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||Neutral Citation Number:  EWHC 3091 (Ch)
||Case No: HC-2015-004970
IN THE HIGH COURT OF JUSTICE
Fetter Lane, London EC4A 1NL
||2 December 2016
B e f o r e :
MR JUSTICE ARNOLD
|| GLOUCESTER PLACE MUSIC LIMITED
||- and -
||(1) SIMON LE BON
(2) NIGEL TAYLOR
(3) NICHOLAS BATES
(4) ROGER TAYLOR
(5) ANDREW TAYLOR
(6) NOTICEVALE LIMITED
(7) HINTCREST LIMITED
(8) YOUNGSTOWN LIMITED
(9) EXITGLEN LIMITED
(10) HUMBLEWARD LIMITED
(11) VETCHCREST LIMITED
(12) ACTIONLINK LIMITED
Ian Mill QC and Andrew Scott (instructed by Lee & Thompson) for the Claimant
Michael Bloch QC (instructed by Russells) for the First to Fourth and Sixth to Eleventh Defendants
The Fifth and Twelfth Defendants did not appear and were not represented, but agreed to be bound by the result
Hearing dates: 14-15 November 2016
HTML VERSION OF JUDGMENT APPROVED
Crown Copyright ©
MR JUSTICE ARNOLD:
- In these proceedings the Claimant seeks declarations that the Defendants, who comprise the current or former members of the pop group Duran Duran and their service companies, have acted in breach of various music publishing and associated agreements ("the Agreements") by serving a series of notices under section 203 of the United States Copyright Act 1976 ("the Notices") terminating assignments to the Claimant of the US copyrights in 37 Duran Duran songs, or will be in breach if the Notices are not withdrawn. The Defendants deny that the Claimant is entitled to such declarations. Whether the Defendants have breached, or will breach, the Agreements by service, or non-withdrawal, of the Notices depends on the correct interpretation of those Agreements, which are governed by English law and confer exclusive jurisdiction on the courts of England.
- The contractual history is in summary as follows. On 28 July 1980 each of the five members of Duran Duran (a "Group Member") entered into a music publishing agreement (a "Group Member Music Publishing Agreement") with the Claimant (then called Tritec Music Ltd) which contained a worldwide assignment of copyright in works written or composed by the Group Member during the term of the Agreement in return for the payment of advances and royalties. The initial term of these Agreements was one year, with provision for extensions through a series of one year "option periods". The Claimant extended each Group Member Music Publishing Agreement through two "option periods" until 1 June 1983, when these Agreements were terminated by and on the terms of a series of agreements in the form of letters ("the Termination Letter Agreements"). They were so terminated so as to enable each Group Member to provide songwriting and associated services in respect of future compositions through UK service companies and rest of the world service companies. Accordingly, each Group Member's service companies entered into music publishing agreements (the "UK Service Company Publishing Agreements" and the "Rest of World Service Company Publishing Agreements") on 1 June 1983. Each Group Member also entered into an agreement with the Claimant in the form of a letter (a "Group Member Letter Agreement") at the same time, which was provided as an inducement to the Claimant to enter into the Service Company Publishing Agreements. On 1 July 1993 agreements were entered into between the Claimant and certain of the Group Members and their Service Companies for the sale, transfer, and assignment of part of the Claimant's interest in the compositions.
- During the term of the Music Publishing Agreements, the Group Members between them wrote the music and/or lyrics of 37 songs ("the Compositions"). These include many of Duran Duran's best-known songs, including "Girls on Film", "Rio", "Hungry Like The Wolf" and "Is There Something I Should Know?". Some of the Compositions were written pursuant to the Group Member Music Publishing Agreements and some pursuant to the Service Company Music Publishing Agreements, but nothing turns on this.
- The Notices were served by letters from the Defendants' representatives dated 11 March 2014 and 24 June 2014. The Notices specify various effective dates of termination for the purposes of section 203(a)(4) of the US Copyright Act in respect of the Compositions. For some of the Compositions, these dates have now passed; for others, the specified effective dates fall between now and 2020.
