Shukran Allah: when it pays to get there first

B4U Network (Europe) Ltd v Performing Right Society Ltd is a decision last week from the Court of Appeal (Civil Division) for England and Wales. You can find it at [2013] EWCA Civ 1236. This was an appeal by B4U against the decision  of Mr Justice Vos at [2012] EWHC 3010 (Ch) to grant summary judgment in favour of the PRS in its copyright infringement claim which was noted on the 1709 Blog here.

In 2004 the PRS, being a society formed to protect the copyright in musical works, had entered into a written agreement with two composers of songs for Bollywood films, Salim and Suleiman Merchant. By this agreement, copyright that the Merchants "may acquire or own" while remaining members of the society was assigned to it. In 2008 the Merchants were commissioned by Indian producers Dharma Productions to compose the music and lyrics for the film Kurbaan. Under that agreement, the rights in relation to musical works composed for the film vested in the film's producer and included all present and future works arising out of the contract and covered all territories of the world.

B4U admitted that it had broadcast a song, Shukran Allah, from Kurbaan on its UK music channel; the PRS inevitably proceeded against it for infringement on the basis that copyright had vested in it by virtue of its agreement with the Merchants.  Vos J granted summary judgment on the basis that B4U had no prospect of successfully defending the claim in relation to the song.  B4U was not particularly happy at this sudden outcome, maintaining that the copyright in the song was nothing to do with the PRS at all.  Said B4U, at the very moment that Kurbaan was composed, ownership of the copyright was instantly transferred to Dharma by virtue of the Copyright, Designs and Patents Act 1988 s.91(1) -- the bit that deals with assignment of future copyrights.  Since copyright in the song was never owned by the Merchants, argued B4U, it fell outside the scope of those works that were assigned to the PRS by the 2004 agreement.

The Court of Appeal (Lords Justices Moses, Kitchin and Underhill) dismissed B4U's appeal. How so?

 When the Merchants entered into their arrangement with the PRS in 2004 and their subsequent commissioning agreement with Dharma in 2008, the song had not yet been composed. Both agreements -- as the parties accepted -- accordingly took effect as equitable assignments of a future copyright.

If the song came within the scope of the equitable assignment to the PRS under the 2004 agreement, under the rules of priority that assignment, being the first in time, took priority over the purported assignment under the 2008 agreement with Dharma.

What rights were assigned to the PRS? The answer was future rights, namely those which the Merchants "may" own. That category of future rights which the Merchants assigned was not weighed down by any requirement that, once the work was created, the rights must be owned by them, since the 2004 agreement did no more than refer to rights capable of being owned by them -- and, at the time the agreement with the PRS was struck, it was beyond argument that the Merchants' rights in music they were yet to compose might be owned by them.

On a historical note, in every Copyright Act since 1911, the author had always in general been the first owner of the copyright, which would make it unnecessary to be concerned as to whether the Merchants ever became owners of the copyright. However, the court was prepared to accept that the effect of s.91(1) was to vest both legal and equitable title to the rights in the song, on its creation, in the first assignee in time. On that basis, those rights now vested in the PRS since they were rights which, as at the date of assignment, the Merchants might have owned.

Kurbaan here
Shukran Allah here