Confidential Information

Case Note: Douglas and others v Hello! Ltd. and others Trial

John Lambert

15 April 2003

Last updated 19 Feb 2006

Although Lindsay J's judgment and award of damages in favour of OK! Ltd was overturned by the Court of Appeal in Douglas and others v Hello! Ltd. and others
[2005] EWCA Civ 295, his reasoning and analysis still bear reading.

The Facts

The facts of this case are notorious. A freelance photographer managed to infiltrate the wedding reception of the well known actors, Michael Douglas and Catherine Zeta-Jones, at an hotel in New York City, where cameras had been banned, and photographed the couple surreptitiously. His photographs were not very good and offended the couple for a variety of reasons. One of those reasons was that they had agreed with Northern & Shell Plc, the proprietor of "OK!" magazine, to grant it the exclusive right to take photographs at the reception and publish them in its periodical. That publisher had agreed to pay £1 million for the right which is why the couple went to great lengths to exclude other photographers. The intruder delivered his photographs to an intermediary who passed them on to someone else who in turn passed them on with the result that they eventually came into the hands of the Spanish parent company of the publisher of "Hello!"

CC managed to obtain an interim injunction to restrain publication but that was overturned on appeal. A factor that influenced the CA was a draft witness statement stating incorrectly that "Hello!" had not known in advance that pictures of the wedding would be taken or offered for sale. That evidence was bolstered by a statement in a letter from one of the intermediaries, which was later retracted, to the effect that "Hello!" had acquired the photographs on the open market in good faith. Because of the lifting
of the injunction, Mr Douglas and Miss Zeta-Jones had to select in some haste official pictures of their wedding so that they could be published in "OK!" no later than the unauthorized snaps in "Hello!"

The Issues

CC sued DD on a number of grounds that included breach of confidence, invasion of privacy, breach of the data protection principles, conspiracy and various other torts. Of the 280 paragraphs of the judgment, the first 179 were on the facts. Of the remainder, paragraphs 181 to 228 focussed on the law of confidence. Another 10 paragraphs focussed on data protection. Privacy took up only one (albeit quite long) paragraph of the judgment. While his lordship expressed scepticism as to the existence of a
right of privacy arising out of the Human Rights Act 1998 ("the HRA"), he did not quite go so far as to throw out the claim altogether. Instead, he declined to hold that there was an existing law of privacy under which the Douglases were entitled to relief. He gave various reasons for declining that invitation observing that it was unnecessary for his decision because, even if a right of privacy exists, the Douglases would have been unable to make any recovery greater than that which was open to them under the law of confidence.

Interaction of the Law of Confidence with Human Rights
The judgment is valuable in that it analysed all the authorities to date in which the law of confidence has interacted with the HRA. From these, Lindsay J distilled the following principles at paragraph [186]:

	Breach of confidence is an established cause of action but its scope now has to be evaluated in the light of the obligation under s.6 (1) of the HRA to act in a way that is not incompatible with the rights guaranteed by the European Convention on Human Rights ("ECHR"), that is to say a "Convention right".
	Such evaluation can be achieved by regarding the often opposed rights conferred respectively by arts 8 and 10 of the ECHR as absorbed into the action for breach of confidence, thereby giving it new strength and breadth.
	A balance between those conflicting interests has to be struck. It will be necessary for the courts to identify, on a case by case basis, the principles by which the law of confidence must accommodate arts 8 and 10.
	In general, the weaker the claim for privacy, the more likely it will be outweighed by a claim based on freedom of expression.
	The right to freedom of expression described in art 10 (1) of the ECHR is

"subject to such conditions ... as are prescribed by law and are necessary in a democratic society .... for the protection of the .... rights of others [and] for preventing the disclosure of information received in confidence ...".

The right to freedom of expression is thus expressly subject not only to the right in art 8 for respect to private and family life but also to rights recognized by the law as to confidence, even where those latter rights do not originate from the ECHR.

