Common Design in Intellectual Property Rights Cases (Torts and Joint Liability)

What is a Common Design?

In the context of infringement of intellectual property rights and tort law, a common design is a conspiracy between two or more people who cooperate to commit a tort.

Common design is a "concerted action" or "agreed common action" by its participants.

The legal tests to prove a common design are descriptive tests, to allow flexibility in the application of the legal principles to the facts of the case. 

That's because courts recognise that there are an infinite number of ways which two or more people might cooperate to commit a tort.    

For a person to be liable as part of a common design:

• Participation in the common design is a baseline requirement
• An agreement is required.
  Tacit agreement to participate in the common design is enough. An express agreement is not required.
• The collective acts committed by the participants are tortious acts, whether they knew it or not at the time.

When a common design is established, the defendants – “tortfeasors” – are jointly and severally liable for their joint enterprise.

The overall consequence of a person participating in a common design is this:

If a number of persons jointly participate in the commission of a tort, each is responsible, jointly with the others, and also severally, for the whole amount of the damage caused by the tort, irrespective of his participation.

 

Which Torts?

Torts are causes of action - legal claims - which are actionable civil wrongs. 

The principles of liability for participation in a common design apply to all torts in one way or another.

Well-known torts include:

• infringement of the different types of intellectual property rights.
  Infringement gives rise to "tortious liability".
  So when a person, without permission, does an act with respect to the intellectual rights which requires a permission:
  • infringes a registered trade mark
  • infringes a copyright work
  • infringes the patent rights 
  • infringes design rights
  • passes off their business as another business.
• the tort of conversion – the civil law which enables property owners to obtain damages for misuse of their property
• the tort of negligence
• procuring a breach of contract, such as a breach of warranty or a breach of covenant.

Remedies for Tortious Liability 

The primary remedies are damages to compensate in a monetary sense. Damage assessments are often heard separately to the trial on liability for the tort in court cases. 

The remedy of an injunction prevent recurrence of the tort.

In all torts, the standard rules of evidence apply. The claimant bears the burden of proof to show the existence of the tort and all of the elements of the common design alleged, on the balance of probabilities. 

 

Differences: Criminal Law and Civil Law

Both the criminal law and the civil law have their each of concepts of “common design” which give to liability.

Completely different legal tests apply to establish liability for tortious acts.

Joint responsibility in the law of tort is more restricted than it is in the criminal law. 

In NCB v Gamble [1959] 1 QB 11 at 23, Devlin LJ explained the conceptual difference between the two:

the consequence [in the criminal law] is that selling a person a gun knowing that person will use it to kill someone else will make the seller an accessory to the murder but will not in itself make him liable in tort.

Common design in the civil law of tort means that:

• it is not accessorial liability. Participation is required, not just providing the tools. Cheering from the sidelines does not attract liability.
  There are public policy reasons for this. In the criminal sphere of law, it is in the public interest that those playing a more superficial role in commission of crime are convicted. 
• indeterminate and uncertain liability is filtered out.
  There must be a greater degree involvement: cooperation and participation in tort.
• it is liability as a principal to the tort, because they played a part.
  "Going along for the ride" won't attract liability. It's more like a joint enterprise: a common purpose.

Joint liability arising from participation in a common design arises where the person can be termed an actual perpetrator.

Below, we focus common design in tort law and intellectual property rights.

 

The Test for Common Design

The modern law of common design starts with the judgment in The Koursk [1924] P 140. In that case, Scrutton LJ defined common design:

• mere similarity of design (ie "a plan") on the part of independent actors, causing independent damage is not enough 
• there must be concerted action to a common end. There is one tort committed by one of them on behalf of and in concert with the other.
  (That’s not to say that more than one tort could be committed simultaneously)
• persons are said to be "joint tortfeasors" when their respective shares in the commission of the tort are done in furtherance of that common design.

Therefore, the joint tortfeasor needs to join or share in the commission of the tort (which is the common design).

The elements to be established against an alleged participant of the common design:

1. There must be a common design: some level cooperation in a joint enterprise.
   That is, the acts by one or more people give rise to the tortious wrongdoing, such as patent infringement.
   The acts relied on as tortious should be done by one or more of the alleged joint tortfeasors, the actual perpetrator or perpetrators.
2. The other alleged joint tortfeasor, "the alleged participator" itself did acts in furtherance of the common design. 
   It's the assistance in the commission of the tort and the act turns out to be, tortious that gives rise to liability. 
   There's no need for the participator to commit an independent tort. Some act is required which facilitates commission of the tort.
3. It’s not necessary to show that the alleged joint tortfeasor knew or was even aware that their act which assisted the common design:

• • constituted a tort, or
  • gave rise to a tort or
  • intended that the claimant would be harmed.

However the person must have nevertheless assisted in, and been party to a common design to commit, the act that constituted or gave rise to the tort.

Put another way, there must be:

• a common design between the primary and secondary parties
• to do acts which … amounted to infringements, and
• the secondary party has acted in furtherance of that design.

