Phonographic Performances Ltd v Department of Trade and Industry
| Jurisdiction | England & Wales |
| Judge | The Vice-Chancellor |
| Judgment Date | 23 July 2004 |
| Neutral Citation | [2004] EWHC 1795 (Ch) |
| Docket Number | Case Nos: HC03C00868 HC03C00869 |
| Court | Chancery Division |
| Date | 23 July 2004 |
[2004] EWHC 1795 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Vice-Chancellor
Case Nos: HC03C00868 HC03C00869
Mr. David Pannick QC and Mr. Pushpinder Saini (instructed by Messrs GSC Solicitors) for the Claimant
Mr. Daniel Alexander QC and Miss Jemima Stratford (instructed by the Treasury Solicitor) for the Defendants
Hearing dates : 7 th and 8 th July 2004
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
Ss.67 and 72 Copyright Designs and Patents Act 1988 ("the 1988 Act") provide that certain actions do not constitute an infringement of the copyrights therein mentioned if carried out in accordance with the provisions of those respective sections. S.67 relates to copyright in sound recordings and playing them as part of the activities of a club. S.72 deals with the copyright in a broadcast or cable programme or any sound recording or film included in it and showing or playing it to an audience who have not paid for admission to the place where it is to be seen or heard.
By Council Directive 92/100/EEC ("the Rental Directive"), promulgated by the Council of the European Communities on 19th November 1992, it was provided in Article 8.2 that
"Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such a phonogram, is used for broadcasting by wireless means or for any communication to the public, and to ensure that this remuneration is shared between the relevant performers and phonogram producers."
Article 10 entitled Member States to provide for limitations to that right. In particular Article 10.2 provided that
"….any Member State may provide for the same kinds of limitations with regard to the protection of performers, producers of phonograms, broadcasting organisations and of producers of the first fixations of films as it provides for in connection with the protection of copyright in literary and artistic works."
Article 15.1 provided that
"Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive not later than 1st July 1994."
The claimant ("PPL") is a company limited by guarantee. Its membership includes over 3,000 record companies carrying on business in the UK. Such members own or are exclusive licensees of the copyright in the sound recordings made by them. The right to play them in public or to authorise others to do so ("the Performing Right") is assigned by the member to PPL if he owns the copyright. In cases where the member is only an exclusive licensee then PPL is appointed the exclusive agent of the member in respect of the exercise of the Performing Right. The rights so conferred on PPL enable it to grant licences to others and to collect and distribute amongst its members payments received as consideration for such licences. Accordingly both PPL and its members were and are concerned to limit or remove altogether the exemptions from infringement afforded by ss. 67 and 72 of the 1988 Act.
Shortly after the promulgation of the Rental Directive PPL commenced a campaign to secure the repeal of ss.67 and 72 on the basis, amongst others, that each of them was a limitation on the right to a single equitable remuneration for which Article 8.2 required the Crown to make legislative provision and neither of them was a limitation on such right permitted by Article 10. The Crown did not agree and so informed PPL. This has remained the position of both PPL and the Crown ever since.
The Rental Directive was not implemented by the UK on or before 1st July 1994. The Copyright and Related Rights Regulations 1996 SI 1996/2967, which were intended to do so, were made on 26th November 1996. No alteration was thereby made to either of ss.67 and 72 of the 1988 Act. On the same day PPL made it clear that it did not intend to make either a complaint to the European Commission or an application for judicial review of the Crown's failure to repeal either section.
On 22nd May 2001 Directive 2001/29/EC ("the Harmonisation Directive") was promulgated by the European Parliament and the European Commission. By Article 11 there was added to Article 10 of the Rental Directive Article 10.3 which provided that the permitted limitations on the right to a single equitable remuneration should
"…only be applied in certain special cases which do not conflict with a normal exploitation of the subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder."
