Hi copywrong and welcome to the forum.
I need to be clear about exactly what you mean by the words "we also showed the main photo" in order to get this image to appear on your site. If you only linked to both the image and the news article so that no copy of the image was hosted on your server, then you have not infringed copyright and are covered by UK and EU law thanks to a couple of important cases known as
Svensson and
GS Media. These were both decisions of the Court of Justice of the European Union (CJEU) while the UK was still a member of the EU and so its decisions form part of retained EU law as far as the UK is concened. In the first case,
Svensson, the CJEU said that provided that the work being linked to was not behind a paywall or otherwise protected, and was freely available online to the general public, no infringement occurred if a second party linked to that work, even where it might appear to an ordinary user of the internet as if the work formed part of the second party's own website.
GS Media expanded this doctrine by saying that the ruling in
Svensson applied even where the material being linked to was hosted on a site where it was not authorised by the copyright owner, unless the lack of authorisation was obvious from the circumstances. However this was only the case provided that the person intending to create the link was not doing so for commercial gain (as well as having no reason to suspect that the material was being hosted without authorisation). For websites where commercial gain was a signiicant purpose, it was then up to the individual who intended to create a link to satisfy themself that the material was being lawfully hosted by the first site. The court did not elaborate on what it meant by linking that “is carried out for profit" but this is generally accepted mean that any commercial website would be required to conduct the additional due diligence, whereas the operator of a private 'hobby' website or a poster on a blog or Instagram for intance, would generally not be required to carry out any extra verification.
However if you actually saved a copy of the image or even a thumbnail of it, on your own server, that may have constituted grounds for an infringement claim. Unfortunately, the solicitors you consulted were wrong about the fail dealing exception applying in your case.
Section 30 (2) of the Copyright Designs and Patents Act 1988 specifically excludes photographs from the exception for reporting current events:
(2) Fair dealing with a work (other than a photograph) for the purpose of reporting current events does not infringe any copyright in the work provided that (subject to subsection (3)) it is accompanied by a sufficient acknowledgement.
However, even if you had saved a copy of the image on your website, the copyright owner is still only entitled to damages equivalent to the loss he has suffered by you not obtaining the necessary licence. This is where the small print may matter. Although you have found the image is available through Alamy for a modest fee, you will need to check that the licence they (Alamy) are offering is for editorial use. It is possible that if it is a newsworthy image, the editorial rights to exploit the image may have been allocated to PA Media which will no doubt charge a higher licence fee, and to Alamy for commercial use, where the lower fee applies.
The situation where the copied image is just a thumbnail is a bit more complicated. There is no specific exemption from copyright for low quality or reduced size variants of images, such as thumbnails. There have been a number of cases (eg:
Perfect10 v Amazon) in the USA where their Fair Use doctrine has been held to allow the use of thumbnails as part of an indexing system, such as search engine results. It has also been argued, sometimes successfully, that use of thumbnails is
de minimis and poses no economic threat to the copyright owner's right to exploit his intellectual property. However it can also be argued that many photographs while worthy of copyright are themselves mere signposts towards something else (eg a photograph of the Mona Lisa or an Andy Warhol painting) and so similarly, a thumbnail may usurp the purpose of the image it is based on. Anyway, the fundamental point is that in UK law while it may be accepted practice on, say, YouTube etc to employ thumbnails without authorsiation, it is not without it risks.
