IN THE SUPREME COURT OF JUDICATURE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London
February 14th, 2002
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Between:
Claimants
-and-
Defendants
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Mr Pushpinder Saini (instructed by Sheridans)
for the claimant.
Mr Stephen Bate (instructed by Harbottle & Lewis) for the defendants.
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1. The claimant, Ludlow Music Inc ('Ludlow') is the owner of the copyright which subsists in the works of the celebrated American musician Woody Guthrie. In 1961 Woody Guthrie composed the lyrics and music of a song called 'New York Town'. In 1973, the songwriter Loudon Wainwright III composed a parody of Woody Guthrie's lyrics called 'I am the way (New York Town)', which was set to the same music. The claimant owns the copyright in the Loudon Wainwright III lyrics. The first Defendant, Robbie Williams, is the well-known pop singer. With the second Defendant, Mr. Chambers, he is the composer of a composition whose title is 'Jesus in a Camper Van'. Mr Nicholas Strauss QC sitting as a deputy judge of the Chancery Division held on an application for summary judgment under CPR 24 (now reported at [2001] FSR 271) that the lyrics of Jesus in a Camper Van' infringed the copyright in the lyrics of 'I am the Way (New York Town)'. There is no suggestion that there is any infringement of Woody Guthrie's musical work. The judge reserved the question of damages to this hearing, in the light of an open offer which had been made by the defendants before the proceedings started.
2. Mr Strauss QC was not satisfied that this was a case in which either a final injunction could be granted or an award of additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988 be made without hearing evidence. Accordingly he gave judgment for the claimant but gave the defendants permission to defend the claim in respect of the Claimant's entitlement to a final injunction and to additional damages. He ordered preliminary disclosure for the purpose of enabling the claimant to elect between an inquiry as to damages for infringement and an account of profits (see Island Records v. Tring International [1996] 1 WLR 1256). The claimant has elected to pursue the remedy of damages, so preserving its claim to additional damages which it would lose if it elected to pursue an account of profits- Redrow Homes v. Betts Brothers [1999] 1 AC 197 (HL (Sc)).
3. Accordingly, the claim comes before me with four questions to be decided. Given that the copyright in the lyrics is infringed, (1) is the claimant entitled to a final injunction? (2) what damages should be awarded to the claimant on account of the infringement? (3) should additional damages be awarded? and (4) if so, how much? The claimant contends that damages are to be computed on the basis of 50% of all royalties earned by the infringing work. The additional damages are put also at 50% of the royalties giving the claimant all the royalties earned by the infringing work. The defendants contend that such an award is disproportionate: the infringement is minor and relates to the lyrics only. They say that the infringement is so minor that this is a proper case for damages under Lord Cairns' Act (now section 50 of the Supreme Court Act 1981) in lieu of a final injunction. They maintain that since their open offer was made the claimant has acted unreasonably, and they seek their costs.
4. On the issues which he sent to trial, Mr Strauss QC advanced a number of considerations which he took into account in sending these questions to trial. In my view he was clearly right to do so, and they have raised difficult issues. There has been no challenge to his finding on infringement which was concise.
5. 'I am the Way' contains the line "Ever good man gets a little hard luck sometimes". The fourth verse of 'I am the way (New York Town)' consists of the line "Every Son of God gets a little hard luck sometime" repeated three times followed by "Especially when he goes around saying he's the way". 'Jesus in a Camper Van' contains the lines "I suppose even the Son of God/Gets it hard sometimes/Especially when he goes round/Saying I am the way". This is repeated, and then the first two lines are repeated three times. Mr Strauss found that the copying was 'substantial, although not by much'. He said this:
More significantly, "Jesus in a Camper Van" takes the central idea from "I am the way (New York Town)", namely that the Son of God attracts bad luck by going around and saying I am the way" and embodies it in virtually identical words. I think this is of sufficient substance to amount to an infringement of copyright. It is difficult to elaborate further; the point is one of first impression.
6. Neither Robbie Williams nor Mr Chambers gave evidence at the hearing before me. His manager, Mr David Enthoven of IE Music Limited, gave three witness statements but was not available and was in consequence not cross-examined on them. Thus the history of the infringing composition can be ascertained only on very limited hearsay evidence, and no examination of the reasons for the original use of the Loudon Wainwright III lyrics was ever made.
7. For the claimant the evidence of fact was given by Mr Larry Richmond. He is the managing director of the Richmond Organisation which owns the claimant Ludlow, and he is a director of Ludlow. He conducted the abortive negotiations in respect of the infringing composition. His attitude both to royalty rates is criticised as unreasonable and uncommercial by the defendants. His was the only evidence for the claimant.
8. Of the defendants' witnesses, Mrs Hook, formerly Rowden, who was employed by the third defendant as their Sampling/Infringement manager, and who had conducted the correspondence with Ludlow was the principal witness as to the course of the negotiations. I shall refer to her as Ms Rowden, as this is the name by which she appears in all the documents. Tom Bradley, a director of the third Defendant, who had also conducted part of the negotiation with Mr Richmond gave evidence. They were the principal witnesses. Mrs Blain, an independent specialist in obtaining copyright clearances from copyright owners, for samples in particular, gave expert evidence on the practice of clearing and on the approach to be taken in negotiations by willing parties.
9. All the witness statements which had been before Mr Strauss QC were before me.
10. 'Jesus in a Camper Van' was one of the songs in Robbie Williams' second album, and was recorded some time between 12th March and 28th June 1998. So far as it goes, the evidence is that Robbie Williams had heard somebody singing the words 'I am the way' and had had the idea of writing a song about Jesus in a camper van going around singing 'I am the way'. It is not clear on the evidence when it was appreciated that a clearance in relation to the Loudon Wainwright III lyrics might be necessary. Initially, Mr Enthoven's evidence was that the need was appreciated towards the end of June 1998, when somebody in the studio told Mr Williams that he thought a couple of lines might have come from a Loudon Wainwright III song. He told Mr. Enthoven, who thought it might be helpful to his career to be seen as having co-written a song with Loudon Wainwright III and contacted the latter's managers, the Rosebud Agency. In his third witness statement, Mr Enthoven says on the contrary that the question of clearance arose earlier than June 1998, probably at the end of 1997 when a demo version of the song was made. It appears that Mr Enthoven contacted Bob Clifford, the Standard Catalogue Manager, at EMI Music Publishing. Limited. Mr Clifford replied on 24 March 1998 as follows, in a letter relied on by both sides. He concealed the identity of the composer under the name 'Sven Beige':
Thank you for the tape of "Sven Beige's" song "Jesus in a Camper Van".
This has posed a bit of a problem. We do not believe that it is from a Louden Wainwright (or however y'spell his name) song. Certainly the MCPS, PRS, ASCAP and BMI have nothing on that song title.
I have also asked around - Demon Records, lyric experts - most of whom say "yes ... It does ring a bell ... but I can't tell you where it comes from.".
Without those writer details you now have various options:-
1 . Dump the track, or
2. Carry on - but be aware that the original lyric owners could chase you to negotiate a portion of the song, to insist on 100% of the song, or, worst scenario, make you withdraw the release. It could be that nobody says a word .....
The letter is copied to Ms Alison Rowden, EMI's Sampling/Infringement Manager, and it follows that the question of clearances was being actively pursued.