- It is common ground that, so far as is relevant to the present dispute, the Music Publishing Agreements are in essentially identical terms. By way of example, the parties referred me to a set of the Agreements between the Claimant and Nigel John Taylor (known as John Taylor) and his service companies. It is also common ground that little turns on the differences between the Group Member Music Publishing Agreements and the Service Company Music Publishing Agreements. Accordingly, I can concentrate on the Group Member Music Publishing Agreement between the Claimant and John Taylor and on the Group Member Letter Agreement between the Claimant and John Taylor.
- The relevant clauses of the Group Member Music Publishing Agreement are in the following terms (with John Taylor being referred to as "the Writer" and the Claimant being referred to as "the Publishers"). Clause 3(a) provides, so far as relevant:
"The Writer as beneficial owner (and by way of assignment of future copyright and rights where appropriate) hereby assigns to the Publishers all the copyrights and all other rights whatsoever and howsoever now or hereafter known (subject as hereinafter provided) in all musical compositions and/or lyrics and/or original arrangements of musical works (whether or not such musical works so arranged are in the public domain) which may prior to the date hereof have been written composed or created in whole or in part by the Writer and not been assigned by the Writer to any third party and which may during the term hereof be written composed or created in whole or in part by the Writer including the titles words and music thereof (all of such musical compositions lyrics and arrangements being hereinafter together called 'the said works') throughout the world and the right to renew and extend such copyrights and other rights and the ownership of such renewed and extended copyrights and other rights as may now or hereafter be conferred by the laws of any territory so that the entire copyrights and all other rights in the said works shall be vested in the Publishers absolutely free from the adverse claims of any third party
- Clause 4 provides:
"Without prejudice to the generality of the grant of rights hereinabove contained the Publishers shall have the right to make and publish and to authorise others to make and publish:-
(a) new adaptions, orchestrations, dramatisations and arrangements of the said works
(b) additions and alterations to and deletions from the said works subject to prior consultation with the Artist by the Writer
(c) new lyrics or lyric translation in any language to the music of the said works and new music to the lyrics of the said works
all of such rights in such modifications and new matter to be exercised in such manner as the Publishers shall think fit so that the entire copyrights and all other rights whatsoever and howsoever throughout the world in such modifications and new matter shall be vested in the Publishers absolutely for the full term thereof and all renewals and extensions thereof subject always to payment of the Writer's share of all fees and royalties as provided for herein".
- Clause 6 provides, so far as relevant:
"The Writer hereby warrants and agrees:-
(b) that he is or will be the sole owner (subject to the terms of this Agreement and subject to the existence of any collaborator referred to in Clause 5 thereof) of the copyright and of all other rights of the nature referred to in Clause 3(a) hereof in the said works and that he has not previously granted transferred to [sic] assigned and will not grant transfer or assign any interest in the copyright or such other rights in the said works or any of them or any part thereof to any other person firm or corporation
- Clause 12 provides:
"The Writer shall at the Publishers expense take such steps and proceedings as the Publishers may reasonably require to renew and extend any and all copyrights and other rights which may now or may hereafter exist in the said works and after such renewal and extension shall transfer and assign to the Publishers for their own use and benefit the rights herein granted for such renewed or extended term so that each such transfer or assignment shall be in the form annexed hereto marked 'Exhibit A' subject to the payment of royalties provided for herein In the event that the Writer shall after written request fail to do so the Writer hereby appoints the Publishers to be his Attorney and to take all and any such steps and proceedings in the name and on behalf of the Writer but at the Publishers expense and execute and deliver to the Publishers in the name of the Writer any such transfer and/or assignment".
- Clause 18 provides, so far as relevant:
"This Agreement shall be governed by and construed under the laws of England whose courts shall have exclusive jurisdiction
- The Group Member Letter Agreement provides, so far as relevant:
"I hereby confirm warrant and guarantee to you that:
(b) The Companies are in a position to enter into the Publishing Agreements and to assume all the obligations and to give to you all the warranties and undertakings contained therein and all rights in the said works (as defined therein) and are the absolute owners of all copyright and any other rights in the said works throughout the world for the full period of copyright and all renewals and extensions thereof whether now or hereafter possible.
