I once assisted a client who was faced with an interesting predicament from one of these Intellectual Property Rights (“IPR”) online “enforcers” and had the overwhelming impression that these claims management companies were the equivalent of the “parking cowboys” of the Internet.
My client was an alternative health provider. He used a professional photograph of a cup of cappuccino coffee on his business website that was apparently protected by copyright and a Creative Commons Licence, only to receive emails from an “IPR Enforcement” company purporting to act for the owner of the original photograph.
My client took down the offending work from his website immediately upon being notified that he had potentially infringed the creator’s IPR Licence and therefore only received the benefit of the work for a period of weeks.
An IPR Licence for a single generic photograph that contains no unique features and is otherwise unremarkable will generally cost in the region of £20 for lifetime use. However, the IPR Enforcer was demanding a damages settlement of just over £550 under threat of issuing County Court Proceedings on behalf of the photograph’s owner. The IPR Enforcers gave no justification nor rationale for how they had calculated the damages claim.
Damages in IPR infringement actions broadly follow the normal rules of contract law: they are intended to place the claimant in the position that they would have been had the breach not occurred. Therefore, the defendant may be ordered to give an account of their profits and pay the claimant the benefit they had directly received because of using the work in breach of their IPR.
The damages threshold for a civil claim to be placed on a County Court track whereby the winning party can normally expect to recover their legal costs of either bringing or defending a claim from the losing party is currently £10,000. Any claim worth less than this figure will be allocated on the Small Claims Track whereby it is not normally possible for a party to recover their legal costs even if they are successful at a fully contested trial.
This case was a good illustration of the sharp practices that many such “enforcement” companies deploy on parties who have no legal experience or qualifications. As with Car Parking and Traffic Fine “Enforcers”, this business model is based on the principle that most people will view the amount demanded as too low to be worth arguing over, let alone going to court or instructing a solicitor at cost (especially when those costs cannot be recovered) and will simply pay up at the first time of asking without defending the claim.
Following my advice, my client was able to negotiate a reduced settlement from the original demand of just over £550 down to £50: a reduction of over 90% of the original amount claimed!
My recommendation is to stick to your guns, do not give an inch and look after your pennies, lest unscrupulous parties wish to convert them into pounds lining their own coffers.