British Sky Broadcasting Group Plc v Digital Satellite Warranty Cover Ltd & Ors

A person may be jointly liable for a company’s wrongful acts where he intended, procured and shared a common design that those acts should occur. The agreement may be tacit, and the person need not have carried out the acts personally. A director or officer is not protected merely because he acted through the company, unless he did no more than perform his constitutional role. The same principle applies to breach of confidence, database-right infringement, trade mark infringement and passing off. For database right, making database contents available to even a limited group may constitute re-utilisation where the conduct harms the maker’s investment. Extraction includes transferring database contents from one electronic medium to another.

The claimants operated businesses using the SKY marks and maintained customer databases in which database right subsisted. The defendants were companies, company officers, employees and alleged intermediaries involved in the supply or use of customer data for competing extended-warranty services.

The companies were subject to a statutory stay following liquidation. Arnold J had previously granted summary judgment establishing the companies’ liability for breach of confidence, database-right infringement, trade mark infringement and passing off, but had left the personal liability of three individuals for trial: British Sky Broadcasting Group Plc v Digital Satellite Warranty Cover Ltd [2011] EWHC 2662 (Ch). The issues included whether those individuals shared a common design with the companies, whether other defendants supplied or transmitted the data, and the meaning of database re-utilisation.

1. The claims succeeded against Mr Freeman, Mr Sullivan, Mr Marrow and Mr Lee. The claims against Mr Steele, Mr Waters, Mr Sibbald and Mr Reynolds failed.

2. Applying CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 and Unilever Plc v Gillette (UK) Ltd [1989] RPC 583, joint liability arises where the defendant intends, procures and shares a common design that the primary wrongs should occur. An express plan is unnecessary; tacit agreement is sufficient. The parties need not share a design to commit an infringement if they combine to secure acts which prove to be infringements.

3. Under MCA Records Inc v Charly Records Ltd [2001] EWCA Civ 1441, a director or officer does not escape personal liability merely because the acts were carried out through the company, unless the person did no more than perform the constitutional role of director or officer. The principle applied equally to breach of confidence, database right, trade mark infringement and passing off. Equity did not require a different substantive approach: the secondary party needed knowledge and intention sufficient to affect his conscience.

4. The evidence showed that Mr Freeman, Mr Sullivan and Mr Marrow knew of and approved the companies’ acquisition, processing and marketing use of confidential Sky data. Their agreement could be inferred from the companies’ informal management, their involvement in sourcing and processing the data, and their misleading attempts to conceal its sources. They therefore intended, procured and shared a common design to commit the companies’ wrongs.

5. Mr Lee admitted that Sky data supplied to him was transferred to Digital. His explanations were not credible. He was liable for misuse of confidential information, database-right infringement and breach of his employment contract.

6. The court accepted, if required, that “making available to the public” in the definition of re-utilisation in article 7(2) of Council Directive 96/9/EC, reflected in regulation 12(1) of the Copyright and Rights in Databases Regulations 1997, can include making database contents available to particular recipients. The relevant question was whether the conduct harmed the maker’s investment. Transfer of substantial Sky data for unauthorised marketing would satisfy that test. Extraction included copying contents from one electronic medium to another.

7. The papers concerning Mr Freeman, Mr Sullivan, Mr Marrow and Mr Steele were directed to be referred to the Director of Public Prosecutions. Costs and the precise terms of relief were left for further determination.