C.B.S. Songs Ltd v Amstrad Consumer Electronics Plc

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE NICHOLLS,SIR DENYS BUCKLEY,LORD JUSTICE FOX
Judgment Date25 February 1987
Judgment citation (vLex)[1987] EWCA Civ J0225-8
Docket Number87/0158 Ch. 1984 A. No. 5221

[1987] EWCA Civ J0225-8

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION INTERLOCUTORY LIST

(MR JUSTICE WHITFORD) (IN CHAMBERS)

Royal Courts of Justice,

Before:

Lord Justice Fox

Lord Justice Nicholls

and

Sir Denys Buckley

87/0158

Ch. 1984 C. No. 5567

Ch. 1984 A. No. 5221

(1) CBS Songs Limited (suing on its own behalf and on behalf of the other members of the Mechanical Rights Society Limited)
(2) Emi Records Limited and
(3) Chrysalis Records Limited (both suing on their own behalf and on behalf of the other members of the British Phonographic Industry Limited)
(Plaintiffs/Respondents)
and
(1) Amstrad Consumer Electronics PLC
(1st Defendants/Appellants)
(2) Dixons Limited
(2nd Defendants)

MR G.W. HOBBS (instructed by Herbert Smith & Co.) appeared on behalf of the Appellants (1st Defendants).

MR M. FYSH (instructed by Wilkinson Kimbers) appeared on behalf of the 2nd Defendants.

MR J. MUNBY (instructed by Hamlin Slowe) appeared on behalf of the Respondents (Plaintiffs).

1

LORD JUSTICE NICHOLLS
2

The Copyright Act, 1956, creates rights of property and for their protection confers civil remedies and imposes criminal liabilities. The question arising on this appeal is whether copyright owners who, in respect of the acts complained of, cannot bring themselves within the scope of any of the civil remedies expressly conferred by the statute, nonetheless have a cause of action in equity for the grant of an injunction to restrain defendants from carrying out acts which constitute criminal offences and which damage their copyrights (this equitable jurisdiction being supplemented by the jurisdiction under Lord Cairns' Act to award damages in addition to or in lieu of an injunction).

3

Before the Court are two appeals and a cross-appeal from an order of Whitford J. of 8th May 1986. They represent the latest stage in what the Judge aptly described as the battle between Amstrad, the well-known manufacturer of electronics equipment, and those concerned to protect the interests of manufacturers and suppliers of tapes, with Dixons, the well-known retailer of electronics equipment reluctantly tied, as its Counsel put it, to Amstrad's coat-tails.

4

In 1984 Amstrad Consumer Electronics plc, to give Amstrad its full name, introduced onto the market three new models of tape-to-tape recording machines, designated TS39, TS87 and SM104. A feature of these models is that they have two cassette decks from which it is possible to reproduce from one tape directly onto another, at twice the normal playback speed. The machines, and this facility, were advertised on television and in the press in terms likely to encourage home copying of favourite tapes. Amstrad sells only to the trade, but in the advertisements Dixons Limitedwas named as one of the well-known retailers from whom the Amstrad tapedecks could be purchased.

5

British Phonographic Industry Limited ("BPI") is a trade association, whose members comprise record companies making most of the lawful records sold in this country. BPI wrote to Amstrad, and also to its principal trade outlets, asserting that by its advertisements Amstrad was encouraging the public to break the law, by inviting them to acquire machines with the double-headed facility for the purpose of copying from tapes containing copyright works.

6

The upshot was two actions, in the course of which considerable procedural complications, not to say convolutions, have come about. Shorn of all matters not essential to the present appeals, the history is this. The first action, which I shall call "the declaratory action", was brought by Amstrad against BPI. The writ was issued on 30th October 1984. The only substantive relief claimed was a declaration to the effect that by advertising and offering for sale and selling six specified models of audio systems, including the three I have mentioned, Amstrad had not acted unlawfully "as alleged in a (letter from BPI's solicitors dated 26th October 1984) or at all".

7

On 16th November 1984 the writ in the present action, which I shall call "the second action", was issued by CBS Songs limited, EMI Records Limited and Chrysalis Records Limited. The first plaintiff was expressed to be suing on behalf of itself and of the other members of the Mechanical Rights Society Limited ("MRS"), and the second and third plaintiffs were expressed to be suing on their behalf and on behalf of all the other members of BPI. Amstrad is the first defendant and Dixons the second defendant.

