Theft of material

[Richard Simpson]

Can anyone comment on this.

The company I worked for as a freelance editor went into administration, having published and not paid for the final issue that I produced for them. They restarted next day under a slightly different name. This is an extract of a letter I sent the administrator, who was working as an advisor to the company before being appointed as administrator.

"I provided editorial material as detailed in the aforementioned invoice (‘the work’), that was and remains my copyright under the Copyright, Designs and Patents Act of 1988, to (‘the company’).
The company published the work thereby accepting my terms by performance. The company did not settle the invoice as submitted and agreed, thereby breaching the terms agreed. There was no written or verbal contract between myself and the company by which I gave my consent for the work to be circulated outside the terms of the 1988 Act, which therefore stands unchallenged. The terms of the transaction remain as agreed between the parties, being the strict understanding that consent to publish rests on the transfer of an agreed payment between the two parties. Failure by the company to conclude the agreement by issue of payment therefore results in the breach of copyright.
The company has made and circulated copies of the work in electronic and material form. Therefore, the case stands that the comapny, and its directors, managers, advisors and printers, are now in breach of the Copyright, Designs and Patents Act of 1988, (see Chapter 2, Parts 17 and 18), and are liable to criminal and civil action being taken against them for the offences that they have committed under the above Act.
All the works were submitted and published, and the invoice became due, prior to your appointment as Administrators of the company on January 20 of this year, and therefore the protections outlined in the Insolvency Act of 1986 do not apply.
I note that you state that the company had been trading at a loss for two years prior to your appointment. While this clearly raises the question as to whether the company was being knowingly traded whilst insolvent, therefore making the directors personally financially liable under law, it should be noted by yourselves that this claim is for breach of copyright law and not at present for breach of company law.
It is clear from your letter that you act “for and on behalf of the company.” You must therefore arrange full settlement of the aforementioned invoice with immediate effect to avoid me instigating action against you.

Yours sincerely



R Simpson

[CopyrightAid]

Sound fair enough - though you may need to spell it out to some people .

They should either pay you or stop using your work. If you don't receive payment of your invoice, it may be worth looking at going via the small claims court to obtain payment. Failing that, you really have no option but to take this to a solicitor with a view to either seeking an injunction or a claim to recover the cost of your work (plus additional legal costs).

[Richard Simpson]

I had a reply today:

It reads:

"XXX and I were appointed Joint Administrators of the Company on 20 January 3009. The business and assets were sold on 21 January and the company ceased trading. No orders were placed by the company during the administration period.
Any claim you may have will rank as an unsecured claim against the Company. I have noted your claim and shall pass details on to the Liquidator, should one be appointed.
I would draw your attention to the provisions of paragraph 43(6) of schedule B1 to the Insolvency Act 1986 which states that no legal process may be commenced or continued agains the company or its property except with the leave of the Court, which to my knowledge has not been obtained, or the consent of the Joint Administrators which, for the avoidance of doubt, is not given. I would ask you to note to your files and trust that, in the circumstances, no further action will be taken."



My comments are as follow:

Para 1)

This much is on the record already, and nothing in my letter suggested otherwise.

Para 2)
My claim is that, by not settling my invoice when due, the company not only breached its contract with me, but in doing so breached to Copyright Act, which is a criminal offence.

Para 3)
So, does the Insolvency Act really give the company and its directors immunity against a criminal prosecution? So, if I started a company called 'Firemakers' and went round burining peoples' houses down, could I avoid prosecution for arson by going into administration?

For clarity, the last edition of publication which I edited was circulated before the company went into admin. The phoenix company did not acquire the right to continue publication of my magazine, although they have an exclusive licence to buy it from the Administrators, should they wish to do so, between now and September.

Does anyone know of any case law where a company in administration, or its directors, have been prosecuted for breach of copyright?


I suspect the coming months will see many other companies doing what this one has done (going into admin, then starting up the next day). Should they be allowed to get away with it?

[CopyrightAid]

I suspect that they are trying to baffle you with red tape.

What they say is correct IF you had already transferred copyright to the other company. If you did not transfer copyright to company (i.e. transfer was to be completed on full payment), then they have no right to use your work (in the same way that a person buying a stolen car does not own the car).

I would have to suggest that you take this to a solicitor who will be able to look into the contract/agreement properly and ensure that you are correct before moving this matter forward - go down to your local CAB/Business Advice Centre and ask them to recommend someone locally.

[Richard Simpson]

Draft of my reply:


I again point out to you that the works submitted by myself were reproduced and published as the Winter 2008 issue of European Truck & Bus Technology, and the invoice for said work became due at a time when you state that you were working as an advisor to the company, but prior to your appointment as administrator.

By publishing the work and then failing to settle the invoice, you are in clear breach of the Copyright, Designs and Patents Act of 1988.

This is a criminal offence: specifically against Intellectual Property Rights. The case of Millar v Taylor (1796) establishes that copyright is a form of property. The case of LB (Plastics) Ltd v Swish Products Ltd (1979) states that: “The basis of copyright protection is that one man must not be able to appropriate the result of another’s labour.” A Court would be likely to take the view on the basis of the facts as stated above that this is what has happened here.

The Proceeds of Crime Act (2002) states that Intellectual Property Rights Offences are a Schedule 2 offence. A charge within this category identifies the offender as having what POCA describes as a ‘criminal lifestyle’. Under POCA, a court can therefore assume that all the offender’s assets have been obtained through his criminal lifestyle, and these assets can be targeted for confiscation.

To conspire with another party to breach the Intellectual Property Rights of others is even more serious. Scott v Metropolitan Police Commissioner (1979) establishes that agreements which might have the effect of injuring a third party’s proprietary rights in copyright material constitute the Offence of Conspiracy to Defraud. The penalties laid out by law for Conspiracy to Defraud are substantial. Section 12 (1) of the Criminal Justice Act of 1987 provides for a penalty of 14 years imprisonment and/or an unlimited fine.

I have been patient and polite in my dealings with you and your subordinates. I have once again had to explain to you the serious nature of the matter in which you are involved I now ask you for the third and final time to settle the invoice as submitted and agreed by return.

Comments anyone?