation that the defendants were using the Disclaimer, because he wanted to cause harm to the defendants, harm generated by videos vanishing in large numbers from the channel. The fourth element of the tort is satisfied. The counterclaim succeeds."
Whether the Takedown Instructions were in Breach of the Contract
The learned judge did not even mention this issue. Doubtless, that was because he had found that there was no contract between the parties.
If the Answer to either the Fifth or Sixth Issue is "Yes", the Quantum of Loss suffered by the Defendants.
The practice in the Chancery Division is to determine whether a defendant has infringed the rights of the claimant (or vice versa where there is a counterclaim) at a hearing known as "the trial". If the claimant succeeds at trial the court may order a second hearing to decide how much money the defendant owes to the claimant. A successful claimant can choose damages (compensation for any loss that may arise from the defendant's wrongdoing) or an assessment of the defendant's profits from such wrongdoing and their payment to the claimant. The hearing that assesses a claimant's damages is known as an "inquiry" and the hearing that assesses the defendant's profits is known as "an account of profits".
At the case management conference, Recorder Michaels had ordered the assessment of the defendants' damages to take place immediately after trial should they succeed on their counterclaim rather than in an inquiry. Judge Hacon said at para [148] that he imagined that at the CMC it would have appeared that such an assessment would be straightforward and more efficiently done at the trial but as he added in the next paragraph it had not worked out that way.
At the case management conference, Recorder Michaels had ordered the assessment of the defendants' damages to take place immediately after trial should they succeed on their counterclaim rather than in an inquiry. Judge Hacon said at para [148] that he imagined that at the CMC it would have appeared that such an assessment would be straightforward and more efficiently done at the trial but as he added in the next paragraph it had not worked out that way.
At para [89] he had noted that at the CMC the recorder had ordered in the usual way that if liability in Mr Costa's claim were established at trial there would be a separate hearing to settle quantum. As it was common ground that the works upon which Mr Costa and Ms Wilkinson had collaborated (other than the Disclaimer) were works in which they both owned copyright, it followed that Mr Costa's rights would have been infringed by the use of those works on the YouTube channel after the expiry of the licence on 23 July 2021. The claimant adduced some evidence of such use after that date which was not challenged by the defendants. His Honour, therefore, found at para [90] that Mr Costa's rights in those joint works have been infringed. That entitled Mr Costa to claim an inquiry or an account of profits provided that any award likely to be made would be proportionate to the time of the court that would be taken up in assessing what the sum would be. For that proviso, the learned judge relied on Jameel v Dow Jones & Co Inc., [2005] QB 946, [2005] EWCA Civ 75, [2005] 2 WLR 1614, [2005] EMLR 16, [2005] EMLR 353 at [54] and [69]-[70].
As the defendants had produced some evidence of loss as a result of the claimant's takedown notices, the judge thought at para [149] that any further argument on the counterclaim should take place at the same time as an inquiry or account in relation to Mr Costa's claim for copyright infringement. He added at [150] that the dispute was between two individuals, not between well-financed corporations. In his view, there should be a set-off before money changes hands in one direction or the other. He offered to assess the defendants' claim on the papers following further brief submissions should Mr Costa not seek an inquiry or account.
The Further Hearing
As I noted in the procedural history there was a second hearing before Judge Hacon to determine the form of the order. According to his judgment in Costa v Dissociadid Ltd and another [2023] EWHC 49 (IPEC) (16 Jan 2023), that hearing took place on 18 Oct 2022. The judge was minded to grant the injunction requiring the claimant to withdraw the takedown notices that I mentioned above but decided not to do so because the claimant's counsel had indicated that he intended to challenge the court's jurisdiction.
The Costs Order
The Costs Order
His Honour directed the parties to submit written submissions on the jurisdiction issue. The claimant did not pursue the jurisdiction challenge and contended that the court should refuse to grant the injunction in the exercise of its discretion. After considering the parties' submissions, the judge granted the injunction. He did not award costs to either party for the action down to and including the hearing of 18 Oct 2022 but he made the following order in respect of the costs incurred afterwards:
"The Claimant shall pay the Defendants' costs incurred after the hearing on 18 October 2022 to the date of this Order, such costs to be paid pursuant to CPR 63.26(2). The Defendants have permission to apply to the Court."
"The Claimant shall pay the Defendants' costs incurred after the hearing on 18 October 2022 to the date of this Order, such costs to be paid pursuant to CPR 63.26(2). The Defendants have permission to apply to the Court."