Merely assisting, even knowing assistance, is not enough to make the secondary party jointly liable as a joint tortfeasor with the primary party.

The level of participation actually required to establish liability was deliberately left open, because:

"It would be unwise to attempt to define the necessary amount of connection. Each case must depend upon its own circumstances."

In common design cases:

• There is no need for secondary party to map out a plan of a joint enterprise with the primary offender. Tacit agreement or understanding is sufficient.
• in intellectual property rights cases, there is no need for a common design to infringe. It is sufficient that the combined acts which is the outcome of the common design infringes.

A person cannot be treated as a joint tortfeasor on the basis of nothing more than tacit or even express agreement that someone else should perform the wrongful act. There must be some act of assistance that is more than minimal and does more than merely facilitate the tort

 

Process of determining Liability

First, a common design is identified, and then assess whether the person said to be a joint tortfeasor furthered that design or common purpose.

The court is looking for:

• some "concerted action to a concerted end" or “some act” (The Koursk),
• a common purpose which turn out to be tortious

 

Level of Involvement Required

Rather than assess whether the alleged joint tortfeasor was "an essential part", “an effective part” or "of real significance" to the commission of the tort, courts approach the question of liability from the other direction. 

Looking at participation from this other direction: relatively minor participation, assistance, contributions and influence will not give rise to liability where:

• the contribution or assistance is trivial or de minimus – in the sense of being negligible to avoid liability
• one person or entity looks on with approval at what another person or entity is planning or doing. On the second and third factors
• the assistance does not need to be “indispensable” or match the responsibility of the primary tortfeasor. 
• a person sells a product which they know will be used to commit a tort
• a person looks on, even with approval at what another person or entity is planning or doing
• two legal entities are only related by a common shareholding or control by the same directors

For example, liability for participating in a common design can arise by:

• assisting in the organisation or preparation of acts of physical destruction (genetically modified plants crops), but not participating in the acts of destruction themselves
• helping the primary assailant to locate a victim whom he intended to attack, by travelling with them in car to point out the person , or
• marketing a website on the basis that users could unlawfully download copyright material to attract users

 

Directors' Liability 

In cases involving a common design, the separate legal existence of the company to its directors and shareholders applies, just as it usually does in other situations.

Directors of companies actually have no power in respect of companies. It is the board of directors in board meetings which exercise the powers of the company.

Directors can play different parts in companies to which they are appointed. Some may simply attend board meetings, exercise their voting rights and have no day-to-day operational role in the company.

If a director simply votes in board meetings and nothing else, it cannot be they participate in any common design which the company may be liable. The company is a separate legal person.

The same principles of separate legal existence apply to shareholders of a company. Again, if a shareholder does nothing more than vote at general meetings and extraordinary meetings, they can have no participation in a common design.

In Standard Chartered Bank v Pakistan National Shipping Corporation and others (No 2) [2000] 1 Lloyd's Rep 218, it was said:

There is no reason why a director of a company should be in any different position to a third party and therefore it is possible that a director can be capable of becoming a joint tortfeasor by procuring and inducing the company, for which he works, to carry out a tortious act. However there are good reasons to conclude that the carrying out of duties of a director would never be sufficient to make a director liable. 

In a later case, “never” was considered to overstate the legal position. Still, something more is required -  participation in the common design:

If […] the wrongful acts which are the subject of complaint, the liability of the individual as a joint tortfeasor with the company arises from his participation or involvement in ways which go beyond the exercise of constitutional control, then there is no reason why the individual should escape liability because he could have procured those same acts through the exercise of constitutional control.

 

Intellectual Property Examples

In intellectual property law, "infringement" take place when one of the exclusive rights of the intellectual property rights owner is exercised, without the permission or licence of the owner.

The significance in the context of common design is this.

If as a result of the common design an intellectual property right is infringed:

• all of the participants of the common design are joint tortfeasors, and
• all of them are liable for all of the damages suffered, and
• irrespective of their level of participation in the commission of the infringement.

In intellectual property cases, liability as a joint tortfeasor arises where

So a person is liable that intends and procures and shares a common design that the infringement takes place. They're joint tortfeasors.

• In L'Oréal v eBay [2009] EWHC 1094, [2009] RPC 21, a retailer, eBay sold infringing products of trade mark owners in its website.
  eBay was under no legal duty to prevent infringement and facilitation of infringement with knowledge. Intention of making a profit was insufficient to give rise to liability as a joint tortfeasor in a common design
• MCA Records Inc v Charly Records Ltd [2002] FSR 26  directors may be jointly liable for torts committed by the company where they participate in the acts forming part of the common design.

Example: Software Development

A company is engaged to develop software (referred to as the "Company" below). 

The Company delivers software which infringes a third party’s copyright, an intellectual property right. The Company is the primary tortfeasor. There is no defence.

The Claimant that engaged the Company however want to join to the legal proceedings those individuals who came together and cooperated to deliver the infringing software in the new software package that was delivered.

