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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Performing Right Society Ltd. v B4u Network (Europe) Ltd. [2012] EWHC 3010 (Ch) (22 October 2012)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2012/3010.html
Cite as: [2012] EWHC 3010 (Ch), [2013] FSR 19, [2013] Bus LR 664

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Neutral Citation Number: [2012] EWHC 3010 (Ch)
Case No: HC11CO2553

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY

The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
22/10/2012

B e f o r e :

MR. JUSTICE VOS
____________________

Between:
PERFORMING RIGHT SOCIETY LIMITED
Claimant
- and -

B4U NETWORK (EUROPE) LIMITED
Defendant

____________________

(Computer-aided transcript of the Stenograph Notes of Marten Walsh Cherer Ltd., 1st Floor,
Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.
Telephone No: 020 7067 2900. Fax No: 020 7831 6864
e-mail: info@martenwalshcherer.com)

____________________

MR. ROBERT HOWE Q.C. (instructed by Taylor Wessing LLP) appeared for the Claimant.
MR. JAMES MELLOR Q.C. and MR. JAMES ABRAHAMS (instructed by Field Fisher Waterhouse LLP) appeared for the Defendant.

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    MR. JUSTICE VOS :

    Introduction

  1. By an Application Notice dated 16th March 2012, the claimant, Performing Right Society Limited ("PRS"), seeks summary judgment under Part 24 of the CPR in relation to part of its claim in these proceedings. It claims judgment for infringement of copyright in relation to a single musical work called 'Shukran Allah', or in English 'Thank you God', which I shall call the 'Song'.
  2. The Song is one of some 2,500 musical works composed by Mr. Salim Merchant and Mr. Suleiman Merchant (the "Composers"). The Composers are well-known composers of songs that feature predominantly in Bollywood musicals made in India.
  3. PRS is a well-known music rights collecting society. The defendant, B4U Network (Europe) Limited ("B4U"), is a satellite television broadcaster. In 1999, B4U launched B4U Music and B4U Movies, which are television channels showing Bollywood films and music videos, as I understand the position, within the United Kingdom.
  4. The case before me is said to have significance beyond the Song itself and even the compositions of the Composers, because there are many Bollywood songs which are very popular and may be affected by similar types of agreements.
  5. Despite the ramifications of what I have to decide, the issue that has ultimately been distilled in the course of argument is extremely narrow. It is a point of construction and law, which can be quite shortly stated.
  6. In essence, the question is whether there is a material difference in their legal effect between an assignment of rights which the assignor may in the future acquire or own, on the one hand, and a present assignment of all future rights in any musical works, on the other hand.
  7. PRS claims that this is a distinction without a difference and that the assignment which it took from the Composers of the rights which they "may acquire or own" took effect as a present assignment of a future copyright. PRS, therefore, says that its assignment took priority over a subsequent present assignment of future copyrights in the songs that the Composers would create for a Bollywood movie called Kurbaan, which the Composers entered into with the producers of that film, Dharma Productions Private Limited, ("Dharma" or the "Producers").
  8. Conversely, Mr. James Mellor Q.C. and Mr. James Abrahams, counsel for B4U, argue that there is all the difference in the world between the two formulations and that the assignment to the PRS was in fact an assignment subject to a condition precedent, namely, the acquisition of the copyright or the ownership of it, which cannot have taken place until after the assignment to the Bollywood producer, Dharma. Thus, they say, the subsequent assignment takes priority and the copyright in the Song passed, on its creation, by the operation of sections 11 and 91 of the Copyright, Designs and Patents Act 1988 ("the 1988 Act") straight to Dharma, without having any opportunity to be caught by the terms of the assignment to PRS.
  9. Several other points were previously taken, but this is what the case came down to. Before dealing with this central point, I shall set out a brief chronology of the relevant events, the test under Part 24 and the relevant authorities that have been relied on by the parties.
  10. Chronological background

