23 October 2018

Cruising for a bruising: Spandau Ballet strike gold!

As the copyright owners of some of the more memorable songs from the 80’s, Spandau Ballet’s management company, Reformation Publishing Company Ltd (“Reformation” – effectively owned by Gary Kemp, an employee when he wrote the band’s songs, hence Reformation own the copyright as employer) are keen to protect the golden eggs. So when someone appears to infringe their rights, they will take steps to stop them.

The issue in the case Reformation Publishing Company Limited v Cruiseco Limited and anor [2018] EWHC 2761 (Ch) was the unauthorised use of two extracts from the Spandau Ballet songs “Gold” and “True” for the purposes of advertising a “Back to the 80’s” music-themed cruise. The defendants having accepted that the video clips with the music (called a “sizzle reel”) did require a licence, the issues were the sum payable for such a licence and whether or not there should be any damages for the flagrancy of the breach.

To cut a long story short

In early 2017 the first defendant (“Cruiseco”), agreed to charter and manage the 7 day 80’s music-themed cruise sailing from Southampton in May 2018. The selection of artists and creation of promotional material was the responsibility of Cruising Country PTY Limited (aka “Choose your Cruise”) part owned by Artists Network Australia (“ANA”) who created the sizzle reels.

One of the chosen artists was Tony Hadley, the former lead singer of Spandau Ballet. He had fallen out with Gary Kemp, since in 1999 (supported by John Keeble, drummer, and Steve Norman, guitarist/saxophonist of Spandau Ballet) he argued they were all joint authors of the songs and should share in the royalties. The only member of the band not involved was Gary Kemp’s brother Martin. The court found fully in favour of Gary Kemp. There was, therefore, ‘history’ between Tony and Gary.

The printed publicity material for the cruise heavily featured Tony Hadley. The sizzle reels prepared by ANA used the original recordings of True and Gold. It was not disputed that two licences would have been required: one from the publishing rights owner (ie Reformation) and the second from the copyright owner of the actual recordings (Warner Group – not a party to the proceedings).

From the correspondence in evidence, it was apparent to Tony Hadley’s management that if the original Spandau Ballet recordings were used, there was a problem. Accordingly, they suggested Tony’s own recordings of the songs should be used. As the judge, Mr Justice Nugee, pointed out, while that would have negated the need for a licence from Warner Group, one was still needed from Reformation as the copyright owner of the songs.

Despite the suggestion, the sizzle reels sent from ANA to Cruiseco, which lasted 2 minutes and 20 seconds, contained a 19 second extract from Gold (as the opening) and a 23 second extract from True (which was the closing song) from the original recordings. This was emailed on the 22nd June 2017 to 257 individual travel agency businesses in order for them to seek publicity for the cruise, together with a separate link to a file sharing platform (Hightail) where the clip could be played. The following day, a current member of Spandau Ballet informed Reformation he had spotted the publicity material, whereupon Reformation’s director (a former manager of the band, Stephen Dagger) sought legal advice, and a written demand was sent to Cruiseco requiring immediate removal of the material. The material was eventually taken down on 5 days later.

Two days before trial, it transpired that the Hightail file sharing platform had remained active during the entire period (1 year). However, unless an individual had the necessary link they would not have been able to access the clip, and so the songs.

The issues to be decided were, therefore, how long did the infringement last (5 days or 1 year) and what was the appropriate measure of damages?

Highly Strung 

The first issue did not trouble the court unduly. As the 5 days had been admitted, the claimant had to establish the songs were ‘made available to the public’ for the longer period. That would depend on whether the 257 individuals who received the material and link either constituted the public or (as the judge considered they were not) any of those individuals would have forwarded the link on to members of the public. As there was no evidence they had done, the period of infringement was set at 5 days.

That did not necessarily mean that in considering the appropriate measure of damages, the requisite licence to be negotiated between a willing licensor/willing licensee would only last 5 days. In fact, a large part of the judgment looked at what type of damages would be appropriate and the recent cases of One Step (Support) Ltd v Morris – Garnier [2018] UKSC 20, and the Court of Appeal decision in Eaton Mansions (Westminster) Ltd v Stinger Compania de Inversion SA [2013] EWCA Civ 1308 and concluded the term “Wrotham Park damages” to cover all the types of remedy should no longer be used.

As Nugee J. makes clear, there is no material difference in the principle by which a willing licensor/licensee’s negotiations are used to assess damages in IP infringement cases as is applied in the case of trespass to land. The reason for stating this was because in the Eaton Mansions decision, while the infringement lasted from 2007 until 2010, the actual lease did not expire until 2053. However, the court was only prepared to accept that the appropriate licence was required until the infringement ceased and not some longer date. So in Reformation’s case, 5 days: this despite Reformation arguing that in their business as licences were generally granted for a minimum period of 6 months that’s what they would have done. As is clear from the cases cited, a party’s view of they would have done is not relevant to the court’s decision.

That left two considerations: the appropriate license fee and additional damages for the flagrancy of the breach.

Daggers drawn

Deciding the appropriate amount of damages is an art not a science, but the general starting point is if these two songs have already been licensed, how much and for what duration? Unsurprisingly, as licensing is a major part of Reformation’s business, evidence was readily available as to specific licences covering the internet, radio etc. and for a period of a year. Based on this evidence, the judge concluded that a reasonable licence fee for 1 year for the songs would be £155,000. However, the Judge considered that simply pro-rataing that sum for a 5 day period would not truly reflect what the parties would have negotiated. There was some evidence that the early days of any licence are the important ones and so the Judge considered that 25% of the annual fee would be the appropriate sum ie £38,750.00.

That left the issue of damages for the flagrancy of the breach. It was accepted that ANA were the agents acting for Cruiseco. While seemingly harsh, the principle that acts of an agent who causes damage being attributed to the principal was applied. The judge concluded the relevant individual at ANA behind the sizzle reels should have known licences were required and considered how he dealt with the matter as reckless behaviour. An additional sum of £25,000 was awarded for the seriousness of the infringement, making the total damages £63,750.

True Gold

While this is the first IP case after the UKSC’s One Step decision, little has changed as it continued to follow the well-trodden path of willing licensor/ licensee: this has always been the case where neither loss of profit or an account of profits is the appropriate measure of damages.

What this case does is indicate that the courts may be more willing to award damages for flagrancy beyond cases where it is the actual infringer who is reckless, by applying the law of agency, and so include the principal.

Reading this case one is left with the impression that there was an underlying current of animosity, because of Tony Hadley’s involvement, albeit indirectly. Tony and Gary may not have fallen out in the playground of Dame Alice Owen’s Grammar School, but they certainly have now.