INTELLECTUAL PROPERTY ENTERPRISE COURT
Fetter Lane, London, EC4A 1NL
B e f o r e :
(Sitting as a Deputy Judge of the High Court)
| HENRY HADAWAY ORGANISATION LIMITED
|- and -
|(1) PICKWICK GROUP LIMITED
(2) GORDON LORENZ PRODUCTIONS LIMITED
(3) THE ESTATE OF MR GORDON LORENZ
Richard Edwards (instructed by Gordon Dadds) for the First Defendant
The Second Defendant and Third Defendant were not present or represented
Hearing dates: 13 and 14 October 2015
Crown Copyright ©
Melissa Clarke (sitting as a Deputy Judge of the High Court):
Pickwick 2's Witnesses
Background and evidence
Creation of the Recordings
Receivership of Point
Pickwick 2 Agreements
Pickwick 2 Issued Recordings
(i) Is HHO the owner of the copyright in the Recordings, alternatively is HHO an exclusive licensee of the copyright in the Recordings?
(ii) Did Pickwick 2 know or have reason to believe the copies they were making were infringing copies?
In light of the Amended Defence I add a third issue:
(iii) If HHO is an exclusive licensee of GLPL, does the 'Buyout Agreement' or any collaboration of Mr Lorenz in the release of the Pickwick 2 Issued Recordings afford Pickwick 2 a defence of consent to any infringing acts?
"15. In practice the English rules of equity are also important. In Robin Ray v Classic FM  FSR 622 Lightman J dealt with a case arising from a dispute about ownership of copyright, which arose from work done by claimant pursuant to a consultancy contract with the defendant. The defendant argued on various grounds that it owned the copyright. One argument was that it had commissioned the creation of the copyright work in question by the claimant and therefore the defendant owned the copyright in equity. Lightman J analysed the law on this question in detail from p640 to 644. The whole analysis is relevant to the case before me. It was approved in full by the Court of Appeal in R Griggs Group v Evans  EWCA Civ 11 (Jacob LJ paragraphs 13 to 16).
16. In summary the salient points at the outset of Lightman J's analysis are:
(a) There are a considerable number of authorities where a copyright, brought into existence by a person ("the contractor") pursuant to a contract for services with another ("the client"), has been held to belong in equity to the client;
(b) The issue in every such case is what the client under the contract has agreed to pay for and whether he has "bought" the copyright.
(c) The alternatives in each case are that the client has bought the copyright, some form of copyright licence or nothing at all.
(d) The general principles governing the respective rights of the contractor and client are as follows:
(1) the contractor is entitled to retain the copyright in default of some express or implied term to the contrary effect;
(2) the contract itself may expressly provide as to who shall be entitled to the copyright in work produced pursuant to the contract;
(3) the mere fact that the contractor has been commissioned is insufficient to entitle the client to the copyright. Where Parliament intended the act of commissioning alone to vest copyright in the client e.g. in the case of unregistered design rights and registered designs, the legislation expressly so provides […]. In all other cases the client has to establish the entitlement under some express or implied term of the contract."
"In proceedings brought by virtue of this Chapter with respect to a sound recording, where copies of the recording as issued to the public bear a label or mark stating:
(a) that a named person was the owner of copyright in the recording at the date of issue of the copies, or
(b) that the recording was first published in a specified year or in a specified country,
the label or mark shall be admissible as evidence of the facts stated and shall be presumed to be correct until the contrary is proved."
(1) An exclusive licensee has, except against the copyright owner, the same rights and remedies in respect of matters occurring after the grant of the licence as if the licence had been an assignment.
(2) His rights and remedies are concurrent with those of the copyright owner…
(3) In an action brought by an exclusive licensee by virtue of this section, a defendant may avail himself of any defence which would have been available to him if the action had been brought by the copyright owner.
Preliminary Finding of Fact
Is HHO the owner of copyright in the Recordings? Alternatively is it the exclusive licensee?
i) Who made the arrangements necessary for the making of the Recordings? If not GLPL either solely or jointly with Pickwick 1/Carlton, then HHO's claim must fail, as it has framed its case around GLPL's rights as author and first owner of copyright, as discussed.
ii) If GLPL solely or jointly made the arrangements necessary for the making of the Recordings, what effect, if any, does the 1992 Agreement have on the ownership of copyright in the Recordings?
iii) Is there any evidence of assignment of GLPL's rights of copyright to Pickwick 1/Carlton or any other third party after the 1992 Agreement and before the February 2008 Agreement?
iv) Has HHO succeeded in rebutting the s105 presumptions upon which Pickwick 2 relies?
v) What effect, if any, does the December 2008 Agreement have on ownership of copyright in the Recordings?
