CDV Software Entertainment AG v Gamecock Media Europe Ltd & Ors

Copyright may be infringed by a person who authorises another to perform a restricted act. Liability may also arise where parties combine, by tacit or express agreement, to secure acts which prove to be infringements. For inducing breach of contract, the defendant must know that the conduct will amount to a breach and intend to induce that breach. Knowledge that the conduct may, on legal analysis, constitute a breach is insufficient. A genuine belief that the conduct is contractually permitted may therefore defeat the necessary intention, even where the belief is legally wrong.

This supplemental judgment followed an earlier judgment determining the principal liability issues in CDV’s claims concerning the exploitation, distribution and sale of games. The court had reserved questions concerning SouthPeak Interactive Corporation’s liability for copyright infringement, the liability of SouthPeak Interactive Limited and SouthPeak Interactive Corporation for inducing Gamecock Media Europe Limited’s breach of contract, and SouthPeak US’s liability for costs.

The central issues were whether SouthPeak US had participated in or authorised acts infringing CDV’s copyright, and whether either SouthPeak entity possessed the knowledge and intention required for the tort of inducing breach of contract.

1. SouthPeak US was liable for copyright infringement. Under Copyright, Designs and Patents Act 1988, section 16 (2), copyright is infringed by a person who, without the copyright owner’s licence, performs or authorises another to perform a restricted act.

2. The relevant inquiry was whether SouthPeak US combined with SouthPeak UK to secure the doing of acts which constituted infringement. Applying the approach in MCA Records Inc v Charly Records Ltd [2001] EWCA Civ 1441 and Unilever Plc v Gillette (UK) Ltd [1989] RPC 583, a common design or concerted action could be established without an expressly mapped-out plan. Tacit agreement was sufficient, and the common design need not itself be a design to infringe.

3. The evidence showed that SouthPeak US directly participated in, authorised and combined with SouthPeak UK to secure the making, distribution and sale of the relevant products. A declaration was therefore made that SouthPeak US was liable for infringing CDV’s copyrights by exploiting or authorising exploitation without CDV’s consent.

4. The claims for inducing breach of contract failed. Applying OBG Ltd v Allan [2008] 1 AC 1, liability required knowledge that the defendant was inducing a breach of contract and an intention to do so with knowledge of the consequences. It was insufficient that the defendants knew they were procuring conduct which was, on legal analysis, a breach.

5. The evidence showed that the relevant individuals genuinely believed that the defendants were entitled to act as they did. Their belief was legally mistaken, but there was no evidence of the necessary intention to induce a breach. The inducement claims were dismissed. SouthPeak US was ordered to bear the costs of the consequential-relief hearing and, jointly and severally with the other defendants, the costs of the claim and counterclaim and specified payments on account.