	The Council of Europe Resolution 1165 of 1998 gives some guidance which includes recognition that information about some people's lives has become a highly lucrative commodity for certain sections of the media and that protection is to be given against interference by the media. Thus even a public figure, including those in the arts, is entitled to a private life although he or she may expect and accept that his or her circumstances will be more carefully  scrutinized by the media.
	At the same time, the fact that an individual has achieved prominence on the public stage does not mean that his or her private life can be laid bare by the media.
	If public attention has been courted by a claimant, that may lead to that claimant having less ground upon which to complain.
	Freedom of expression on the media's part is not invariably the trump card but it is a powerful one to which the court must always pay appropriate respect.
	Where the court is considering whether to grant any relief which, if granted, may affect the exercise of the Convention right to freedom of expression, the court must have particular regard to any relevant privacy code such as that of Press Complaints Commission ("the PCC").
	The PCC code provides:

"Privacy
3. (i) Everyone is entitled to respect for his or her private and family life, home, health and correspondence. A publication will be expected to justify intrusion into any individual's private life without consent.
(ii) The use of long lens photography to take pictures of people in private places without their consent is unacceptable.
Note Private places are public or private property where there is a reasonable expectation of privacy."

Misrepresentation
"11. (i) Journalists must not generally obtain or seek to obtain information or pictures through misrepresentation or subterfuge.
(ii) ...............
(iii) Subterfuge can be justified only in the public interest and only when material cannot be obtained by any other means."

The code also provides that there may be exceptions to the provisions as to privacy and misrepresentation in the public interest. The "public interest" is defined to include:

"(i) Detecting or exposing crime or a serious misdemeanour;
(ii) Protecting public health and safety;
(iii) Preventing the public from being misled by some statement or action of an individual or organisation."

Under the same heading at sub-paragraph (iii) continues:

"There is a public interest in freedom of expression itself. The Commission will therefore have regard to the extent to which material has, or is about to, become available to the public."

	If there is an intrusion where a person can reasonably expect his or her privacy to be respected, that intrusion will be capable of giving rise to liability for breach of confidence unless the intrusion can be justified.
	A duty of confidence arises whenever a confidante is in a situation where he or she either knows, or ought to know, that the other person can reasonably expect his or her privacy to be protected.
	The existence of a relationship giving rise to a duty of confidence may be inferred from the facts.
	The fact that the information at issue is obtained by unlawful activity does not mean that its publication will necessarily be restrained, though the fact that unlawful means have been used to obtain the information may be a compelling factor when judicial discretion comes to be exercised.
	Photographs may be regarded as "information" for the purposes of the law of confidence. The law of confidence can encompasses photographs of an event even if it could have been described in words or by drawings.
	There is jurisdiction to grant injunctions to restrain publication of photographs taken surreptitiously in circumstances where the photographer should have known that the occasion was a private one and that photography was not permitted.
	Equity may intervene to restrain publication of photographs taken in breach of confidence provided that the prospective claimant makes it clear, expressly or impliedly, that no photographs are to be taken of them.

Image as a Trade Secret
The Douglases complained not only of the intrusion of their wedding but also of potential damage that publication of unauthorized photographs could do to their careers. In her evidence, Catherine Zeta-Jones said:

"Both Michael and I are in the business of 'name and likeness'. Any photographs of us that are published are important to us, not just personally but professionally as well. People go to see movies specifically because either Michael or I are in them and they have expectations, amongst other things, of the way we will look. Those expectations are created to a significant degree by the images they see of us in the media. Directors take into account the public's perception of actors and actresses when casting for films. The hard reality of the film industry is that preserving my image, particularly as a woman, is vital to my career."

She added that there was for that reason a clause in every performance contract that she signed giving her full photo approval. That means that no still photographs of a movie may be published or distributed without her prior consent. She explained that that is not a right that all actors manage to obtain and it is only granted to those with sufficient 'star' power but it is one that she claimed to have worked hard to obtain. Consequently, she worked hard to enforce and control that right. She said that she spent a great deal of time sifting through hundreds of photographs that are taken of her during a film shoot and selecting those that she knows will benefit her career.

Her husband said something similar:

"On a professional level, because my name and likeness is a valuable asset to me, it has always been important for me, professionally, to protect my name and likeness and to prevent unauthorised use of either and I have taken steps to do so."

In view of that evidence and the lengths to which to which the Douglases went to keep out photographers, the judge considered it appropriate to examine the applicability of the law of confidence on the basis that CC had a valuable trade asset, a commodity the value of which depended, in part at least, upon its content at first being kept secret and then of its being made public in ways controlled by them. In the case of "OK!", the right to exclusivity of photographic coverage of the wedding was even more plainly a trade secret.

