Implied terms - claim fails on two counts
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For some ten years or so the Defendantís provided advertising
and marketing services to Orvec as well as being responsible for the
design and maintenance of Orvec's website and advertising. It also made
photographs of products which Orvec offered to the airlines and these
were featured on Orvec's website and in its printed advertising.
The parties ended their business dealings in 2011. In the
discussions which led to the parties going their separate ways the use
of the photographs were discussed. A hird party known as Intex started
to compete with Orvec in the supply of textile products to airlines.
They had previously supplied products to Orvec and had employed two of
Intex then contacted Linfoot and supplied various photographs
some of which appeared on Intex's website. Among them were images about
which Orvec filed a claim. The images on Intex's website included
photographs created for Orvec and that they had been supplied by
Linfoots in breach of contract. Orvec argued that the Advertising
Agreement contained an implied term. Essentially Orvec submits that the
implied term gave it a perpetual and exclusive licence under the
copyright in the Photographs and that Linfoots acted in breach of
Orvec's exclusive right.
The second complaint is that the appearance of the relevant
images on Intex's website gave rise to passing off on the part of
Intex. The problem was that Intex was not a defendant but Orvec alleged
that by supplying Intex with the images Linfoots (a) equipped Intex
with the means to pass off and (b) procured the passing off. The images
were used by Intex on its website from November 2012 until May 2013. So
the alleged passing off by Intex falls to be assessed as of November
In Attorney General of Belize v Belize Telecom Ltd
 UKPC 10;
 1 WLR 1988
Lord Hoffmann, who gave the judgment of the Board of the Privy Council,
stated that the assessment of whether a term is to be implied into an
instrument goes no further than being part of the objective
investigation into what the instrument was intended to mean. Generally
where a term is not expressly stated, the objective inference will be
that no such term was intended. He said this:
 The question of implication arises when the instrument
does not expressly provide for what is to happen when some event
occurs. The most usual inference in such a case is that nothing is to
happen. If the parties had intended something to happen, the instrument
would have said so. Otherwise, the express provisions of the instrument
are to continue to operate undisturbed. If the event has caused loss to
one or other of the parties, the loss lies where it falls."
In BP Refinery (Westernport) Pty Ltd v Shire of
Hastings (1977) 180 CLR 266, 282Ė283 Lord Simon of
Glaisdale, giving the advice of the majority of the Board, said that it
was "[not] necessary to review exhaustively the authorities on the
implication of a term in a contract" but that the following conditions
("which may overlap") must be satisfied:
"(1) it must be reasonable and equitable; (2) it must be
necessary to give business efficacy to the contract, so that no term
will be implied if the contract is effective without it; (3) it must be
so obvious that 'it goes without saying' (4) it must be capable of
clear expression; (5) it must not contradict any express term of the
Any starting point is the express terms of the contract into
which Orvec seeks to introduce an implied term. By common consent they
are Linfoots' standard terms and conditions. They were presented by
Linfoots when a quotation was given for a piece of work.
"Terms and Conditions
1. All prices are subject to VAT where applicable.
2. Any outside services or expenses over and above those
estimated will be charged extra.
3. Prices are based on current costs of labour and materials
and may be subject to alteration.
4. Any alterations to the design may adjust the price.
5. The use of the design is limited to the items in the
6. Copyright remains the property of the company unless
7. This quotation is valid for a period of 30 days.
8. After the first presentation, accounts will be submitted by
Linfoots Limited at the end of each calendar month for work carried out
during that month, or at set stages in the work.
9. Payment is due 28 days following the issue of an invoice."
It was self-evident that there must contain the implied term
that Orvec had a licence under Linfoots' copyright to use the
advertising material supplied by Linfoots. The issue between the
parties concerns the nature of the licence granted.
Orvec advanced two alternative implied terms. It was either
(a) Linfoots had granted Orvec a worldwide, perpetual,
non-terminable and exclusive licence to use the images in the
(b) Orvec can use the images for all marketing purposes,
without limitation and the images would not be supplied to a third
party without the permission of Orvec.
The Judge agreed that one could imply a simple implied term
but nothing more... "I agree that where a designer creates a
work of a nature such as the logo of a client, at the time of the
agreement between the parties it must have been understood between
designer and client that (a) no one other than the client could have a
legitimate reason to copy the work and (b) the client would expect to
be able to prevent others from copying it. The reasonable person
considering the agreement would conclude that copyright must pass to
the client and that a term in the agreement between the parties should
be implied to that effect".
Both claims were dismissed. See Giggs case on implied terms
and ownership of logos.
Written by Michael Coyle
About the Author
Solicitors offer services and advice for litigation,
commercial contracts, Intellectual Property and IT legal agreements. We
are experts in commercial law with a heavy emphasis on Intellectual
Property, Internet and e-commerce law. Lawdit is a member of the
International Trademark Association, the Solicitors' Association of
Higher Court Advocates and we are the appointed Solicitors to the
largest webdesign association in the world, the United Kingdom Website
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Article Published/Sorted/Amended on Scopulus 2014-07-15 09:05:50 in Legal Articles