Confetti Records (A Firm) and Others v Warner Music UK Ltd (trading as East West Records)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Lewison,Mr Justice Lewison |
| Judgment Date | 05 June 2003 |
| Neutral Citation | [2003] EWHC 1274 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 02 1565 |
| Date | 05 June 2003 |
[2003] EWHC 1274 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Lewison
Case No: HC 02 1565
Mr. Graham Shipley (instructed by Silverman Sherliker) for the Claimants
Mr. Robert Howe (instructed by Russells) for the Defendant
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Hearing dates: 14 th,15 th,16 th,19 th,22 nd May 2003
Approved Judgment
The facts
In about November 1995 the Third Claimant, Mr Andrew Alcee, composed the track "Burnin". The First Claimant, Confetti Records ("Confetti"), paid him £300 for it. In exchange Confetti was to have the recording and complete ownership of the track, including all copyright and rights to exploit the recording. A formal assignment of copyright was made on 12 June 2002.
Confetti is a small record label which specialises in a variant of garage music known as UK Garage or Speed Garage music. Its proprietors include Ms Maria Joachim and Mr Richard Pascal, known as John Jo. Before she worked for Confetti, Ms Joachim was an estate agent.
Mr Pascal considered that "Burnin" would be the kind of track that Ant'ill Mob should be associated with. Ant'ill Mob is what he described as a "concept group". The significance of this is that Ant'ill Mob do not have identifiable members in the traditional sense of a group. They are promoted and known by their name, sound and image, and when required to perform, Confetti engage session musicians to form the group.
The original version of "Burnin" consists of an insistent instrumental beat accompanied by the vocal repetition of the word "burning" or variants of it.
In October 2000 Confetti decided to commission a further mix of "Burnin". This was produced by Jeff Allen, a production engineer. Mr Alcee made two further mixes of "Burnin" in August 1991 and November 2001. Each mix was aimed at a slightly different segment of the market.
"Burnin" proved to be very popular. In November 2001 it was number 1 in the official UK Garage top 10 in DJ magazine, and it was number 1 in various record shops around the country. Confetti received a number of requests to licence the track for inclusion in compilation albums. The requests came from, among others, Sony, Warner and the Ministry of Sound.
The Heartless Crew are a leading act within the UK Garage scene. They were formed in North London about ten years ago. There are three of them: DJ Fonti, and MCs Mighty Mo and Bushkin. Typically the band will either write and record their own backing track or they will use recordings made by other artists as a backing track. The band will then mix these tracks together. DJ Fonti has a particular style of mixing known as "Crisp Biscuit". The final part of the process is where the band rap or MC over the backing tracks to create a new work. The rapping is performed by the two MCs, while the mixing is performed by the DJ.
Mr Richard Thomas, the A & R director of East West Records, "discovered" The Heartless Crew and signed them up to East West Records in November 2001. East West Records is a trading division of Warner Music UK Ltd, the Defendant.
In late November 2001, on the initiative of The Heartless Crew, East West decided to undertake a mix compilation album as their first release. It was to be called "Crisp Biscuit".
Mr Thomas knew both the work of the Ant'ill Mob and also Confetti. He telephoned Mr Pascal to ask for Confetti's permission to include "Burnin" in the album. It was the Heartless Crew themselves who proposed including "Burnin" on the album. Originally it was proposed that another track by the Ant'ill Mob, called "You Should Have Known", would also be included, but this was dropped.
Ms Joachim said that Mr Thomas' enthusiasm for the tracks by the Ant'ill Mob made it clear that he saw the inclusion of the Ant'ill Mob as crucial to the success of the album. Mr Thomas, on the other hand, painted a different picture. He said that Mr Pascal was so keen for the tracks to be used on the album that he offered to licence them for free. He said that Mr Pascal told him that "Burnin" was being released as a single in January 2002 on the Confetti label. In exchange for the free licence, he wanted an undertaking from East West to include an excerpt from the recording in the TV advertising for the album. Mr Thomas told him that he would rather simply pay him for the use of the record, as it would make matters less complicated. He said that Mr Pascal agreed and an advance of £500 per track was agreed. Ms Joachim's version was not put to Mr Thomas in cross-examination. Mr Thomas' version was not put in full to Mr Pascal in cross-examination either. But Mr Pascal agreed in cross-examination that when first approached by Mr Thomas he was "very keen" that the track should be licensed to Warner. In general, I prefer Mr Thomas' evidence on this point to Ms Joachim's. However, in view of the fact that, as I shall explain, the advance was negotiated up from £500 to £1,500, I think it unlikely that Mr Pascal offered to licence the track for free.