  11. On 9th June 2004 the Composers each entered into written agreements with the claimant (the "PRS Agreements"), which provided in part as follows:
  12. "1. Definitions
    In this agreement...
    (d) 'territory' means the territory for which you transfer the rights to us under clause 2(a) [including the UK];
    (e) 'transfer' means (depending on the context) assign or assignment; and
    (f) 'the rights' means, in respect of any musical work:
    (i) the performing right; and
    (ii) the film synchronisation right...
    2. The Transfer
    (a) you transfer to us absolutely for all parts of the world the rights which belong to you on the date of this Agreement or which you may acquire or own whilst you remain our member.
    (b) the transfer mentioned in clause 2(a) shall last for so long as you remain our member and for any additional period which is specified in our Constitution...
    4. Your Obligations You:
    (a) warrant and represent that you own or have full power to transfer the rights and that the musical works (the rights in which you have transferred to us under this Agreement) do not and will not infringe the copyright in any other musical work...
    (c) promise to...
    (iii) do all such acts as are necessary to vest the rights in us and enable us to enforce all or part of the rights;
    (iv) insert in each relevant contract you make with a third party a clause expressly reserving to us the rights and to make such contract subject to this Agreement;
    (v) refrain from licensing any of the rights and from otherwise dealing with the rights which you have transferred to us;
    (vi) avoid doing anything which is likely to prejudice our ability to meet our obligations to you and to our other members."
  13. On 15th September 2008 the Composers entered into a written agreement with the film producers, Dharma, to write music for the forthcoming film Kurbaan (the "Commissioning Agreement"). Both parties to the Commissioning Agreement were Indian, and it seems most likely that it is governed by Indian law. Certainly, the Commissioning Agreement makes reference to the Copyright Act 1957, which may well be the Indian Copyright Act. Neither party has pleaded or made any submission as to Indian law. The PRS has complained that a complete copy of the Commissioning Agreement is not available today, but, as it seems to me, the relevant provisions are available, and I have been told by Mr. Mellor that the copy that has been made available is the only copy that B4U has in its possession, power, custody or control. In those circumstances, it seems to me that I should do the best I can with the copy that I have got, and that is how I intend to proceed.
  14. Mr. Robert Howe Q.C., counsel for PRS, speculated that B4U might have argued that the Commissioning Agreement was a contract of service under which the Composers were employed; but in the result, this was not pleaded or, indeed, alleged. It was common ground that the Commissioning Agreement created a contract for the Composers' services.
  15. The Commissioning Agreement provided as follows:
  16. "1. ENGAGEMENT
    (a) The producer engages the Music Directors [the Composers] to inter alia create, recreate, write, arrange, orchestrate, conduct, perform, record and deliver to the Producer [Dharma] music to be included in the Film ... and provide all services usually rendered by a music director to a first class Animated Film ('Services'), on the terms and conditions contained in this Agreement...
    2. COPYRIGHT
    (a) The Music Directors hereby confirm and agree that the entire copyright (if any) or any performer's rights, if any, or any other rights arising from the Services or the product of the Services of the Music Directors, including without limitation the Music shall vest with the Producer as the first owner of the same pursuant to this contract of service executed. This shall be applicable to all present and future work arising out of the Services. This right shall be exercised for the whole period of the right and in all territories of the world;