11. The masters of the track were recorded during the period from 12 March 1998 to 28 June 1998.
12. At some stage, Loudon Wainwright III was identified as the author of the relevant lyrics, and as Loudon Wainwright III's agent Ms Margot Nassau of the Rosebud Agency appears to have been approached by Mr Enthoven. On 30 July 1998 she wrote to Mr Enthoven asking for a tape of 'Jesus in a Camper Van'. On 18th August 1998, she wrote to Mr. Enthoven enclosing a CID of Loudon Wainwright III's works, including 'I am the way (New York Town)' and adding I think you'll find the lyrics are almost identical to the chorus of Robbie Williams' 'Jesus in a Camper Van' and suggesting that he contact the claimants c/a The Richmond Organisation "regarding a writers split for the song", giving Evelyn Sasko as the contact. A day later she wrote to Ms Sasko at the Richmond Organisation confirming that Loudon Wainwright III considered the lyric acceptable and wished to be named as a co-writer.
13. This also was copied to Ms Rowden, who states that she thought it was borderline whether a substantial part of 'I am the way' had been copied and whether copyright clearance was required. She wrote to Evelyn Sasko on 21st August enclosing a tape. She said:
With regard to "Jesus in a Camper Van", you will note that its similarity to "I am the way (New York Town)" is lyrical only and is limited to two lines. Furthermore, the lyric we use is not exactly the same and in our opinion the context and the use of the two songs overall are very different. We feel that 'Jesus in a Camper Van' contains elements inspired by, rather than directly copied from, "I am the way (New York Town)".
14. She went on to ask Evelyn Sasko whether she considered that authorisation was required and if so the terms on which she would be willing to grant a licence and asked for an urgent response. The letter and the enclosed tape and clearance request were sent by courier to the Richmond Organisation. At this point, Ms Rowden entered into negotiation with the claimant. The further correspondence was carried on with Mr Richmond, even if signed by Ms Sasko. Mr Richmond's evidence is that he paid no attention to the 'Urgent' on this request. He said he might have been in and out of the office, and that it was a slow time. He said that his company worked a little more slowly that record companies want. Nothing, he said, started until he listened to the tape.
15. On 26 August Ms Rowden, who appears to have received no acknowledgment of her letter of 21 August 1998, sent a fax to Ms Sasko. It is headed 'Urgent. Without Prejudice and Subject to Contract'. Having apologised for following up so soon after the original letter, she continues
Chrysalis Records have a tight deadline for final production of this track in order that Robbie Williams' album will meet its proposed release date of 26 October 1998 and have therefore asked that I respectfully request your immediate response to my letter.
Also, should you feel that the use of "I am the way (New York Town)" requires publishing clearance, please advise by return the writer/publisher credit that you would require on the record.
Again, sorry for the immediate follow up and I hope that you will appreciate the urgency of the matter.
16. Ms Rowden's fax failed to elicit a response. Mr Richmond read this fax and admits that he was personally responsible for the delay. He told me that he didn't know who the artist was, and that it looked like other requests which, as he put it, ultimately fizzle. So Ms Rowden faxed Ms Sasko again on 8 September:
Chrysalis Records have now informed us that they must have writer/publisher credits as a matter of urgency, not later than close of business in the United Kingdom on Thursday 10 September 1998.
She asks for an immediate response, if possible that day by fax or telephone. On 8 September Ms Sasko finally faxed a response:
Further to your correspondence, this matter is being reviewed and we will be getting back to you shortly.
On this day also, Ms Sasko wrote directly to Loudon Wainwright III, asking for his confirmation that the use of 'I am the way' in 'Jesus in a Camper Van' was acceptable to him, and asking for his written approval. This resulted in a dispute as to sharing of royalties between Ms Nassau, on behalf of Loudon Wainwright III and Mr Richmond, who wanted a different split. So Loudon Wainwright III's written approval was not immediately obtained, but was finally forthcoming on 29 September. Ms Nassau asked on this date whether Ms Sasko could 'update us on the negotiated songwriter split with Robbie Williams for "Jesus in a Camper Van"'.
17. On 21 September 1998, some two or three days short of four weeks after her original enquiry, Ms Rowden again faxed Ms Sasko, asking for a decision:
I am truly sorry to follow up yet again, but we are under great pressure from the record company. Please advise whether you are now in a position to respond with regard to the above matter.
On 30 September 1998, the day after she received the written confirmation from Loudon Wainwright III, Ms Sasko replied that the Richmond Organisation agreed to the proposed usage on condition that the claimants were the 50% copyright holder of the new composition on a worldwide basis. In other words (it being common ground that there was no musical similarity between the two works) the claimants wanted the entire share of the copyright attributable to the lyrics, although only a small part of 'Jesus in a Camper Van' was derived from the earlier work. Mr Richmond admitted under cross-examination that the problem over Loudon Wainwright III's share of the royalties did not hold the transaction up. It follows that Mr Richmond had dealt with the matter so dilatorily that a clearance request in respect of one track, whose urgency was entirely clear, did not receive any sort of substantive reply for slightly less than six weeks, although Mr Richmond's organisation owned the copyright and was not obliged to obtain consent from any other person.
18. On 2 October, Ms Rowden consulted Mr Enthoven and sought his approval for the terms sought by Mr Richmond. Mr Enthoven refused, saying that he 'would be prepared to go to 25%'. On 6th October, Alison Rowden replied that this demand was excessive, that she did not believe that the similarity amounted to copyright infringement and offered a 10% copyright ownership, suggesting that this would be more than fair. On the same day, Larry Richmond replied rejecting this proposal in the following terms:
We are in receipt of your letter ... to Evelyn Sasko. We reject both your comments throughout and proposal in the second to last paragraph.
Ludlow Music, Inc. is the copyright owner of the above composition. If it is your writer's intention to use any lyrical or musical excerpts of the above listed copyrighted [sic], then a 50/50 split of the new work is appropriate and required for our interests.
If you are not encouraged by this proposal, we suggest you and your writer delete any reference to our copyrighted composition.
19. Mr Richmond repeatedly suggested that he intended that this letter should make it clear that the terms of consent were not negotiable. Ms Rowden plainly did not see the letter in this light, and on 9 October she sought Mr Bradley's assistance in negotiating with Mr Richmond.
20. By this date, the masters for the album including 'Jesus in a Camper Van' had been supplied to the manufacturer Chrysalis Records Ltd. and manufacture was about to start (it started on 10 October). The artwork had been prepared. The album states that the lyrics are reproduced 'by kind permission of' the claimants'; Mr. Enthoven says that it did not occur to him that permission would be refused. The album was due for release (and was in fact released) on 26th October. Ms Rowden also states that it never occurred to her for a moment that the claimants would refuse to consent to 'Jesus in a Camper Van' being released at all. Mr Richmond maintains that it was clear that this letter showed that he was not open to further negotiation. He explained to me that he understood that in English terms this amounted to a claim to the whole copyright in the lyrics there being no copyright in the song as a whole. I shall discuss his reference to 'our interests' further below.
21. Ms Rowden says that she is sure that she was being strung along, so as to make negotiation against the forthcoming release date, before which she was conscious that Ludlow could seek interim injunctive relief. The succeeding events may be summarised as follows.
22. On 9 October, the relevant collecting society, the, Mechanical Copyright Protection Society or MCPS was notified of the ownership of the copyright in the recording. Ludlow is identified as a 'proposed publisher'. On 20 October, Ms Rowden chased Mr Bradley, and on 21 October sent him a tape. Mr Bradley sent a tape and a lyric sheet to Ludlow on the 23 October. The album was released on 26 October. Mr Richmond said that he did not have in mind that the release was on 26 October, and that he did not even speculate as to when the master had been delivered to the record company. He did remember that Mr Bradley had sent his a demo, rather than a tape of a master. Mr Bradley thought that he had sent a finished version, which I confess seems more likely to me.
