Absolute Lofts South West London Ltd v Artisan Home Improvements Ltd & Anor

Copyright damages assessed on the user principle begin with the sum the parties would reasonably have agreed for a licence, having regard to the realistic alternatives available to the infringer. Where infringement was knowing, Copyright, Designs and Patents Act 1988 s.97(2) and art.13(1) of the Enforcement Directive may provide alternative routes to additional compensation. Those routes are not cumulative. Article 13 permits a restitutionary element reflecting unfair profits and requires remedies to be effective, proportionate and dissuasive, but excludes punishment. A defendant’s unfair profits may justify an award beyond the notional royalty where the royalty would not adequately compensate the copyright owner for actual prejudice.

The claimant owned copyright in 21 photographs of loft conversions displayed on its website. The defendants admitted copying and using the photographs on a competing website and accepted liability. The remaining issues were the amount of compensatory damages on the user principle and whether additional damages were available under s.97(2) of the Copyright, Designs and Patents Act 1988 or, alternatively, art.13(1) of the Enforcement Directive.

The court also considered whether s.97(2) remained applicable alongside the United Kingdom implementing regulations and how unfair profits should be assessed.

1. Compensatory damages. The appropriate starting point for a hypothetical licence is an accurate characterisation of the circumstances immediately before infringement. The court must consider the realistic alternatives available to the willing licensee. Here, the defendant would have obtained sufficiently suitable stock photographs for £300 rather than commission bespoke professional photography. The compensatory award was therefore £300.
2. Knowledge. The defendant either knew, or had reasonable grounds to know, that the photographs were infringing copies. That satisfied the knowledge requirement under regulation 3 of the Intellectual Property (Enforcement, etc) Regulations 2006 and art.13(1) of the Enforcement Directive.
3. Relationship between remedies. Section 97(2) of the Copyright, Designs and Patents Act 1988 remained available. A successful claimant could rely on either s.97(2) or art.13(1), whichever produced the greater award, but the awards could not be cumulative.
4. Article 13. Article 13(1)(b) permits damages assessed by reference to a notional royalty while also allowing account to be taken of unfair profits and non-economic prejudice. The limitation to damages appropriate to actual prejudice excludes a punitive element but does not prevent a restitutionary element where appropriate. Knowing infringement may also make a dissuasive element appropriate, provided the award remains compensatory rather than punitive.
5. The defendant’s website misrepresented the claimant’s photographs as depicting its own work. The defendant thereby obtained profits which were unfairly generated by exploitation of the claimant’s intellectual creativity. The court awarded a further £6,000 under art.13(1), and would have awarded the same sum under s.97(2). The final award was £6,300.

First-instance decision. No prior appellate decision is stated in the judgment.