CSC Media Group Ltd v Video Performance Ltd (CT/94/05)
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE FLOYD,Mr Justice Floyd |
| Judgment Date | 10 August 2010 |
| Neutral Citation | [2010] EWHC 2094 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2009/APP/0563 |
| Date | 10 August 2010 |
[2010] EWHC 2094 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE COPYRIGHT TRIBUNAL
Before: The Hon Mr Justice Floyd
Case No: CH/2009/APP/0563
CT/94/05
In the Matter of a Reference Under Section 126
Of the Copyright Designs and Patents Act 1988
Ian Mill QC and Tom Weisselberg (instructed by Olswang LLP) for the Licensing Body/Appellant
Edmund Cullen (instructed by Davenport Lyons) for the Respondent
Hearing dates: July 1 st and 2 nd 2010
Approved Judgment
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.
Mr Justice Floyd:
Introduction
This is an appeal by Video Performance Limited (“VPL”), from a decision of the Copyright Tribunal (His Honour Judge Fysh QC SC, Rear-Admiral James Carine and Colonel Roderick Arnold) dated 7 September 2009 in which the Tribunal resolved a number of issues about the terms on which the Respondent CSC Media Group Limited (“CSC”) should be licensed to use VPL's music video repertoire in the operation of CSC's broadcast television music channels.
VPL is a licensing body within the meaning of section 126 of the Copyright Designs and Patents Act 1988 (“the CDPA”). Its members are record companies and other persons who are owners or exclusive licensees of the rights to broadcast and perform certain music videos in public and the right which permits the copying of those videos for the purpose of subsequent broadcast or public performance. VPL licenses broadcasts of music videos on behalf of its members (and copying for the purpose of such broadcasting). VPL seek to grant licences to their repertoire in return for a royalty calculated by reference to the gross revenue that will be received by a licensee in respect of the broadcast of the television channel, pro-rated by reference to the channel's usage of VPL Repertoire, but have also granted licences on a fixed fee basis. Their licensees are generally broadcasters of 'music television channels' (i.e. television channels where a substantial proportion of the broadcasting output comprises music videos).
CSC was incorporated by Mr Keith Macmillan in May 2002. It was originally known as Chart Show Channels Ltd and carried on business as a broadcaster of music television channels. CSC initially operated three music television channels but from 2004 it additionally managed three music television channels for BSkyB (Scuzz, Flaunt and Bliss). The BSkyB channels were then purchased by CSC in 2006. CSC now operates seven music television channels and a similar number of non-music channels.
CSC has effectively been licensed by VPL since September 2002 under the terms of a written licence which provided for the payment to VPL of a pro-rated fee based on the headline rate of 20% of gross revenue (“the CSC 2003 Licence”). The CSC 2003 Licence was never signed, and it expired on 17 th September 2005. Thereafter CSC has been licensed under the terms of a letter (“the Extension Letter”) whose purpose was to give the parties three months in which to negotiate new terms. Following the making of the application to the Copyright Tribunal under section 126 of the CDPA (see below), CSC have been licensed by virtue of section 126(3).
Before the Tribunal, CSC's position was that the royalty rate should be 8% of gross revenue, pro-rated for usage, whilst VPL's position was that it should be 20% (also pro-rated). The Tribunal fixed a rate of 12.5%, pro-rated as well. The royalty rate is the target of the principal ground of appeal. The Tribunal, by its order, backdated the commencement of the licence to 2006.
The parties were agreed on the way in which the pro-rating should be done, which was based on a formula which differed from that contained in CSC's 2003 licence. However at the end of its decision, the Tribunal expressed dissatisfaction with the formula, replacing it with that found in the CSC 2003 Licence. This alteration of the pro-rating formula forms the second ground of appeal now pursued.
VPL's Notice of Appeal contained two other grounds on which it attacked the Tribunal's decision. However, in the course of the argument in this court, Mr Mill QC, who appeared for VPL, indicated that these grounds were no longer pursued in relation to the CSC licence in the circumstances as they currently stood. That leaves only the two grounds which I have mentioned.