He explained at para [9] of his judgment of 16 Jan 2023 that CPR 63.26 (2) provides that where a party has behaved unreasonably the court may make an order for costs at the conclusion of the hearing; pursuant to CPR 45.32. Such costs are in addition to the cap on total costs that generally applies to the Intellectual Property Enterprise Court. He set out his reasons in para [10]:
"(1) The Claimant's objection to the relief sought by the Defendants and now granted under paragraph 1 of this Order was not raised until the evening before the hearing on 18 October 2022 dealing with the matters consequential upon the judgment of 22 July 2022. It was asserted at that hearing that the Court did not have jurisdiction to grant such relief but no authority was proffered in support of the objection. Because the objection went to the jurisdiction of the Court, the parties were given the opportunity to provide written submissions on the point and did so. The Claimant has now withdrawn the submission that the Court has no jurisdiction and asserts instead that the Court should not exercise its discretion to grant such relief. For the reasons given by the Defendants in their submissions I am satisfied that such relief constitutes an appropriate exercise of the Court's discretion.
…
(5) No significant costs would have been incurred by the Defendants after the hearing on 18 October 2022 had the Claimant not raised its late objection to the Court's jurisdiction. Save to an insignificant degree, those costs were caused by and related to the Claimant's argument regarding the Court's lack of jurisdiction. The Defendants are entitled to their costs since that date in accordance with CPR 63.26(2)."
The defendants filed a statement of costs from 18 Oct to 25 Nov 2022 which was the date of the order. After considering the statement, His Honour made a second order on 8 Dec 2022 requiring Mr Costa to pay Dissociadid and Ms Wilkinson £10,000 within 14 days.
The Wasted Costs Application
Mr Costa applied for an order that his counsel and/or his solicitors should pay those costs. He relied on s.51 (6) of the Senior Courts Act 1981:
The proceedings referred to in s.51 (1) are the Civil Division of the Court of Appeal, the High Court, the Family Court and the County Court. "Wasted costs" are defined by s.51 (7) as
"any costs incurred by a party—
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay."
This provision is implemented by CPR 46.8:
"(1) This rule applies where the court is considering whether to make an order under section 51(6) of the Senior Courts Act 19813 (court’s power to disallow or (as the case may be) order a legal representative to meet, ‘wasted costs’).
(2) The court will give the legal representative a reasonable opportunity to make written submissions or, if the legal representative prefers, to attend a hearing before it makes such an order.
(3) When the court makes a wasted costs order, it will –
(a) specify the amount to be disallowed or paid; or
(b) direct a costs judge or a district judge to decide the amount of costs to be disallowed or paid.
(4) The court may direct that notice must be given to the legal representative’s client, in such manner as the court may direct –
(a) of any proceedings under this rule; or
(b) of any order made under it against his legal representative."
It is supplemented by para 5.7 of Practice Direction 46 - Costs Special Cases:
(a) at the first stage the court must be satisfied –
(i) that it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and
(ii) the wasted costs proceedings are justified notwithstanding the likely costs involved;
(b) at the second stage, the court will consider, after giving the legal representative an opportunity to make representations in writing or at a hearing, whether it is appropriate to make a wasted costs order in accordance with paragraph 5.5 above."
Mr Costa and his former legal representatives submitted representations and evidence in writing. After consulting the parties, the learned judge decided to deal with Mr Costa's application on paper.
After considering s.51 (6), CPR 46.8 and para 5.7 of PD 46, Judge Hacon referred to Lord Justice Simon Brown's judgment in Fletamentos Maritimos SA v Effjohn International BV [2003] Lloyd's Rep. P.N. 26,:
"The principles upon which these provisions are to be applied have been established by a trilogy of recent cases in this court: Ridehalgh v Horsefield [1994] Ch 205, Tolstoy-Miloslavsky v Aldington [1996] 1 WLR 736, and Wall v Lefever (unreported, transcript dated 14th July 1997). Amongst them are these (and here I quote only the essence of principles elaborated in these authorities with very great care):
1. Improper conduct is that which would be so regarded 'according to the consensus of professional (including judicial) opinion.' Unreasonable conduct 'aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive … The acid test is whether the conduct permits of a reasonable explanation.' Negligent conduct is to be understood 'in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.' (all from Ridehalgh).
2. 'Legal representatives will, of course, whether barristers or solicitors, advise clients of the perceived weakness of their case and of the risk of failure. But clients are free to reject their advice and insist that cases be litigated. It is rarely if ever safe for a court to assume that a hopeless case is being litigated on the advice of the lawyers involved … It is, however, one thing for a legal representative to present, on instructions, a case which he regards as bound to fail; it is quite another o lend his assistance to proceedings which are an abuse of the process of the court … It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of the process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it.' (all from Ridehalgh).
3. 'A solicitor does not abdicate his professional responsibility when he seeks the advice of counsel.' (Ridehalgh) The role which leading and junior counsel played in Tolstoy in putting their signatures to the statement of claim 'did not exonerate the solicitors from their obligation to exercise their own independent judgment to consider whether the claim could properly be pursued; they were not entitled to follow counsel blindly.'
