Thurgood v Coyle

A contractual licence to use copyright material is not confined to a related building contract unless the agreement so provides. The court must construe the licence from its language and commercial context, while respecting the limits of the words used. A licence permitting use and reproduction for all purposes relating to a defined development may extend to reproducing drawings to facilitate a sale of the development. Copyright restricts copying, but does not generally prevent the owner of a copy from showing it to another person. Section 63 of the Copyright, Designs and Patents Act 1988 may also protect copying or issuing copies to the public for advertising the sale of an artistic work.

Mercury Development Mortlake Ltd was in administration and its building contractor, John Coyle Contracts Ltd, was in liquidation. The administrators wished to sell a partly completed development and transfer to the purchaser the right to use engineering and architectural drawings.

The contractual licence in the JCT building contract was accepted to be limited to works under that contract. The issue was whether earlier irrevocable licences granted by the consultants to Mercury were free-standing rights, or were tied to the JCT contract. A further issue was whether the licences permitted the administrators to reproduce the drawings to facilitate a sale.

1. The licence in the JCT contract was limited to carrying out the defined works under that contract. It did not itself authorise the administrators to transfer unrestricted rights to use the drawings.

2. The consultants’ licence was construed by reference to its own wording. Although background is relevant to contractual interpretation, it cannot be used to make a contract which the parties did not make. The definition of the project did not refer to the JCT contract, even though the agreement contained a separate definition of the building contract which was used when that contract was intended to be mentioned.

3. The scope of the licence was broad. It covered use and reproduction for all purposes relating to the project, including purposes such as use, letting, promotion, advertisement, repair, refurbishment and redevelopment. Those purposes were not confined to the duration or operation of the JCT contract. The licence was therefore a free-standing right and was transferable without the consultant’s consent.

4. Copyright prevents copying, but does not prevent the administrators from showing drawings in their possession to a prospective purchaser, subject to confidentiality. Once the licence was transferred, the purchaser could use and reproduce the drawings for construction and completion of the development.

5. The words permitting reproduction for all purposes relating to the project were wide enough to allow reproduction of the drawings to show them to a prospective purchaser or facilitate the sale. In addition, although not necessary to the decision, section 63 of the Copyright, Designs and Patents Act 1988 indicated that copying or issuing copies to the public for advertising the sale of an artistic work would likely not infringe copyright.

6. The administrators were entitled to the declaration sought. An interim costs payment of £25,000 was ordered, payable within 14 days.

First-instance decision; no earlier or appellate decision is stated in the judgment.