Who made the arrangements necessary for the making of the Recordings?
i) commissioned the making of the Recordings;
ii) created the marketing name "the Shows Collection";
iii) set and paid to GLPL the fixed production budget (excluding named artists' advances and royalties);
iv) discussed and approved the albums to be recorded and the named artists to be used in the Recordings;
v) approved and paid, or rejected, the named artists' advances and royalties negotiated by GLPL;
vi) entered into contracts with the named artists; and
vii) provided administrative and secretarial services in the form of Miss Jones.
i) created the idea of what became the Shows Collection and brought it to Pickwick 1;
ii) agreed to produce each Recording on a fixed production budget (exclusive of named artists' fees);
iii) made all other payments, including providing for GLPL's production fee, from the fixed budget;
iv) took the lead in suggesting albums and named artists for discussion and approval by Pickwick 1/Carlton;
v) negotiated named artists' advances and royalties for approval by Pickwick 1/Carlton;
vi) instructed Lorraine Jones to enter into contracts with named artists on those approved terms;
vii) provided Lorraine Jones with contact details and addresses of named artists and agents to enable her to do so;
viii) decided upon, booked, hired and paid for musicians and non-named artists;
ix) booked, hired and paid for CTS Studio time on GLPL's account;
x) attended the studio sessions;
xi) 'produced' the Recordings, in the technical sense of the word, at those sessions;
xii) provided and paid for the physical media on which the Recordings were captured;
xiii) provided finished masters to Pickwick 1/Carlton; and
xiv) drafted the CD liner notes for each album.
i) staff producers;
ii) experience of producing its own music;
iii) accounts with studio facilities to enable the recordings to be made;
iv) address book of orchestras and musicians and vocalists; and
v) evidence of close relations with the calibre of named artists needed, or their agents.
What is the effect of the 1992 Agreement, if any?
i) Mr Santilli's clear and credible recollection of discussing the copyright in the Recordings with Mr Tommaro in 1999, after the purchase of Carlton by Point, and checking it against Carlton's own rights database to find it logged as being owned by GLPL and exclusively licensed to Carlton. I find this compelling. His evidence was that he did ask the terms of the agreement between the parties, but can't remember them. It seems likely to me that if he had been informed that the terms of the agreement were different to his initial understanding, i.e. that Point did own the rights through its purchase of Carlton, he would be likely to remember that. His inability to remember the terms gives further weight to his evidence that the rights were owned by GLPL.
ii) The undisputed evidence of Mr Cooper that Gordon Lorenz prevented ABM from selling the physical stocks of CDs of the Recordings following the purchase by ABM of Point Rights Limited, because the rights had reverted to GLPL. Again, Mr Cooper remembers that he tried to look for any agreements relating to the Recordings but doesn't remember what he found. If Mr Cooper had found any evidence that the rights were not owned by GLPL but remained in the ownership of the receivers of Point, for example, I would expect him to remember it.
iii) Mr Santilli's evidence of conversations with both Mr Lorenz and Mr Mittrich around the time of the Point receivership in 2000, in which both told him they believed the rights in the Recordings had reverted to GLPL. I find it more likely than not that Mr Mittrich, as the previous owner of Point, would have known who owned the copyright in the Recordings as between GLPL and Pickwick 1/Carlton.
iv) The evidence of Mr Hadaway that at the meeting in April/May 2000 with Mr Lorenz and Mr Mittrich, Mr Lorenz mentioned he owned the Recordings and Mr Mittrich did not object. I bear in mind that the purpose of this meeting was to persuade Gordon Lorenz to allow New HHOL to exploit the Recordings. If Mr Mittrich knew or believed that the copyright was owned by Point through its ownership of Carlton, it would make no sense for him to agree to his joint venture, New HHOL, obtaining a licence of the Recordings from GLPL.
v) The evidence that the intellectual property rights of the Point group companies at the time of its receivership, including any rights in the Recordings, either (a) were licensed rights which reverted to the copyright owner because of the insolvency event; or (b) were bought by ODS in their intellectual property asset purchase from the receivers in 2000; or (c) remained in Point Rights Limited when the shares in that company were bought by ABM. There is no evidence before the court that any intellectual property rights either were sold elsewhere, or passed in bona vacantia to the Crown on the dissolution of the Point companies, which are the other possible options. Pickwick 2 suggests the latter happened, by Mr Betts and Mr Hartley's evidence that they believed the rights had 'vacated'. I cannot accept that it is likely the receivers would have allowed this to happen, when it is clear that the Recordings had commercial value and were of interest to both ABM and ODS.
Since it is not part of Pickwick 2's case that ABM bought the copyright in the Recordings, point (c) above can be discounted. It appears from the evidence of Mr Hadaway and Mr Santilli that ODS had not bought the copyright in the Recordings from Point, so point (b) above can be discounted. That leaves (a) as the only possibility supported by evidence – that the rights enjoyed by Point in the Recordings were licensed rights, which reverted to the GLPL as copyright owner on the insolvency of Point.