    (b) The Music Directors hereby expressly consent to the incorporation of the Music and the performance of the Music Directors, if any, arising consequent to the rendering of the Services in the Film. Consequent to the same the Music Directors confirm that the Music Directors do not have and shall not exercise any performer's rights under the provisions of the Copyright Act 1957 ('the Act');
    (c) Without prejudice to the aforesaid, in the event of any copyrights or any other rights, including performer's rights being vested by law in the Music Directors, in respect of the Music, the Music Directors hereby assign to the Producer without any limitation, reservation or condition the entire copyright and performer's rights and all other right, title or interest of whatsoever nature ... whether vested, contingent or future in or to the product, results or proceeds ... of the Services ... whether now known, or in the future created to which the Music Directors are now or may at any time after the date of this Agreement be entitled by virtue of or pursuant to any of the laws in force in any part of the world to hold to the Producer, its successors, assignees, and licensees absolutely for the whole period of such rights for the time being capable of being assigned..."
  17. Clauses 2(q) and (r) of the Commissioning Agreement sought to deem that the works carried out under it were carried out under a contract of service; but as I have said, no reliance is placed by B4U on those clauses.
  18. On 11th February 2009 Dharma entered into a Licence Agreement with UTV Software Communications Limited in relation to the right to distribute and exhibit certain listed films, including Kurbaan.
  19. On or shortly before 26th October 2009, PRS was notified by the Composers that they had composed the Song for Kurbaan.
  20. On 15th December 2009 UTV Software Communications Limited entered into a film licence agreement with LMB Holdings Limited (a company apparently within the B4U group) for the satellite television broadcasting rights to certain films, including Kurbaan.
  21. On 17th March 2010 a licence agreement was entered into between Sony Music Entertainment India PVT Limited and B4U for the satellite broadcasting right to song videos, including the Song. It appears that B4U does not have in its possession all the intermediate documents assigning the video rights in the Song to Sony Music Entertainment India PVT Limited. But Mr. Sunil Rohra's witness statement says that he believes that the documentation goes all the way back to Dharma. It seems that nothing turns on the absence of a complete chain of title in this case.
  22. On 7th April 2010, B4U broadcast the Song in the UK on its B4U music channel. This, as I understand it, is admitted.
  23. On 22nd September 2010, PRS sent a letter before action to the defendant.
  24. On 26th July 2011 the PRS issued its claim form.
  25. On 28th October 2011 B4U sent a draft Amended Defence to PRS, requesting PRS's consent to the amendments. The amendments pleaded customs and practices in the Bollywood film industry to the effect that Composers are commissioned to write and compose for Bollywood films on the basis that the Producers become the owners of all relevant copyrights. This custom has not in the event been relied upon in oral argument before me.
  26. On 17th January 2012 PRS wrote to B4U, saying that it intended to make an application for summary judgment.
  27. On 26th January 2012 B4U wrote, refusing its consent to the summary judgment application; the application was duly made, as I have indicated, on 16th March 2012, and now comes on before me.
  28. On 25th May 2012 Amended Particulars of Claim were served by the claimant.
  29. Part 24 of the CPR