(d) I will do all that is required of me under the Employment Contracts to ensure that the Companies will duly and punctually perform discharge and implement all their obligations and undertakings under the Publishing Agreements insofar as they require my co-operation.
(f) If either of the Companies should for any reason refuse duly to perform and observe or procure the performance and observance of each and all of the terms and conditions of the relevant Publishing Agreement then you shall be entitled to serve written notice on both me and the Company requiring me and the Company to do all in our power to procure that the said terms and conditions of the relevant Publishing Agreement are performed and observed and if I shall not take all steps within my power which I am able to take within the next thirty days after service of such notice you may serve a further written notice on me upon service of which I shall be deemed added as a direct party to that Publishing Agreement jointly and severally with that Company without prejudice to any rights you may have against the Company
(g) As Beneficial Owner I hereby assign to you (to the extent of my interest if any and to the extent that I have not already assigned the same to one or other of the Companies or the Performing Right Society Limited ('the PRS')) the entire copyright and all other rights throughout the world and all renewals and extensions thereof whether now or hereafter existing in the said works subject only as the Publishing Agreements respectively provide.
Section 203 of the US Copyright Act
- Section 203 provides, so far as relevant, as follows:
"(a) CONDITIONS FOR TERMINATION. In the case of any work other than a work for hire, the exclusive or non-exclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:
(3) Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.
(4) The termination shall be effected by serving an advance notice in writing, signed by the number and proportion of owners of termination interests required under clauses (1) and (2) of this subsection, or by their duly authorized agents, upon the grantee or the grantee's successor in title.
(A) The notice shall state the effective date of the termination, which shall fall within the five-year period specified by clause (3) of this subsection, and the notice shall be served not less than two or more than ten years before that date. A copy of the notice shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect.
(B) The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation.
(5) Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.
(b) EFFECT OF TERMINATION. Upon the effective date of termination, all rights under this title that were covered by the terminated grants revert to the author
- There is no dispute that, as is obvious, the purpose of section 203 is to protect authors from the consequences of transactions which involve assignments of copyrights for the full term of those copyrights. It should be noted, however, that no expert evidence as to US law was adduced by either party. I shall return to this point below.
Jurisdiction and applicable law
- There is no dispute that this Court has (exclusive) jurisdiction over the present dispute or that the applicable law is English law by virtue of the parties' express choice of that law in the Music Publishing Agreements. Despite the absence of dispute on the points, it is necessary to say a little more on this subject for reasons that will become apparent later in this judgment.
- The Court is required to give effect to the parties' choice of law by Article 3 of the Rome Convention on the law applicable to contractual obligations, to the extent that it is given the force of law in the United Kingdom by section 2 of the Contracts (Applicable Law) Act 1990. The applicable law determines the parties' "contractual obligations" including questions of material validity (Article 8(1)), interpretation (Article 10(1)(a)) and performance (Article 10(1)(b)). It is important to note that section 2(2) of the 1990 Act provides that Article 7(1) of the Rome Convention, which provides for effect to be given to the mandatory rules of the law of another country with which the situation has a close connection, does not have the force of law in the United Kingdom.
- The rule at common law is that the question of whether, and to what extent, title to copyright is assignable depends on the law under which that copyright was created (the lex loci protectionis, that is to say, the law of the country "where protection is claimed" in the words of Article 5(2) of the Berne Convention for the protection of literary and artistic works, which is properly interpreted as being the law of the country in respect of which protection is claimed): see Campbell Connelly & Co Ltd v Noble  1 WLR 252 at 255 (Wilberforce J). There is no reason to think that the position is any different under the Rome Convention: see Dicey, Morris & Collins, The Conflict of Laws (15th ed) at 24-069.
