#6664 - Douglas V. Hello! Ltd. - Commercial Remedies BCL

Douglas v. Hello! Ltd.

Facts

On 18 November 2000, Mr Douglas and Ms Zeta-Jones, who were and are very well known film stars, were married at the Plaza Hotel, New York. As soon as the couple's engagement was announced in early 2000, there was intense interest in this event from certain sections of the media; in particular, from the publishers of "OK!" and "Hello!" magazines.

The Douglases decided, with a view to reducing what Ms Zeta-Jones called "the media frenzy", that they would grant that right to one publisher. According to Mr Douglas, they regarded this course as "the best way to control the media and to protect our privacy". After some negotiations, they entered into a contract with OK! ("the OK! contract") on 10 November, eight days before the wedding.

By clause 6, the Douglases were to hire a photographer at their own expense "to take colour photographs of the wedding ('the photographs')". They also agreed to "use their best efforts to ensure that no other media... shall be permitted access to the wedding, and that no guests or anyone present at the wedding ... shall be allowed to take photographs".

The guests began arriving at the hotel at about 7.30 in the evening of 18 November. There were speeches, entertainers, music, and dancing. The cake was cut at midnight, and the reception ended around 5.30 on the morning of 19 November. Although the event appeared to have been an unqualified success, it transpired that a paparazzo, Mr Rupert Thorpe, had infiltrated the reception, and surreptitiously taken photographs, including some of the bride and groom (together and separately). How this happened has still not been explained, at least in these proceedings.

Mr Ramey immediately approached potential purchasers, including Hello! Negotiations between Mr Ramey, in California, and Ms Sue Neal, then employed by Hello! as a picture editor in London, were quickly concluded. At some point during 19 November, with the authority of her superiors in Madrid, Ms Neal agreed to pay 125,000 for the exclusive right to publish the unauthorised photographs in "Hello!" magazine in the UK, and in its sister publications in Spain and in France. The judge had little difficulty in concluding that both Mr Ramey and Hello! would, or at least ought to, have known of the OK! contract, and of the sort of terms it would have included (in particular, with regard to exclusivity), as well as of the elaborate security procedures to prevent intrusion and unauthorised photography at the reception.

The staff of "Hello!" magazine then started to prepare for the next edition on the basis that it would include the unauthorised photographs. Meanwhile, OK! learnt that unauthorised photographs had been taken and were on the market. The Douglases were informed, and were, according to their evidence, not surprisingly "shocked". On learning that Hello! had bought, and were intending to publish, the unauthorised photographs, the Douglases and OK! applied for, without notice to Hello!, and obtained from Buckley J, an interlocutory injunction on 20 November. This injunction, which restrained Hello! from publishing photographs of the wedding, was continued by Hunt J the following day, after a hearing at which Hello!, as well as the claimants, were represented.

Hello! appealed and after a hearing over two days the Court of Appeal (Brooke, Sedley and Keene LJJ) announced, a little before 5 p m on 23 November, that the appeal would be allowed and the interlocutory injunction lifted.

OK! had originally intended to publish the authorised photographs over two issues, its 242nd and 243rd, which were respectively due to come out on 30 November and 6 December in London, and a day later in the rest of the United Kingdom. However, on discovering the existence of the unauthorised photographs, they decided to bring the publication forward. This meant that the selection of photographs was an exercise carried out by the Douglases "in some haste", rather than being "a leisurely, unhurried and pleasant process" to quote from para 88 of the judgment. As the judge found, the need for expedition resulted in expense, which would not otherwise have been incurred.

Compensatory Damages in the Court below: In that judgment, Lindsay J rejected the argument that the Douglases were entitled to damages calculated on the basis of a notional licence fee, but he indicated that, if that had been the proper basis, he would have assessed the notional fee at 125,000. He awarded the Douglases damages on a different basis, namely, (a) 3,750 each for the distress occasioned by the publication of the unauthorised photographs, (b) 7,000 between them for the cost and inconvenience of having to deal hurriedly with the selection of the authorised photographs to enable them to be published in "OK!" magazine no later than the publication of the unauthorised photographs in "Hello!" magazine, and (c) nominal damages of 50 each for breach of the Data Protection Act 1998

Douglases argument on notional license fee: Finally, if Hello! are liable to the Douglases, but not to OK!, the claimants contend that the damages awarded to the Douglases should be equivalent to the licence fee which they would have negotiated with Hello! for the publication of the unauthorised photographs in "Hello!" magazine, and that the judge's assessment of that fee at 125,000 was too low.

Holding

Modes of computation of damage for unauthorized use

It is well established that damages in a case involving unauthorised use of, or unauthorised benefiting from, intellectual property and similar rights can be assessed in a number of different ways. In General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 1 WLR 819 , 824-827, Lord Wilberforce identified the normal categories at least in patent cases. They are the profit, or the royalty, which was or would have been achieved (e g where the defendant manufactures, or licences the manufacture of, goods covered by the patent), and the licence fee which would reasonably have been charged (eg. where it is not possible to assess the level of profit). The present case is far from normal, and in our view none of these normal methods of assessment would be appropriate.

Hello! Did not make a profit in this case

This is not a case where a profit was made by...