Torts (Economic)

• Author: International Law Group
• Pages: 119-122

Page 119

By leave of three members of the House of Lords granted on July 28, 2005, the third Plaintiff, Northern & Shell plc (NAS), publishers of "OK!" magazine, appealed from an adverse decision of the Court of Appeal, Civil Division. It allowed an appeal by the first Defendant, "Hello! Ltd."(HL) holding HL liable in damages to NAS for breach of confidence and assessing the damages at £1,026,706 for loss of profits caused by the Defendant's exploitation of unauthorized photographs of the November 18, 2000 private New York wedding between Mr. Michael Douglas and Miss Catherine Zeta-Jones (the Douglases) well-known fi lm actors. (The Douglases are not parties to the present appeal.)

The Douglases had agreed with NAS, the publisher of an English celebrity magazine, "OK!" (third Plaintiff ), to grant it exclusive rights for a period of nine months to publish those wedding photographs approved by the Douglases. The magazine paid the Douglases £1m. The contract further provided that the Douglases retained any rights not expressly granted to NAS. The Douglases hired an official photographer, and jointly owned any copyright in the photographs taken.

The Douglases agreed that they would take all reasonable security steps to restrict unauthorized access to the wedding so that third party media would be unable to take, obtain or to timely market their wedding photographs. The couple told all guests not to take any photographs and set up tight security measures. Nevertheless, a freelance photographer named Rupert Thorpe (presumably by passing himself off as a waiter or guest ) infi ltrated the wedding reception and covertly took photographs.

Thorpe then sold the exclusive right to publish the unauthorized photographs to the first Defendant, the English publisher of "Hello!" a celebrity magazine in competition with NAS. When the Douglases and NAS found out that that the first Defendant intended to publish unauthorized photographs, they obtained an ex parte interlocutory injunction from an English court on November 20, 2000 that restrained publication of the photos. The Court of Appeal, however, lifted the order three days later.

"Hello!" began to sell copies of its issue containing the unauthorized photographs the next day. The third Plaintiff put out two issues of its own publication thus incurring expenses. The Plaintiffs sued for damages as a result of the first Defendant's unauthorized publication and joined further Defendants.

The judge held, inter alia, that the third Plaintiff was entitled to damages from the first Defendant for the loss of profits from the exploitation of the authorized photographs attributable to the publication of the unauthorized photographs. On the other hand, it rejected the third Plaintiff 's claim against the first Defendant based on the economic torts of deliberate interference with the third Plaintiff's business or conspiracy to injure by lawful or unlawful means. The Court therefore decided that "Hello!" was liable to "OK!" for the loss...