UK: Douglas v Hello! Ltd

Everyone will recall the glamorous couple Michael Douglas and Catherine Zeta-Jones, more used to red carpets than courtrooms, fighting for their privacy over wedding photos sold to Hello! The couple sold exclusive rights of their wedding to OK! for £1m in order to retain control over the media and their privacy. The Claimants based their claim on breach of confidence, breach of privacy and breach of the Data Protection Act. Aside from the celebrity angle, this case has attracted much attention because it has tested the bounds of the right to privacy, introduced in 2000 by the Human Rights Act.

Commercial exploitation of privacy or "image rights"

The Court of Appeal ruled that whilst Hello! had breached the Douglases' confidentiality, that confidentiality did not extend to OK!, the third Claimant. OK! had no cause of action against Hello! for breach of commercial confidence. The decision will come as a blow to magazines and newspapers wishing to protect their exclusive rights to stories and is a victory for those running 'spoilers'. The judgment raises important points regarding the extent to which the law of confidence can be used to protect the commercial exploitation of privacy or "image rights".

Right to privacy – is there or isn't there?

Following the approach in the European Court of Human Rights case of von Hannover, the Court of Appeal affirmed that the courts in England and Wales have a duty under the Human Rights Act to protect the privacy of an individual from an unjustified invasion of privacy by another. The Court of Appeal further affirmed that the courts will do this through developing the common law duty of confidence. The Court of Appeal also indicated that, in certain circumstances, injunctions for breach of confidence should be granted by the courts more readily.

Everyone will recall the glamorous couple Michael Douglas and Catherine Zeta-Jones, more used to red carpets than courtrooms, fighting for their privacy over wedding photographs sold to Hello!

The couple sold exclusive rights of their wedding to OK! for £1m with a view to retaining control over the media and their privacy. Outwitting the strict security measures in force on the day, a photographer snatched some photographs of the happy couple, which then appeared splashed across the pages of Hello!, spoiling the exclusive story promised to OK! Although originally granted a temporary injunction against Hello!, this was overruled on the "balance of convenience", on the basis that damages would be an adequate remedy, since it would be straightforward to calculate the extra profits made by Hello! if publication went ahead. The claim was based on breach of confidence, breach of privacy and breach of the Data Protection Act. Aside from the celebrity angle, this case has attracted much attention because it has tested the boundaries of the right to privacy, introduced in 2000 by the Human Rights Act.

When the case came to trial in 2003, the judge ruled that the Defendants had breached the confidence of all three Claimants (the third being the publishers of OK! magazine, Northern & Shell) and ordered Hello! to pay OK! over £1m in compensation. The Douglases were entitled to damages for breach of confidence because the wedding was essentially a private affair, whereas OK! was awarded damages on the basis that the breach of confidence was in the form of a trade secret. Yesterday, the Court of Appeal ruled that OK! had no cause of action against Hello! and consequently must repay the damages awarded for loss of sales.

Many jurisdictions recognise the rights of celebrities to commercialise private information about themselves. In France, for example, the Code Civil contains a "droit a l’image" and, in the US, it is not uncommon for actions to be brought against anyone who seeks to benefit from the commercial exploitation of a celebrity’s identity without consent.

The law in the UK does not recognise "image rights" as such, however, the decision of the judge at first instance had suggested that the UK was edging towards the introduction of a new commercial privacy right. The judge compared information regarding the Douglases’ wedding to a trade secret, which the Douglases had the right to exploit and to keep confidential until exploited. Hello! contended that no such right existed under UK law. In considering this issue, the Court of Appeal raised two important points:

The Court of Appeal saw no reason, in principle, for not protecting a person’s opportunity to profit from confidential information about themselves, in the same way that, a person’s opportunity to profit from confidential information in the nature of a trade secret is protected. In analysing the previous decisions on this issue, the Court considered that they reflected the following principle:

"Where an individual (‘the owner’) has at his disposal information which he has created or which is private or personal and to which he can properly deny access to third parties, and he reasonably intends to profit commercially by using or publishing that information, then a third party who is, or ought to be, aware of these matters and who has knowingly obtained information without authority, will be in breach of duty if he uses or publishes the information to the detriment of the owner".

