- A casenote by Sophia Hurst, 4th year, Oxford University
- Written during a vacation scheme at Norton Rose LLP August 2011
- Reviewed by partners
On 27 July the Supreme Court of England and Wales handed down a judgement determining two important issues of intellectual property law. The first was to clarify definition of “sculpture” in the Copyright, Designs and Patents Act 1988. The second was to overturn the Court of Appeal’s decision in ruling that claims based on infringements of US copyright taking place in the USA are justiciable in the courts of England where the court has personal jurisdiction over the defendant. This is a significant ruling which categorically confirms that claims for infringement of foreign copyright are in principle justiciable in England.
Background to the case
The appeal was concerned with intellectual property rights in the Imperial Stormtrooper helmet made for use in the first Star Wars film, “Star Wars Episode IV – A New Hope”.
The film’s characters, conceived by Mr Lucas, were drawn by an artist and given three-dimensional form by the respondent, Mr Ainsworth. The respondent made several prototype vacuum-moulded helmets and, subsequently, 50 helmets for use in the film.
The Appellants, Lucasfilm, own copyrights in the artistic works created for the Star Wars films and have built up a licensing business, including licensing models of Imperial Stormtroopers.
In 2004 Mr Ainsworth used his original equipment to make versions of the Imperial Stormstrooper helmet and armour for sale to the public in the US, where Lucasfilm obtained judgment against him. It also commenced proceedings in the English High Court, involving claims for infringement of English copyright and claims under US copyright law.
The English law claim involved section 4 of the Copyright Designs and Patents Act 1988 that the helmets qualified for protection under English law as “sculptures”, in which copyright subsists as an original artistic work. The issue of whether an Imperial Stormtrooper helmet was a sculpture would determine whether Mr Ainsworth’s copying of the original helmets was an infringement of copyright. It was also relevant to a defence under section 51 of the 1988 Act to an English copyright action based on infringement of the designs of the helmet recorded by the artist. If the helmet did not qualify as sculpture, and was therefore not an artistic work, there could be no infringement of copyright in a design document. No separate claim based around a design right could be brought under Part III of the act because such a claim was time-barred by section 216.
Lucasfilm also brought claims based on US law.
The High Court held that the helmet was not a work of sculpture and so there was no infringement of copyright under English law. However, the English courts also had to determine whether it had jurisdiction to hear those of Lucasfilm’s claims based on US law. The High Court held that the US copyright claims were justiciable and that US copyright had been infringed. The Court of Appeal ( EWCA Civ 1328) allowed Mr Ainsworth’s appeal. It agreed with the judge’s findings that the helmet was not a work of sculpture, but held that the US copyright claims were not justiciable. Lucasfilm appealed to the Supreme Court.
The Supreme Court unanimously allowed the appeal. In a joint opinion given by Lord Walker and Lord Collins, with which Lord Mance agreed, it held that the helmets were not sculptures for the purposes of English copyright law, but that the US copyright claims could be heard in English proceedings.
On this latter issue, the decision takes a new approach to the application of principles of private international law in the context of intellectual property cases. It is this aspect of the ruling which is likely to prove far more significant for future commercial and IP cases.
Definition of ‘sculpture’
The court conducted a review of the legislative development in the area of copyright for sculptures and the surrounding case law. Having disapproved the approach in previous decisions which emphasised the manner of creation (whether by hand or industrially) as decisive, the court strongly favoured an approach which did not extend the meaning of the word ‘sculpture’ in the Act far beyond the meaning it held for ordinary members of the public. The court noted with approval a formulation that a sculpture is a “three dimensional work made by an artist’s hand.”
At trial the application of this definition turned on whether the helmet’s function was primarily artistic or utilitarian. Despite Lucasfilm’s contention that the helmet’s purpose was wholly artistic, to make a visual impression on the film-goer, the trial judge found that it was a mixture of “costume and prop” and that the artistic creation was the film itself; within which the helmet had a utilitarian function which was to portray an idea linked to a character. The Supreme Court found that it would not be appropriate to interfere with this finding.
Following this rather strict interpretation, is likely that objects that have a function as well as artistic value will not qualify as sculpture for the purposes of copyright protection. 3D objects falling outside the scope of copyright protection for sculptures could nevertheless be protected by design right. Design rights are protected under Part III of the 1988 Act, but do not offer the same level of protection for 3D objects as copyright. In particular, the length of protection is only 15 years from the date of the design being recorded in a design document or prototype. Indeed, in Lucasfilm v Ainsworth the filmmakers were prevented from claiming any design right because any such right would have already expired.