Allegations made against Mr Lorenz?
Evidence of Later Assignment?
Section 105 Presumptions?
Effect of the December 2008 Agreement?
i) Clause 1 - "The Company shall be deemed the sole owner of the master recordings with complete and total rights of exploitation throughout the world by any means whatsoever including but not limited to Public Performance, broadcast and the manufacture of devices for the means of audio reproduction whether now known or in the future and the right to sell, assign or license such rights to third parties".
ii) Clause 3 - "The Company shall be solely responsible for the fulfilment of all copyright obligations arising out of the manufacture and sale of the Records hereunder."
iii) Clauses 4 and 5, which provide for payment to GLPL of a 10% royalty on the wholesale price of all records sold, with six monthly accounting.
iv) Clause 6 - "The Company shall be entitled to the right of production, reproduction and sale in the territory of the world of Records manufactured in pursuance of this agreement. The company shall at all times have the right at their discretion to decide whether and/or when to commence or discontinue the said production and sale Records manufactured in pursuance of this agreement and the right and licence at all times to use and publish the artist(s) name(s) for the labelling catalogues and exploitations of the said Records."
v) Clause 7 - "The term "Records" or "Master Recordings" used in this Agreement shall be deemed to be a reference to any disc records of any material and revolving at any speed or any other device or contrivance of any tape, character or description whether now or hereafter known for the reproduction of sound."
Did Pickwick 2 know or have reason to believe the copies they were making were infringing?
Does the Buy-out Agreement or any collaboration by GLPL in the Pickwick 2 Issued Recordings afford Pickwick 2 any defence of consent?
i) I have found that Mr Hartley's evidence was confused and unconvincing. In particular, his explanation for why Pickwick 2 bought out rights it accepted it had no contractual obligation to pay, which was paraphrased in Mr Edwards' submissions as "I'd better pay him something because he was the producer and how else is he to be paid", lacks credibility.
ii) I find the emails from Mr Lorenz to Mr Betts, which purportedly relate to this buyout of rights, to be problematic. Mr Betts says that Mr Lorenz's suggestion of a buyout of rights in the Recordings is found in an email of 30 June 2009. The reference is "I wondered if you had an opportunity to consider… [various unrelated projects]… and finally a buy out for the 32 CDs listed." No list is attached. This is not a full-page printout like all of the other emails, but a reduced size photocopy. It is tailed by a Pickwick 2 auto message, which can only have been applied if it was replied to or forwarded by somebody within Pickwick 2, but that response is not disclosed. I cannot know if the response might have shed some light on the buyout referred to. It is difficult to avoid the conclusion that the email from GL has been copied in order to remove the Pickwick 2 response. I bear in mind that this point was not put to Mr Betts in cross-examination and he has had no opportunity to answer it.
iii) Mr Betts says that the list of 32 CDs to which that email relates is found attached to an earlier email of 27 May 2009 and includes many of the titles of the Recordings. There is no evidence connecting the two, save that the earlier email appears to contain a list of 32 CDs. However this appears to be the first page of a multipage email. It has no sign-off from Mr Lorenz as is his almost invariable style and it is not tailed by the AVG virus-checking wording that is seen on most of the other emails from Mr Lorenz around this time. It is not clear whether this is a list of 32 CDs or a truncated part of a longer list. This was put to Mr Betts who had no answer to give.
iv) The Buyout Agreement itself is not an agreement as such, merely an invoice for a buyout of 46 unspecified titles of 1 August 2009. It does not refer in any way to the Recordings. As evidence of an agreement it provides no real assistance.
v) Pickwick 2's evidence of Mr Lorenz's delivery of the masters of the Recordings was extremely weak. Mr Hartley admitted he had no direct knowledge of whether the masters were delivered. Mr Betts described masters generally as being on CD-R discs with handwritten or printed labels. Despite this, the CDs disclosed as masters by Pickwick 2 in these proceedings are those retail copies of the CDs on which the Pickwick/Carlton Statements were found. I do not accept that they are the masters, nor that Mr Lorenz delivered them. It is more likely than not that they are part of the old stock of CDs which passed to Pickwick 2 on the purchase of ABM.
Annie Get Your Gun
Aspects of Love
*Chitty Chitty Bang Bang
*Crazy for Gershwin
Fiddler on the Roof
Guys and Dolls
Jesus Christ Superstar
Joseph and the Amazing Technicolor Dreamcoat
Kiss Me Kate
Me and My Girl
My Fair Lady
*Paint Your Wagon
Phantom of the Opera
*Porgy and Bess
The King and I
*The Lion King
The Rocky Horror Picture Show
The Sound of Music
Val Doonican Love Songs
West Side Story
*Whistle Down the Wind
* Those Recordings included in Schedule A to the February 2008 Agreement but not contained in Schedule 1 to the December 2008 Agreement