Applying the above principle to the facts, the Court dismissed the appeal against the judgment in favour of the Douglases based on commercial confidence. The Douglases had taken steps to ensure that their wedding was a private event and that no unauthorised photographs were published. Hello! was aware of this and was also aware of the fact that the Douglases intended to exploit their private wedding commercially by publishing authorised photographs in Hello!. Hello! had deliberately obtained photographs,knowing that such photographs were unauthorised and published them to the detriment of the Douglases, causing them commercial loss. As a result, Hello! was liable to the Douglases for breach of commercial confidence.

The trial judge had awarded damages to OK! for breach of confidence and had compared the nature of confidentiality of the photographs to that of a trade secret, the confidentiality of which can be shared and sold between others. The Court of Appeal did not agree with this analysis and concluded that:

"…confidential information or private information, which is capable of commercial exploitation but which is only protected by the law of confidence, does not fall to be treated as property that can be owned or transferred"

The Douglases’ right to protection of the information regarding their wedding did not arise as a result of any proprietary interest in it but arose as a result of Hello’s knowledge of the confidential nature of the information and the fact that Hello! had obtained the information in breach of commercial confidence. The Court considered that the contract with OK! did not transfer any proprietary rights in the photographic information regarding the wedding, but merely granted to OK! a licence to exploit the approved photographs commercially for a nine month period. It did not grant any rights to OK in respect of any other photographs of the wedding. OK!’s complaint was not that Hello! had published the approved photographs for which OK! had been granted the exclusive licence to publish but that Hello! had published other images, which could not be published by anyone who knew that such images were confidential. These unapproved photographs were confidential only to the Douglases and not OK! and therefore, OK! did not have any right to protect the confidentiality of the photographs.

The Court of Appeal found in favour of Hello! in relation to OK!’s claim for commercial confidence and concluded that the trial judge was wrong to hold that OK! could invoke commercial confidence in relation to the wedding photographs. In doing so, the Court has narrowed the extension afforded to privacy as a commercial right provided by the trial judge.

In reviewing the question of privacy, the Court of Appeal followed the landmark decision of the European Court of Human Rights (ECtHR) in von Hannover. In von Hannover, the ECtHR had considered whether photographs of Princess Caroline of Monaco and her children amounted to privacy infringement. Weighing up the conflicting Convention rights of Article 8 (right to private and family life) and Article 10 (right to freedom of expression), the judgment of the ECtHR held that national courts have a duty to protect privacy of individuals against the intrusion of others. Moreover, the ECtHR ruled that, even if a photograph is taken in a public place, the photograph will constitute an infringement of privacy, unless it contributes to a debate of genuine public interest.

Following the approach in von Hannover, the Court of Appeal affirmed that the courts in England and Wales have a duty under the Human Rights Act to protect the privacy of an individual from an unjustified invasion of privacy by another. The courts have been developing the law in this regard for some time. However, the Court of Appeal’s affirmation of this suggests that we may well see an increased protection of privacy rights in future. The courts would do this through developing the common law duty of confidence in a way that will give effect to the right for privacy under the Human Rights Act.

The judges also made it clear in obiter statements that the original application for an injunction should have been granted, as damages would not have been an adequate remedy for the Douglases, suggesting that judges, in future, may more readily grant interim injunctions in privacy cases.

Although the press have hailed the outcome as a victory for Hello! because OK! is not entitled to compensation (although OK! has said it intends to seek leave to appeal to the House of Lords), the judgment and, in particular these observations, may be worrying for the media. Developing the law of confidence may well seriously curtail the ability of the media to publish information about individuals.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

The original publication date for this article was 20/05/2005.