Chappell & Company Ltd v Nestlé Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JENKINS,LORD JUSTICE ORMEROD,LORD JUSTICE ROMER |
| Judgment Date | 19 March 1958 |
| Judgment citation (vLex) | [1958] EWCA Civ J0319-2 |
| Date | 19 March 1958 |
| Court | Court of Appeal |
[1958] EWCA Civ J0319-2
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Jenkins,
Lord Justice Romer,
Lord Justice Ormerod.
MR. GUY T. ALDOUS, Q. C., and MR. JOHN WHITFORD, instructed by Messrs, McKenna & Co., appeared for the Appellants The Nestle Company, Limited (Defendants).
MR. J.N. COPE, instructed by Messrs. Howe & Rake, appeared for the Appellants Hardy Record Manufacturing Company Limited (Defendants).
MR. K. E. SHELLEY, Q.C., and MR. P.J. STUART BEVAN, instruoted by Messrs. syrett & Co., appeared for the Respondents (Plaintiffs).
I will ask Lord justice Ormerod to deliver the first judgment in this case.
This is an appeal from an order of Mr. Juetice Upjohn made on the 14th November, 1957, that the defendant be restrained from infringing the copyright in a musical work entitled "Rockin' Shoes" or any other musical work of which the plaintiffs are the owners of the copyright or under which they have been granted an exclusive licence. The matter came before the learned Judge on a consent order that the motion originally launched by Chappell & Company Limited, the exclusive licensees, should be treated as the trial of the action, and the owners of the copyright, the Winneton Music Corporation, were allowed to be joined as plaintiffs. By consent of the parties the action was tried on the evidence filed on the motion. There were no pleadings and no issues arese on the facts. The sole question was, and is, the construction to be put upon the words "retail sale" in Section 8 of the Copyright Act, 1956.
It will be useful before setting out the facte to read the relevant parts of the section in question. section 8 of the Copyright Act, 1956, sub-section (1) reads as follows: "The copyright in a musical work is not infringed by a person (in this section referred to as 'the manufacturer') who makes a record of the work or of an adaptation thereof in the United Kingdom, if: (a) records of the work, or, as the case may be, of a similar adaptation of the work, have previously been made in, or imported into, the United Kingdom for the purposes of retail sale, and were so made or imported by, or with the licence of, the owner of the copyright in the work; (b) before making the record, the manufacturer gave to the owner of the copyright the prescribed notice of his intention to make it; (c) the manufacturer intends to sell the record by retail, or to supply it for the purpose of its being sold by retail by another person, or intends to use it for making other records which are to be so sold or supplied; and (d) in the case of a record which is sold by retail, the manufacturer pays to the owner of the copyright, in the presoribed manner and at the prescribed time, a royalty of an amount ascertained in accordance with the following provisions of this section".
Then sub-section (2) reads; "subject to the following provisions of this section, the royalty mentioned in paragraph (d) of the preceding sub-section shall be of an amount equal to six and one-quarter per cent of the ordinary retail selling price of the record, calculated in the prescribed manner: Provided that, if the amount so calculated includes a fraction of a farthing, that fraction shall be reokoned as one farthing, and if, apart from this proviso, the amount of the royalty would be less than three-farthings, the amount thereof shall be three-farthings".
From this it will be seen that the copyright in a musical work is not infringed by a person making a record thereof provided the conditions set out in the section are fulfilled. In this case, apart from a question on the notice, with which I will deal later, the only condition which it is claimed has not been fulfilled is the one set out in (1) (c), namely, that the manufacturers intended to sell the record by retail or to supply it for the purpose of being so sold. It is not disputed that the manufacturers knew how Nestle's intended to deal with the records, and supplied them for that purpose.
