Reformation Publishing Company Ltd v Cruiseco Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 22 October 2018 |
| Neutral Citation | [2018] EWHC 2761 (Ch) |
| Date | 22 October 2018 |
| Court | Chancery Division |
| Docket Number | Case No: Claim No. IP-2017-00141 |
[2018] EWHC 2761 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Nugee
Case No: Claim No. IP-2017-00141
Tom Richards and Tom Coates (instructed by M Law LLP) for the Claimant
Maxwell Keay (instructed by K&L Gates LLP) for the Defendants
Hearing date: 28 June 2018
Judgment Approved
Introduction
This is the hearing of an action for damages for infringement of copyright. Although most of the facts are not in dispute and the trial only took 1 day, a considerable number of points were argued and have to be resolved.
The 1 st Defendant, Cruiseco Ltd, is an English company and the 2 nd Defendant, Discovery Travel Centre Pty Ltd, is a company incorporated in New South Wales which is its parent company, owning 100% of its shares. They are in the business of operating cruise holidays. One of their holidays was a music-themed cruise marketed as “Back to the 80's” and a short video or sizzle reel ( “the Publicity Clip”) was produced to promote the cruise. This included extracts from two well-known Spandau Ballet songs, “Gold” and “True”. On 22 June 2017 the Defendants posted the Publicity Clip on their own websites, and also put it on a filesharing platform and sent a link to that platform to a large number of UK High Street travel agents, encouraging them to use it.
The Claimant, Reformation Publishing Company Ltd ( “Reformation”), as is now accepted, is the owner of the copyright in the musical works in the two songs. The Defendants had not obtained any licence for the use of the songs and, as again is now accepted, infringed Reformation's copyright.
On being contacted by Reformation, the Defendants on 26 June 2017 took steps to take down the Publicity Clip from their websites and told the travel agents not to use it. It has very recently become apparent however that they failed to take it down from the filesharing platform where it remained live until 26 June 2018 (two days before trial).
The effective question at trial was what damages should be paid for the infringement by the Defendants. It is agreed that these should be assessed on the basis of a reasonable licence fee. Reformation also has a claim for additional damages under s. 97(2) of the Copyright, Designs and Patents Act 1988 ( “the 1988 Act”).
Issues
At a Case Management Conference before HHJ Hacon on 18 December 2017 the following issues were identified:
“ The claimant's copyright infringement claim
1. Is the claimant the owner of the copyright in the Works?
2. Is copyright in the Works subsisting?
3. If the defendant infringed the claimant's copyright, what was the period of the infringement?
4. Did the defendant reasonably believe at all times that copyright licences had been obtained in respect of any copyright works featured in the Publicity Clip?
Damages in relation to the claimant's claims
5. What is the reasonable licence fee that the defendant would have paid to the claimant which would have permitted the defendant to make use of the Works as pleaded in the claimant's Particulars of Claim at paragraphs 5 and 6 and as admitted at paragraphs 4 and 5 of the defendant's Defence and/or found pursuant to issues 3 and 4 above?”
Since then there have been the following developments:
(1) First, the 2 nd Defendant was added to the claim, and it was accepted in a Re-Amended Defence dated 12 June 2018 that the 1 st and 2 nd Defendants carry on a single business as travel agent and organiser of cruise holidays, and that if the 1 st Defendant is liable for any infringement, then the 2 nd Defendant is jointly liable for that infringement. It is therefore unnecessary to distinguish between the two Defendants.
(2) Second, although the Defendants had on the pleadings put in issue the question of Reformation's ownership of copyright, by letter from their solicitors dated 22 June 2018 (that is, 6 days before trial) the Defendants conceded that Reformation owns the copyright in the musical works in the two songs.
(3) Third, until just before the trial it had been thought that what was in issue was an infringement that had lasted 5 days. As a result of the discovery that the link to the filesharing platform in fact remained live, Reformation now claim that the infringement has continued for over a year.
The effective issues as they now are can be summarised as follows:
(1) For the purposes of assessing the damages for the Defendants' infringement, did the relevant infringement continue for 5 days or for about a year?
