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United Kingdom: No Right to Transfer a "Commercial Confidence" - the Court of Appeal Decision in the Douglas/OK! v Hello! Dispute
25 May 2005
Article by Sara Payne
The latest bout in the legal dispute between rival OK! and Hello! celebrity magazines over the publication of photographs of the wedding of Catherine Zeta Jones and Michael Douglas has taken place this week in the Court of Appeal. In this most recent round, Hello! (publisher of the unauthorised photographs) championed over OK! (publisher of the official photographs). Northern & Shell plc, the publishers of OK!, have been ordered to repay to Hello! the award of damages of just over £1 million made at first instance to OK!. However, OK! is unlikely to throw in the towel - its legal advisers have already indicated their client’s intention to appeal to the House of Lords.
The facts of the case are well-known. When they married in 2000 the Douglases entered into an exclusive deal with OK! magazine to publish photographs of their wedding reception. The agreement (worth £1 million to the Douglases) was that the Douglases would have their own photographer at the reception and would then select approved (and where necessary re-touched) photographs to be published by OK! under an exclusive licence for a period of 9 months. The Douglases were to retain copyright in the photographs. The Douglases said that they entered into the deal with OK! to reduce what they called the "media frenzy" over their wedding and as "the best way to control the media and to protect our privacy". In their agreement with OK! the Douglases also agreed to take extensive measures to prevent other photographs being taken at the wedding reception, even by guests. Despite this, a paparazzi photographer infiltrated the reception and took some unauthorised pictures including, some would say, less flattering pictures of the couple such as ones of Catherine Zeta-Jones eating and playfully brandishing a cake knife at her husband. Hello! purchased the exclusive right to publish these unauthorised photographs and prepared to run a spoiler to the exclusive OK! publication. OK! successfully applied for an interim injunction but shortly afterwards Hello! appealed and overturned the injunction. Both magazines ended up running rival features at the same time. The matter went to a full trial and was hailed as a case on the law of privacy under English law. In fact, the judge found for both the Douglases and OK! in breach of confidence. The Douglases were found to have suffered breach of both their personal right in confidence (as the wedding reception was clearly a private event) and also a breach of what the judge called "commercial confidence" in their right to make money out of their private information, being photographs of the wedding reception. The judge said that the information of what took place at the wedding reception was similar to a trade secret which the Douglases were entitled to exploit and to keep confidential until exploited. The judge at first instance also said that this claim of breach of "commercial confidence" had been legitimately passed by the Douglases to OK!. He said that "trade secrets can be sold and it common enough in commercial confidence cases for the benefit of the confidentiality to be shared with others" (Paragraph 187). The Douglases were awarded a relatively small sum in damages that related to their labour and expense of editing a selection of photographs that were to be provided under the contract with OK!, with the vast bulk of the damages awarded to OK! for loss of profit from the exploitation of the authorised photographs.
Hello! appealed the first instance decision on various grounds, all of which failed save for the overturning of the large damages award to OK! for breach of "commercial confidence". In coming to their decision, the Court of Appeal looked again at the contract the Douglases had entered into with OK! and concluded that it was merely a licence that did not carry with it any right to claim, through assignment or otherwise, the benefit of any other confidential information vested in the Douglases. The Douglases/OK! licence did not purport to transfer or even share with OK! the right to use any photographic information about the wedding other than approved wedding photographs. Whilst the Court of Appeal acknowledged that in some cases an exclusive licensee of intellectual property does have the right to sue an infringer (e.g. an exclusive patent licensee), in the absence of such statutory provision a mere exclusive licence to use authorised photographs of an event does not carry with it the right to sue a third party for infringement of a right vested in the licensor to object to the publishing of other photographs at that event.
Points to note from the Appeal
What does it all mean?
As the Court of Appeal acknowledged, English law has made a great advance in now recognising the right of a celebrity to commercially exploit him or herself, including publicising a private event. The significance of this cannot be underestimated in an age where many a famous individuals’ "value" is dictated by the degree to which they are able to control the way that they are portrayed in the media, whether it be by an agreed endorsement, a posed wedding or baby feature or simply by telling the media that they will turn up in a particular place at a particular time, so that they are ready for the photographers.
Whilst with one hand this Court of Appeal decision offers support to celebrities seeking to exploit the commercial rights in their own private information, the other hand deals them a blow in that it prevents them passing on the protection of such rights to anyone purchasing and publicising that private information. It will no doubt lead to further consideration of the types of commercial arrangements used to transfer and exploit such rights.
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