  30. Part 24.2 of the CPR provides as follows:
  31. "The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if --
    (a) it considers that --
    (i) that claimant has no real prospect of succeeding on the claim or issue; or
    (ii) that defendant has no real prospect of successfully defending the claim or issue; and
    (b) there is no other compelling reason why the case or issue should be disposed of at a trial."
  32. The notes to Part 24.2.3 of the CPR explain the meaning of the words "no real prospects of succeeding/successfully defending". But both parties have relied on the relevant principles set out by Popplewell J and summarised in FG Wilson (Engineering) Limited v. John Holt & Company (Liverpool) Limited [2012] EWHC 2477 (Comm) at [20]. I do not need to set them out, since they are so well known, but I should perhaps record what he said about the deciding of points of law on summary judgment applications, as follows:
  33. "On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that it is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success."

    The Copyright Designs and Patents Act 1988

  34. Section 9(1) of the 1988 Act provides that,
  35. "(1) In this Part 'author', in relation to a work, means the person who creates it. ..."
  36. Section 11 of the 1988 Act provides as follows:
  37. "11(1) The author of a work is the first owner of any copyright in it, subject to the following provisions.
    (2) Where a literary, dramatic, musical or artistic work ... is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary.
    (3) This section does not apply to Crown copyright or Parliamentary copyright (see sections 163 and 165) or to copyright which subsists by virtue of section 168 (copyright of certain international organisations)."
  38. Section 20 of the 1988 Act provides as follows:
  39. "(1) The communication to the public of the work is an act restricted by the copyright in
    (a) a literary, dramatic, musical or artistic work ...
    (2) references in this part to communication to the public are to communication to the public by electronic transmission ..."
  40. Section 91 of the 1988 Act provides as follows:
  41. "(1) Whereby an agreement made in relation to future copyright, and signed by or on behalf of the prospective owner of the copyright, the prospective owner purports to assign the future copyright (wholly or partially) to another person, then if, on the copyright coming into existence, the assignee or another person claiming under him would be entitled as against all other persons to require the copyright to be vested in him, the copyright shall vest in the assignee or his successor in title by virtue of this subsection.
    (2) In this Part
    'future copyright' means copyright which will or may come into existence in respect of a future work or class of works or on the occurrence of a future event, and
    'prospective owner' shall be construed accordingly, and includes a person who is prospectively entitled to copyright by virtue of such an agreement as is mentioned in subsection (1) ..."