The paperwork associated with the licensing of recordings was handled by Ms Katie Ferries, a business affairs assistant at East West. She has no legal training. Amongst her jobs was the preparation of "fax back" heads of agreement or deal terms to send to the relevant record companies. She used standard templates for this. There were two different templates. One was Warner UK's standard deal terms used for licensing recordings from the major record labels. The other was used for licensing recordings from independent record companies such as Confetti. Ms Conacher, Ms Ferries' superior, explained that the templates were not electronically stored word processing templates, but were "somewhere between a precedent and just a suggested form of doing a document".
On 11 December 2001 Ms Ferries sent "fax back" heads of terms to Confetti, marked for the attention of John Joe. The letter begins:
"Re: "CRISP BISCUIT" – SUBJECT TO CONTRACT
We are planning to release an album entitled "Crisp Biscuit" which will be mixed by The Heartless Crew. We would like to licence the following tracks on a non exclusive basis for the above album. Proposed deal terms are as follows:"
The letter then set out proposals about the tracks, the term of the licence, the territories it was to cover, the royalty, the dealer price, the advance, the number of tracks, the release date, the estimated sales and so on. Most of these matters, including the heading "subject to contract", were part of the standard template. Ms Ferries said that she did not know what the phrase "subject to contract" meant.
The letter also said that the proposed track listing was attached. Unfortunately it was not, and so on 13 December Ms Ferries sent the fax again.
Mr Thomas and Mr Pascal spoke again. It was agreed between them that only one track would be licensed, namely "Burnin", and that the amount of the advance would be £1,500. By mistake he appears to have told Ms Ferries that the agreed advance was £1,000, and this was the figure that appeared in the fax she sent on 17 December. Mr Pascal immediately queried the figure. Ms Ferries agreed to check with Mr Thomas, and a day or two later Mr Thomas confirmed that he had made a mistake and that the agreed advance was £1,500.
On 19 December 2001 Ms Ferries sent a fax to Mr Pascal containing revised deal terms. Since it is at the heart of the case I must set it out in full.
Dear John
Re: "CRISP BISCUIT" –SUBJECT TO CONTRACT
Further to our telephone conversation on Monday 17 th December I am pleased to enclose revised deal terms in relation to licensing the following tracks on a non-exclusive basis for the above album:
TRACK:
"Burnin" by Anthill Mob
TERM:
3 years
TERRITORY ROYALTY:
UK & Ireland 19% of net published dealer price (less sales tax & withholding tax if applicable)
DEALER PRICE:
CD £10.25/MC £7.25
ADVANCE:
£1,500
NO. OF TRACKS
40 (tbc)
RELEASE DATE:
March 2002 (tbc)
ESTIMATED SALES:
50,000
ACCOUNTING:
Half yearly (90 days)
CLUB/MAIL ORDER:
50% on the basis we are accounted to
LABEL COPY:
Please provide
CONTRACTING PARTY:
Please provide
Please confirm that the tracks do not contain any uncleared samples.
I would be grateful if you would let me know as soon as possible if you are able to clear these tracks for inclusion.
Please send a copy of the tracks on CD or DAT and also on vinyl as soon as possible.
N.B. If you do not control rights in all the Territories requested please advise as soon as possible.
With best regards."
At the foot of the letter was the legend "Read and Agreed" and a space for signature on behalf of Confetti Records.
Ms Joachim and Mr Pascal said that they sent faxed back a signed version of the terms before Christmas. The signed version bears the date "19–12–01" opposite Mr Pascal's signature on behalf of Confetti. If it was sent it did not arrive, because Ms Ferries chased Mr Pascal on 8 January 2002, and shortly thereafter, Mr Pascal returned a signed version of the fax. No transmission report for any fax was produced, and no telephone bill for the pre-Christmas period was produced either. I find that the signed deal memo was not returned before Christmas.
On about 15 January 2002, some days after the return of the signed deal memo, Ms Ferries received from Confetti the label copy for "Burnin". This sets out...
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