The Court commented on the relationship between copyright and design right, noting an “emerging legislative purpose” of protecting three-dimensional objects in a graduated way, unlike the indiscriminate protection of literary copyright. Different periods of protection, the court felt, are accorded to different classes of work. Artistic works of art (sculpture and works of artistic craftsmanship) have the fullest protection; followed by works with “eye appeal”; and under Part III of the 1988 Act a modest level of protection has been extended to purely functional objects. The Court felt that there are good policy reasons for the differences in the periods of protection, which went against “allowing the boundaries of full copyright protection to creep outwards”.
Justiciability of a foreign copyright claim
In holding that there was “no reason” for the English courts to refuse to take jurisdiction over an English defendant in a claim for breach of foreign copyright, the Supreme Court made a significant new step in the law.
The Court of Appeal had held that the US claims were not justiciable. They concluded that the common law rule in British South Africa Co v Companhia de Moçambique – that an English court had no jurisdiction to entertain an action for the determination of title to foreign land, or the recovery of damages for trespass to such land – was a general principle and so could be extended to claims for infringement of foreign intellectual property rights. Lucasfilm contended that the Court of Appeal was wrong to extend that rule to apply in its case.
The Supreme Court reviewed the development of the case law. In particular, the case law refusing the justiciability of an IP right outside of the territory where it was granted has relied on two ‘rules’ in the previous authorities. The Supreme Court analysed both of these and found that much of the justification for applying them to questions of the infringement of intellectual property rights was either misconceived or had been undermined by more recent developments.
The Mocambique rule and Act of state doctrine
The rationale for the Mocambique rule came to be understood as being based on the fact that the right is held “according to the laws of the country where it is situated, and as the right of granting it is vested in the ruler of the country, controversies relating to such property can only be decided in the state in which it depends.” It was to avoid conflict with foreign jurisdictions.
This led to a question whether there is a distinction between actions to determine title and/or validity and actions for infringement of rights. The Court found that development in the law meant that state action/ no jurisdiction rules are only concerned with actions to protect title
Firstly, today it is Article 22(1) of the Brussels Convention that prescribes exclusive jurisdiction for determination of rights “in rem”. The European Court has confirmed that this section should not be extended to actions for damages based on infringement of rights in rem or on damage to property in which rights in rem exist. Thus, the Moçambique rule only applies to determinations of the validity of rights and should not be extended to claims concerned with the infringement of those rights. It therefore could not, in their lordships’ opinion, be relied upon by the appellants to exclude justiciability of the US claim in the English courts.
The Court also considered the Act of State doctrine, which has been used in the US courts as a basis for non-justiciability of foreign trade mark and patent rights. The doctrine had founded decisions that a US federal court should not rule on the validity of a foreign IP right because the granting of such a right is an act of a foreign sovereign done within its own territory, which should not, under international law, be adjudicated upon elsewhere. However, the doctrine has been held not to apply to actions for infringement, as such actions do not lead to deciding upon the validity of acts of foreign governmental officials. The Court concluded in the present case that the doctrine was no impediment to an action for infringement of foreign intellectual property rights, “even if validity of a grant is in issue, simply because the action calls into question the decision of a foreign official.”
The rule in Phillips v Eyre
The second rule that the Court held to be inapplicable was the first branch of the rule in Phillips v Eyre which dictates that when a wrongful action has been committed on foreign soil, the action cannot be brought on home soil unless it would have actionable if it had occurred on home soil, as well as at the place where it occurred. This rule was widely considered to exclude intellectual property claims from being heard outside of the territory where the right was granted because the rights concerned were “local”. Thus, it was thought that the holder of a French patent, trade mark or copyright could not sue in England for its infringement in France, because the French patent trade mark or copyright is territorial in its operation and so any supposed breach of the French right would not be wrongful if committed in England. However, as the Supreme Court rightly noted its judgment in the present case, “to describe the claims as “local” is simply to beg the question whether as a matter of law they must be brought in the place where the rights originate and are effective.”
Their lordships considered the question to have been resolved by Parliament. The rule in Phillips v Eyre was abolished by the Private International Law (Miscellaneous Provisions) Act 1995. Consequently, so far as English proceedings are concerned, the rule in Phillips v Eyre is no impediment to actions in England for infringement of foreign intellectual property.
The court noted several developments in EU and international law which, in its opinion, substantially cast doubt on the view that actions for infringement of intellectual property rights cannot be brought outside the State in which they are granted or subsist.
