Independiente Ltd v Music Trading Online (HK) Ltd
| Jurisdiction | England & Wales |
| Judge | The Vice-Chancellor |
| Judgment Date | 13 March 2003 |
| Neutral Citation | [2003] EWHC 470 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 02C02413 |
| Date | 13 March 2003 |
[2003] EWHC 470 (Ch)
The Vice-Chancellor
Case No: HC 02C02413
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Henry Carr QC and Mr. Mark Vanhegan (instructed by Wiggin & Co) for the Claimants
Mr. Jeffery Onions QC and Mr. Philip Roberts (instructed by Messrs Nicholson Graham & Jones) for the First to Third and Fifth Defendants
Hearing date : 4 th March 2003
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.
Introduction
The claimants are the owners or the exclusive licensees of the UK copyright in various sound recordings. The fifth defendant ("Mr Robinson") is a substantial shareholder in the second defendant ("BVI"), the beneficial owner of the shares in the third defendant ("UPI") and a director of the first defendant ("HK") and of UPI. The first defendant ("HK") is a wholly owned subsidiary of BVI. (Proceedings against the fourth defendant have been discontinued.)
Since early 2000 the defendants or one of them have operated a website at www.cd-wow. com in the trading name CD-WOW at which they advertise for sale a large number of CDs containing sound recordings of well known popular artists. Orders placed on that website are supplied by HK with CDs from Hong Kong. Such CDs are genuine in that they were made and released on the market outside the European Economic Area with the knowledge and approval of the owners of the UK copyright or their exclusive licensees.
On 23rd August 2002 the claim form in these proceedings was issued by the claimants seeking an injunction, damages or an account of profits and delivery up of infringing copies. The claim is made in relation to CDs embodying sound recordings in which they own or are the exclusive licensees of the UK copyright which had been released on the market outside EEA and subsequently supplied by HK to buyers in the UK. The infringements relied on are the importation of such CDs into the United Kingdom and their subsequent possession in the course of business and issue to the public as provided in ss.18, 22 and 23 Copyright, Designs and Patents Act 1988 (" CDPA"). The claim form states that the claimants are
"suing on behalf of themselves and for and as representing all other members of the British Phonographic Industry Ltd ["BPI"] and Phonographic Performance Ltd ["PPL"]".
In the particulars of claim served the same day it is alleged that the claimants are members of BPI and/or PPL and sue on behalf of all other members whose names are set out in Schedule 1 thereto. It is claimed that nearly all sound recordings produced in the UK are produced, manufactured or distributed by such members each of whom is a qualifying person for the purposes of s.154 CDPA.
In response to an objection made by solicitors for the defendants, by a letter dated 4th October 2002 the claimants' solicitors indicated that the representative claim would be limited to those members of BPI and PPL as are "owners and/or exclusive licensees of UK sound recordings". The defendants were not satisfied with this assurance and on 23rd December 2002 issued the first of the applications now before me seeking an order in accordance with CPR Rule 19.6(2) preventing the claimants from acting in the representative capacity claimed on the grounds that (1) the claimants have not demonstrated that they are authorised by the persons they claim to represent to bring the action as presently constituted and (2) they do not have the same interest as those persons.
Following further correspondence between the parties' respective solicitors the second application now before me was issued by the claimants on 5th February 2003. By that application the claimants seek, amongst other things, to add as the sixth and seventh claimants Sony Music Entertainment (UK) Ltd and Sony Music Entertainment Inc, and to amend the particulars of claim. If permission to amend as sought is granted then the title to the claim will still aver that the first six claimants "sue on behalf of themselves and for and as representing all other members of [BPI and PPL]". Paragraphs 3 to 7 will be in the following terms:
3. The First to Sixth Claimants are and have at all material times been members of the British Phonographic Industry Limited ("the BPI") and/or Phonographic Performance Limited ("PPL"). The BPI is a company limited by guarantee established (amongst other things) to represent the interests and to protect the rights of its members and, in particular, the sound recording copyrights owned by or exclusively licensed to its members together with the rights in performances owned by such members. PPL is a company limited by guarantee. Its objects include (among other things) the power to authorise the BPI to take action in the interest of any member or members of PPL with a view to protecting the interests or rights of any member or members of PPL with particular regard to infringement of copyright in sound recordings. The members of the BPI have given it a mandate to authorize third parties to act on their behalf to prosecute proceedings in the High Court. The BPI has authorized the First to Sixth Claimants on behalf of its members and on behalf of the members of the PPL to commence and prosecute these proceedings.
