Can retailers avoid liability for selling copyright infringing goods?

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In the second of a series of posts, we look at the potential liability of the so-called “innocent infringer” under UK law, that is, a business which has unwittingly traded in a product which infringes intellectual property rights without knowledge of the infringement.  Last time considered trade marks (iPit post here) which concluded there was no defence.

This time we look at copyright.  Can the seller stick his head in the sand and claim he knew nothing about the original work?  Or does the law oblige the retailer to investigate claims of infringement?

Primary copyright infringement

Section 16 of the Copyright, Designs and Patents Act 1988 (the CDPA) states that:

The owner of the copyright in a work has… the exclusive right…

(a) to copy the work…

(2) Copyright in a work is infringed by a person who without the licence of the copyright owner does, or authorises another to do, any of the acts restricted by the copyright.

(3) References in this Part to the doing of an act restricted by the copyright in a work are to the doing of it—

(a) in relation to the work as a whole or any substantial part of it, and

(b) either directly or indirectly;

and it is immaterial whether any intervening acts themselves infringe copyright.

Secondary copyright infringement

Sections 22 and 23 of the CDPA state that:

(22) The copyright in a work is infringed by a person who, without the licence of the copyright owner, imports into the United Kingdom, otherwise than for his private and domestic use, an article which is, and which he knows or has reason to believe is, an infringing copy of the work.

(23) The copyright in a work is infringed by a person who, without the licence of the copyright owner—

(a) possesses in the course of a business,

(b) sells or lets for hire, or offers or exposes for sale or hire,

(c) in the course of a business exhibits in public or distributes, or

(d) distributes otherwise than in the course of a business to such an extent as to affect prejudicially the owner of the copyright,

an article which is, and which he knows or has reason to believe is, an infringing copy of the work.  

When will there be a reason to believe?

In Nouveau Fabrics v Voyage Decoration, Dunelm Soft Furnishings Ltd [2004] EWHC 895 (Ch) a copyright owner sued a supplier and a retailer for infringement of a pineapple image.  The retailer claimed it was innocent as it was merely a retailer and tried to pass the responsibility for infringement back to its supplier.

Interpreting the defence, Mann J sitting in the High Court said:

47 …”reason to believe” requires more than “reason to suspect”, and it requires an evaluation of all factors known to the defendant in order to see whether he fulfils the test. He does not have to accept a claimant’s assertions at face value, but he cannot ignore them either. Having been made aware of the claim of copyright and copying, he has to evaluate it. What start as grounds for suspicion have to harden into grounds for belief, whether or not the defendant actually believes it. His evaluation will, in many cases (and certainly in the present) have to include making reasonable inquiries, and the answer to the question of whether he has reason to believe will have to take the result of those inquiries into account…

53.  I am prepared to decide that a defendant who receives a claim that he is indirectly infringing copyright, and who therefore is a person who has reason to suspect, is capable of becoming a person with reason to believe if he carries out no sensible inquiries, and does absolutely nothing in the face of continued assertions of the copyright by the owner, though much will depend on the facts of the case. If Dunelm made no inquiries and performed no evaluation, then in the circumstances of this case they had nothing with which to rebut the prima facie good claims of Nouveau, and they acquired reason to believe that there were possessing and selling infringing copies.

Summary

In summary therefore, if the retailer did not know and had no reason to believe that copyright subsisted in the works, then it will not be liable.  However, once a retailer is informed of a reason to suspect that there is copyright infringement (such as upon receiving a letter before action), then it falls under an obligation to make enquiries and evaluate the position.  If the claims are ignored then there is nothing with which to defend the prima facie case.

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