A TEST case battle by retail giant Marks and Spencer (M&S) to ward off claims for payment in respect of distribution of newspaper extracts supplied to them by a cuttings agency has failed.
In a legal action which will have major implications in copyright circles, the High Court has ruled that M&S should pay a Newspaper Licensing Agency (NLA) fee in respect to its unauthorised copying of newspaper cuttings.
Laura Deacon of Herbert Smith, who played a major role in masterminding the NLA's victory in the case, describes the decision as "landmark" in an area of copyright law that has never been probed before.
Mark Shillito, the Herbert Smith partner in charge of the case for the NLA, says that the decision to impose a licence fee should warn those who do not take out licences to expect an unwelcome "knock on the door".
The NLA successfully argued that M&S was infringing copyright of the typographical layout of newspaper articles and that under those circumstances it had to pay a licence, expected to run to around £7,000 a year, in respect of its activities.
The chief executive of the NLA, Anthony Rentoul, said after the ruling that since the NLA scheme had been established in January 1996, around 16,000 companies and other organisations which regularly copied newspaper cuttings had taken out licences.
"The NLA was disappointed that M&S chose to stand out among the others in not applying for a licence." he says.
"In the light of this judgment, any company or organisation with a photocopier, on which press cuttings are copied without an NLA licence, needs to consider its position very carefully. There can be very few companies or other organisations who will not find themselves in breach of the law if they are equipped with a photocopying or fax machine and do not have an NLA licence."
Depending on the extent of copying carried out, licences can cost as little as around £80 a year, on the basis of a charge of 2p a copy. The licence fees are distributed among national and regional publishers belonging to the scheme.
M&S had argued that it had a defence under the provisions of section 30 (2) of the Copyright, Designs and Patents Act 1988, relating to 'fair dealing' in respect of the use of newspaper articles for the purpose of reporting current events and argued that the copying that had taken place did not constitute a "substantial part of the copyright work". It also called into question the NLA's right to issue licences.
Mr Justice Lightman said in his nine-page written judgment that M&S had three press offices which regularly distributed cuttings throughout the company on topics such as merchandising and corporate affairs. It also distributes cuttings, provided by the Broadcast Monitoring Company – a Financial Times subsidiary which is licensed by the NLA, relating to M&S itself.
He said that one question that had to be answered was whether the NLA was entitled to copyright of each individual article in the newspapers in question, or only of each newspaper as a whole. He held that separate copyright subsisted in the typographical layout of each article copied, and that under those circumstances, copies of cuttings from whole newspapers were copies of "substantial parts" of the works.
He found that the NLA was entitled to the copyright of such articles.
He said the actions M&S had been involved in went far beyond what could be justified as fair dealing.
He said that to establish the copyright defence of fair dealing, it was necessary to establish that the dealing with the copyrighted work in question had been part of an exercise to report current events. He took the view that on no sensible basis could the fair dealing defence be applied to what had happened in this case.
"There is wholesale copying of material which goes beyond what is necessary to report current events to M&S personnel," he said.
Shillito said: "This is a decision of considerable importance in the copyright field.
"It has ramifications for all companies and individuals who make photocopies from newspapers."