Orvec International Ltd v Linfoots Ltd

An implied contractual term must reflect what the agreement, read objectively and in context, would reasonably be understood to mean. The court must adopt a simple and minimalist implication, generally implying no more than is necessary. In a copyright licence, a bare non-exclusive licence may be sufficient. A photograph containing a client’s trade mark does not automatically justify an exclusive or perpetual licence. Passing off requires proof of a misrepresentation causing or likely to cause damage to goodwill. Supplying material cannot create secondary liability where the alleged primary passing off has not been established.

Orvec supplied textile products to airlines and had engaged Linfoots to provide advertising services, including product photographs. Linfoots retained copyright under its standard terms. After the parties’ relationship ended, Linfoots supplied some images to Intex, a competitor of Orvec.

Orvec alleged that Linfoots had breached an implied exclusive licence and had assisted or procured passing off by Intex. The central issues were the nature of any implied copyright licence and whether Intex’s website made actionable misrepresentations about the origin of products or airline customers.

1. Contract. The court applied the approach in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988. Implication is part of the objective construction of the agreement. The court must identify what the instrument would reasonably be understood to mean, rather than improve it on grounds of fairness or reasonableness.
2. The implication must be approached simply and minimally. The more complex the proposed term, the less likely it is to have been implied. Consistently with Liverpool City Council v Irwin [1977] AC 239, the court should imply no more than is necessary. In a copyright licence, that may mean implying a bare licence only.
3. The standard terms necessarily implied a licence for Orvec to use the advertising material, but they did not imply a worldwide, perpetual and exclusive licence. The appropriate term was a non-exclusive licence, probably perpetual. The reasoning in Griggs Group Ltd v Evans [2005] EWCA (Civ) 11; [2005] FSR 31, concerning a work such as a client’s logo, did not require the same result for photographs containing a trade mark. No breach of contract was established.
4. Passing off. Goodwill was established, but Orvec failed to prove that Intex’s website falsely represented either that the products originated from Orvec or that the identified airlines were Intex’s customers. The principle recognised in Bristol Conservatories Ltd v Conservatories Custom Built Ltd [1989] RPC 455 was accepted, but the necessary misrepresentation was absent on the evidence.
5. As primary passing off by Intex was not established, the allegations that Linfoots had equipped Intex with the means to pass off or had procured the passing off could not succeed. The action therefore failed in both breach of contract and passing off.