The hearing before the Copyright Tribunal lasted three weeks. There was voluminous written evidence. Many witnesses, both factual and expert, were required to attend for cross-examination. Mr Mill's primary submission was that, if he was successful on his ground of appeal concerned with royalty rate, this court could and should substitute for the Tribunal's decision, the rate contended for by VPL. I indicated at an early stage that I did not think that such a step could be justified. On any view, there was evidence which could support a royalty rate of less than 20%. Mr Mill wisely did not suggest that I could, in the course of a hearing of less than two days, set some intermediate royalty rate. The hearing before me was accordingly conducted on the basis that, if the appeal demonstrated that the Tribunal had erred to the necessary high standard (see below), then the matter would have to be remitted to a differently constituted Tribunal for it to look at the matter afresh.
The statutory provisions
Section 126 provides as follows:
“ (1) A licensee under a licence which is due to expire, by effluxion of time or as a result of notice given by the licensing body, may apply to the Copyright Tribunal on the ground that it is unreasonable in the circumstances that the licence should cease to be in force.
(2) Such an application may not be made until the last three months before the licence is due to expire.
(3) A licence in respect of which a reference has been made to the Tribunal shall remain in operation until proceedings on the reference are concluded.
(4) If the Tribunal finds the application well-founded, it shall make an order declaring that the licensee shall continue to be entitled to the benefit of the licence on such terms as the Tribunal may determine to be reasonable in the circumstances.
(5) An order of the Tribunal under this section may be made so as to be in force indefinitely or for such period as the Tribunal may determine.”
Section 128(3) provides, so far as material:
“(3) The Tribunal may direct that an order under section … 126 … has effect from a date before that on which it is made, but not earlier than the date on which the … application was made or, if later, on which the licence was granted or, as the case may be, was due to expire.”
Section 129 sets out certain matters to which the Tribunal is to have regard under section 126:
“In determining what is reasonable on a reference or application under this Chapter relating to a licensing scheme or licence, the Copyright Tribunal shall have regard to—
(a) the availability of other schemes, or the granting of other licences, to other persons in similar circumstances, and
(b) the terms of those schemes or licences,
and shall exercise its powers so as to secure that there is no unreasonable discrimination between licensees, or prospective licensees, under the scheme or licence to which the reference or application relates and licensees under other schemes operated by, or other licences granted by, the same person.”
Section 135 provides that the obligation to have regard to these specific matters “does not affect the Tribunal's general obligation in any case to have regard to all relevant considerations”.
Rule 17 of the Copyright Tribunal Rules 1989 (which has, since the Decision, been repealed but replaced by a similar provision in Rule 30(1) of the Copyright Tribunal Rules 2010) provided:
“The final decision of the Tribunal on a reference or an application … shall be given in writing and shall include a statement of the Tribunal's reasons.”
The general approach in law
The task for the Tribunal is to set terms which are “reasonable in the circumstances”. The Tribunal has been said to have in this connection “a discretion in the widest possible terms” per Harman J in ( Association of Independent Radio Companies Ltd v Phonographic Performance Ltd unreported, 16 January 16, 1986) (“ AIRC v PPL 1986”).
When considering comparable licences, as required by section 129, the correct approach has been described by the Tribunal in this way in Association of Independent Radio Companies v Phonographic Performance Limited [1993] EMLR 181 (“ AIRC v PPL 1993”) at 218:
“'It is for the Tribunal in assessing the transactions cited as comparable to decide to what extent the rights licensed are of the same or a similar kind, whether the transactions were concluded at arm's length with neither side affected by stress, and whether they were affected by legal factors which do not apply in this case. It is then for the Tribunal to adapt any relevant comparators to the case under review.' ”
Also on the subject of comparators, the Tribunal said this, in my judgment correctly, in AEI Rediffusion Music Limited v Phonographic Performance Limited [1998] RPC 335 (“ AEI v PPL”):
“It is well established that, if the Tribunal is satisfied that there exist other licences which are sufficiently comparable to the licence they are going [semble to be] asked to settle, the Tribunal should adopt a similar rate absent any special circumstances. (See section 129 of the Act, Smith Kline & French Ltd's (Cimetidine)...
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