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The High Court has handed down a high profile judgment finding that the Defendants (the owners of the intellectual property in the Star Wars franchise) had wrongfully induced a third party company to breach its contract with the Claimant, causing him the loss of a chance to earn profits from that agreement.

The judgment contains a useful summary of the law on (1) the requisite knowledge and intention required to make out the tort (at paras 77 & 78)  and (2) the correct approach to causation and quantification in cases involving the hypothetical actions of third parties (at paras 90 to 96).

The Claim related to the filming and broadcasting of an independent Star Wars fan convention which took place in Manchester in December 2015, shortly before the release of Star Wars Episode VII: The Force Awakens. The Claimant contracted with the organisers to film and live broadcast the convention to cinemas.

In August 2015 lawyers for the Defendants sent the convention organisers a series of ultimatums threatening to sue for alleged copyright and trade mark infringement, unless the organisers undertook to preventing the Claimant from filming and broadcasting the convention. The Defendants maintained that stance notwithstanding the Claimant’s warnings as to the existence of the Agreement. Ultimately the organisers complied with the Defendants’ demands.

At trial the Court found that there was no basis for implying a term into the Agreement requiring the Defendants’ approval to the film and that the Claimant and the organisers had no, on the facts, agreed to rescind the agreement in the face of the Defendants’ objections. Notably, there was no attempt at trial by the Defendants to justify their stance by reference to any pleaded or proven intellectual property rights by which they might themselves have restrained the film.

The Court went on to hold that the Defendants acted with the requisite knowledge and intention, relying upon the endorsement in OBG Ltd v Allan [2008] 1 AC 1 of Lord Denning’s comments in Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 that blind eye knowledge and recklessness (as to whether the conduct induced would amount to a breach of contract) would suffice. The Court criticised the Defendants for failing to enquire into the agreement, in the light of the Claimants’ warnings, and came to the conclusion that the Defendants clearly did not want any broadcast of the convention to proceed, for fear that it would interfere with the “carefully choreographed” marketing campaign behind Episode VII, at a time when expectations around that release were “relatively delicate” and “uncertain” (see paragraphs 83-85 of the Judgment).

The Court furthermore rejected the Defendants’ case that the film would have made no money. It found that there was a real and substantial chance that the Claimant would have secured 150 cinema screenings, which would have been sufficient to exceed (by some margin) his necessary costs. It considered that the film (on a budget of c. £18,000) would have generated revenues of over £200,000, bringing the Claimant a net profit (after taking into account revenue splits in the Agreement) of nearly £40,000, and valued the lost chance to earn profit accordingly.  

Shane Sibbel acted for the successful claimant at trial. Tom Cleaver acted for the successful claimant prior to trial.

Clerks

Staff