Whether copyright subsists in works created by computers may be one of the trickiest IP issues of our time. In this decision, the Court of Appeal has (once again) indicated a preference for continuing to align UK copyright law with EU copyright law, with significant implications for the protection of works of applied art and works generated by AI.

At first glance the recent UK Court of Appeal judgment in THJ Systems Ltd v Sheridan [2023] EWCA Civ 1354 addresses the relatively uncontroversial issue of the standard of originality that UK Courts should apply when considering the protection of artistic works, in particular in relation to graphic user interfaces ('GUIs'). Indeed, even Lord Justice Arnold commences his judgment with the wistful observation that "It is unfortunate that the parties have been unable to resolve their differences, because it seems likely that the costs of the appeals will have greatly exceeded what is at stake." But despite that unassuming introduction, the case itself may be one of the most interesting UK copyright decisions of 2023, filled with intriguing hints toward answers to some of copyright law's stickiest unresolved questions. 

The case

The dispute between the parties concerned a breakdown of a business relationship, and whether a computer software developer, Mr Mitchell, had validly expelled the defendant, Mr Sheridan, from membership of a partnership they had formed. Both Mr Mitchell and Mr Sheridan had an interest in options trading, and Mr Sheridan operated a company which delivered training for members of the public interested in buying and selling options via brokers. Mr Mitchell developed software named OptionNET Explorer, which displayed financial information about the performance of options in the market alongside graphic representations of option risk profiles. The parties formed a partnership, which licenced the OptionNet software to Mr Sheridan's training company for use in his teaching and seminars, an imposed an obligation for Mr Sheridan to promote the OptionNet software in those presentations. The relationship between the parties deteriorated, and Mr Mitchell terminated the licence for Mr Sheridan to use the OptionNet software. One of the claims was that Mr Sheridan's company continued to use the software in teaching and seminars after the licence was terminated, and in doing so infringed Mr Mitchell's copyright in the images of option risk and price charts generated by the software. A screenshot of one of these charts is set out below:

At first instance, the High Court held that the GUI and screenshots of risk and price charts generated by the software were original, protected by copyright and that Mr Mitchell was their author as he had exercised "sufficient skill and labour for the result to amount to an artistic work". The Court however held there was insufficient evidence to show that Mr Sheridan's company had infringed that copyright by live streaming the images as part of the online teaching seminars. 

The decision in the Court of Appeal

Two issues from the original decision were appealed to the Court of Appeal:

1. The defendants appealed on the issue of whether the GUI and screenshots of risk and price charts generated by the software were artistic works in which copyright subsists and whether Mr Mitchell was the author; and
2. The claimants cross-appealed on the dismissal of their claim for copyright infringement.

The Court of Appeal held that the High Court did not apply the correct legal test to determine whether the GUI and screenshots were original artistic works within the meaning of section 4(1)(a) of the Copyright, Designs and Patents Act 1988. Instead of assessing "sufficient skill and labour", the Court should have assessed the originality using the more demanding test of originality laid down by the Court of Justice of the EU pre-Brexit, being whether the works were "the author's own intellectual creation". In re-applying this correct test, the Court of Appeal held that the component parts of the GUI were "laid out with some care", and that Mr Mitchell had "made choices as to what to put where, including such matters as which commands to put into the ribbon and in what order. He also selected what fonts and colours to use". The Court of Appeal held that while the degree of visual creativity was low and that therefore the scope of protection would be narrower, there was sufficient originality for the images produced by the software to be protected as original artistic works. The Court of Appeal also held that the High Court was wrong to dismiss Mr Mitchell's claim for copyright infringement based on a lengthy review of the procedural history of the litigation and admissions made by the defendants during the litigation. The Court therefore ordered an inquiry into the damages or loss of profits suffered by the claimant due to the infringement.

Why is this decision significant?

While the outcome of the Court of Appeal decision is unsurprising, the judgment provides interesting insights into how the Court might in future deal with some of the uncertain issues in UK copyright law.