Firstly, article 22(4) of the Brussels I Regulation provides that, in proceedings concerned with the registration or validity of IP rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for or has taken place have exclusive jurisdiction irrespective of the domicile of the defendant. Their lordships felt that this was an exception to be strictly construed and applies only to intellectual property rights which are required to be deposited or registered. The European Court has emphasised that article 22(4) is only concerned with cases in which a question of validity arises and does not apply to infringement actions in which there is no issue as to validity.
Secondly, The Draft Principles for Conflict of Laws in Intellectual Property, 2011 implicitly envisage actions based on infringement of foreign IP rights in that its two main principles are (a) the primary rule of jurisdiction in the Principles is habitual residence (Part 2, section 1), and (b) the primary law applicable to infringement is the law of the State for which protection is sought (Part 3, section 6).
Implications of the decision
The reasoning of the Court which led it to allow Lucasfilm’s appeal on the justiciability point relied strongly on the distinction between validity and infringement proceedings. However, the distinction between validity actions and infringement actions may not be one that is clear-cut.
There is a question as to how the English courts would treat infringement proceedings which also require issues of validity to be determined. If the action is for infringement and validity is treated as an accessory issue then perhaps logically it should ‘follow the principal’ in the sense that the action should be capable of being brought in a foreign court. Conversely, an ECJ decision has suggested that exclusive jurisdiction would apply if the question of validity were raised by way of defence in infringement proceedings. Such a rule might have the unfortunate effect of encouraging parties to tactically plead a validity defence where an action in the foreign court is considered to be less advantageous.
There are also practical issues to consider. Separate proceedings to determine validity and infringement will inevitably increase the parties’ costs. There is also the difficulty that, in fragmenting the issues this way, a court may not hear all of the evidence relevant to the action which would inform its decision on the scope of the right.
Moreover, the decision promotes a certain degree of ‘forum shopping’ in that the English courts will now appear to be a very attractive place for potential claimants to bring proceedings against English residents, irrespective of where the alleged breach occurred. There is a temptation for claimants to take two bites at the legal cherry and consolidate actions based both on the relevant English law and its foreign equivalent. The fact that the English civil procedure rules provides for costs shifting, with the losing party normally being ordered to pay a significant part of the winning party’s legal costs, is another factor that could make the prospect of enforcement in England attractive to a foreign copyright owner with a strong case.
The issue on this appeal was a very narrow one because the appellants did not contest the application of the Moçambique rule to intellectual property so far as it is limited to patents and other intellectual property rights dependent on the grant or authority of a foreign State, and to cases where what is in issue is the validity of the patent, as opposed to its infringement. There is a degree of doubt whether the reasoning in this case concerning copyright could be extended to a similar case involving, for example, a patent.
Certainly the Court’s analysis seems to envisage differing legal treatment between different IP rights. At  their lordships thought that the distinction was more easily justified when applied to patents, as claims might touch on the validity of patents in sensitive areas such as armaments. This was felt to be the rationale behind article 22(4) of the Brussels I Regulation. Conversely, it was thought that copyright rarely involves delicate political issues and those problematic cases could be “dealt with by an application of the principles of public policy”.
Lord Mance agreed with the justiciability of foreign copyrights, but was unwilling to express a view about the application or scope of the doctrine of act of state in relation to issues of validity of foreign intellectual property rights which were dependent upon state grant. One factor which does go towards justifying a distinction is the fact that some EU member states, in light of the specialised nature of patents as opposed to other rights, have set up a system of specific judicial protection, to ensure that these types of cases are dealt with by specialised courts. The question has not been resolved by the Lucasfilm judgement and it is surely open to potential claimants for foreign patents to seek to extend the scope of the Court’s decision.
Sophia Hurst is currently in her 4th year at Oxford University studying law with law studies in Europe (France). She wrote the above casenote on a recent Supreme Court decision, Lucasfilm v Ainsworth, in the field of intellectual property and private international law. The casenote was written during a 2011 summer vacation scheme at Norton Rose LLP. It was reviewed by a senior partner and two partners and a version kept on file for the IP department’s know-how resources. A shorter version was mailed to clients, including Orange and T-mobile and a number of large US companies.
Copyright Designs and Patents Act 1988
Private International Law (Miscellaneous Provisions) Act 1995
British South Africa Co v Companhia de Moçambique  AC 602
Phillips v Eyre (1870) LR 6 QB 1
The Draft Principles for Conflict of Laws in Intellectual Property
Case C-343/04 Land Oberösterreich v ČEZ as  ECR I-4557, para  et seq.
Case C-4/03 Gesellschaft für Antriebstechnik GmbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK)
 ECR I-6509, para  et seq.