23. According to Mr. Richmond's letter to Mr Bradley dated 22 March 1999, there were conversations between them in October or early November 1998. Mr Richmond originally suggested under cross-examination that he had spoken to Mr Bradley in person in the United States about the problem before 30 September and thus before release of the album, and that Mr Bradley had not shown any urgency. Mr Bradley's evidence that the meeting which Mr Richmond remembered had taken place a year later was accepted. There were further differences in recollection between them as to what had been said. Neither had clear recollections of the discussion. There is a note to the effect that Mr. Richmond telephoned Mr. Bradley on 10th March 1999 to say that it remained the claimants' position that they would not accept anything less than 50%. Certainly, although no reference is made to this conversation, Mr. Richmond's letter of 22 March 1999 is as follows:
Further to our conversations back in October and early November last year, we have not heard back from you concerning the unauthorized use of Ludlow Music, Inc.'s composition listed above in the recording "Jesus in a Camper Van" by Robbie Williams.
When we last discussed this matter, Ludlow Music Inc. suggested a 50/50 division of the new composition in order to avoid a dispute concerning the unauthorized use of our copyrighted composition or any part thereof. You indicated you would discuss the matter at your end and get back to us.
If we cannot settle this matter as outlined above we will take all necessary steps to protect our copyrighted composition both in the United Kingdom and throughout the world.
We would appreciate a review of all unit sales in all formats which include "Jesus in a Camper Van" from release date to the present.
This letter appears to have been provoked by a notification by the Harry Fox Agency, which performs in the US the same function as the MCPS over here, in relation to licensing the importation of a CD. Also on 22 March 1999, Ms Sasko wrote to the Harry Fox Agency saying that the publisher split recorded on their notification had not been agreed and telling the importer Musicrama Limited to apply for the statutory mechanical licence. This of course is not consistent with wishing to prevent circulation of the album, even in the United States.
24. Mr Richmond described this as a knee-jerk response Given that the notice was dated almost a month earlier, I am not sure whether this can be right, but since he was not cross-examined directly on that issue I say no more about it. His letter of 22 March 1999 was copied to his English solicitors, Sheridans.
25. Mr Richmond's evidence was that until he became aware of the notice from the Harry Fox Agency he was unaware that the album had been released. The Richmond Organisation includes a number of significant publishing companies in the United Kingdom, including Essex Music Limited, which is run by Mr Richmond's brother Frank, and Westminster Music Limited. Indeed, Mr Frank Richmond runs the London end of the Richmond Organisation's business. The letter of 22 March is copied to Frank. Part of Mr Richmond's explanation for his dilatoriness in this matter is that at the outset he had not heard of Robbie Williams, and that after his letter of 6 October he did not know, notwithstanding the contents of the various letters from Ms Rowden, that the album was due for release in October. Thus, when he received the notification from the Harry Fox Agency, it was a surprise to him. I do not believe his evidence. I find it incredible that he did not ask his brother Frank at the outset (1) who Robbie Williams was, if he did not know and (2) whether he was a significant artist. These are matters which any sensible person asked by EMI for a clearance would consider.
26. On 19th April 1999, Messrs Sheridans wrote to EMI and BMG, alleging copyright infringement, enclosing copies of letters to the MCPS and the PRS and asking for confirmation:
1. That all monies received by you with respect to the exploitation of the composition ... will forthwith be paid to our clients without deduction.
2. A full account of all sums received by you in respect of (the composition) will be prepared and forwarded to us ... no later than 14 days from the date hereof.
3. Your confirmation and undertaking that all future sums received by you in respect of the exploitation of (the composition) will be paid to our clients without deduction.
4. You will immediately notify the appropriate collection societies that the our client is the owner of 100% of the copyright in the composition ...
They added that all their client's rights and remedies were reserved. Thus, the claimants now claimed all income derived from the composition, not merely the whole of the share attributable to the lyrics. They did not ask for the sales of the album to cease. This is in contrast to a letter written on behalf of Westminster Music Limited in 1992 in respect of the track 'Rivers of Ice' by the Simple Minds, which was alleged to infringe the copyright in a Ludlow catalogue composition called 'The Dark Island'. This is one of the examples relied on by Mr Richmond as illustrating the Richmond Organisation's policy of seeking 100% interest in derivative works. The solicitor's letter in respect of 'Rivers of Ice' requires pressing to stop. Mr Richmond said that he just didn't think that way when it came to 'Jesus in a Camper Van'. It is consistent with another 50% case, 'Streets of London'/'Smiling' where the original demand was for 100% but Mr Richmond settled for 50% after four months.
27. The letter to the MCPS asked it not to distribute any fees or royalties pending resolution of the dispute. It did not ask the MCPS to withdraw any licence it had given to record the work, or to refrain from granting any further licence.
28. Correspondence between Sheridans and the defendants' solicitors Harbottle and Lewis ensued. As late as 3rd August 1999 Sheridans wrote:
Having considered question of damages, we have received clear advice that the Court would uphold our client's claim for 50% of the copyright of the new work by Robbie Williams as a reasonable licence fee.
29. It is only in their letter of 16th August 1999 that, having again referred to their clients' entitlement to "a licence fee of at least 50%". Sheridans also say that the infringing material should have been deleted and express confidence that the court will uphold their clients' property rights in the original recording. Nothing further happened until Sheridans' letter before action of 8th December 1999, followed by the issue of proceedings on 3rd February 2000.
30. It is a curious feature of the history which I have set out that at no stage did Mr Richmond say that his terms were non-negotiable. Neither Ms Rowden nor Mr Bradley, both familiar with negotiations of this kind, formed the view that Mr Richmond was immovable, although he was certainly a hard negotiator. Neither thought that he was objecting to release of the record if he did not obtain his 50%. Mr Bradley said that Mr Richmond was a very forceful negotiator, and that if he objected to release of the record with the track he would have expected him to say so. Mr Saini submitted forcibly for Ludlow that it should have been, and was, quite clear that Ludlow wanted the offending lyrics removed, and that this was clear to Ms Rowden at all times after 9 October. Mr Saini drew attention to the 'agreement in principle' which Ms Rowden told Ms Sasko that she considered existed in the fax of 6 October 1998, and suggested that it was clear when Mr Richmond's reply was received that there was no agreement and that this was consistent with the fact that she did not tell Chrysalis or Mr Enthoven that there was any agreement of any sort. My finding is that when Ms Rowden says she has an agreement in principle in this fax, she is pushing the negotiations along. It is not part of a careful analysis. Nor does the bona fides of her belief that the clearance would eventually be granted depend upon whether she thought she had an 'agreement in principle' at this point. I am quite satisfied that she genuinely believed that this was a dispute about money, and that she was confident at the time that she would eventually have an agreement.
31. At some point in the period between release and March, EMI decided to register the claimants at all collection societies with 25% of the copyright, representing 50% of the income attributable to the lyrics. According to Alison Rowden; they felt that they were being held to ransom and that to register an interest which they believed was several times more than the claimants deserved would appease the claimants and protect themselves. Mr Bradley said that to register a conflicting claim was EMI policy, and that this step was taken so as to provoke a dispute resolution procedure conducted by MCPS. He said that when he had been deputy chief executive of the MCPS there had been hundreds of such disputes, and that the way it worked was that both parties were asked to put up their case. If one put up nothing, the MCPS would pay the disputed royalty to the other. If the conflict continued, the royalty would be withheld pending resolution by agreement or in court. Registering a 25% share to Ludlow was, in his view, fair. When he received the letter of 22 March 1999, he telephoned Mr Richmond. Mr Bradley considered that the request for unit sales figures suggested that Mr Richmond was not primarily concerned with stopping sales of the album even though the letter refers to 'unauthorized use' of the copyright work.
