Crosstown Music Co 1, LLC v Rive Droite Music Ltd and Others

JurisdictionEngland & Wales
JudgeLord Justice Mummery,Mr Justice Morgan,Sir Paul Kennedy
Judgment Date02 November 2010
Neutral Citation[2010] EWCA Civ 1222
Docket NumberCase No: A3/2009/0811
CourtCourt of Appeal (Civil Division)
Date02 November 2010

[2010] EWCA Civ 1222

IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Hon Mr Justice Mann

Before: Lord Justice Mummery

Mr Justice Morgan

and

Sir Paul Kennedy

Case No: A3/2009/0811

HC07C01296

Between
Crosstown Music Company 1,LLC
Appellant
and
(1) Rive Droite Music Limited
Respondent
(2) Mark Taylor
(3) Paul Barry

Mr Nigel Tozzi Qc And Mr Andrew Hunter (Instructed By Messrs Russells) For The Appellant

Mr Ian Mill Qc And Mr Edmund Cullen (Instructed By Messrs Forbes Anderson Free) For The Respondents

Hearing dates: 27 th & 28 th May 2010

Approved Judgment

Lord Justice Mummery

Lord Justice Mummery:

The main issues

1

This litigation is about the ownership of the United Kingdom copyrights and the foreign copyrights in 119 songs. The claimant is an American music publishing company seeking a declaration of title. It acquired the copyrights in 2006, not direct from the defendant songwriters, but by purchase from the defendant publishing company, to which the writers had initially assigned their copyrights under a succession of songwriting agreements between 1994 and 1998. The claimant is successor to the original publishing company under the agreements.

2

Under those agreements the writers assigned, for limited periods, their rights in songs written or co-written by them. The consideration included a nominal price of £1 and payment of advance royalties. The writers were entitled to bi-annual accounts and to payment of a share of the profits generated by exploitation of the songs. The songwriting agreements were assignable. The agreements were expressed to be subject to English law. They conferred exclusive jurisdiction on the English courts. The contractual term at the heart of this case made provision for the automatic reverter of the copyrights to the writers in the event of material breaches of the relevant agreement that had been notified, but not remedied. Publishing agreements commonly include a term of this kind: see Laddie, Prescott & Vitoria:The Modern Law of Copyright (3rd ed) paras 24–45 and 24–46; and The Encyclopaedia of Forms & Precedents (5th Ed 2010 Reissue) Vol 21(2) Form 18 clause 1.2.1, Form 201 clause 9.3.1 and Form 209 clause 11.2.1.

3

The trial judge (Mann J) made an order on 25 March 2009 dismissing the claims against the songwriters and declaring that, as a result of unremedied material breaches of the agreements and the automatic operation of the reverter clause, the copyrights in the songs scheduled to the court order reverted to the writers on the respective dates specified, being the dates on which the relevant notices of the breaches of the songwriting agreements expired (22 May 2007 in the case of Mark Taylor and 6 June 2007 in the case of Paul Barry.) In his judgment [2009] EWHC 600 (Ch) and in the order containing the declaration the judge drew no distinction between the United Kingdom copyrights and the foreign copyrights.

4

This appeal, for which the judge granted limited permission, is on two principal points of law.

5

The first is the interpretation of s90(2) of the Copyright, Designs and Patents Act 1988 (the 1988 Act) which governs the transmissibility of rights under the 1988 Act. In support of the appeal it is argued that the automatic reverter clause in the songwriting agreements was legally ineffective under s90(2), being contrary to the common law principles of personal property and outside the scope of dealings permitted by the legislation, which states that copyright is transmissible as personal or movable property and that

“90 (2) An assignment or other transmission of copyright may be partial, that is limited so as to apply—

(b) to part, but not the whole, of the period for which copyright is to subsist..”

6

In brief, the interpretation of the section rejected by Mann J and served up again in this court is that, to be within s90(2), an assignment must at its outset be for a known, fixed and certain period. If that is correct, it follows that it is legally impossible to have a valid and effective automatic reverter of rights contingent on the occurrence of an uncertain future event, such as an unremedied breach of contract. This argument leads to the conclusions that (a) the reverter clause in the song writing agreements can only take effect as a contractual obligation to re-assign the copyright in the events specified and (b) the claimant takes free of that contractual obligation, as it was not a party to the songwriting agreements and was not subject to any relevant equities.