The facts are that the Hardy Record Manufacturing Company Limited, whom I shall refer to as the manufacturers, make records by a new process which is so inexpensive as to enable them to be sold wholesale for 4d. each. They are one-sided records made on a thin film of cellulose acetate, and are designed to be played at revolutions per minute. Nestle' s, the well known suppliers of milk chocolate and other similar products, entered into an agreement with the manufaoturers to purchase a quantity of recordings of a piece of dance music called "Rockin' shoes", the copyright of which was vested in the plaintiffs. They caused to be supplied to the manufacturers the necessary cards on which the records could be mounted. On the cards was printed, amongst other matters, a notice that this and other records could be obtained by sending to Nestle's for each record a postal order for 1s.6d., together with three wrappers for Nestle's 6d. milk chocolate bars. It was agreed by Nestle's that the object of selling records in this way was to advertise their milk chocolate. None-the-less, they stated, and it was not disputed, that the price of 1s.6d. enabled them to make a reasonable profit on the sale of a record. The learned Judge held that sales of records such as this were not retail sales within the meaning of the section, and granted an injunction to the plaintiffs.
Mr. Aldous on behalf of the appellants contended that the words in question in the statute should be given their normal meaning, and that "sale by retail" meant a sale to the consuming customer in contrast to a wholesale sale which is a sale to the trade. He further contended, as a matter of construction, that under the general law a work once published is free to the public. The Copyright Acts restrict that freedom and impose penalties for infringement, and should therefore be construed so as not to restrict the public more than necessary. He cited the case of Boosey v. Wright, reported in 1900, 1 Chancery Division, at page 122, which established that there waa no copyright in recorded music (in that case the perforated sheets for an "Aeolian" organ) and submitted that the section of the Copyright Act 1911 which restricted the freedom of performance of recorded music, and Section 8 of the Act of 1956 which replaced it, should not in consequence be given an interpretation more restrictive than was strictly necessary. He cited a number of authorities in support of this submission, including Walsh v. secretary of state for India, reported in 10 House of Lords Cases, at page 386, David v. da Silva, reported in 1934 Appeal Case B, at page 114 and, to show that the principle was applied more rigidly if penal consequences were involved, L.C.C. v. Aylesbury Dairy, reported in 1898, 1 Queen's Benoh Division, at page 109, and Rex v. Chapman, reported in 1931, 2 King's Benoh Division, at page 609.
It was further contended that even if, as the learned Judge appears to have held, a sale by retail meant a cash sale, that is, a sale where the consideration was wholly in money, the sale of a record under the conditions set out above was in fact a cash sale.
Mr. Shelley on behalf of the respondents contended in the first place that, as the effect of section 8 was to make an exception to the grant of the broad right of copyright, it should in consequence be construed narrowly. He further contended that a sale by retail meant a sale in the ordinary way of a trader's business, and that the section did not contemplate a transaction such as this, which was for the purpose of advertising Nestle's goods, and in respect of which other conditions had to be fulfilled by the purchaser in addition to the payment of the price. It was submitted that the use in section 8(2) of the term "ordinary retail selling price" as a basis for calculating the royalty to be paid necessarily implied that the sale "by retail" in sub-section 1 (c) should be an "ordinary" retail sale. The contrast contemplated in the section, submitted Mr. Shelley, was not the contrast between wholesale and retail, but between selling by retail on the one hand and methods of distribution which might have some of the indicia of a sale on the other, and the transaction in question oame within the latter classification.
Whichever way the transaction is regarded, it is not disputed that it was a sale. C.J. Dawson (Clapham) Limited v. H. & C. Dutfield, reported in 1936, 2 All England Reports, at page 232, and indeed a number of earlier authorities, establish beyond doubt the proposition that a transaction is none the less a sale because part of the consideration consists of the exchange of other goods.
There seems to be little authority as to the definition of "retail". In Turpin's case, reported in 1931 Appeal Cases, at page 470, at page 473 Lord Dunedin said: "It may be that in striotness the words 'retail trade or business' are only applied with complete accuracy to cases of selling goods; or it may be that they may properly be applied to all trades and business which deal directly with the 'consuming' customer". The question under consideration there was whether a parage and motor repair depot was an industrial hereditament within section 3(1) of The Rating and Valuation (Apportionment) Act 1928, but it would certainly appear that Lord Dunedin regarded dealing with the consuming customer as a necessary ingredient of "retail trade".
For my part, after a careful consideration of the words of the section and of Mr. Shelley's submissions, I can find no sufficient ground for the meaning which he seeks to attribute to the word "retail". The distinction appears to me to be between a sale to the trade on the one hand, and to the...
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