32. Mr Bradley rejected any contention that there had been a deliberate release of a flagrantly infringing track on this album. Both he and Ms Rowden said, and I accept, that a producer should always try to obtain copyright clearances before release of the work, but that from time to time a record will be released before clearance, since it is possible, as I understood their evidence, to have a high degree of confidence that the clearance will be obtained. He accepted, I think, that it was clear by March that negotiations were near the end of the line with Mr Richmond, and in answer to a question from me he said that if Mr Richmond had asked for 50% once more, he would have known that the negotiations had stuck. My impression was that had Mr Bradley not being acting under clear instructions from Mr Enthoven he would probably have agreed the 50%. Ms Rowden said that it was EMI's policy not to hold up release of albums when they were licensing their own works. Mr Richmond saw the terms offered by EMI in certain of the licences disclosed in this case, and said that they surprised him: he would never have consented to them. No doubt this reflects the difference between a copyright owner like EMI who both grants and takes licences and a copyright owner who has no need to take licences and has therefore no need to think of the rates which will demanded next time.
33. My impression of Mr Richmond's evidence under cross-examination was that he regarded derivative works as damaging and dangerous. I understood that the reference he made to 'our interests' in the letter of 6 October 1998 was a reference to his desire to ensure that he maintained full control over any work which was derived, however trivially, from a work which he controlled. His attitude had undoubtedly been shaped by experiences of having works 'sampled' on hip-hop albums. He told me that if he identified a reference to a song in his catalogue, he would generally listen to the surrounding lyrics to see if they were indecent. He considered that the majority of derivative works are found in hip-hop or rap albums. If the lyrics were recognised, he would then consider whether the music had recognisable origins in a work in his catalogue. With samples, he aimed to acquire 100% of the copyright. He might consider whether to negotiate a royalty with the writer of the derivative work, but that was, I think, something which he regarded as an optional extra. He told me that he would. Stick at 50% if there was an unrecognisable tune, as there is in the present case.
34. Mr Richmond was obviously very conservative in his attitude to the licensing of the works in his catalogue. It turned out that he had granted very few licences indeed and all these are in evidence (in LR4 and LR5). Thus, a sample (words and music) of the Ralph McTell album was licensed by Westminster Music Limited, a United Kingdom subsidiary of the Richmond Organisation, for 50% of the copyright of the words and music. Others had been licensed for 100% of the words and music ('Iron Man' and 'I can't explain'). It also seems that Robbie Williams has taken licences for substantial interests in the copyrights of other tracks.
35. The reasonableness of Mr Richmond's negotiating approach is only of significance in considering the question of damages. If I consider that his demands are unreasonably inflexible, or unreasonably high, then they are no doubt not entitled to much weight in assessing potential terms as between willing licensor and willing licensee. Mr Bradley considered that he was unreasonable. Closely related to this question is whether Mr Richmond in fact strung Mr Bradley and Ms Rowden along.
36. I think that the true position is that Mr Richmond was content for sales of the album to continue provided that he was assured of his 50%. He was not concerned about the nature of Robbie Williams' derivative work, which he regarded as unexceptionable. He preferred that sales should continue. When asked why he wanted an injunction in the present case he replied that it was because otherwise for the next 50 or 75 years there would be no arrangement to protect his rights. The derivative work could be used in an infinite number of ways, and that possibility he wished to prevent.
37. Section 96 of the Copyright, Designs and Patents Act 1988 ('the 1988 Act') provides that in an action for infringement, and subject to the provisions of Chapter VI of the 1988 Act, 'all such relief by way of damages, injunctions, accounts or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right'. Section 97 makes provision for damages in infringement actions:
97. (1) where in an action for infringement of copyright it is shown that at the time of the infringement the defendant did not know, and had no reason to believe, that copyright subsisted in the work to which the action relates, the plaintiff is not entitled to damages against him, but without prejudice to any other remedy.
(2) The court may in an action for infringement of copyright having regard to all the circumstances, in particular to-
(a) the flagrancy of the infringement, and
(b) any benefit accruing to the defendant by reason of the infringement,
award such additional damages as the justice of the case may require.
This case raises issues both as to the proper approach to damages for infringement generally and as to additional damages in particular.
38. It is sometimes said that damages in copyright infringement actions compensate the claimant for the depreciation in the value of the copyright caused by the activity of the defendants. This is not a particularly helpful formulation, and in the many cases the claimant is in the business of reproducing the copyright work or licensing others to reproduce it, damages for infringement may be approached on the same basis as in patent actions. In General Tire v. Firestone [1975] 1 WLR 819 the principles are comprehensively set out by Lord Wilberforce in a passage which I should quote in full, as it is relevant to many of the problems which arise in the present case.
As in the case of any other tort (leaving aside cases where exemplary damages can be given) the object of damages is to compensate for loss or injury. The general rule at any rate in relation to "economic" torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong (Livingstone v. Rawyards Coal Co (1880) 5 App Cas 25, per Lord Blackburn, at p. 39).
In the case of infringement of a patent, an alternative remedy at the option of the plaintiff exists by way of an account of profits made by the infringer - see Patents Act 1949, section 60. The respondents did not elect to claim an account of profits: their claim was only for damages. There are two essential principles in valuing that claim: first, that the plaintiffs have the burden of proving their loss: second, that, the defendants being wrongdoers, damages should be liberally assessed but that the object is to compensate the plaintiffs and not punish the defendants (Pneumatic Tyre Co Ltd v. Puncture Proof Pneumatic Tyre Co Ltd (1899) 16 RPC 209, 215.)
These elemental principles have been applied in numerous cases of infringements of patents. Naturally their application varies from case to case. Reported authorities, many of which were cited in argument, may be useful as illustrations of judicial reasoning, but are capable of misleading if decisions on particular sets of facts and observations in judgments leading up to such decisions are later relied upon as establishing a rule of law. Nevertheless I think it useful to refer to some of the main groups of reported cases which exemplify the approaches of courts to typical situations.
1. Many patents of inventions belong to manufacturers, who exploit the invention to make articles or products which they sell at a profit. The benefit of the invention in such cases is realised through the sale of the article or product. In these cases, if the invention is infringed, the effect of the infringement will be to divert sales from the owner of the patent to the infringer. The measure of damages will then normally be the profit which would have been realised by the owner of the patent if the sales had been made by him (see United Horse-Shoe and Nail Co Ltd v. John Stewart & Co (1888) 13 App Cas 401). An example of this is Boyd v. Tootal Broadhurst Lee Co Ltd (1894) 11 RPC 175 where the plaintiff manufacturers proved that a profit of 7s per spindle would have been made, and settlements of litigation for lesser rates were discarded.
2. Other patents of inventions are exploited through the granting of licences for royalty payments. In these cases, if an infringer uses the invention without a licence, the measure of the damages he must pay will be the sums which he would have paid by way of royalty if, instead of acting illegally, he had acted legally. The problem, which is that of the present case - the respondents not being manufacturers in the United Kingdom - is to establish the amount of such royalty. The solution to this problem is essentially and exclusively one of evidence, and as the facts capable of being adduced in evidence are necessarily individual, from case to case, the danger is obvious in referring to a particular case and transferring its conclusions to other situations.
