Lucasfilm v. Ainsworth: Preview to a UKSC hearing

We had earlier briefly discussed the decision of the England and Wales High Court in Lucasfilm v. Ainsworth, and important decision on the interplay between intellectual property and private international law. The case was decided by the Court of Appeal subsequently (in December 2009); but what makes the issue particularly relevant at present is that the UK Supreme Court will shortly be hearing an appeal from the Court of Appeal decision. This case raises highly important issues pertaining to conflict of laws, and we will be following the UK Supreme Court decision. By way of introduction to that discussion, this post briefly looks at the Court of Appeal decision (Lucasfilm v. Andrew Ainsworth, [2009] EWCA Civ 1328).

The case also raises several questions in intellectual property law; for the time being, we will skip those issues and turn to one of the private international law issues: can a foreign copyright be enforced in a domestic court? More particularly, as the Court framed the issue, “Must or should this court accept jurisdiction to enforce Lucasfilm’s US copyrights against Mr Ainsworth for what he has done and threatens to do by way of sales from here to the US?” The issue turns on subject-matter jurisdiction. The relevant facts were stated to be as follows:

“The starting point here is that it is now common ground or undisputed that Lucasfilm does have US copyrights and that Mr Ainsworth has infringed them. The acts which constitute infringement by US law were all actually done in or from the UK. They consist of sales to US customers in the US by despatch of products from the UK, advertising on the internet and the placing of advertisements in US publications. It would seem that questions of where the property passes, or where the contract was made, or what law governs it and the like are irrelevant under US law. They might not be if the position were the other way round (see e.g. Badische Anilin v Hickson [1908] AC 419 – under the old law no UK patent infringement by sale and despatch from Germany). It is not necessary to examine whether the concession of infringement according to US law is correct. What is to be noted is that the extent to which US copyright law extends "a long-arm" to acts in fact done only in this country is itself a question of American, not English law. Other foreign laws might extend an even longer arm: if they did it would make no difference if jurisdiction here is automatic and compulsory.  The arguments for subject-matter jurisdiction fall under three heads: a) That the judgment in Owusu, Case C-281/02 compels it; b) That this court in Pearce v Ove Arup [2000] Ch. 403 decided that the English courts have subject-matter jurisdiction over all acts of infringement of copyright committed anywhere in the world; c) That, even if subject-matter jurisdiction is not compelled, the courts here have a discretion to accept jurisdiction and should do so as a matter of forum conveniens.”

Contention (a), based on Owusu, is a matter turning on EU law. Once more, I will skip this discussion, and instead turn to contention (b). Under common law, do domestic courts have subject-matter jurisdiction in respect of all acts of copyright infringement, including those concerning a foreign copyright? Mann J. in the High Court had held in favour of such jurisdiction, holding that he was “prepared to conclude that an English court can, and in an appropriate case should, determine at least questions of infringement of foreign copyright cases. Those cases will include cases where subsistence is not in issue. I would not, however, hold that questions of subsistence can never be decided here. In land cases incidental questions of title can apparently now be considered. I can see no reason why the same should not apply to copyright…”

The answer to the question turns on decisions going back to 1893, when the House of Lords decided the case of British South Africa v. Companhia de Mocambique, [1893] AC 602. In Mocambique, an action was brought in the English Courts in respect of trespass to land in South Africa. Lord Herschell drew a distinction between “matters which are transitory and those which are local in nature.” In respect of the latter, English Courts would not have jurisdiction. The decision was summaried in Dicey & Morris (Rule 79): “Subject to the exceptions hereinafter mentioned, the court has no jurisdiction to entertain an action for (1) the determination of the title to, or the right to the possession of, any immovable situate out of England (foreign land); or (2) the recovery of damages for trespass…” How does this apply to intellectual property? This will turn on the rationale behind the rule.

Now, what is the rationale behind such a formulation? Is it a traditional “local action” rule, or is the rationale based on notions of non-interference with sovereignty of another state? It was contended before the Court of Appeal that the rationale was non-interference with sovereignty; but when validity of intellectual property itself was not in question, but merely infringement is, there is no question of interference with sovereignty. Hence, it was argued, the Mocambique rule should not be made applicable.

The Court of Appeal rejected this line of reasoning, and held that “Moçambique is not limited to claims about land, nor to claims about title or validity of the foreign right relied upon. Infringement of an IP right (especially copyright, which is largely unharmonised) is essentially a local matter involving local policies and local public interest. It is a matter for local judges…” After giving several reasons for this holding, the Court of Appeal also held that it did not find substance in the distinction made between validity and infringement in this context. It was observed:

“The supposed distinction is between a foreign court adjudicating on whether the grant of a right by a State was valid and adjudicating upon whether that right is infringed. The former is said to call in question a sovereign act, the latter not. But adjudicating on infringement will itself often require the foreign court to decide on the scope of the right granted by the foreign sovereign. In a patent case for example, the scope of the monopoly granted is often in question, quite apart from validity. Sometimes it is on the basis that if the patent is wide enough to catch the defendant it is invalid. Questioning the scope of a monopoly granted by a sovereign state in a foreign court therefore carries with it the foreign court ruling on the scope of a sovereign act, which is not different in kind from ruling on its validity”

On the basis of these (and other) reasons, it was held that English Courts had no subject-matter jurisdiction. The UK Supreme Court is likely to go into these issues in depth; and should it actually do so, one can expect a detailed conceptual analysis of interplay between the rules of conflict of laws and intellectual property.