8

In the Statement of Claim in the second action, it is alleged that nearly all sound recordings available in this country are copyright and that nearly all the copyrights, or the exclusive licences under such copyrights, to reproduce sound recordings are owned by members of BPI. Also, that nearly all the mechanical rights in musical works in this country are owned by or exclusively licensed to the members of the MRS, who comprise nearly all the publishers of music in this country. Having referred to the three new Amstrad models and their introduction onto the market, the Statement of Claim continues with an allegation that the primary purpose for which that equipment was designed was that the public would buy and use it to make copies of commercially available pre-recorded tapes and gramophone discs. It is also alleged that machines purchased will be so used, in infringement of the copyrights in the tapes and recordings, and to the damage of the plaintiffs and those whom they represent, and that in practice, for reasons which are self-evident, the plaintiffs and those whom they represent are unable to stop such use or obtain legal redress for such infringements by individual members of the public.

9

The various alleged causes of action put forward are these: that Amstrad and Dixons have incited others to infringe copyright; that they have authorised others to infringe copyright; that they are liable, as accessories before the event or as joint tortfeasors, to the infringement of the plaintiffs' copyright; and that the equipment is being supplied in breach of a common law duty of care owed to copyright owners, and also in breach of an equitable duty of care not to allow goods likely to be used for infringement to pass out of Amstrad's and Dixons' hands. The principal relief claimed is an injunction restraining the defendants from parting with possession of the three models complained of "without taking such precautions as are necessary reasonably to ensure that copyrights in sound recordings or musical works owned or exclusively licensed to the plaintiffs or a member of (BPI) or (MRS) are not infringed by the use of such machines". The plaintiffs also claim an inquiry as to damages and an account of profits.

10

In a schedule to the defence served by BPI in the declaratory action, the Statement of Claim in the second action was set out in extenso, and in its defence BPI placed reliance on the matters set out in that Statement of Claim as justification for the accusations made by BPI in the letters to Amstrad and the trade to the effect that Amstrad was acting wrongfully in its advertising and sale of the new equipment. In this way the causes of action set up in the second action became issues also in the declaratory action.

11

The declaratory action came to trial comparatively speedily. In March 1985, shortly before the trial of the declaratory action was due to take place, proceedings in the second action were stayed until further order. In consequence, summonses which by then had been issued by Amstrad and Dixons for the striking out of the second action or, alternatively, to prevent the plaintiffs from suing in a representative capacity, stood adjourned.

12

The trial of the declaratory action took place in June 1985. Whitford J. found in favour of BPI and dismissed the action. On 24th October 1985 an appeal by Amstrad to this Court was dismissed. The judgments of Whitford J. and of the Court of Appeal are reported at (1986) FSR, 159. All three members of this Court, comprising Lawton, Slade and Glidewell L.JJ., decided that none of the issues raised in the Statement of Claim in the second action and relied on by BPI in its defence in the declaratory action gave rise to any civil liability on the part of Amstrad. However, during the hearing a further point had been raised, namely, that the putting out by Amstrad of the advertising material complained of might be capable of amounting to an incitement to commit the crime created by Section 21 (3) of the Copyright Act 1956. Section 21 (3) provides:

13

"Any person who, at a time when copyright subsists in a work, makes or has in his possession a plate, knowing that it is to be used for making infringing copies of the work, shall be guilty of an offence under this subsection".

14

The suggestion was that a tape-recording is capable of being a "plate" within the definition in Section 18 (3) and that once a person who is in possession of a tape-recording consciously forms the intent to use it for the purpose of making an infringing copy, he is guilty of an offence under Section 21 (3). The Court decided that it was neither necessary nor proper to adjudge whether Amstrad had committed the offence of inciting persons to commit the Section 21 (3) offence, but in its discretion refused to make the declaration sought by Amstrad.

15

This outcome placed BPI in the unsatisfactory position that, having obtained from the Court the order it sought (viz., the dismissal of the appeal), it was unable to seek to take the matter further to the House of Lords, even though on all the substantive issues canvassed and decided in the action BPI had failed. BPI was...

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