(2) If the answer to (1) is that the relevant infringement only continued for a period of 5 days, is the duration of the notional licence the period of infringement or the period that would have been negotiated had a licence been sought?
(3) Having regard to the answers to (1) and (2), what is a reasonable licence fee?
(4) Is this a case for additional damages? The Publicity Clip was produced for the Defendants by Artists Network Australia ( “ANA”), and Reformation's case is that ANA were at least reckless as to whether they were infringing the copyright owner's rights. That therefore raises the following issues: (i) were ANA the Defendants' agents for this purpose? (ii) were ANA reckless? (iii) do these circumstances justify an award of additional damages? and (iv) if so, how much?
Facts – (i) copyright in the songs
Reformation's claim is to copyright in the musical works consisting of the songs Gold and True. Although there is no longer any dispute in relation to this, I should briefly give some of the background. This is taken from the witness statement of Mr Stephen Dagger, the manager of Spandau Ballet and a director of Reformation, who gave evidence before me but who was not cross-examined on this part of his evidence.
I have also had the benefit of reading the judgment of Park J in Hadley v Kemp [1999] EMLR 589. This was a judgment given after trial of an action in which three of the other members of Spandau Ballet (Mr Tony Hadley, the band's lead singer, and two others) sued Mr Gary Kemp and claimed among other things that they were joint authors of Spandau Ballet's songs. With one minor exception (a song called “Glow”), Park J rejected that claim, finding that Mr Kemp was the sole author of all the songs in question (which included Gold and True). That judgment is not technically evidence in this case but it goes into the background in considerable detail and is a helpful introduction.
As Park J points out at 597 (section E1), if a member of a band composes a song and the band then records it, there are in fact likely to be three copyrights created. There are two in the song: one in the music (which is a musical work) and one in the lyrics (which is a literary work). At the relevant time these copyrights subsisted by virtue of s. 2(1) of the Copyright Act 1956 which applied to original literary, dramatic or musical works. There is also a quite separate copyright in the particular performance of the song which is recorded on the master tape (which is a sound recording). This copyright subsisted by virtue of s. 12(1) of the Copyright Act 1956 which applied to sound recordings.
In the present case both Gold and True were written by Mr Gary Kemp in the spring of 1982. He was the sole author of both the music (as found by Park J) and the lyrics. The copyright would therefore have vested in him save for the fact that he was at the time employed by Reformation for his composing and writing services. Reformation was a company wholly owned by Mr Kemp, and of which he and Mr Dagger were directors, which had been formed to employ him for that purpose: see Park J's judgment at 597 (section D) and 598 (section E1). That meant the copyright vested in Reformation. Reformation's claim in this action is in fact pleaded solely by reference to the musical works and not the literary works, but it was not suggested that this was of any practical significance.
Mr Dagger refers to these rights as the copyright in the compositions or the publishing rights. He distinguishes them from the rights in the recording (otherwise known as the “masters”) which are usually owned by the record company to which the band was signed at the time. In the present case the recording rights are owned by Warner Group.
The practical effect is that when a song is used in advertising or the like, two licences are needed. One is from the owner of the copyright in the particular recording which is used. The other is from the owner of the publishing rights.
Facts – (ii) the cruise and the Publicity Clip
The Defendants trade together as Cruiseco and I will refer to them as Cruiseco without distinguishing between them. I can take the background from the evidence of Mr Stephen Lloyd. Mr Lloyd was the Chief Executive of Cruiseco from 2000 to March 2017, and a consultant from April to October 2017 when he retired. He is resident in Australia and was not called to give oral evidence but the Defendants relied on his witness statement as hearsay. His evidence was therefore not tested in cross-examination but there is no reason to doubt what he says about the background.
Cruiseco operates and markets cruise holidays in Australia and the UK. It has offices in Australia and the UK, and websites with Australian and UK domain names which it uses to advertise to Australian and UK customers.
On a number of occasions it has chartered and managed those charters for a specialist music-themed cruise operator called Cruising Country Pty Ltd, trading as Choose Your Cruise ( “Choose Your Cruise”), to hold music-themed cruises. On these ventures Cruiseco's role...
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