Two classic cases under this heading are Penn v. Jack (1866) 14 LT 495, (1867) LR 5 Eq 81 and Aktiengesellschaft fur Autogene Aluminium Schweissung v. London Aluminium Co. Ltd (No. 2) (1923) 40 RPC 107. In Penn v. Jack the patentee was shown to have approached all users of the invention and to have successfully required the vast majority to pay him a royalty of 2s 6d per horse power. The defendant was one of the few who refused and it was held that he should pay damages for infringement based on the accepted royalty rate on the basis that he might have expected to have got a licence at the same rate. The Aluminium case contains a clear statement by Sargant J., at pp. 113-114:
... what has to be ascertained is that which the infringer would have had to pay if, instead of infringing the patent, he had come to be licensed under the patent. I do not mean by that that the successful patentee can ascribe any fancy sum which he says he might have charged, but in those cases where he has dealt with his property merely by way of licence, and there have been licences at certain definite rates, there prima facie, apart from any reason to the contrary, the price or royalty which has been arrived at by means of a free bargain between the patentee and the person desiring to use the patented article has been taken as being the price or royalty that presumably would have to be paid by the infringer. In doing that, it seems to me that the court is certainly not treating the infringer unduly harshly; he should at least, in my judgment, have to pay as much as he would in all probability have had to pay had he to deal with the patentee by way of free bargain in the way in which other persons who took licences did in fact pay.
These are very useful guidelines, but the principle of them must not be misapplied. Before a "going rate" of royalty can be taken as the basis on which an infringer should be held liable, it must be shown that the circumstances in which the going rate was paid are the same as or at least comparable with those in which the patentee and the infringer are assumed to strike their bargain. To refer again to Boyd v. Tootal Broadhurst Lee Co Ltd, 11 RPC 175: when it was argued that because numerous other persons had agreed to pay at the rate of 4s per spindle the infringer should also pay at the rate (rather than at 7s per spindle, which represented the normal profit), it was relevant to show that the rate of 4s was negotiated by way of settlement of litigation in which the validity of the patent was in doubt. This was not the equivalent of that which the court had to assume: for that purpose the patent must be assumed to be valid. This line of argument is very relevant in the present case, for, as I shall show, the appellants adduced a great deal of evidence as to the royalties actually agreed by various licensees, and this was discarded, totally, by the learned judge and the Court of Appeal. They had every right to discard it if the bargains which led to these royalties being agreed were reached in circumstances differing from those which must be assumed when the court is attempting to fix a bargain as between patentee and infringer. The central question in the present case is whether this difference existed.
3. In some cases it is not possible to prove either (as in 1) that there is a normal rate of profit, or (as in 2) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and of any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant of weight, in the face of the more concrete and direct type of evidence referred to under 2. But there is no rule of law which prevents the court, even when it has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications. The true principle, which covers both cases when there have been licences and those where there have not, remains that stated by Fletcher Moulton LJ in Meters Ltd v. Metropolitan Gas Meters Ltd (1911) 28 RPC 157, 164-165: though so often referred to it always bears recitation.
There is one case in which I think the manner of assessing damages in the case of sales of infringing articles has almost become a rule of law, and that is where the patentee grants permission to make the infringing article at a fixed price - in other words, where he grants licences at a certain figure. Every one of the infringing articles might then have been rendered a non-infringing article by applying for and getting that permission. The court then takes the number of infringing articles, and multiplies that by the sum that would have had to be paid in order to make the manufacture of that article lawful, and that is the measure of the damage that has been done by the infringement. The existence of such a rule shows that the courts consider that every single one of the infringements was a wrong, and that it is fair - where the facts of the case allow the court to get at the damages in that way - to allow pecuniary damages in respect of every one of them. I am inclined to think that the court might in some cases, where there did not exist a quoted figure for a licence, estimate the damages in a way closely analogous to this. It is the duty of the defendant to respect the monopoly rights of the plaintiff. The reward to a patentee for his invention is that he shall have the exclusive right to use the invention, and if you want to use it your duty is to obtain his permission. I am inclined to think that it would be right for the court to consider what would have been the price which - although no price was actually quoted - could have reasonably been charged for that permission, and estimate the damage in that way. Indeed, I think that in many cases that would be the safest and best way to arrive at a sound conclusion as to the proper figure. But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reason of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully.
A proper application of this passage, taken in its entirety, requires the judge assessing damages to take into account any licences actually granted and the rates of royalty fixed by them, to estimate their relevance and comparability, to apply them so far he can to the bargain hypothetically to be made between the patentee and the infringer and to the extent to which they do not provide a figure on which the damage can be measured to consider any other evidence, according to its relevance and weight, upon which he can fix a rate of royalty which would have been agreed.
39. This frequently-cited passage does not deal with one problem which is common in copyright licensing, and this is the correct treatment of derivative works, that is, works which are themselves entitled to a copyright but which infringe another. Save in the case of slavish copying it is likely that there will be a copyright in the derivative work. In Redwood Music v. Chappell [1982] RPC 109 at 120, Robert Goff J said this:
For Redwood, Mr Bateson submitted that no copyright can subsist in an arrangement of a work made in infringement of the copyright in the original work. In support of this proposition, he relied upon Gramophone Co Ltd v. Steven Carwardine and Co [1934] Ch. 450; however, it appears that in that case Maugham, J. merely proceeded upon an assumption that the Copyright Act 1911 gives protection only in respect of records lawfully made. The difficulty with Mr Bateson's submission is, however, that it involves an interpolation into section 2(1) of the Act of 1956. The subsection provides that copyright shall subsist, subject to the provisions of the Act, in every original literary, dramatic or musical work; Mr. Bateson seeks to insert the word "lawful" before or after the word "original". I must confess that I can see no warrant for any such interpolation. It is to be observed that in Wood v. Boosey (1868) LR 3 QB 223 Kelly CB contemplated that copyright might subsist in an infringing work (see p 229); yet the opportunity was not taken, either in 1911 or in 1956, to reject that opinion in the statutory definitions enacted in the Acts of those years. Furthermore, Mr. Bateson's submission, if accepted, could lead to substantial injustice. It is understandable that the owner of a copyright should be entitled to restrain publication of an infringing work; but the idea that he should be entitled to reap the benefit of another's original work, by exploiting it, however extensive such work might be, however innocently it might have been made, offends against justice and commonsense. I have therefore no hesitation in rejecting the argument of Redwood on this point.
40. It is now possible to add that the matter has been allowed to rest by the legislature in the 1988 Act. Moreover such a copyright is enforceable: see ZYX Music GmbH v. Chris King [1995] FSR 566 (Lightman J) subject to an obligation on the owner of the copyright in the derivative work to account to the author of the first work.
41. When copyright clearance for derivative works is obtained, it is common in the trade for the owner of the work in respect of which the licence is sought (I shall call this the 'first work', and the copyright the 'first copyright') to demand a share of the copyright in the derivative work. This simplifies the collection of royalties, and gives the owner of the first work control over the exploitation of the derivative work. This has become important as the use of 'samples' of recorded works intended for use in other works has become widespread. Ms Blain, who gave expert evidence on the part of the defendants, was engaged in the business of clearing samples. Her evidence was that the most usual method of clearance she encounters is where the copyright owner in the first work claims a percentage copyright interest in the derivative work. The writer and publisher of the first work are then cited to the collection societies as co-writer and co-publisher of the derivative work, and collect any income direct at source. The advantage of a joint share in the copyright is that no exploitation of the work can take place without the consent of the joint owners (see section 173(2) of the 1988 Act).
42. When one comes to consider comparables in a case such as the present, the position is rather more complex than it would be in respect of a patent. If the owner of the first copyright stipulates for (say) 50% of the copyright, it is implicit that there will be a licence for the particular recording in respect of which his consent is obtained. In countries where there is no statutory licence in respect of second performances (there is now no such licence in the United Kingdom, although there is one in the US) all other forms of exploitation will be subject to the further control of the owner of the first copyright. The royalty rate and the right acquired by the owner of the first copyright are thus inseparable aspects of the same question, and must be considered together.
43. Ludlow adduced almost no evidence on quantification. The contention advanced was as follows (I quote from Mr Saini's skeleton argument):
...Ludlow, whose business includes licensing compositions to third parties such as the Defendants, made a clear, non-negotiable, offer of licence for the use at a rate of 50% of all royalties earned by the later work. The novelty lies in the relevance of this offer to the quantification of damages. In summary, the claimant will submit that this is the fee which fixes the damages to which it is entitled given the choice offered to the Defendants to either pay this fee or to delete the Source Work.