1.  Implications for post-Brexit divergence between the EU and UK on copyright originality

One of the key uncertainties has been the extent to which the UK courts might begin to diverge from EU copyright law principles following Brexit and the Retained EU Law (Revocation and Reform) Act, which comes into effect from the start of 2024. There is an element of reading the tea leaves in drawing hints from the Court of Appeal. 

This decision can be interpreted as a signal that the Court of Appeal does not have an appetite to depart from the Court of Justice case law elaborating on the standard of originality. The case is therefore consistent with the earlier decision of Tunein Inc v Warner Music UK Ltd & Anor [2021] EWCA Civ 441, where the Court of Appeal chose not to depart from Court of Justice copyright case law on hyperlinking and communication to the public. In contrast, in the recently decided Court of Appeal trade mark decision Industrial Cleaning Equipment (Southampton) Ltd v Intelligent Cleaning Equipment Holdings Co Ltd [2023] EWCA Civ 1451, the UK Court did depart from Court of Justice authority. 

2.  Implications for the protection of designs under copyright law

Related to the issue of copyright originality is the extent to which the configuration and appearance of products can obtain dual protection under designs law and under copyright law. As we have discussed previously, pre-Brexit EU Court of Justice case law relating to designs for clothing and folding bicycles has made the possibility of dual protection arguable. The discussion of copyright originality in this Court of Appeal decision, confirming that originality does not require artistic merit, may implicitly confirm that the UK system of closed categories for the protection of copyright works is inconsistent with pre-Brexit EU law. There are a number of cases pending (including in the WaterRower litigation, where judgment following the trial in the summer is due to be handed down soon) where the UK courts will get a chance to grapple with this uncertainty.  

2.  Implications for the protection of computer-generated works in the UK, including generative AI outputs

As discussed in our AI 101 series of blogposts, UK copyright law includes an unusual (in international terms) and rarely-litigated provision at section 9(3) of the Copyright, Designs and Patents Act 1988 which provides that "In the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken". This provision has gained attention following the mass release of generative AI models that can produce content at scale, typically in response to text prompts, with some believing it was a moment of prescience on the part of Parliament that enables the outputs of generative AI to have copyright protection.

The Act goes on to define computer-generated work as a work "generated by computer in circumstances such that there is no human author of the work". This is a troublesome definition, as copyright law requires that the 'author' (being the person who 'created' the work) to have made free and creative choices so as to stamp the work created with their personal touch. During the discussion in the House of Lords in 1988 which discussed this provision, Lord Beaverbrook commented that the "the person by whom the arrangements necessary for the creation of a computer-generated work are undertaken will not himself have made any personal, creative effort", and for that reason would not be entitled to moral rights protection. 

Section 9(3) was relied upon by the parties in this case, with the claimants arguing that Mr Mitchell should be taken to be the author of the GUI screenshots as he was the author of the software, and therefore made the arrangements necessary for the screenshots to be produced. In contrast, the defendant's denied that copyright existed in the GUI, but argued that if it did, the person by whom the arrangements necessary for the creation of the screenshots was the software user, through their action of "selecting which option to depict and the time period over which to display it" and that the user, rather than Mr Mitchell should be deemed the author. 

Either Parliament (legislating decades before the EU courts enunciated the requirements for copyright protection) was intending that any work, regardless of its originality, would be protected by copyright (which is one reading of Lord Beaverbrook's statement in Parliament), or it caters only for the protection of works where the 'person' that created the works is a computer but that the computer is expressing the free and creative choices (etc.) of a human. 

While the Court of Appeal did not directly focus on the question of who made the "arrangements necessary for the creation of the work", the Court's reliance on the originality of the screenshots and the requirement for an author to be "able to express their creative abilities in the production of the work by making free and creative choices so as to stamp the work created with their personal touch" suggests that section 9(3) only comes into play where a computer creates a work and that work reflects the personality of a human. This seems to make sense, and is likely preferable to the idea that computer-generated works would be protected by copyright under a lower threshold than works created by humans.