Bristol Groundschool Ltd. v. Intelligent Data Capture Ltd.
[2014] EWHC 2145 (Ch)
In the High Court of Justice, Chancery Division, Intellectual Property
Case Number HC11C01768
Before Deputy Judge Richard Spearman QC
Decided on July 02, 2014

Relevancy of the case: Dispute over static artwork created by the first defendant for inclusion in the claimant’s copyrighted training material

Statutes and Provisions Involved

• The Copyright Designs and Patents Act 1988 (Sections 1, 2, 296ZA, 296ZB)
• The Computer Misuse Act 1990 (Sections 1(1), 17(5))

Relevant Facts of the Case

• The instant dispute relates to an allegation of copyright infringement and breach of contract between the claimant and the first defendant.
• The claimant specialises in training commercial pilots. They entered into a contract in 1999 to convert existing training manuals into an electronic format.
• The claimant owned the copyright to these electronic manuals. The first defendant produced some static artwork to be included in the syllabus.
• The dispute concerns copyright ownership of these static artworks. The first defendant’s owners had a fallout and have been producing electronic and printed training material, including static artwork. As a result, their actions are infringing the claimant’s copyright.

Prominent Arguments by the Counsels

• The claimant’s counsel argued that:
  • The copyright agreement covers the ownership of static artwork. The agreement’s language shows the parties’ intention to include the static work within the copyright agreement.
  • “Produced by IDC for inclusion in the syllabus document” meant “made available to BGS by IDC.” This interpretation would ensure that the claimant retained the copyright ownership in static artworks, preventing the loss of their core product if relations soured.
  • The claimant paid for the production of static artworks, supporting their claim to ownership. The first defendant’s interpretation would lead to uncertainty regarding which artworks BGS owned.
  • Mr and Mrs Cownie, the owners of the first defendant entity, are liable as they directly approved and authorised the use of its artworks by other corporate defendants.
  • The 2001 agreement created an ordinary commercial relationship. No implied term of trust or confidence could be imported into such an agreement.
  • The claimant’s conduct does not constitute a repudiatory breach since it did not go to the root of the contract. The first defendant cannot use prior repudiatory breaches by the claimant as a defence against its own subsequent repudiatory breaches. The first defendant was aware of the claimant’s breaches and did not terminate the contract.
  • Issuing the patch for ATPL Digital 5.3 was permissible under Clause 9 of the 2001 agreement and did not breach the Copyright Designs and Patents Act 1988.
• The defendant’s counsel submitted that:
  • The static artwork falls outside the ambit of the copyright agreement.
  • The claimant should have been prepared for termination since the contract had continued beyond the initial term without a fixed end date. The circumstances and commercial realities faced by both parties justified a shorter notice.
  • “Produced for” meant “created for,” asserting that artworks explicitly made for the claimant belonged to the first defendant. The static artworks provided by third parties should not belong to the claimant. The claimant’s interpretation would have caused the first defendant to transfer third-party copyrights to the claimant, creating legal and commercial issues.
  • The claimant’s unauthorised downloading of materials from the first defendant’s system constituted a repudiatory breach of contract. It violated the Copyright Designs and Patents Act 1988 and undermined the 2001 agreement. The claimant concealed its repudiatory breach, which prevented the first defendant from making an informed decision about terminating the contract.
  • Issuing the patch for ATPL Digital 5.3 constituted a breach of Section 296 of the Copyright Designs and Patents Act 1988.

Opinion of the Bench

• The parties, through contact, intended to provide the claimant with ownership rights over the content produced by the first defendant. The claimant obtains copyright ownership when it pays the first defendant for the static artwork. This is within the contract’s ambit.
• It is essential to consider the practical and commercial context of the contract. It included the artworks produced by the first defendant for inclusion in the syllabus document. The first defendant made them available to the claimant under this contractual relationship. This favours the claimant’s broader claim of copyright ownership.
• Mr and Mrs Cownie were the guiding minds behind the corporate defendants. Hence, their involvement in copyright infringement cannot be denied.
• Copyright of 3D artworks and other animations belongs to the claimant. The first defendant has breached the contract, and the claimant can seek remedy for damages.
• However, the ownership of 2D artworks remains with the first defendant.
• The parties should have sought court orders to address the breach of good faith and commercial unacceptability instead of resorting to self-help measures. The first defendant’s breaches could not provide a defence against The claimant’s claim for breach of contract.

Final Decision

• The claimant owns the copyright in static artworks produced by the first defendant for inclusion in its teaching materials. Mrs Cownie is personally liable due to her direct involvement and control over the corporate defendants’ use of the disputed artworks.
• The claimant’s conduct did not amount to a repudiatory breach of contract. The claimant is entitled to a perpetual license for use. However, the claimant infringed upon the first defendant’s copyright by downloading materials in 2009 without permission.

Jyotsna Sood and Nandita Karan Yadav, undergraduate students at the National Law Institute University, Bhopal, and Prachi Chakravarty, an undergraduate student at University Law College, Bangalore University, prepared this case summary during their internship with The Cyber Blog India in May/June 2024.