    Authorities

  42. In Chaplin v. Leslie Frewin (Publishers) Ltd [1966] 1 Ch 71, an infant aged 19 and his adult wife entered into two agreements, the first with two journalists to write an "autobiography" of the infant (seemingly a contradiction in terms) on terms that the copyright in the finished work was to be the property of the infant and his wife, and the second with a publisher on terms that the publisher should, during the term of the copyright, have the exclusive right to publish and sell the work. It was held by the Court of Appeal (Winn and Danckwerts LJJ, Lord Denning MR dissenting) that the contracts were binding on the infant. The court also held that the contracts were sufficient to transfer the copyright in the future work from the author to the publishers. This was the effect of section 36 of the Copyright Act 1956, which is the predecessor of section 91 of the 1988 Act, and was in terms that are sufficiently similar for me to assume in this case that they have the same effect.
  43. Winn LJ said this at pages 96-97:
  44. "I think, as my Lord has said, that it is of great importance in this case to consider what is the effect in the statutory law governing ownership of copyright of the document called 'memorandum of agreement' signed on April 17, 1965, by Michael Chaplin and his wife, herself not a minor. I am conscious that this is largely repetition of what my Lord has said, but I proceed to say that in my view the effect of the combined operation of section 36(1) and section 37(1) of the Copyright Act, 1956, is that by that contract and by the subsequent coming into existence, before any avoidance of the contract, of the work, which was at the time of the making of the contract the contemplated work, there vested in the publishers the legal right of copyright in that work. It is clear from the provisions of section 36(1) of the Act that copyright is to be transmissible as personal or movable property and is to be transmissible inter alia by assignment or by operation of law. It appears to me that clause 1 of the document should, on the proper construction of the document, be regarded as, and given the effect of, an assignment of copyright -- and assignment at the time when it was made of future copyright -- which by the effect of section 37(1) of the statute became an assignment of copyright and a vesting of copyright when the work came into existence.
    Section 37(1) provides ... In my own judgment, the copyright having thus vested in the publishers, it could not be divested or avoided by any such purported election on the part of the infant, Michael Chaplin, as was exercised and conveyed by the solicitor's letter of August 26, 1965. ... I think there is a real distinction between the effect of a deed, and of the annulment of that deed, granting a property and interest, and the vesting of personal and movable property rights by force of the 1956 statute. For the purposes of what I have already said, it is irrelevant whether the contract of April 17 was voidable."
  45. In Peer International Corporation v. Termidor Music Publishers [2004] Ch 212, Neuberger J (upheld in the Court of Appeal) considered the effect of an expropriatory Cuban statute, Cuban Law 860, passed in 1960, which provided that the rights of publishers under agreements not presented for the approval of the Cuban Musical Rights Institute were to be forfeited. The question was whether effect should be given to such a statute in relation to several songs that had been composed in Cuba prior to the statute and also prior to any publication of the works in the UK or in any Berne Convention country so that no copyright subsisted at the time of the assignments in the United Kingdom.
  46. Neuberger J held that the agreements operated as present assignments of future copyright and were effective to render the assignee (Peer) the owner in equity of the copyright at that moment.
  47. Paragraph 5, in relation to the facts, explains that the assignments in question related inter alia to "all works composed within a certain specific future period." Neuberger J, as he then was, said this at paragraphs 70-82:
  48. "As a separate argument, Mr. Mellor contends that to treat the English copyright to these various Cuban works composed by Cuban musicians, the title to which had been transferred by contracts executed in Cuba, mostly subject to Cuban law, as being unaffected by the Cuban Law 860 would be unrealistic on three grounds. First, to treat the English copyright, and any other territorial copyright, as a separate right subject to the law of that particular country, rather than looking at the copyright globally. Secondly, the copyright of the works anywhere in the world is so intimately connected with Cuba, that it would be wrong not to give effect to a Cuban decree in respect of title to the English copyright. Thirdly, this is not a case where the decree in question, Law 860, is itself confiscated or transferred away the copyright; it was only because of Peer's choice not to present to register the initial agreements to the Institute for approval under Decree 10 of Law 860 that it was deprived of the copyrights.
    In my view, even taken together, these points do not undermine the conclusion I have reached. The concept of a worldwide copyright is not acceptable as a matter of law, save to the extent that there is any Convention or Treaty, such as the Berne Convention, recognised in English law which has that sort of effect. The relevant law relating to copyright is as summarised in para 22-051 of Dicey & Morris. At least in the view of English law, copyright is, of necessity and by definition, a territorial concept, and in so far as it is English -- or UK -- copyright, it is governed by English -- or UK -- law. Although it is an abstract concept, English copyright could no more be removed from England than English real property could be removed from England. ...
    74. ... As I have mentioned, this second type of case arises where the composition had not been published in the United Kingdom or in any Berne Convention territory. ...
    75. On the face of it, there is a powerful argument for contending that, as no English copyright existed at the relevant time, there was merely a contractual right in favour of Peer, arising under the initial agreements, to enjoy title to these copyrights if and when they came into existence. As this was no more than a contractual right, with no location in England, the argument is that it could be abrogated by a Cuban decree, such as Law 860, at least in relation to the Cuban agreements, i.e. those initial agreements which were subject to Cuban law. ...