It is further contended that to conduct an assessment of a reasonable fee on the basis of the comparables is to condone the Defendant's infringement and to defeat the principle, recently affirmed by the Court of Appeal in PPL v. Maitra [1998] 1 WLR 870.
44. Ludlow also seek additional damages, to lift the appropriate share of the copyright above 50% (remembering that 50% in this context is the whole of the copyright in the words, the music being unarguably non-infringing), essentially on the ground of deliberate and cynical infringement by all the defendants except, possibly, Mr Chambers.
45. Since considerable reliance is placed on PPL v. Maitra, I should discuss it at this point. This was a case in which in a number of actions by Phonographic Performance Limited ('PPL'), which is the society which administers the public performances of phonograms, had come before the court on applications for judgment in default of defence. Public performance of recorded performances is an infringement of the copyright in the recording. PPL act on behalf of the record companies to grant licences for the playing of recordings made and sold by the record companies to those in charge of premises where the records are played. In principle any public playing of a record requires a licence from PPL. PPL regularly demand payment for past infringements, and the taking of a licence for the future, from those in control of such premises. If no payment is forthcoming, and if a licence is not taken for the future, then they sue for infringement, and it is a normal feature of the interim applications list in the Chancery Division that there will be a number of applications for judgment in default of defence made by PPL. PPL require a person who applies to take a licence to take the licence from the first day, and so no licence for the future is forthcoming until past infringements have been regularised. Chadwick J took the view that the injunction was being used to recover, in effect, damages for past infringement, and limited its duration to a period of six months, with liberty to apply, contemplating that PPL would apply if a licence were not granted.
46. This was accordingly a case in which the practice of PPL to require payment for the past before a licence for the future was under consideration. It is to be noted that there is no compulsory licence in respect of the public performance of sound recordings: and thus PPL can grant or refuse a licence if they please. Mr Saini fastened on three passages in the judgment of the Court of Appeal, delivered by Lord Woolf CJ:
Although the Act in other parts provides for licences as of right to be granted, there is nothing requiring an owner of copyright of the type being considered in this case to grant a licence, save where the Monopolies and Mergers Commission [now the Competition Commission] has become involved (see sections 98 and 144). An owner may exercise and exploit his proprietary right by licensing some and not others. He may charge whatever he wishes.
And again:
Although the terms upon which PPL licence their copyright are subject to the control of the Copyright Tribunal, Parliament did not see fit to restrict the way that they enforced their copyright against infringers. Parliament provided them with the same rights as ordinary copyright owners and prima facie they should be granted the same relief.
We accept that when a person establishes infringement of copyright and a threat to continue infringement, an injunction will in the ordinary case be granted without restriction. This is especially true when the defendant takes no part in the proceedings. But the court, when granting an injunction, is still required to exercise a discretion and in so doing there could be circumstances where restriction or refusal of an injunction would be warranted. We do not believe that such circumstances arise in this case or would normally do so in similar cases.
Finally:
The second limb of the proviso to the injunction was intended to ensure that the injunction did not continue for a period longer than was necessary to protect PPL's rights. That was considered to be, at most, seven months. The purpose of such a limitation in time was to prevent PPL using the threat of committal to make the defendant pay further licence fees.
Use of an injunction by PPL to obtain money to which they are not entitled would be an abuse, but there is no evidence that that ever occurs. Where unauthorised use of PPL's copyright is taking place, we do not believe it is an abuse to refuse to licence that copyright without an appropriate payment for past use and an agreement for future use. Nor do we consider it an abuse for PPL to require compliance with an injunction either by the person refraining from using the repertoire or by paying for such use that has taken place and will take place.
47. In my view, these passages are no support for the proposition which Mr Saini seeks to extract from them. If a copyright owner refuses to licence at all, then he is entitled to damages (and possibly additional damages) and an injunction against an infringer. If he refuses a licence except on terms that the intending licensee considers unreasonable, and the intending licensee thereafter infringes, then he is again in principle entitled to damages and possibly additional damages, and an injunction. But there is no distinction between these two cases. In truth, to hold otherwise would be to permit the copyright owner to fix his own damages by (to use Sargant J's words) ascribing any fancy sum which he says he might have charged. In every case, the compensation for the invasion of the right is objectively assessed. The passage in the Meters case quoted by Lord Wilberforce in General Tire (above) should not be read as justifying the claimant in claiming that which he demands for permission in every case. The sum sought by the claimant may be objectively unreasonable as the price of the consent which he is entitled to refuse to the defendant. What the Meters case is talking about is a rate the reasonableness of which is shown by the fact that others take it, and this is why Lord Moulton in that case refers to the patentee granting licences.
48. In my judgment, when it is accepted (as it is in this case) that some form of royalty or profit share is the appropriate basis for damages, rather than a claim on the basis of loss of the claimant's profits caused by the defendant's activities, then the basis of the assessment is a transaction as between willing licensor and willing licensee. This case is not a case of a 'going rate'. There is no 'going rate' for the Loudon Wainwright III work. Rather it is a case which has to be decided on all the evidence. The relevant evidence includes the sort of rates which appear in other similar transactions (these are too different from the present case to amount to 'comparables' as that term ought to be used) and the evidence about the approach which is taken to the negotiation of such agreements. It includes, as it must, the fact that some people, though not many, appear to be willing to licence a recording on the basis that Ludlow or another company in the Richmond Organisation will obtain 50% or 100% of the work. I am conscious also that precision is not attainable and that if one is to err, one should err on the side of generosity to the claimant
49. Both sides were agreed that the correct approach was to view damages as a matter of royalty share. They differ widely on the appropriate quantum. Mr Richmond wants 50% of the income from the track, not only because this is what he asked for, but because it is what he always asks for, if he does not ask for 100%. Ms Blain says that that is not the normal approach to licensing an infringement which is, to use Mr Strauss's words, a substantial part but only just, in a derivative work whose whole feeling and overall message is different from that of the first work. As I have indicated, she thinks the most usual method of clearance is for a percentage share, carrying the income, in the copyright in the derivative work, although she recognises that either a buy-out or an 'income participation deal' which did not involve a share in the copyright are kinds of deal she might seek where the use of the first work was slight.
50. Ms Blain is slightly more scientific than Mr Richmond in her approach. She identifies both quantity and prominence of use as important factors. She would if appropriate use a musicologist's report, and one has been provided in this case by Mr Oxendale, who is a well-known expert in this area. She takes into account the relative bargaining power of the parties. She considers a number of transactions in which EMI has granted clearances at percentages between 10% and 100% for an adaptation. In a number of cases, she expresses the view that the users got a good deal from EMI, thus somewhat confirming Mr Richmond's view that the EMI licences were 'substandard'. She comes to a conclusion that 12% is an appropriate rate, based upon the lack of similarity in the music; the difficulty in detecting similarity in the lyrics without a lyric sheet (i.e. merely by listening to the works), the lack of knowledge of Loudon Wainwright III in the United Kingdom and Mr Oxendale's calculation of the amount the song physically represented by infringing matter (18 bars out of 76).