3A. The Seventh Claimant is incorporated under the laws of the State of Delaware and is (along with the Sixth Claimant) a company within the Sony Group of companies.
4. The First to Sixth Claimants each sue on their own behalf and for and on behalf of and as representing all other members of the BPI and PPL that own or are the exclusive licensees of United Kingdom sound recording copyrights. ("the Relevant Members").
5. The Relevant Members members of the BPI and PPL are continually and frequently producing, manufacturing and/or distributing records embodying new sound recordings, and nearly all reproductions of sound recordings (namely compact discs, vinyl records and cassette tapes) that are produced, made or distributed within the United Kingdom are produced, manufactured and/or distributed by the Relevant Members members of the BPI and/or PPL.
6. The Relevant Member member of the BPI and/or PPL responsible for the making of each sound recording owns the United Kingdom sound recording copyright therein or is the exclusive licensee thereof. Lists of the current members of the:
BPI that are Relevant Members are set out in Schedule 1 annexed hereto; and
PPL that are Relevant Members but not also members of the BPI are set out in Schedule 1A annexed hereto.
7. Each of the Relevant Members members of the BPI and PPL is and has at all material times been a qualifying person within the meaning of section 154 of the 1988 Act.
CPR Rule 19.6 , so far as relevant, provides that
(1) Where more than one person has the same interest in a claim –
(a) the claim may be begun; or
(b) the court may order that the claim be continued,
by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.
(2) The court may direct that a person may not act as a representative.
(3) Any party may apply to the court for an order under paragraph (2).
(4) Unless the court otherwise directs any judgment or order given in a claim in which a party is acting as a representative under this rule –
(a) is binding on all persons represented in the claim; but
(b) may only be enforced by or against a person who is not a party to the claim with the permission of the court.
The issues for my determination are (1) whether the claim comes within the provisions of CPR Rule 19.6(1), and if so (2) whether I should make a direction under Rule 19.6(2) that the claimants may not act as representatives. The extent to which I should grant permission to amend the particulars of claim or make the further directions sought depend on my answers to those questions.
The Facts
BPI was incorporated in 1972. The objects for which it was established include:
[(a)…]
(b) to promote and protect the welfare and interest of the British record industry and in this respect to take such action on behalf of its members or individual members of the Association as may be considered necessary;
[(c) to (j)]
(k) to make representations and to institute and to prosecute and defend proceedings before the Copyright Tribunal and any other Court or Tribunal; and
(l) to do all such other things as are incidental or conducive to the attainment of the above objects or any of them."
An aspiring member is required to sign an application form. It summarises the objects of BPI and contains an acknowledgement that if the application is accepted the applicant agrees to abide by the rules and regulations of BPI as contained in its memorandum and articles of association or otherwise decided on by the Council of Management of BPI. The Articles of Association, adopted on 22nd September 1999, contain the usual provisions for regulating the conduct of a company's business through a board of directors. It was submitted by counsel for the claimants that the operation of the objects clause of the memorandum of association and the application form signed by all members conferred on BPI, without more, the authority to institute proceedings in the name or on behalf of a member. I do not agree. The memorandum confers on BPI the corporate ability to sue on behalf of others. The member acknowledges that that is so. Such acknowledgement does not, without more, authorise BPI to institute any particular action in the name or on behalf of a member.
PPL adopted a new memorandum of...
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