Charles And Ivy Ltd & Anor v Chelsea Supplies Ltd

A reasonable licence fee for copyright infringement is assessed by a hypothetical negotiation for the use actually made, taking account of both parties’ bargaining positions and any realistic non-infringing alternative. A principal may be fixed with knowledge acquired by an agent within the scope of the agency. Under the Copyright, Designs and Patents Act 1988, additional damages may reflect flagrancy and benefit from infringement. That benefit is not confined to proven additional sales or profit and may include launching a competing business sooner. Deliberate use with knowledge, or reason to believe, that copyright subsists may be flagrant even without appreciation of the full legal consequences. Prompt removal and short use may reduce the additional award without displacing findings of flagrancy or benefit.

The First Claimant retails and wholesales fencing products. The Second Claimant, its holding company, owned copyright in twenty marketing images and had licensed their use to the First Claimant. The Defendant also sells fencing products and admitted that its web developer, acting as its agent, used the images on its website.

Following the admission of liability, the court held an inquiry into whether the Defendant or its agents knew or had reason to believe copyright subsisted, compensatory damages, additional damages, and costs. The central questions were the value of the use made of the images and whether the infringement and its surrounding circumstances justified additional damages.

1. The court gave judgment for the Claimants for £7,000, comprising £4,000 compensatory damages and £3,000 additional damages, together with interest. It also summarily assessed the liability-stage costs at £13,704.50 and awarded the Claimants their inquiry costs.

2. The Defendant had not established that it and its admitted agent lacked knowledge or reason to believe that copyright subsisted in the images. The court inferred from the inadequate disclosure and the absence of evidence from employees and the web developer that this evidence would not have assisted the Defendant. It found that an employee likely directed the developer to the Claimants’ website and that the images were used because no corresponding Defendant images existed. Knowledge acquired by an agent while carrying out the task for which it was engaged, within the scope of the agency, was attributable to the Defendant.

3. The appropriate compensatory measure was a reasonable fee for the actual use, assessed by a hypothetical negotiation. The court considered a possible non-infringing alternative of delaying the launch until the Defendant’s own images were ready, as well as the Claimants’ commercial sensitivity about licensing to a nearby competitor. Duration, number of images, non-exclusive use and the value of launching without delay supported a fee of £4,000. The creation cost and the Defendant’s asserted image costs did not determine the fee.

4. The infringement was flagrant for the purposes of section 97(2) of the Copyright, Designs and Patents Act 1988. The developer deliberately used the images, knowing or having reason to believe copyright subsisted; it was unnecessary that the developer appreciated the full legal consequences. The Defendant was fixed with the agent’s acts and knowledge. The benefit under section 97(2)(b) was that the images enabled the Defendant to present and launch a competing business sooner. That benefit did not require proof of additional sales or profit.

5. The court rejected the characterisation of the case as moral prejudice for the purposes of regulation 3 of the Intellectual Property (Enforcement, etc) Regulations 2006. Prompt removal and the relatively short period of live use mitigated the additional award but did not displace flagrancy or benefit. The award also avoided double recovery of the compensatory fee. Court fees were recoverable in addition to the stage costs cap under rule 46.21(5)(a) of the CPR.

Following the Defendant’s formal admission of liability and the court’s order of 30 April 2026, the High Court conducted this damages inquiry.