51. I have listened to the recordings of the two songs and most of the other licensed songs in the case. I agree that the message of both is different. While I am considering an infringement only of the lyrics of 'I am the way' the musical context is immaterial. I agree with Mr Strauss's assessment of the degree of similarity, although to my mind the idea of the Son of God attracting bad luck does not emerge that clearly from the lyrics of 'Jesus in a Camper Van', which are not entirely coherent. If, therefore, I am satisfied that the degree of borrowing is material to the rate, then I must conclude that the rate asked for by Ludlow is too high, and I am satisfied that it is material. Ms Blain and the other material satisfy me that rates vary according to the degree of borrowing, 100% being appropriate in cases of great use, such as arrangements. What then of the rate? My feeling is that 12% is too low. While it is supported by purely mathematical considerations, there is little else to commend it. I am also mindful of the fact that the use was considered helpful to Mr Williams. Mr Enthoven thought it might do him some good to be associated with Loudon Wainwright III, if only among the credits of the album.
52. The only other fixed point is the proportion which EMI attributed to Ludlow when the registered the song with the MCPS. There are three possibilities. This either represented a valuation of Ludlow's rights, or a sum which should prevent Ludlow from complaining, or a sum pulled out of the air. I suspect that it was the second alternative, but I should take it into account. Taking these matters together, I am satisfied that the right figure is 25% of the interest.
53. There is no doubt that copyrights are special in this sense, that provision is made for the payment of additional damages in the circumstances set out in section 97 of the 1988 Act. If the royalty demanded by the copyright owner for a licence is either a rate that represents the going rate or a rate that it would be reasonable to demand in all the circumstances (see the passage from the speech of Fletcher Moulton LJ in the Meters case quoted above) then that is what will be recovered as damages. Where the owner is only willing to licence at a figure more than the market will bear, he will nonetheless recover his true damage. But in such a case the jurisdiction to award additional damages is important, since it is highly important that the approach to the computation of damages should not have the effect of encouraging would-be licensees deliberately to infringe, having calculated that they may in this way effectively obtain a compulsory licence in respect of the period of infringement at a rate lower than the owner of the copyright demands. All depends upon the circumstances. Even the nature of deliberate infringements varies from case to case. It is possible that the infringer has a well-based belief that negotiation is dragging on, but that experience of many other like negotiations suggests that agreement will be forthcoming in the usual way. At the other end of the range, a clear refusal by the owner of the right may be met by deliberate and cynical infringement. I accept the thrust of Mr Saini's submission to this extent. The two cases should, in my judgment, be treated differently.
54. In Redrow Homes v. Betts [1999] AC 197, the House of Lords expressly did not come to any conclusion as to the nature of the award of additional damages. Lord Clyde considered that additional damages were more probably aggravated, rather than exemplary, damages. Lord Jauncey of Tullichettle left the point open. Disregarding the legislative history of the section it seems to me that the two matters to be considered that are identified in section 97(2)- flagrancy and benefit to the defendant- do at least point in favour of the suggestion that the section is aimed (among other things) at what might be called 'restitutionary damages', that is, damages calculated by reference to the additional benefit accrued to the defendant by his deliberate infringement. Such damages are not truly compensatory, but nor are they exemplary. They are related to the account of profits. In Cala Homes (South) Limited v. Alfred McAlpine Homes East Limited (No 2) [1996] FSR 36 Laddie J came to the opposite conclusion in the course of a judgment which reached a conclusion expressly overruled in Redrow Homes. He based himself largely upon the discussion of section 17(3) of the Copyright Act in the Whitford Report, and concluded that the change in expression in section 97(2) was not a change without consequence as a result of the provisions of section 172 of the 1988 Act. The point was also left open by the Court of Appeal in ZYX Music v. Chris King [1997] 2 All ER 129 (CA).
55. For my part, I do not read the decision of the House of Lords in Redrow Homes as excluding the possibility that an award of damages under section 97(2) might include a restitutionary element. Returning to considerations closer to the facts of the present case, I consider that one should not exclude the possibility that an award of damages might be made under section 97(2) against a defendant who had declined the claimant's offer of a licence but deliberately infringed, with the effect of bringing the award of damages up to the fee originally sought by the claimant, or even so as to enable the claimant to participate in the profits made by the defendant while also recovering damages for the invasion of his right. Whether such an award of damages should be made must depend upon all the circumstances of the case. Where the owner of the right did not grant licences, I can again envisage circumstances in which an award of strictly compensatory damages might be accompanied by an award of additional damages reflecting the benefit derived by the defendant, as the section appears to contemplate. Thus, if the correct approach to infringement damages were to calculate a royalty on a 'profits available' basis, then in a case of flagrant infringement it might be right to take a larger share of the available profits for the claimant's account than would otherwise be taken.
56. It is not necessary for me to decide whether additional damages can include a punitive element, or be purely punitive. Accordingly I do not do so.
57. I find as a fact that EMI did knowingly infringe Ludlow's copyright in permitting Chrysalis to press the CD containing 'Jesus in a Camper Van'. I reject the suggestion that this was in any way cynical, but was a decision made in the expectation that an agreement would be reached, as usual, concerning the subject matter of the song. I am satisfied that neither Ms Rowden nor Mr Bradley considered that they had a 'take it or leave it' offer from Ludlow. I consider that they were justified in this belief for two reasons. The first is that Mr Richmond's letter of the 6 October 1998 does not state that it is. Negotiators are quite capable of making final offers of this sort, and Robbie Williams and EMI were confronted with one such in the case of a track called 'Love Supreme' (Williams/Chambers), which was an arrangement of an existing composition (I will survive' (Perren/Fekaris)). Universal Music Publishing Limited wrote in June 2000 offering a licence in respect of 65% of the composition and say
Our US office have informed us that the above quote is non-negotiable.
The next matter is that Mr Richmond was not concerned about release dates, and indeed did not pay any attention to them. He reiterated his demand in November, without saying it was a take it or leave it demand. I find that he discussed rates with Mr Bradley knowing of the release. This is consistent with the impression which was created in the mind of Ms Rowden and Mr Bradley. There was nothing either cynical or flagrant about their approach.
58. I should add that I consider that their own licensing practice would have reinforced their belief that negotiation should be possible, even though Mr Richmond regarded EMI's deals as substandard. Considering all the circumstances, I do not find any basis for an award of additional damages in this case. I emphasise that this case may be exceptional in this respect, and it may be that in the usual case an infringer who refused a licence and deliberately infringed would end up paying the rate that had been asked and refused. But all depends upon the circumstances of the case, and I attach particular importance to the factors I have discussed above.
59. The position of Mr Williams so far as additional damages are concerned calls for separate comment. It is said to arise from Mr Enthoven's refusal to authorise a 50% share in favour of Ludlow, given Ms Rowden's view that it was 'extortionate'. If Mr Enthoven was acting on Mr Williams' behalf as his manager, then I do not understand that Mr Williams would be vicariously liable for Mr Enthoven's actions. However, it must be the case that by reason of his authorising the making of the recording (which he must do) Mr Williams authorised the principal infringement. His manager's refusal to clear the recording must, it seems to me, be attributed to Mr Williams. Thus, if I had considered that this was a cynical act of infringement, I can see no reason why Mr Williams should not have been included in the order for additional damages.
60. In principle, injunctive relief should be available to restrain the invasion of any proprietary right. The exceptions to this rule are well known. I need only concentrate on two matters in the present case. The first is the defendants' contention that they are entitled to pay damages in lieu of an injunction. The starting point is the judgment of AL Smith LJ in Shelfer v. City of London Electric Lighting Company [1895] 1 Ch 287. This case and Jaggard v. Sawyer [1995] 1 WLR 269 now indicate the limits of the jurisdiction. I shall set out the often-cited passage from the judgment of AL Smith LJ:
Many Judges have stated, and I emphatically agree with them, that a person by committing a wrongful act (whether it be a public company for public purposes or a private individual) is not thereby entitled to ask the Court to sanction his doing so by purchasing his neighbour's rights, by assessing damages in that behalf, leaving his neighbour with the nuisance, or his lights dimmed, as the case may be.
