Protecting the value of exclusives

The most
significant aspect of last month’s judgment from the Court of Appeal in
the case brought by Michael Douglas and Catherine Zeta Jones over the
publication of unauthorised pictures of their wedding in Hello!
magazine, was the Court’s refusal to allow any claim in damages from
OK! magazine, which had secured the exclusive to the event, in respect
of its supposed lost sales.

With damages for privacy claims
restricted to little more than compensation for distress caused by the
unauthorised publication, awards are always going to be limited. Courts
are not going to grant greater damages for distress in invasion of
privacy claims than they do in personal injury actions, where awards
have always been relatively modest.

One reason why the court was
not prepared to allow OK!’s claim for damages was that the contract
between the magazine and the Douglases contained solely a licence to
use certain pictures of the event and did not provide for any
participation on the part of the magazine in the privacy or
confidentiality of it.

For that reason, the court could not see
how it could be said that OK! had acquired any interest enforceable
against Hello! arising from the infringement of the privacy or
confidentiality of the Douglases. So the Douglases had a valid claim
for infringement but no substantial commercial loss (because they were
paid anyway) and OK! had substantial commercial loss but no valid claim.

It
would of course have been possible to draft an agreement which
purported to grant the magazine an assignment of or some interest in
the confidentiality rights of the occasion. However, the judgment seems
to question whether these rights are assignable in any event.

While
there would be no harm in future, including broader provisions
conferring rights to the purchaser of the rights in confidentiality, it
is not clear whether this would in fact mean that such claims,
publisher against publisher, could then be brought successfully.

Another
approach to such arrangements might be to construct the agreement so
that the celebrity does suffer some commercial loss in the event that
there is a damaging spoiler. For example, by providing that he or she
does not get the full contractual sum if the exclusivity is undermined.

The
celebrity will then be in a better position to recover the forfeited
amount from the infringing publication. However, the celebrity may be
reluctant to agree to forego payment in such circumstances.

Alternatively,
if there is a flagrant breach of privacy, breaking an exclusive, the
courts may be prepared to award exemplary damages. These are granted
where it can be shown that the defendant knowingly or recklessly
breached or infringed others’ rights, on the basis that the gain to it
would be greater than any compensatory damages awarded. However, in
media cases such awards have been rare.

So, for the immediate
future it appears that it will be difficult for a celebrity or a
publisher to recover damages for the commercial loss arising. The only
solution may be to implement the very best security arrangements to
protect the value of the exclusive. But as this episode shows, even the
most extensive security can be broken.

Dan Tench is the head of public law and a media partner at Olswang

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