Principles specifically applicable to Trade Secrets
Since the photographs had commercial as well as personal value to the Douglases, the judge added the following to his list of general principles discussed earlier. First, the right to enforce an obligation in confidence may be shared by the person to whom the obligation is owed and his licensee even in the absence of a formal assignment. In Gilbert v The Star Newspaper Co. Ltd. (1894) 11 T.L.R.. 3, W.S, for example, Chitty J had joined the theatre proprietor as a plaintiff to an action by W S Gilbert to restrain publication of an article disclosing the plot of one of his comic operas. Secondly, the benefit of an obligation in confidence can pass, be shared between, and be enforceable by, co-owners of, or by a successor in title to the benefit, as in O. Mustad & Son v Dosen [1964] 1 WLR 109.

The Confidence Claim
Applying the principles set out above, the judge considered first whether an action for breach of confidence lay at common law. The classic probanda set out by Megarry J in Coco v AN Clark (Engineers) Ltd. [1969] RPC 4 required, first, the information the subject of the action to have the necessary quality of confidence about it", secondly, that the information must have been imparted in circumstances importing an obligation of confidence, and, thirdly, that there must be an unauthorised use of that
information to the detriment of the party communicating it. His lordship had no difficulty in holding that a photographic representation of the wedding reception had the "quality of confidence" about it. Everyone there, including the photographer, would have been aware from the precautions to exclude cameras and unwelcome guests that they owed a duty of confidence to the bride and groom.  As for "Hello!" and its publishers, their consciences were tainted:

"they were not acting in good faith nor by way of fair dealing. Whilst their position might have been worse had I held that the taking of unauthorised pictures for use by them had been truly commissioned in advance, even without that there is in my view enough to afflict their conscience. They knew that OK! had an exclusive contract; as persons long engaged in the relevant trade, they knew what sort of provisions any such contract would include and that it would include provisions intended to preclude intrusion and unauthorised photography. Particularly would that be so where, as they knew, a very considerable sum would have had to have been paid for the exclusive rights which had been obtained. As to their knowledge of steps taken to protect the secrecy of the event, their own written text in their Issue 639 spoke of "elaborate security procedures". The surrounding facts were such that a duty of confidence should be inferred from them. The Hello! Defendants had indicated to paparazzi in advance that they would pay well for photographs and they knew the reputation of the paparazzi for being able to intrude. The unauthorised pictures themselves plainly indicated they were taken surreptitiously. Yet these Defendants firmly kept their eyes shut lest they might see what they undeniably knew would have become apparent to them. Breach of confidence apart, had the Hello! Defendants opened their eyes they would have seen that the taking of the photographs which they bought had involved at least a trespass."

Such conduct was unconscionable even though the publisher did not in advance and in terms require or authorize trespass and surreptitious photography. All the CC suffered as a result of the unauthorized photography and publication. Distress, expense and inconvenience were caused to the Douglases, and possibly also reduced syndication revenue. OK! had to re-arrange its schedule so as to get out some of the authorized images as soon as possible to mitigate loss. It lost also "the kudos of being, and being seen to be, the only one of the two leading rivals to be able to offer authorized coverage of the 'showbiz wedding of the year'". It may well have sold fewer copies of their magazine and have received less in respect of syndication rights than would have been the case had Hello! not published the unauthorised pictures.

The Balancing Exercise

As for the balancing exercise required by s.12 of the HRA, the judge noted that no public interest was claimed for the unauthorized pictures, either within the understanding of the phrase in the general law or within the terms of PCC code which was "the relevant privacy code". Even if it were, a photographic representation of the wedding was about to become available to the public in OK! The unauthorized
photographs had been obtained by misrepresentation or subterfuge, thereby breaking the PCC code, which Hello! either knew, or should have known, to have been the case. Lindsay J concluded that the publishers' rights to freedom of expression were subject to and, in the circumstances, overborne by the rights of all the CC respectively under the law of confidence.

