Child's play in court as the villains lose

It's good to know that children still indulge in playground games. This is presumably good training, notes the IPKat, for the games they get up to when they're in business and the even more exciting games they have when they get to court. All of this is apparent from Magical Marking Ltd and Andrew Phillis v Holly and others [2008] EWHC (Ch) 2428, a Chancery Division (England and Wales) decision of Mr Justice Norris, delivered yesterday.

Mrs Phillis incorporated Magical Marking (the first claimant) in order to set up a children's playground painting business which used spray paint in order to mark out templates for hopscotch and other playground games. Magical Marking owned the copyright in each of the designs created for this purpose. In order to help her with the business development side of the company, she employed Holly (the first defendant), who owned Education & Special Projects Limited (the fourth defendant). Holly initially gave business development advice as a consultant for a daily fee, but later became a director of Magical Marking and its company secretary, with a 25% shareholding too.

In October 2002 Mrs Phillis' son Andrew (the second claimant) started working for the company. Following a disagreement at a company meeting, Holly announced that he was leaving the company and elected to be bought out. Holly later made two visits to the company's premises and Mrs Phillis -- regarding those visits as disruptive -- banned Holly from the company's premises, giving notice of an extraordinary meeting of the company to be held with the purpose of removing Holly from his position within the company and appointing his replacements.

On the day of the meeting, whilst Mrs Phillis was on holiday and Andrew was elsewhere, Holly and others (including Wayne Canavan, the third defendant) visited Magical Marking's premises. Canavan was a sole director and proprietor of NextGen Technical Services Limited (the seventh defendant), which provided independent IT consultancy services. In the course of that visit a complete copy of the company's electronic business records was created and taken away, its latest data back-up tape removed and its computer system disabled by the insertion of passwords which were not provided to any of the company's staff.

Magical Marking sued for infringement of copyright, sui generis database right and misuse of confidential information. After summary judgment was given against Holly, there was still some outstanding business to attend to, since the claimants still had their claim against Canavan and his company, while Canavan and NextGen brought claims against Holly under Part 20 of the Civil Procedure Rules, maintaining that Holly had represented that he had the authority to instruct Canavan to undertake the work in respect of, inter alia, the copying of the company's electronic business records.

Norris J was not amused by the activities of the various defendants. He held that, on the facts, Canavan's argument that Holly had actual or ostensible authority to instruct him to undertake the work must be rejected. Holly had been using his powers as director for improper purposes, which could not be within his actual authority. This being so, Canavan could not rely on any representations made by him. This being so, Canavan and NextGen infringed in relation to all copyright material, and the extraction of the contents of the company's database without its consent. Both parties would therefore be restrained from infringing Magical Marking's copyright and database right, and from using or disclosing any of its confidential information. Delivery up was also ordered, plus an enquiry as to damages or equitable compensation in respect of infringement of copyright, infringement of database right, and misuse of confidential information.
As to the Part 20 claims, it was clear that Holly had warranted that he had the legal power to instruct Canavan and NextGen to do what they did. Being in breach of that warranty. Holly was liable in respect of the same damage as them, in the event that Magical Marking elected to take equitable compensation. In any event would be just and equitable, having regard to the extent of Holly's responsibility for the damage in question, that he should afford a complete indemnity to Canavan and NextGen.

The IPKat is still unsure as to whether successul IP claimants should be made to elect between damages and an account of profits. He still feels sure that the IP Enforcement Directive doesn't require this and that, in an appropriate case, a successful IP owner should be able to get both. Merpel says, it's five and a half years ago that the defendants' raid on Magical Marking took place. In an ideal world this matter would have been determined a fair while ago.

Rules of hopscotch here
Playground games here
Playground jungle here
Child's play in court as the villains lose Child's play in court as the villains lose Reviewed by Jeremy on Friday, October 17, 2008 Rating: 5

1 comment:

  1. I don't think the choice between an account and an inquiry is as stark as you suggest. This is because you could pursue damages on the IP Directive basis (as potentially factoring in unfair profit to some degree) by opting for an inquiry. There is nothing which dictates that an inquiry must just be an inquiry into compensatory damages.
    Furthermore, it is likely that a claim for statutory additional damages was made in this case and so any damages award could already involve taking account of the benefit which accrued to the infringer.


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