Accordingly the scope for providing for limitations on the right to a single equitable remuneration was narrowed still further by the three step approach that Article 10.3 required. Member States were required to implement the Harmonisation Directive by 22nd December 2002. In common with most other Member States the UK did not. The relevant regulations, The Copyright and Related Rights Regulations 2003 SI 2003/2498 did not come into force until 31st October 2003.
The scope of Article 10 of the Rental Directive has been considered by the Commission both before and after its amendment by the Harmonisation Directive. On 23rd February 1995 the Commission indicated to the UK that it considered that s.67 of the 1988 Act was a limitation permitted by Article 10.2. But on 26th July 2001 the Commission announced that it had instituted infringement proceedings against the UK in the European Court of Justice on the grounds that s.72 of the 1988 Act was inconsistent with Article 8.2 of the Rental Directive and not a limitation permitted by Article 10. That claim is still proceeding, but, as the proceedings are confidential, there is no evidence before me as to the stage it has now reached.
On 10th March 2003 PPL instituted proceedings against the Department of Trade and the Attorney-General ("the Crown") for declarations and damages on the footing that the Crown is in breach of its obligation in European Community Law arising under Article 8.2 of the Rental Directive by failing to provide in domestic law for a single equitable remuneration to be paid by the persons and in the circumstances prescribed by ss. 67 and 72 of the 1988 Act. In its defence the Crown contends for a number of reasons that it is not in breach of any obligation whether under Community Law or otherwise. In addition it contends that any cause of action PPL might otherwise have had arose on 1st July 1994, the date by which the UK should have implemented the Rental Directive, was on 10th March 2003 and is now barred by s.2 Limitation Act 1980. In the alternative the Crown contends that PPL's claim is barred by laches, alternatively that it is estopped from advancing it.
On 1st December 2003 Lawrence Collins J ordered that there be tried as preliminary issues the question
"Whether, or the extent to which, the claims made in [these actions] are barred by limitation, and/or whether, or the extent to which, in all the circumstances, the pursuit of those claims constitutes an abuse of process and/or is barred by estoppel and/or laches."
Those are the issues now before me. It is common ground that I must approach them on the assumption that PPL has established the liability of the Crown for which it contends.
It is also common ground that the preliminary issues raise three questions, namely (1) whether the failure of the Crown to do what Article 15 of the Rental Directive required, whether by 1st July 1994 or at all, gives rise to a single cause of action accruing on that date with continuing consequential damage or successive causes of action accruing when and as often as further damage in consequence of the continuing failure is sustained by PPL; and if not (2) whether the claims are liable to be struck out as abuses of the process of the court in accordance with the propositions enunciated by Lord Woolf MR in Clark v Humberside University [2000] 1 WLR 1988; and if so (3) whether on the facts of this case the claims should be struck out as such an abuse. I will deal with those questions in that order.
One cause of action or several?
At the outset it is necessary to consider the nature of PPL's claim. The decisions of the European Court of Justice in Francovich v Italy [1991] ECR I-5357 and Factortame III [1996] I-1029 have established, and it is not disputed, that a Member State may incur liability to a person under Community law where three conditions are satisfied. They are that (1) the rule of Community law infringed is intended to confer rights on individuals; (2) the breach is sufficiently serious, and in particular that there was a manifest and grave disregard by the Member State of its discretion; and (3) there is a direct causal link between the breach of the obligation resting on the Member State and the damage sustained by the injured party. As I have already pointed out for the purposes of these preliminary issues I have to assume that all those conditions will be established.
The nature of such a claim in English law was considered by Hobhouse LJ in Factortame V [1998] 1 CMLR 1353. In that case the Divisional Court concluded that liability had been established and went on to consider whether exemplary damages could and should be awarded. It was in that context that Hobhouse LJ considered (para 173) that the liability was best understood as a breach of statutory duty. In so doing he relied on the dictum to the same effect of Lord Diplock in Garden Cottage Foods v MMB [1984] AC 130...
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