    76. ... The essential question which arises is whether any property right can be said to survive on the discharge of a contract, whose purported effect was to assign property which was not in existence, or not in the ownership of the assignor, at the date of the contract, or at the date at which the contract is determined, but which comes into existence, or comes into the hands of the assignor, subsequent to the date at which the contract is discharged. The two leading cases in which this question fell to be considered were concerned with bankruptcy. In each case, the contract of assignment related, at least in part, to property which only came into the hands of the assignor after he had become bankrupt and had been discharged from bankruptcy, and, as a result, after the contract itself had been discharged.
    77. In Collyer v Isaacs ... the Court of Appeal 'in the case of an assignment of an expectancy by way of security appears fairly clearly to have held that the assignment gave rise only to contractual obligations, which were released on the assignor's discharge in bankruptcy.' However, a somewhat different view appears to have been taken by the Court of Appeal in In Re Lind (Industrials Finance Syndicate Ltd v Lind [1915] 2 Ch. 345.) Swinfen Eady LJ said at [358]:
    '[A]n agreement to charge future property creates an immediate charge upon the property coming into existence, independently of the contract to execute some further charge, and cannot be said to rest in contract only.'
    78. At [365] and [366] Phillimore LJ referred to the right of an assignee in such a case as being 'a higher right than the right to have specific performance of the contract' and as creating 'an equitable charge which arises immediately upon the property coming into existence.' In similar terms, at [373] to [374], Bankes LJ said 'that equity regarded an assignment for value of future-acquired property as containing an enforceable security as against the property assigned quite independent of the personal obligation of the assignor arising out of his imported covenant to assign'.
    In agreement with the authors of Meagher, at para.665, it seems to me that Collyer must be regarded as 'no longer authoritative' (although I rest my view on the basis that Collyer turned on its own special facts), and that one should 'regard In Re Lind as expounding the present state of the law'. As Mr. Saini contends, the observations in Lind appear to be intended to be of general application, and to be based on principle; they do not, at least to my mind, turn on special rules relating to bankruptcy, as Ms. Pollard suggests.
    80. It also appears to me that some support for the applicability of the decision in Lind to a copyright case can be found from Performing Rights Society Ltd v London Theatre of Varieties Ltd [1924] A.C. 1. Viscount Finlay, after observing that a purported assignment of copyright was, for reasons not germane to the present case, ineffective of common law, continued at p.17:
    'But the assignment was good in equity. It was made for valuable consideration, and as soon as [the assignors] acquired the copyrights the prospective assignment which each of them had made to the [assignee] attached, and the [assignee] became the equitable owner of the performing rights in respect of each of the songs.'
    81. Viscount Cave LC at [13], Lord Sumner at [25] to [26] and Lord Phillimore at [32] appear to have taken the same view. ...
    82. In these circumstances, I conclude that Law 860 was not effective to transfer the title from Peer to the English copyrights which existed in 1960, or to prospective English copyrights which were not yet in existence in 1960."
  49. The 16th Edition of Copinger & Skone James on Copyright 2011 indicates in relation to section 91(1) of the 1988 Act as follows:
  50. "The expression 'entitled as against all other persons' apparently refers to the rules of priority which would have applied apart from the Act if the assignee had been claiming specific performance of the agreement to assign the copyright to him. So, for example, where the prospective owner purports to assign the future copyright to two persons by separate assignments, the first in time will become the owner unless he has so acted to cause his equity to be postponed."
  51. The 4th Edition of Laddie, Prescott & Vitoria on the Law of Copyright [2011] says the following in relation to section 91 of the 1988 Act at paragraph 24.6:
  52. "Under the CDPA 1988 it is possible to assign the copyright in a work or works yet to be created without the need for a subsequent assignment after the work has come in to existence. A similar provision was first introduced by the Copyright Act 1956. Before that Act, an assignment which purported to assign the copyright in future works operated as an agreement to assign and was effective to pass the property only in equity, so that the assignee was the equitable owner with the assignor as his trustee. In order to sue for infringement the legal owner had to be joined. The inconvenience of this was amply demonstrated in Performing Right Society Ltd v London Theatre of Varieties Ltd. Now, under s 91(1) of the CDPA 1988, where an agreement has been signed by or on behalf of the prospective owner of the copyright purporting to assign any future copyright then, if the assignee (or any person claiming under him) would as against all other persons be entitled to require the copyright to be vested in him, on the coming into existence of the work, the copyright vests in the assignee or his successor in title without the need for any further assurance. This means that if the assignee would be entitled to specific performance of the agreement he becomes the legal owner of the copyright in the work as soon as it is created and without the need for a subsequent assignment. If, on the other hand, the assignee would not be entitled to specific performance, for example because there are prior rights, or it was an assignment without consideration or there was a condition precedent which remained unfulfilled by the intended assignee, or the agreement was in restraint of trade, the copyright will not vest in that intended assignee. Section 91(1) also covers chains of assignments so that when the work comes into being the legal title to the copyright vests in the ultimate assignee. ..."