- If and to the extent that title is assignable under the lex loci protectionis, the question of whether, and to what extent, title has in fact been assigned by an agreement governed by English law depends on the effect of the agreement applying English law, and in particular English principles of contractual interpretation: see Peer International Corp v Termidor Music Publishers Ltd  EWHC 2675 (Ch) at  (Neuberger J) (affd  EWCA 1156,  Ch 212).
The relevance of US copyright law
- It is common ground that US copyright law forms an important part of the background to the dispute between the parties. It is also common ground that:
i) US copyrights of the kind in issue in the present case are assignable for their full term;
ii) an assignment of US copyright for the full term of copyright will be effective throughout that term unless and until the author serves notice of termination in accordance with section 203(a)(4);
iii) the Notices served by the Defendants are valid and effective as a matter of US law, and have the consequence that ownership of the US copyrights in the Compositions has reverted, or will revert, to the relevant Group Members as from the dates on which the Notices take effect.
- The Claimant contends that, save to the extent that it forms part of the background as stated above, US copyright law is irrelevant to the dispute.
- The Defendants rely upon the following statement made by Brian Howard of the Defendants' solicitors in paragraph 6 of his witness statement:
"As a consequence of Section 203, a US Court would not allow a claim for damages for breach of a contractual agreement because the statutory termination right supersedes any contractual right. This applies whether that contract was governed under English or US law."
- The Claimant contends that this statement is neither admissible in evidence nor relevant. I agree, for the following reasons. First, these proceedings have been brought by way of Part 8 claim on the basis that the issue between the parties was one of interpretation of the Agreements applying English law and on the basis that there is no dispute as to fact, whereas foreign law is a question of fact. Secondly, and consistently with the first point, the Defendants neither sought nor obtained permission to adduce expert evidence as to US law. Thirdly, Mr Howard claims no expertise in US law. Fourthly, Mr Howard gives no basis for the statement. In particular, he does not identify any decided case to that effect. Fifthly, Mr Howard only purports to state the current position under US law. He does not say what US law was in the period from July 1980 to June 1983. It follows that his evidence is not relevant to the interpretation of the Agreements.
- Counsel for the Defendants submitted that Mr Howard's statement was admissible because it was unchallenged. This is a non sequitur. Each side's solicitor made a brief witness statement outlining his client's position. In effect, these statements functioned as statements of case. In the absence of any reply to Mr Howard's statement, the Claimant can be taken to have joined issue with it. In any event, the Claimant did not need to challenge inadmissible and irrelevant evidence contained in it.
- Counsel for the Defendant submitted that Mr Howard's statement was relevant because his statement of the current law was to be taken to represent the law at the relevant time. But that assertion would require evidence to support it.
The relevance of English public policy
- Counsel for the Defendants suggested that a term of a contract governed by English law and subject to the exclusive jurisdiction of the English courts that expressly prohibited an author from exercising his right of termination under section 203 of the US Copyright Act would be unenforceable as a matter of English public policy. In my judgment it is not open to the Defendants to rely upon this suggestion. It was not advanced in Mr Howard's witness statement. Nor was it advanced in counsel's skeleton argument. Even in counsel's oral submissions, the suggestion was not advanced by way of a positive case of the Defendants', but as a point which the Court should consider of its own motion. In my judgment, if the point was to be taken, some form of advance notice was required, not least so that the Claimant could have the opportunity to consider whether to seek to adduce evidence as to US copyright law.
- Even if the point is open to the Defendants, I am not persuaded that it is correct as a matter of law. Counsel for the Defendants admitted that he was unable to cite any authority in support of the proposition. Nor did he advance any cogent argument of principle in support of it, other than a vague reliance upon comity. The general rule, however, is that English courts will enforce a contract which is valid and enforceable under English law even if the contract would be unenforceable as contrary to public policy in another country with which the contract has a connection: see In re Missouri Steamship Co (1889) 42 Ch D 321 at 335-337 (Lord Halsbury LC) and Vita Foods Products v Unus Shipping Co Ltd  AC 277 at 296-298 (Lord Wright). It is true that English courts will not enforce a contract the performance of which would be unlawful in its place of performance (see e.g. Ispahani v Bank Melli Iran  Lloyd's Rep Bank 133 at 136-137 (Robert Walker LJ)), but counsel for the Defendants did not invoke that principle here.
