Douglas & Ors v Hello Ltd. & Ors

Protection for private information is afforded through the action formerly called breach of confidence, now focused on misuse of private information. The decisive threshold is whether the subject reasonably expected privacy; where that threshold is met, the court balances the competing Article 8 and Article 10 values.

Authorising selected photographs of a private occasion does not authorise publication of different, unauthorised photographs. Photographs are especially intrusive because they permit the public to view the private occasion itself. Private information which an individual can lawfully control may also be commercially exploited and protected against knowing unauthorised publication.

However, an exclusive licence to publish authorised photographs does not transfer the licensor’s residual rights of privacy or confidence in other images. The economic tort of unlawful interference requires an object or purpose to injure the claimant, whether as an end or as a means; foresight or reckless indifference alone is insufficient.

Michael Douglas and Catherine Zeta-Jones held a private wedding reception in New York. They contracted with OK! magazine for exclusive publication of approved official photographs. A photographer infiltrated the reception and took unauthorised photographs. Hello! knowingly bought and published six of them.

Lindsay J held that the Douglases and OK! could recover for breach of confidence, but rejected OK!’s claims in economic tort. He later awarded damages to the Douglases and substantial loss-of-profit damages to OK! The liability judgment is reported as Douglas v Hello! Ltd (No 3) [2003] 3 All ER 996.

Hello! appealed the findings and awards. The Douglases and OK! cross-appealed on alternative economic-tort liability and on a proposed notional licence-fee measure of damages. The central issues were whether private and commercial confidence survived the exclusive publication agreement, whether OK! acquired the relevant confidence, and what intention unlawful interference requires.

1. Hello!’s appeal was dismissed as against the Douglases but allowed as against OK!. The unauthorised photographs depicted a genuinely private occasion. Hello! knew, or ought to have known, that the Douglases reasonably expected the information to remain private. English law therefore protected it through the extended action for breach of confidence.
2. The publication agreement with OK! did not extinguish the Douglases’ privacy. Their release of selected, approved photographs did not authorise publication of other photographs showing different, informal moments. A photograph is particularly intrusive because it lets the viewer become a spectator of the private event. The fact that the wedding occurred in New York did not alter the position: the complaint concerned publication in England, and New York law allowed the Douglases to arrange a private wedding.
3. The court also upheld the Douglases’ commercial-confidence claim. An individual who can properly deny third-party access to private or created information, and reasonably intends to exploit it commercially, may restrain or recover for knowing unauthorised use to his detriment. That protection is not ordinary property, but depends upon the defendant’s conscience and knowledge.
4. OK! had no corresponding claim. The contract gave it an exclusive nine-month licence to publish the approved photographs. It did not assign or share the Douglases’ residual confidence in other photographic information. An exclusive licence makes an otherwise unlawful act lawful; without statutory provision, it does not give the licensee a right to sue for infringement of a right retained by the licensor.
5. OK!’s economic-tort cross-appeal failed. Unlawful interference and unlawful-means conspiracy require intentional infliction of economic harm. The harm must be an object or purpose of the conduct, either as an end or as a means to another end. Hello! knew its publication might harm OK! and was recklessly indifferent, but the judge’s finding that it had no intention to injure OK! could not be disturbed.
6. The Douglases’ cross-appeal for damages assessed by a notional licence fee was dismissed. They would never have licensed the unauthorised photographs and had already received payment for the exclusive authorised publication. Their existing damages were the appropriate measure. The court also stated, obiter, that the earlier discharge of the interlocutory injunction had been wrong: on the law later clarified by the authorities, the high threshold for an injunction had been met.

• Court of Appeal (Civil Division): Hello!’s appeal was dismissed as to the Douglases’ privacy and commercial-confidence claims, but allowed as to OK!’s confidence claim. OK!’s economic-tort cross-appeal and the claimants’ damages cross-appeal were dismissed.
• High Court, Chancery Division (Lindsay J): Held that publication breached confidence owed to the Douglases and OK!, but rejected the economic-tort claims. The liability judgment is reported as [2003] 3 All ER 996. A later quantum judgment awarded the Douglases £14,600 and OK! £1,033,156.
• Court of Appeal (Civil Division), interlocutory stage: Discharged an injunction restraining publication of the photographs; the decision is reported at [2001] QB 967. This court stated that, in light of later authority, the injunction should have been maintained.