    Mr. Mellor's argument

  53. Mr. Mellor's arguments were quite straightforward. He submitted that the words "which you may acquire or own" in clause 2(b) of the PRS agreement were very simple. They create, he said, a condition precedent that has to be fulfilled before the assignment takes place. The condition precedent is that you have to acquire or own the right before the clause bites. Therefore, says Mr. Mellor, the big question is whether the Composers ever acquired or owned the rights in question.
  54. In relation to the effect of the 1988 Act, Mr. Mellor argued that section 11(1) was referring to anything following in the Act, not just section 11(2). If an employed composer composes a song, the employer is the first owner of the copyright. Therefore, in such a case, clause 2(b) of the PRS Agreement would not bite as the condition precedent would not be fulfilled.
  55. Section 11(3) draws one's attention to other provisions where the general rule does not apply: e.g. sections 163, 165 and 169 in relation to Crown, Parliament and certain international organisations' copyright.
  56. Mr. Mellor then submits that section 11 is subject to section 91. Section 91 asks whether a situation would occur but for the operation of the section. This hypothetical situation has, according to Mr. Mellor, two aspects: (i) The future owner of the copyright has assigned his future copyright to another person; and (ii) the other person would be entitled on the copyright coming into existence (at that moment) to have the copyright vested in him: in other words, he would be entitled to specific performance.
  57. Then Mr. Mellor submits that, when the copyright comes into existence, section 91 has the effect of passing the first copyright directly to the Producers under the Commissioning Agreement, by clause 2(c), whether or not clause 2(a) is effective. The Producers are entitled to specific performance.
  58. Conversely, however, section 2(a) of the PRS Agreement has no effect because the condition precedent is never fulfilled. At the moment of creation, the copyright goes straight across to the Producers so they gain priority having drafted their agreement as an immediate assignment of future rights as opposed to an assignment when rights are created in the future.
  59. Mr. Mellor argues that the definition of "prospective owner" in section 91(2) includes somebody prospective entitled. That means you can have a whole string of assignments so that copyright vests immediately on coming into existence in the person at the end of the chain. There is, he says, no scintilla temporis where anyone along the way owns anything including the author.
  60. PRS has not said, "I assign future copyright", but instead it has said, "I assign the rights which I may, in the future, acquire." This is what creates the condition precedent, according to Mr. Mellor. Nothing is acquired because of the Commissioning Agreement which does have the effect of assigning a present right to future property.
  61. Mr. Mellor submits that there is nothing weird or unusual about this construction as it accommodates employed and contracting composers. He says that one should not construe the words "may acquire or own" as meaning something different. It is clearly a future assignment and not a present assignment.
  62. Mr. Mellor finally seeks to distinguish the case of Peer relied upon by Mr. Howe on three grounds. First, he says, that in that case, the song was already created at the time of the assignment even if the copyright in the UK did not yet exist, so there was something for the equitable charge to attach to. Secondly, he says that in Peer, there was no competing agreement so no condition precedent that had to be fulfilled. Thirdly, he says that Peer was about who had the reversionary interest of the last 25 years under section 5(2) of the Copyright Act 1911 which reverted to the author's estate. The form of the assignment between heirs and assignee was the heirs confirming the agreement with the composer. The decision was that the assignment of future copyright was effective.
  63. Discussion