Applicable principles of English law
- For the reasons explained above, the resolution of the dispute depends on the application of two areas of English law: first, the interpretation of written agreements; and secondly, the doctrine of non-derogation from grant.
Interpretation of written agreements
- There is no dispute as to the general principles applicable to the interpretation of written agreements, which have been considered by the House of Lords and the Supreme Court in a series of recent cases, including Investors Compensation Scheme Ltd v West Bromwich Building Society  1 WLR 896, Chartbrook Ltd v Persimmon Homes Ltd  UKHL 38,  1 AC 1101, Re Sigma Finance Corp  UKSC 2,  1 All ER 571, Rainy Sky SA v Kookmin Bank  UKSC 50  1 WLR 2900, Aberdeen City Council v Stewart Milne Group Ltd  UKSC 56,  SLT 205 and Arnold v Britton  UKSC 36,  AC 1619. In brief summary, the interpretation of a contract is an objective exercise in which the court's task is to ascertain the meaning that the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
- Nor is there any dispute that, as Peter Prescott QC sitting as a Deputy High Court Judge stated in Oxonica Energy Ltd v Neuftec Ltd.  EWHC 2127 (Pat) at :
"The background knowledge that the neutral, reasonable person employs when understanding a commercial document can include knowledge of the relevant law
By relevant law, he meant the law which formed part of the background to the agreement (in that case, international patent law).
Non-derogation from grant
- The law concerning the doctrine of non-derogation from grant was summarised by Neuberger J in Platt v London Underground Ltd  2 EGLR 121 at 122 as follows:
"1. It is well established that a landlord, like any grantor, cannot derogate from his grant. To put it in more normal language, as has been said in a number of cases, a landlord cannot take away with one hand that which he has given with the other see, for instance per Younger L.J. in Harmer v Jumbil Nigeria Tin Areas Ltd (1921) 1 Ch 200 at 225 to 226 and Lord Denning MR in Molton Builders Ltd v City of Westminster (1975) 30 P&CR 182 at 186.
2. In order to determine whether a specific act or omission on the part of the landlord constitutes derogation from grant, it is self-evidently necessary to establish the nature and extent of the grant see, for instance, Leech v. Schweder (1874) 9 App Cas 463 at 467, per Mellish LJ.
3. '[The exercise of determining the extent of the implied obligation not to derogate from grant] involves identifying what obligations, if any, on the part of the grantor can fairly be regarded as necessarily implicit, having regard to the particular purpose of the transaction when considered in the light of the circumstances subsisting at the time the transaction was entered into' per Sir Donald Nicholls V.C. in Johnson & Son Ltd v. Holland  1 EGLR 264 at 267M.
4. There is a close connection, indeed a very substantial degree of overlap, between the obligation not to derogate from grant, the covenant for quiet enjoyment, and a normal implied term in a contract. Thus, in words which apply equally to an implied term in a contract, Bowen LJ said in Myers v Catteson ...1889) 42 ChD 470 at 481, in relation to the derogation from grant principle, that one should give effect to what he called 'the obvious intention of the parties, so as to give the transaction between them a minimum of efficacy and value which upon any view of the case it must have been their common intention that it should have.' In Southwark Borough Council v. Mills (1999) 4 AER 449 at 467F Lord Millett explained that, to a large extent, the covenant for quiet enjoyment, and the obligation of a landlord not to derogate from his grant amounted to much the same thing.