The Defences

The publishers raised a large number of defences all of which were rejected. First, they argued that the information to which confidence had been claimed had not been sufficiently identified for the protection of equity because the wedding day could have been made public otherwise than by photography. In his lordship's view, that argument had been disposed of by the CA on the last occasion that the case had come before it. Secondly, they argued that it was generally understood in journalism that unauthorized pictures, once taken, could be fairly sold, bought and published. While that may be true in most circumstances, such defence did not avail publishers who knew, or should have known, that the pictures had been taken, and distributed, in breach of confidence. Thirdly, it was argued that CC was not entitled to equitable relief because OK! had been able to publish the official pictures at the same time as Hello! had printed the unlicensed ones. Even if that argument were right, it would only go to the remedy and not to the cause of action. Fourthly, it was contended that the photographs were put into the public domain by publication of the authorized shots. That argument ignored the precautions that the stars had taken to restrict reproduction of their images or their precautions to keep out unwanted guests or cameras. Fifthly, they argued that they had neither taken nor commissioned the shots. That was no defence where the publishers knew that the photographs had been taken scrumptiously. Sixthly, they argued that no wrongdoing had been done under the law of the state of New York. The answer to that was that the photographer had at the very least committed a trespass. Seventhly, the publishers relied on freedom of expression under art. 10 ECHR but, as the CA had held when the case was previously before it, that was not a trump card.  Eighthly, they argued that any obligation of confidence was lost when CC published their photographs. If that argument applied at all, it would only do so where publication had been intended. Ninthly, it was argued that the confidential quality of the photographs was lost because of the very wide distribution of the unlicensed snaps. That ignored the precautions that CC had taken to prevent unauthorized photography in the first place. Tenthly, it was said that CC were truly claiming a non-existent intellectual property right corresponding to copyright in the visual aspect of the wedding. The judge could have dealt with that defence by repeating his conclusions on the value of an image as a trade secret and the precautions that CC had taken to prevent unauthorized photography but, instead, he sidestepped the issue by remarking that the fact that the rights claimed by CC were in some respects capable of being likened to, or to overlap with, a claim in copyright did not affect their validity. The 11th argument was that the Douglases were seeking control. Even if that were true, it did not impair their cause of action. The judge considered and rejected a number of other arguments which were, to a large extent, different guises of those that had gone before. The most substantial point was probably one based on Woodward v Hutchins [1977] 1 W.L.R. 760 to the effect that a claimant who has deliberately sought publicity loses the right to insist upon confidentiality in respect of publicity. Lindsay J did not read that case as establishing such a proposition but, even if it did, it had been superseded by later cases.

Data Protection
On this point the judge held that the publishers were "data controllers", the unauthorized photographs were "personal data", the digitization of those photographs, their transmission to London in digital form and their editing constituted "processing". DD could not rely on s.32 of the Data Protection Act 1998 upon which D had relied in Campbell because it depended among other things on the data controllers'
reasonably believing that publication would be in the public interest for which there was no evidence. It was also argued that publishing the unauthorized snaps was merely a continuation of a process that had begun before the Data Protection Act 1998 came into force but that defence hardly got off the ground. It followed that DD had a duty under the Act to process the photographs in accordance with the data protection principles fairly and lawfully for the purposes of a legitimate interest and that they had failed to do.

Conclusion
Notwithstanding the spin to the contrary, DD suffered a comprehensive trouncing. The judge indicated his willingness to grant a perpetual injunction unless DD offered an undertaking and an inquiry as to damages or account of profits. There is little comfort that DD can draw from the dismissal of the other claims, particularly the privacy cause, because their liability would have been no different had they succeeded. The most interesting aspects of this case are first the analysis of the rules to be applied to
the balancing of rights under the law of confidence with the provisions of the HRA and the approximation of an actor's image as tantamount to a trade secret. Whatever happens to the case on appeal, the judge's analysis will be very helpful to practitioners and judges of future cases. It comes pretty close to a checklist which could almost be reduced to a flowchart. The most vulnerable part of the judgment probably lies on the image as a trade secret point and it would not be surprising if DD were granted
permission to appeal on that. If the judgment stands, it could be very useful for merchandisers since there are limits to the extent to which copyright and trade marks can protect a well known likeness in English law. On the other hand, even if DD succeed on that point they have lost on so much else that it is difficult to see how they can avoid liability altogether. Further, if they do appeal, DD risk a cross appeal by CC on the privacy point which could well result in a finding that a right of privacy does indeed exist in English law.

 

Important