7

The second legal point is jurisdictional. To what extent are disputes relating to foreign copyright justiciable in the English courts? The most important of the authorities cited is the recent decision of this court in Lucasfilm Ltd v. Ainsworth 2009 EWCA Civ 1328; [2010] 3 WLR 333 ( Lucasfilm). That case was decided by Mann J at first instance and it was considered by him in the judgment under appeal, but the appeal in Lucasfilm was not heard until after Mann J gave judgment in this case.

8

The Court of Appeal reviewed all the authorities and clarified the law on the jurisdiction of the English courts to hear and determine intellectual property cases. It was held that, unless the copyright in dispute is that created by the law of a Member State of the Brussels Convention, the English courts have no jurisdiction to determine a claim for the infringement of foreign copyright. Rather surprisingly it is the claimant who has taken the point of non-justiciability in its own proceedings for a declaration by the English courts of its title to the disputed rights without any territorial limit.

9

Along with those two principal points, but still within the scope of the limited permission to appeal granted by Mann J, is a range of issues turning on the application of “election and related principles” (i.e. waiver, acquiescence and estoppel) to the facts found by the judge. They are relied on to support the proposition that the Writers elected not to claim or to abandon their rights to a reverter or a re-assignment of the copyrights, or are otherwise precluded from asserting their rights.

10

The judge refused permission to appeal against his factual findings that there were material breaches of the songwriting agreements.

Facts and proceedings in outline

11

The claimant is Crosstown Music Company 1. LLC (Crosstown), a company incorporated under the laws of the State of California. It acquired the rights in the disputed songs under the terms of an assignment dated 19 July 2006 (the Assignment). Crosstown paid about US$10m for the copyrights and the rights under the songwriting agreements to the first defendant, Rive Droite (RD), a music publishing company. RD was put into administration in October 2007 owing very large sums to the songwriters. Although RD was joined as a defendant to Crosstown's proceedings, it has taken no active part in them, or in this appeal. From at least October 2006 onwards Crosstown began actively to exploit the songs, to collect income in respect of them and to render statements of account. The songwriters have accepted payment of royalties from Crosstown, while asserting the effectiveness of the automatic reverter of the copyrights to them.

12

The songs in question were written and composed by the second and third defendants, Mr Mark Taylor and Mr Paul Barry (the Writers) in the 1990s. They are the active respondents to the appeal. The songs were written under a succession of songwriting agreements in similar terms entered into by them with RD between 1994 and 1998. There were 6 agreements in all, consisting of three agreements in the case of each Writer. The Writers assigned to RD the copyright in the relevant songs “throughout the universe” for an initial 2 year period, followed by a 25 year “Retention Period”, after which the rights reverted to the respective writer “without further formality” (clause 4(b)).

13

There was also a provision for the prior automatic reversion of the copyright to the Writers in circumstances of a material and unremedied breach of the relevant agreement notified by the Writers. The reverter provision became a live issue as a result of ongoing disputes between the Writers and RD from about 2000. The disputes were about late accounting and about the shortcomings in the accounts revealed by successive audits. They affected the amount of the payments due to the Writers. There was earlier litigation between the Writers and RD in the Chancery Division and in this court arising out of audit reports by the royalty auditors, RCO. In those earlier proceedings the Writers made no claim to the reversion of copyrights under clause 18(a) set out below. Notices under the agreements were served on RD in December 2002, February 2003 and May 2006 alleging under-accounting. In September 2006 a further audit was carried out, this time by a Mr Bevis, who identified failures by RD to account to the Writers.

14

The crucial term in the songwriting agreements provides that—

“18. Breach or liquidation

(a) In the event that the Publisher [RD] shall be in material breach of the terms of this Agreement and shall fail to take all reasonable action to remedy such breach within [45 days in the case of Mr Taylor] [60 days in the case of Mr Barry] of written notification in reasonable detail of such breach from the Writer all rights assigned to the Publisher hereunder shall forthwith revert to the Writer.

(b) In the event that the Publisher shall go into liquidation, other than for the purposes of re-organisation, then all rights assigned to the Publisher hereunder shall, to the extent permissible under law, revert to the Writer on the day immediately preceding such event.”

15

On 4 April 2007 the Writers, relying on clause 18(a) of the...

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2 firm's commentaries
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1 books & journal articles
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