5. The terms of the lease will inevitably impinge on the extent of the obligation not to derogate. Express terms will obviously play a part, possibly a decisive part, in determining whether a particular act or omission constitutes a derogation. An express term should, if possible, be construed so as to be consistent with what Hart J called 'the irreducible minimum' implicit in the grant itself. However, as he went on to say, a covenant relied on by the landlord 'if construed as ousting the doctrine in its entirety is repugnant
and should itself be rejected in its entirety': see Petra Investments Ltd v Jeffrey Rogers plc ...2000) L&TR 451 at 471.
6. When considering a claim based on derogation from grant, one has to take into account not only the terms of the lease, but also the surrounding circumstances at the date of the grant as known to the parties: see Chartered Trust plc v Davies (1997) 2 EGLR 83 at 87C, per Henry LJ.
- It is common ground that the doctrine of non-derogation can apply to property other than real property. In British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd  AC 577 it was applied by the House of Lords to copyrights. Although the application of the doctrine in the circumstances of that case was and remains controversial, that was not because it was being applied to copyrights.
- It is debatable whether the doctrine of non-derogation of grant is an independent rule of law or an aspect of the law of implied terms; but as the fourth paragraph of Neuberger J's summary indicates, even if it is an independent principle, it is closely related to those which govern implied terms. The general principles governing implied terms were recently re-stated by Lord Neuberger in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd  UKSC 72,  AC 742 at -.
- As is so often the case, the dispute in this case arises because the Music Publishing Agreements do not explicitly address the issue in question, here the exercise of the right of termination under section 203. In a nutshell, the Claimant says that the Group Members assigned their US copyrights to the Claimant for the full term of those copyrights, and that, in the absence of any express reservation by the Group Members of the right of termination under section 203, the exercise of that right was precluded. In a nutshell, the Defendants say that the US copyrights which they assigned were inherently subject to the right of termination, and in the absence of any express prohibition upon the exercise that right, the Group Members were free to do so.
- In addressing these contentions, the starting point is that it is common ground that:
i) the parties are to be taken to have been aware when entering into the Agreements, at least in general terms, of the effect of section 203;
ii) the effect of clause 3(a) of the Group Member Music Publishing Agreements was in substance to transfer the US copyrights in the relevant Compositions to the Claimant; and
iii) in the absence of the service of notices under section 203, those copyrights would remain vested in the Claimant until they expired.
- There was a dispute between counsel as to whether clause 3(a) was properly to be construed as an assignment of, or as an agreement to assign, the US copyrights in the Compositions. In my view it is not possible to determine who is right about this in the absence of evidence as to US copyright law, but it does not matter anyway. As set out above, there is no dispute that, either way, the effect of the clause was in substance to transfer the rights to the Claimant. If it only amounted to an agreement to assign, it is common ground that clause 12 required the execution of a confirmatory assignment in the form of Exhibit A.
- Although the arguments ranged more widely, the principal points made by each side were as follows.
- Counsel for the Claimant focussed upon the following words in clause 3(a) of the Group Member Music Publishing Agreements, and in particular the words I have italicised:
and the right to renew and extend such copyrights and other rights and the ownership of such renewed and extended copyrights and other rights as may now or hereafter be conferred by the laws of any territory so that the entire copyrights and all such other rights in the said works shall be vested in the Publishers absolutely free from the adverse claims of any third party
- He submitted that clause 3(a) obliged the Group Members to vest "the entire copyrights and all such other rights" in the relevant Compositions in the Claimant, and that included the temporal entirety of those copyrights.
- Counsel for the Claimant further submitted that this interpretation was reinforced by the following:
i) clause 4 of the Group Member Music Publishing Agreements, which provides for "the entire copyrights
in such modifications and new matter" to be vested in the Claimant "for the full term thereof and all renewals and extensions thereof";
ii) clause 6(b) of the Group Member Music Publishing Agreements, by which the Group Members agreed not to "grant transfer or assign any interest in the copyright or such other rights in the said works
to any other person firm or corporation" than the Claimant; and
iii) clause (b) of the Group Member Letter Agreements, by which the Group Members warranted that, immediately prior to entry into the Service Company Music Publishing Agreements, the Service Companies were (as employers of the Group Members) "the absolute owners of all copyright
for the full period of copyright and all renewals and extensions thereof" in the compositions which were to be assigned under the Service Company Music Publishing Agreements.