It came to pass that a rogue programmer for the Company used source code in the application that was sent to him from a previous job.

A friend still at his previous employer sent it to him to use on the project. The friend just sent the software. He didn't edit or change the source code. he didn't have the permission of his employer to send it.

The rogue developer is also primarily liable with the company in the common design, and also a “primary tortfeasor”. The friend is not liable for the common design because he merely facilitated the later copyright infringement. The friend did not do the act constituting or giving rise to the tort, be carried out by the Company.

(The friend though will be liable to copyright infringement to his employer. That's a separate tort, because he didn’t have permission to copy and send the source code in the first place.)

Another developer is employed by the Company and worked on the project. She did not know that the source code came from the Company. She edited it as part of her day-to-day tasks. There is no common design with the rogue developer (a primary tortfeasor), because there was no agreement and no tacit agreement with him or the Company. (But she is open to a separate claim for copyright infringement for making an adaptation of the source code by the employer of the friend)

Yet another developer was employed by the Company. In a conversation with the rogue developer, he was told that the software came from another company. They thought they could complete the development faster if they used the source code sent by the friend. The developer helps ports the code for the project. 

This developer is part of a common design and also primarily liable as part of the common design. He is also liable for copyright infringement to the employer of the friend which sent the source code in the first place.

Lastly, the rogue programmer is also liable for copyright infringement to his friend's employer.

 

Intellectual Property Case: Common Design

The leading case for common designs in intellectual property cases is CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013, once of Lord Sugar’s (UK version of The Apprentice) companies.

CBS was company that was in the business of selling music. It was in its interests to maximise sales. A major proportion of its sales was made by music on tape.

Amstrad released a then new product onto the market: the twin cassette deck. It enabled tape to tape copying, and at high speed. 

The cassette deck was advertised as follows:

Now features "high-speed dubbing" enabling you to make duplicate recordings from one cassette to another, record direct from any source and then make a copy and you can even make a copy of your favourite cassette.

The product was also sold with a warning….

"The recording and playback of certain material may only be possible by permission. Please refer to the Copyright Act 1956, the Performers Protection Acts 1958-1972."

The statutes referred to equates to the Copyright, Designs and Patents Act 1988.

CBS Songs claimed that by selling a double cassette deck that enabled copying of music that it was authorising purchasers to infringe copyright.

There was a dual purpose for the cassette decks. It could be used to copy:

• material protected by copyright, such as songs recorded on tapes sold by CBS Songs (and anyone else); and
• material which the user was entitled to copy, such as recordings they recorded onto a tape themselves, which they owned themselves.

Amstrad might have known what would drive sales: copying of music. Sales of blank cassettes skyrocketed after the cassette deck was released onto the market.

Nevertheless, Amstrad well knew that it should distance itself from being seen to be authorising copyright infringement by purchasers.

The Court found:

• Amstrad had no control over the cassette decks after they were sold
• It was a decision for the purchaser or user of the equipment to use it for an unlawful purpose or not. That had nothing to do with Amstrad.
• Amstrad facilitated unlawful copying, but did not authorise it.

Amstrad did not go to the market and say, “buy our machine and copy all of your music”.

There was no authorisation to infringe the copyright works and therefore no common design.

That would have moved Amstrad into the position of file-sharing websites, which promote use of their services by encouraging uploading of copyright works – films, music, software.

Amstrad had no control over the use of the equipment after it was sold. Liability have needed to hinge on mere knowledge of its likely use which is not tantamount to a common design.

Accordingly, Amstrad did not participate in any common design – there was no common design with purchases to copy music from tape to tape.

 

Common Design: US Position

The civil law in the UK above reflects the position in the United States as well.

The US Supreme Court concluded that supply of video recorders to copying video cassettes did not attract joint liability in tort for copyright infringement in Sony Corporation of America v Universal City Studios Inc 464 US 417 (1984)

It is the same position with UK law: only having knowledge at the point of sale that it might be used for a tortious act is not enough. A common intention is required.

Again in Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd 545 US 913 (2005) reached the same conclusion.

It was because "with no evidence of stated or indicated intent to promote infringing uses, the only conceivable basis for imposing liability was on a theory of contributory infringement arising from its sale of VCRs to consumers with knowledge that some would use them to infringe.".

Metro-Goldwyn-Mayer distinguished the Sony Case, that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties".

The difference was that those running the file-sharing website in Metro-Goldwyn-Mayer encouraged infringement of copyright. The owners were encouraging copyright infringements to increase use of its website.

That took the participation to the other side of the line of participation, even though the site was capable of lawful use.

 

Intellectual Property Rights Lawyers

We are specialist intellectual property lawyers.

We advise on intellectual property business law, and UK infringement of all of the forms of intellectual property protection, patents, trade marks, designs and copyright.

As intellectual property solicitors, we also advise on passing off and breach of confidential information.

Contact us on +44 20 7036 9282 or at contact@hallellis.co.uk for more information.