4. 'The jurisdiction to make a wasted costs order must be exercised with care and only in a clear case.' (Tolstoy). 'It should not be used to create subordinate or satellite litigation, which is as expensive and as complicated as the original litigation. It must be used as a remedy in cases where the need for a wasted costs order is reasonably obvious. It is a summary remedy which is to be used in circumstances where there is a clear picture which indicates that a professional adviser has been negligent etc.' (Wall v Lefever)."
His Honour also referred to the following passage from Mr Justice Mackay's judgment in Harrison v Harrison [2009] EWHC 428 (QB):
"[21] … First, the jurisdiction must not be used as a back door means of recovering costs not otherwise recoverable (226B to D). Second, it should not become a satellite branch of litigation or be disproportionate (225G). Third, it is essential that the applicant demonstrate a causal link between the conduct and the incurring of the costs (237E). Fourth, it is generally best left until after trial (238C). Fifth, the procedure to be adopted should be fair and as simple and summary as fairness permits (238G). Sixth, the burden is on the applicant to satisfy the court that the order should be made (239B). And seventh (which is really part of 6), even if the court is satisfied, there is a discretion to decline to make the order.
[22] What is plain from the tenor of that judgment is this: this is not a punitive nor a regulatory jurisdiction but a compensatory one and as a prerequisite persons seeking its exercise must show that the conduct has caused them loss."
"[21] … First, the jurisdiction must not be used as a back door means of recovering costs not otherwise recoverable (226B to D). Second, it should not become a satellite branch of litigation or be disproportionate (225G). Third, it is essential that the applicant demonstrate a causal link between the conduct and the incurring of the costs (237E). Fourth, it is generally best left until after trial (238C). Fifth, the procedure to be adopted should be fair and as simple and summary as fairness permits (238G). Sixth, the burden is on the applicant to satisfy the court that the order should be made (239B). And seventh (which is really part of 6), even if the court is satisfied, there is a discretion to decline to make the order.
[22] What is plain from the tenor of that judgment is this: this is not a punitive nor a regulatory jurisdiction but a compensatory one and as a prerequisite persons seeking its exercise must show that the conduct has caused them loss."
Mr Costa had been under the impression that the judge made his order because his counsel had applied for permission to appeal. His Honour made clear that that was not the case:
"Mr Costa misunderstands the role of that application in my decision to require further written submissions. I did not approve of the lateness of Mr Costa's argument on the jurisdiction of the court but came reluctantly to the conclusion that it was just possible that I was about to make an order that was unlawful for lack of jurisdiction. The indication from counsel that he would seek permission to appeal may have focussed my mind in the moment, but it was not the cause of my decision. The cause was the possibility of making an order beyond the jurisdiction of the court without having first having heard argument and without having been referred to authority which would allow me to decide whether such an order would be lawful."
"Mr Costa misunderstands the role of that application in my decision to require further written submissions. I did not approve of the lateness of Mr Costa's argument on the jurisdiction of the court but came reluctantly to the conclusion that it was just possible that I was about to make an order that was unlawful for lack of jurisdiction. The indication from counsel that he would seek permission to appeal may have focussed my mind in the moment, but it was not the cause of my decision. The cause was the possibility of making an order beyond the jurisdiction of the court without having first having heard argument and without having been referred to authority which would allow me to decide whether such an order would be lawful."
The learned judge considered that the conduct on behalf of Mr Costa in relation to the argument on jurisdiction was unreasonable within the meaning of CPR 63.26 (2). That was because
(i) it was raised too late for the defendants' legal team to deal with the point and was without even supporting authority, thus necessitating the spending of costs and time in further preparation and submissions, and
(ii) on fuller consideration it was not pursued on behalf of Mr Costa, implying that proper research into the law in good time would have led to the argument never being advanced.
However, that did not mean that it was unreasonable within the meaning of s.51 (7) of the Senior Courts Act 1981. He explained at para [30[:
"The term 'unreasonable' apparently has a meaning more narrow and specific in the context of s.51 (7) (a) than in CPR 63.26 (2). Unreasonable conduct in the latter sense more loosely includes behaviour generating costs which are unnecessary when measured against one of tenets of this court, namely minimising of the cost of litigation."
"The term 'unreasonable' apparently has a meaning more narrow and specific in the context of s.51 (7) (a) than in CPR 63.26 (2). Unreasonable conduct in the latter sense more loosely includes behaviour generating costs which are unnecessary when measured against one of tenets of this court, namely minimising of the cost of litigation."
Earlier in the same paragraph, he said that he did not believe that the legal representatives' conduct was "unreasonable" within the meaning of s.51 (7) (a) of the Senior Courts Act 1981 He added that the explanation of that term given by the Court of Appeal – "conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case … [permitting of no] reasonable explanation" – did not seem to me to him apply to the facts of the case.
Conclusion
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