In such cases the well-known rule is not to accede to the application, but to grant the injunction sought, for the plaintiffs legal right has been invaded, and he is prima facie entitled to an injunction.
There are, however, cases in which this rule may be relaxed, and in which damages may be awarded in substitution for an injunction as authorized by this section.
In any instance in which a case for an injunction has been made out, if the plaintiff by his acts or laches has disentitled himself to an injunction the Court may award damages in its place. So again, whether the case be for a mandatory injunction or to restrain a continuing nuisance, the appropriate remedy may be damages in lieu of an injunction, assuming a case for an injunction to be made out.
In my opinion, it may be stated as a good working rule that -
(1.) If the injury to the plaintiffs legal rights is small,
(2.) And is one which is capable of being estimated in money,
(3.) And is one which can be adequately compensated by a small money payment,
(4.) And the case is one in which it would be oppressive to the defendant to grant an injunction:-
then damages in substitution for an injunction may be given.
There may also be cases in which, though the four above-mentioned requirements exist, the defendant by his conduct, as, for instance, hurrying up his buildings so as if possible to avoid an injunction, or otherwise acting with a reckless disregard to the plaintiffs rights, has disentitled himself from asking that damages may be assessed in substitution for an injunction.
It is impossible to lay down any rule as to what, under the differing circumstances of each case, constitutes either a small injury, or one that can be estimated in money, or what is a small money payment, or an adequate compensation, or what would be oppressive to the defendant. This must be left to the good sense of the tribunal which deals with each case as it comes up for adjudication. For instance, an injury to the plaintiffs legal right to light to a window in a cottage represented by £15 might well be held to be not small but considerable; whereas a similar injury to a warehouse or other large building represented by ten times that amount might be held to be inconsiderable. Each case must be decided upon its own facts; but to escape the rule it must be brought within the exception. In the present case it appears to me that the injury to the Plaintiff is certainly not small, nor is it in my judgment capable of being estimated in money, or of being adequately compensated by a small money payment.
In Jaggard v. Sawyer, it was observed that this list of factors was not exhaustive. Millett LJ (as he then was) put the argument about expropriation of the claimant in perspective:
Citation of passages in the cases warning of the danger of "expropriating" the plaintiff needs to be balanced by reference to statements like that of Lord Westbury LC in Isenberg v. East India House Estate Co Ltd (1863) 3 De G J & S 263, 273 where he held that it was the duty of the court not
by granting a mandatory injunction, to deliver over the defendants to the plaintiff bound hand and foot, in order to be made subject to any extortionate demand that he may by possibility make, but to substitute for such mandatory injunction an inquiry before itself, in order to ascertain the measure of damage that has been actually sustained.
When the plaintiff claims an injunction and the defendant asks the court to award damages instead, the proper approach for the court to adopt cannot be in doubt. Clearly the plaintiff must first establish a case for equitable relief, not only by proving his legal right and an actual or threatened infringement by the defendant, but also by overcoming all equitable defences such as laches, acquiescence or estoppel. If he succeeds in doing this, he is prima facie entitled to an injunction. The court may nevertheless in its discretion withhold injunctive relief and award damages instead.
Millett LJ identifies identifies the crucial consideration as the oppressiveness of the injunction sought by the claimant. As Sir Thomas Bingham MR observed, it is important that this does not turn into a mere consideration of the balance of convenience in granting a final injunction to protect the proprietary right.
61. Banks v. CBS Songs Limited (No 2) [1996] EMLR 452 is an example of a case in which damages have been awarded in lieu of an injunction to a songwriter. In that case, in Jacob Ps words 'the plaintiff does not want an injunction because she wants the work not to be performed. She wants an injunction in order to negotiate a price.' This of course is always true when an offer of a licence has been turned down because the asking price was too high, and the recording has gone ahead anyway. Jacob J said this:
It seems to me that I have to consider the position as of today. In theory, the copyright may last another one hundred years. Who is to know whether or not it is likely to be valuable or not? Certainly the defendants wish to press more records. I, accordingly, do not think that this is a case which falls within head (3) of AL Smith LJ, one to be adequately compensated by a small money payment. It does not follow, however, that this is a case for the grant of an injunction. As I have said, it stands out a mile that what the plaintiff wants is a monetary payment commensurate with the amount of use of her work.
Identifying the case as wholly exceptional, Jacob J refused an injunction, taking into account the fact that the defendants had been exploiting the lyrics for eleven years.
62. This passage in the judgment of Jacob J identifies the principal problem with the suggestion that damages in lieu of an injunction can be appropriate in a case such as the present. The problem lies in the duration of the copyright and the multitude of uses to which the work can be put. There are a range of relevant rights in the lyrics of a song, including sheet music rights, mechanical rights, and synchronisation rights. There is the question of performances by other performers, who may make the work more important (or better selling) than the original performance. To refuse an injunction is to deprive the owner of the first copyright any direct share in the profits of such future exploitation and no control over the nature of such exploitation, since the Court has no power, and no ability, to settle a general licence for the future which would take into account different royalty rates for different kinds of use, and so on. The once and for all payment would have to do. Obviously there are cases where a once and for all payment is appropriate. Jaggard v. Sawyer, a case of a use of a road and creation of a driveway in breach of covenant is one such. Such a matter can be dealt with in principle by the payment of the sum which it would have been appropriate for those having the benefit of the covenant to demand, and such a transaction is a familiar one. The result of the once and for all payment is that the unlawful act continues, and damages for it have been prospectively paid. It is to this extent indistinguishable from an expropriation.
63. I cannot say that Mr Richmond's worries for the future should be overridden by the Court. It seems to me that the proper approach in this case is to identify the various acts of infringement now threatened and to see on normal principles whether Ludlow has disentitled itself to relief in respect of these threatened acts.
64. In my judgment, on the facts of the present case the question can be thought to fall naturally into three parts. The first concerns any surviving CDs from the pressing of the album which took place prior to release in October 1998 and any subsequent pressing. The next concerns any further pressings of the same album. Finally there are all other exploitations of the recording and of the work. Mr Saini did not urge injunctive relief in respect of surviving copies. He was right to do so. I have already indicated that EMI were acting reasonably in not holding up release of the album in the particular circumstances, and I consider that the extreme lateness of any intimation from Ludlow that injunctive relief would be sought amounted to acquiescence in the pressing of the album. Future pressings of the same album do not stand on the same footing. It was not suggested that there was any technical reason why a new track should not be substituted. There is no relevant delay, Ludlow's pleadings in this case having made it clear that injunctive relief would be sought some two years ago. It was not suggested that such an injunction would be oppressive even if the appropriate monetary compensation would be readily capable of calculation. But this is not an investigation of the balance of convenience, and I consider that I should grant injunctive relief in respect of further pressings of this album. Existing stocks will be unaffected. Equally there is no reason why all other exploitation should not be prevented. Thus, the injunction will be a general injunction subject to a proviso saving existing copies of the album.
65. This determination also has some impact on the royalty determination. As I have indicated, the practice in the trade is to seek a share of the copyright. If I am to fix damages having regard to the practice in the trade, or having regard to Mr Richmond's practice, the other side of the coin is that a share in the copyright forms part of the deal. The injunctive relief which I grant in this case has the effect of putting Mr Richmond in the position of owning a joint share in the copyright in the derivative work.
66.(a) Damages for infringement should be paid at 25% royalty share as provided for by EMI in the MCPS notification;
(b) Injunctive relief will be granted in respect of all exploitation of the infringing work other than the sale of existing pressings of the album, and damages will not be awarded in lieu thereof;
(c) there will be no award of additional damages under section 97(2) of the Copyright Designs and Patents Act 1988.
I will hear counsel on the form of the order and on costs.