  64. I accept that the outcome in this case turns entirely on the proper construction of the PRS Agreement. It is true that that agreement contains clauses that require the Composers to make future agreements subject to the PRS Agreement. There could be some implication from that that, if they failed to do so, they would simply be in breach of the PRS Agreement.
  65. As it seems to me, however, the true question is whether Clause 2(a) effects a present assignment of future rights.
  66. The operation of the 1988 Act is important to the construction because its regime is applicable when we are considering the UK copyright.
  67. First, as it seems me, the words "following provisions" in section 11(1) of the 1988 Act are referring to sections 11(2) and 11(3). That is the way those words are used in many other sections in the same legislation and it makes no sense to refer to the rest of the Act as the "following provisions" or to exclude the first 10 sections of the Act.
  68. This does not, however, matter very much, if at all, because section 11 is undoubtedly subject to section 91.
  69. Section 91 is not about who is the first owner of the copyright. That is something provided for in sections 9 and 11 and it is, except where the composer is an employee, or engaged by the Crown, Parliament or certain UN organisations, the author.
  70. Section 91 is a vesting section, as Mr. Mellor has submitted, but it does not operate by making the assignee the first owner of the copyright. It operates by providing how the copyright will pass from the prospective owner of the copyright and says that "if on the copyright coming into existence the assignee or other person claiming under him would be entitled, as against all other persons, to require the copyright to be vested in him, the copyright shall vest in the assignee or his successor in title by virtue of this subsection".
  71. The definitions show that section 91 can, as Mr. Mellor says, transmit the copyright when it comes into effect along a chain to the latest assignee; but it does not say that there is no first owner.
  72. That, in my judgment, is the key to this case.
  73. Here, clause 2(a) of the PRS Agreement, even on Mr. Mellor's construction, operates when the copyright is created fulfilling what he described as the condition precedent. At that moment, the two assignments have to be considered: the first, even according to Mr. Mellor, is the PRS Agreement; the second is the Commissioning Agreement. Unless the Commissioning Agreement has already whisked the copyright away, the first in time will prevail as with all equitable assignments or assignments of equitable rights, and as confirmed in the passage I have read from Copinger & Skone James.
  74. I do not think that the Commissioning Agreement can have whisked away the copyright for two reasons. First, whilst it is expressed as a present assignment of a future right, the assignment is in respect of future property. What happens when the musical work is created is that the composers become the first owners of the copyright, and then section 91 operates to transfer the copyright to the assignee. The assignee for this purpose is the first assignee in time, namely, the PRS.
  75. Secondly, even if Mr. Mellor is right that the Commissioning Agreement would be effective to transfer the equitable future copyright to the producers when it was created, it was always subject to the PRS Agreement.
  76. The PRS Agreement was, on its true construction, also effective to do so. The words "transfer to us absolutely for all parts of the world the right which you may acquire or own" are a present assignment of future rights. The word "transfer" is defined as meaning "assign" or "assignment". These words have the same effect as the words of Clause 2(c) of the Commissioning Agreement. They do not, in my judgment, create a condition precedent. They are simply making a present assignment of future rights. This is not an agreement to assign in the future when something happens or anything like it. It is not, as the extract from Laddie contemplates, an agreement to assign if a condition precedent is satisfied, like, for example, if money is paid regularly every year in the future.
  77. In my judgment there is no philosophical or philological difference between saying "I am assigning now a right which does not yet exist" and "I am assigning now a right when I acquire it"; both have the same effect. They are the same because the right does not presently exist in either case.
  78. Moreover, the same situation arose in Peer. There the right did not yet exist because the work had not been published in a Berne Convention country. There was therefore no right in existence at the date of the assignment and yet the assignment was held to be a valid assignment of a future right.
  79. True, Peer does not answer the construction problem here, but I have no doubt that the difference between the wording of the two assignments is, as Mr. Howe has submitted, a distinction without a difference.
  80. The other distinctions made by Mr. Mellor in relation to the Peer decision do not, in my judgment, bear scrutiny.
  81. The position here is that the combined effect of the proper construction of the PRS Agreement and sections 11 and 91 of the 1988 Act is to effect an assignment to the PRS of the future copyright, when it vests in the Composers under sections 9 and 11, as it does. The PRS Agreement assignment takes precedence as being first in time over the Commissioning Agreement assignment.
  82. I should say something about the factual matrix and the consequences of the decision I have reached, since it has been suggested that the result is commercially absurd. I do not agree. It seems to me that, on all the well-known principles of contractual construction that the parties have referred to, the result is just what one would expect. This was not a "Bollywood" contract. It was a PRS contract concerning royalty collection for the playing of musical works in the UK. The PRS Agreement would be expected to catch any future songs written by the Composers that they become first owners of the copyright in respect of. They can change that position as they have now latterly done in respect of India, but I cannot construe the contract with a condition precedent that is not there and cannot have been intended by the parties, looking at the words they used within the four corners of the document, to have been intended to provide some hiatus between the agreement and the assignment taking effect. The words should be taken to mean what they were obviously intended to mean.
  83. Since there is no real prospect that B4U can successfully defend the claim in relation to the Song and no other reason for a trial, I will grant partial summary judgment in respect of the Song.


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