- Accordingly, counsel for the Claimant argued that what the contractual language would have conveyed to a reasonable person having the relevant background knowledge was that the parties' intention was that the "entire copyrights" in the Compositions should vest, and remain vested, in the Claimant for the "full period" of the copyrights. Furthermore, he argued that the exercise by the Group Members of their rights of termination under section 203 would derogate from that grant.
- Counsel for the Defendants submitted that clause 3(a) of the Group Member Music Publishing Agreements was purely concerned with the transfer of copyrights from the Group Members to the Claimant, and not with creating obligations on the Group Members restricting their rights after the transfer of the copyrights. He accepted that clause 3(a) was effective to transfer the US copyrights in the Compositions to the Claimant, and that absent termination the transfer would endure for the full term of those copyrights, but he submitted that that was not determinative of the issue between the parties. What mattered, he argued, was that there was no provision which excluded the Group Members' statutory rights of termination which arose in consequence of, and subsequent to, that transfer.
- Counsel for the Defendants further submitted that none of the other clauses relied upon by the Claimant advanced its case for the following reasons:
i) Clause 4 of the Group Member Music Publishing Agreements was concerned with modifications and new matter, and in any event it simply confirmed that the transfer was of the full term of the copyrights.
ii) Clause 6(b) of the Group Member Music Publishing Agreements did not preclude the exercise of the right of termination under section 203, in particular because it did not preclude transfers to the Group Members themselves.
iii) Clause (b) of the Group Member Letter Agreements simply confirmed that the transfer was of the full term of the copyrights.
- Finally, counsel for the Defendants submitted that the doctrine of non-derogation from grant did not assist the Claimant. If the Agreements on their true construction prohibited the Group Members from exercising their rights of termination, the doctrine added nothing. If the Agreements on their true construction did not prohibit the Group Members from doing so, then there was no basis for contending that it was necessary to imply such a term to give efficacy to the Agreements.
- A point which was common ground between counsel was that there was a requirement for commercial certainty as to the effect of clause 3(a) in terms of the duration of the assignment, because the Claimant would have entered into agreements with third parties (such as sub-publishers in other countries, and in particular the USA) premised upon the grant contained in clause 3(a). Counsel for the Claimant submitted that this supported the Claimant's construction while counsel for the Defendants disputed that.
- In my view these arguments are finely balanced. In the end, and not without hesitation, I have come to the conclusion that the Claimant's interpretation of the Agreements is the correct one for the following reasons. The language of clause 3(a) is wide and general. Particularly when read together with clause 4, I consider that what the language would have conveyed to a reasonable person having the relevant background knowledge was that the parties' intention was that the "entire copyrights" in the Compositions should vest, and remain vested, in the Claimant for the "full term" of the copyrights. That implicitly precludes the Group Members from exercising rights under US law which have the result that the Claimant's ownership of the copyrights is brought to an end prior to their expiry. Moreover, this interpretation is reinforced by clause 6(b), by which the Group Members promised not to transfer any interest in the copyrights to any other person, which I read in context as meaning any person other than the Claimant. (This is clearer from the wording of clause 6(b) of the Service Company Music Publishing Agreements, which refers to "any person, firm or corporation other than Tritec".) In effect, what the Group Members have done by exercising their rights of termination is to transfer the reversionary interest in the copyrights from the Claimant to themselves. Although I do not consider that the doctrine of non-derogation of grant provides the Claimant with an independent route to this conclusion, I do consider that it supports the Claimant's interpretation of the Agreements. On the other hand, I consider that the requirement for commercial certainty is a neutral factor.
- For the reasons given above, I conclude that the Defendants have acted in breach of the Agreements by serving the Notices or, where they have not yet taken effect, will do so if they are not withdrawn. I will hear counsel as to the terms of the declarations sought by the Claimant.
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